<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to section 13 or 15(d) of the Securities
-----
Exchange Act of 1934
For the quarterly period ended June 27, 1999 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 33-14051
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Prandium, Inc.
--------------
(Exact name of registrant as specified in its charter)
Delaware 33-0197361
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
18831 Von Karman Avenue, Irvine, California 92612
----------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (949) 757-7900
--------------
Indicate by check mark 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 and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
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As of August 11, 1999, the registrant had issued and outstanding 180,380,513
shares of common stock, $.01 par value per share.
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<PAGE>
PART I. FINANCIAL INFORMATION
---------------------------------
Item 1. Financial Statements
- -------
PRANDIUM, Inc.
--------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
($ in thousands)
<TABLE>
<CAPTION>
June 27, December 27,
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 4,187 $ 17,707
Receivables 4,867 9,106
Inventories 4,550 5,020
Other current assets 3,658 3,957
------------ ------------
Total current assets 17,262 35,790
Property and equipment, net 197,165 201,314
Reorganization value in excess of amount allocable to identifiable assets, net 34,429 35,129
Costs in excess of net assets of business acquired, net 65,491 56,455
Other assets 16,970 19,498
------------ ------------
$ 331,317 $ 348,186
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------
Current liabilities:
Current portion of long-term debt, including capitalized lease obligations $ 2,235 $ 2,498
Accounts payable 17,381 22,447
Self-insurance reserves 23,370 25,040
Other accrued liabilities 65,831 74,833
Income taxes payable 3,523 3,742
------------ ------------
Total current liabilities 112,340 128,560
Other long-term liabilities 3,719 3,612
Long-term debt, including capitalized lease obligations, less current portion 249,284 237,151
Stockholders' deficit:
Common stock - authorized 300,000,000 shares, par value $.01 per share,
180,380,513 shares issued and outstanding on June 27, 1999 and 178,105,294
shares issued and outstanding on December 27, 1998 1,804 1,781
Additional paid-in capital 222,353 222,353
Accumulated deficit (258,183) (245,271)
------------ ------------
Total stockholders' deficit (34,026) (21,137)
------------ ------------
$ 331,317 $ 348,186
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements
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<PAGE>
PRANDIUM, INC.
--------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
($ in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the Quarters Ended
----------------------------------------
June 27, June 28,
1999 1998
---------------- ----------------
<S> <C> <C>
Sales $ 140,315 $ 120,095
---------------- ----------------
Product costs 36,925 32,033
Payroll and related costs 49,495 41,712
Occupancy and other operating expenses 34,392 31,331
Depreciation and amortization 6,238 5,283
General and administrative expenses 8,233 6,998
Opening costs 1,016 638
Loss on disposition of properties, net 767 738
---------------- ----------------
Total costs and expenses 137,066 118,733
---------------- ----------------
Operating income 3,249 1,362
Interest expense, net 7,610 5,999
---------------- ----------------
Loss before income tax provision (4,361) (4,637)
Income tax provision 147 127
---------------- ----------------
Net loss $ (4,508) $ (4,764)
================ =================
Net loss per share - basic and diluted $ (0.02) $ (0.04)
================ ================
Weighted average shares outstanding - basic
and diluted 180,380,513 121,515,391
================ ================
</TABLE>
See accompanying notes to condensed consolidated financial statements
-3-
<PAGE>
PRANDIUM, INC.
--------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
($ in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
---------------------------------------
June 27, June 28,
1999 1998
-------------- --------------
<S> <C> <C>
Sales $ 274,573 $ 233,401
-------------- --------------
Product costs 72,646 62,796
Payroll and related costs 97,435 81,918
Occupancy and other operating expenses 69,535 62,179
Depreciation and amortization 12,915 10,622
General and administrative expenses 16,871 14,116
Opening costs 1,703 1,258
Loss on disposition of properties, net 1,193 1,406
-------------- --------------
Total costs and expenses 272,298 234,295
-------------- --------------
Operating income (loss) 2,275 (894)
Interest expense, net 14,893 11,826
-------------- --------------
Loss before income tax provision (12,618) (12,720)
Income tax provision 294 254
-------------- --------------
Net loss $ (12,912) $ (12,974)
============== ==============
Net loss per share - basic and diluted $ (0.07) $ (0.11)
============== ==============
Weighted average shares outstanding - basic
and diluted 180,380,513 121,515,391
============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements
-4-
<PAGE>
PRANDIUM, INC.
--------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
------------------------------
June 27, June 28,
1999 1998
----------- -----------
<S> <C> <C>
Decrease in Cash and Cash Equivalents
Cash flows from operating activities:
Cash received from customers, franchisees and licensees $ 275,687 $ 234,475
Cash paid to suppliers and employees (269,687) (227,995)
Interest paid, net (7,733) (7,365)
Opening costs (1,703) (914)
Income taxes paid (513) (267)
----------- -----------
Net cash used in operating activities (3,949) (2,066)
----------- -----------
Cash flows from investing activities:
Proceeds from disposal of property and equipment 1,794 74
Proceeds from sale of notes receivable, net 3,246 0
Proceeds from payments on notes receivable 1,914 0
Bridge note receivable - KKR merger 0 (3,000)
Cash required for the acquisition of KKR (2,115) 0
Capital expenditures (16,103) (9,710)
Lease termination payments (2,505) (722)
Other (654) (172)
----------- -----------
Net cash used in investing activities (14,423) (13,530)
----------- -----------
Cash flows from financing activities:
Net proceeds from issuance of notes 0 11,620
Proceeds from working capital borrowings, net 5,900 0
Payment of debt issuance costs (160) (97)
Reductions of long-term debt, including capitalized lease obligations (888) (1,625)
----------- -----------
Net cash provided by financing activities 4,852 9,898
----------- -----------
Net decrease in cash and cash equivalents (13,520) (5,698)
Cash and cash equivalents at beginning of period 17,707 32,518
----------- -----------
Cash and cash equivalents at end of period $ 4,187 $ 26,820
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements
-5-
<PAGE>
PRANDIUM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
---------------------------------
June 27, June 28,
1999 1998
-------------- --------------
<S> <C> <C>
Reconciliation of net loss to net cash used in operating activities:
Net loss $ (12,912) $ (12,974)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 12,915 10,622
Amortization of debt issuance costs 777 597
Expense of unamortized opening costs 0 344
Loss on disposition of properties 1,193 1,406
Accretion of interest on discount notes 6,197 3,948
(Increase) decrease in receivables, inventories and other current assets 1,154 (628)
Decrease in accounts payable, self-insurance reserves, other accrued
liabilities and income taxes payable (13,273) (5,381)
------------- -------------
Net cash used in operating activities $ (3,949) $ (2,066)
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements
-6-
<PAGE>
PRANDIUM, INC.
--------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Unaudited)
1. Company. Prandium, Inc., formerly known as Koo Koo Roo Enterprises,
-------
Inc. and as Family Restaurants, Inc. (together with its subsidiaries, the
"Company"), was incorporated in Delaware in 1986. The Company is primarily
engaged in the operation of restaurants in the full-service and fast-casual
segments, through its subsidiaries. Information relating to periods ending
prior to October 30, 1998 included in this report relates to the historical
operations of Family Restaurants, Inc. and, except as otherwise indicated, does
not reflect the operations of Koo Koo Roo, Inc., a Delaware corporation, or The
Hamlet Group, Inc., a California corporation (collectively, "KKR"), which the
Company acquired on October 30, 1998. At June 27, 1999, the Company operated
308 restaurants in 27 states, approximately 68% of which are located in
California, Ohio, Pennsylvania, Indiana and Michigan, and franchised and
licensed 25 restaurants outside the United States.
2. Financial Statements. The Condensed Consolidated Financial Statements
--------------------
in this Form 10-Q have been prepared in accordance with Securities and Exchange
Commission Regulation S-X. Reference is made to the Notes to the Consolidated
Financial Statements for the Year Ended December 27, 1998 included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 27, 1998
(the "Form 10-K") for information with respect to the Company's significant
accounting and financial reporting policies, as well as other pertinent
information. The Company believes that all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the results
of the interim periods presented have been made. The results of operations for
the quarter and six months ended June 27, 1999 are not necessarily indicative of
those for the full year.
3. Acquisition of KKR. The following table summarizes unaudited pro
------------------
forma combined financial information for the Company, assuming the acquisition
of KKR occurred as of the beginning of fiscal 1998. The unaudited pro forma
combined financial information is not indicative of the results of operations of
the combined companies that would have occurred had the acquisition occurred at
the beginning of the period presented, nor is it indicative of future operating
results. The unaudited pro forma adjustments are based upon currently available
information and certain assumptions that management believes are reasonable
under the circumstances.
-7-
<PAGE>
<TABLE>
<CAPTION>
Six Months
Quarter Ended Ended
June 28, 1998 June 28, 1998
-------------- --------------
(Pro Forma)
($ in thousands, except
per share data)
<S> <C> <C>
Consolidated Statements of Operations Information
Sales $142,825 $278,467
Net loss from continuing operations $ (6,461) $(29,265)
Pro forma basic and diluted loss per common share $ (0.03) $ (0.16)
Pro forma weighted average number of common
shares outstanding (in thousands) 178,105 178,105
</TABLE>
An appraisal of the acquired real estate, restaurant equipment, furniture,
fixtures and leasehold interests has been completed. However, the final
allocation of purchase price to the fair value of tangible assets acquired and
liabilities assumed continues to be dependent upon certain valuations and other
studies that have not progressed to a stage where there is sufficient
information to make a definitive allocation. Although the purchase price
allocation is preliminary, the Company does not anticipate significant changes
to the allocation.
4. Strategic Divestment Program. In the fourth quarter of 1998, 48 non-
----------------------------
strategic Chi-Chi's restaurants were designated for divestment (the "Strategic
Divestment Program"). In conjunction with the Strategic Divestment Program, the
Company recorded a provision for divestitures of $22,884,000, including
divestment reserves of $12,256,000. For the six months ended June 27, 1999, the
Company utilized (i) $154,000 for severance costs associated with certain
restaurant and regional managers in connection with the restaurants divested and
(ii) $739,000 for net costs associated with lease terminations, subsidized
subleases, brokerage fees and other divestment costs. Thirty-two of the
restaurants were still in operation at the end of the second quarter of 1999,
and, accordingly, only $2,538,000 of the divestiture reserves have been
utilized as of June 27, 1999. The Strategic Divestment Program is scheduled to
be completed over a 12 to 18 month period and the operating results will be
included in the Company's consolidated statement of operations until the
divestments are completed.
5. Segment Information. The Company operates exclusively in the food-
-------------------
service industry. Substantially all revenues result from the sale of menu
products at restaurants operated by the Company. The Company's reportable
segments are based on restaurant operating divisions. Operating income (loss)
includes the operating results before interest. The corporate component of
operating income (loss) represents corporate general and administrative
expenses. Corporate assets include corporate cash, investments, receivables and
asset portions of financing instruments.
-8-
<PAGE>
<TABLE>
<CAPTION>
For the Quarters Ended For the Six Months Ended
-------------------- --------------------
June 27, June 28, June 27, June 28,
1999 1998 1999 1998
--------- --------- --------- ---------
(Unaudited)
($ in thousands)
<S> <C> <C> <C> <C>
Sales
El Torito Division $ 58,674 $ 57,583 $ 112,100 $ 109,392
Chi-Chi's Division 58,927 62,512 117,705 124,009
Koo Koo Roo Division 22,714 0 44,768 0
--------- --------- --------- ---------
Total Sales $ 140,315 $ 120,095 $ 274,573 $ 233,401
========= ========= ========= =========
Depreciation and Amortization
El Torito Division $ 2,402 $ 2,339 $ 4,836 $ 4,773
Chi-Chi's Division 2,566 2,547 5,084 5,069
Koo Koo Roo Division 1,002 0 2,474 0
Corporate 268 397 521 780
--------- --------- --------- ---------
Total Depreciation and Amortization $ 6,238 $ 5,283 $ 12,915 $ 10,622
========= ========= ========= =========
Operating Income (Loss)
El Torito Division $ 3,595 $ 4,346 $ 5,158 $ 5,831
Chi-Chi's Division 297 (2,395) (1,492) (5,570)
Koo Koo Roo Division 267 0 (79) 0
Corporate (910) (589) (1,312) (1,155)
--------- --------- --------- ---------
Total Operating Income (Loss) $ 3,249 $ 1,362 $ 2,275 $ (894)
========= ========= ========= =========
Interest Expense, net
El Torito Division $ 254 $ 211 $ 413 $ 472
Chi-Chi's Division 102 137 176 313
Koo Koo Roo Division 19 0 43 0
Corporate 7,235 5,651 14,261 11,041
--------- --------- --------- ---------
Total Interest Expense, net $ 7,610 $ 5,999 $ 14,893 $ 11,826
========= ========= ========= =========
Capital Expenditures
El Torito Division $ 4,412 $ 2,768 $ 6,960 $ 4,765
Chi-Chi's Division 6,160 3,350 7,747 4,608
Koo Koo Roo Division 635 0 1,134 0
Corporate 209 194 262 337
--------- --------- --------- ---------
Total Capital Expenditures $ 11,416 $ 6,312 $ 16,103 $ 9,710
========= ========= ========= =========
<CAPTION>
June 27, Dec. 27,
1999 1998
-------- --------
(Unaudited)
($ in thousands)
<S> <C> <C>
Total Assets
El Torito Division $ 102,617 $ 100,056
Chi-Chi's Division 111,687 112,328
Koo Koo Roo Division 101,069 108,410
Corporate 15,944 27,392
--------- ---------
Total Assets $ 331,317 $ 348,186
========= =========
</TABLE>
- 9 -
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------
Results of Operations
Certain information and statements included in this Management's Discussion
and Analysis of Financial Condition and Results of Operations, including,
without limitation, statements containing the words "believes," "anticipates,"
"expects," "intends," "plans," "estimates" and words of similar import,
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and involve known and unknown risks and
uncertainties that could cause actual results of the Company or the restaurant
industry to differ materially from expected results expressed or implied by such
forward-looking statements. Although it is not possible to itemize all of the
factors and specific events that could affect the outlook of a restaurant
company operating in a competitive environment, factors that could significantly
impact expected results include (i) the continuing development of successful
marketing strategies for each of the Company's concepts, (ii) the effect of
national and regional economic conditions, (iii) the availability of adequate
working capital, (iv) competitive products and pricing, (v) changes in
legislation, (vi) demographic changes, (vii) the ability to attract and retain
qualified personnel, (viii) changes in business strategy or development plans,
(ix) business disruptions, (x) changes in consumer preferences, tastes and
eating habits, (xi) increases in food and labor costs and (xii) the Company's
ability to mitigate the impact of the year 2000 issue successfully. The Company
disclaims any obligation to update any such factors or to publicly announce the
result of any revisions to any of the forward-looking statements contained
herein to reflect future events or developments.
The following should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" presented in the
Form 10-K.
Information relating to periods ending prior to October 30, 1998 included
herein relates to the historical operations of Prandium, Inc. (formerly known as
Koo Koo Roo Enterprises, Inc. and as Family Restaurants, Inc.) and does not
reflect the operations of KKR which the Company acquired on October 30, 1998.
As used herein, "comparable restaurants" means restaurants operated by the
Company on January 1, 1998 and that continued in operation through the end of
the second quarter of 1999.
Liquidity and Capital Resources
- -------------------------------
A. Liquidity
The Company reported net cash used in operating activities for the six
months ended June 27, 1999 and June 28, 1998 of $3.9 million and $2.1 million,
respectively. Cash needs are being funded by available cash balances,
supplemented, as necessary, by working capital advances available under the
Foothill Credit Facility (as defined below). In addition, in 1997 and 1998 FRI-
MRD Corporation, a wholly owned subsidiary of the Company ("FRI-MRD"), raised
approximately $67.3 million in cash from the issuance of senior discount notes
and senior secured discount notes to supplement its liquidity needs. The
Company's viability has been and will continue to be dependent upon its ability
to generate sufficient cash flow to meet its obligations on a timely basis, and
to comply with the terms of its financing agreements.
-10-
<PAGE>
Statement of Cash Flows. For the six months ended June 27, 1999, net cash
used in operating activities was $3.9 million compared to $2.1 million for the
six months ended June 28, 1998. This increase was in part due to the $0.5
million decline in cash received from customers, franchisees and licensees net
of cash paid to suppliers and employees. In addition, interest paid, net,
opening costs and income taxes paid also increased by $0.4 million, $0.8 million
and $0.2 million, respectively. For the first six months of 1999, net cash used
in investing activities was $14.4 million compared to $13.5 million for the same
period in 1998. In the first six months of 1999, proceeds from the sale of
notes receivable of $3.2 million, proceeds from payments on notes receivable of
$1.9 million, increased proceeds from disposal of property and equipment of $1.7
million and the absence of funding the bridge note receivable more than offset
$2.1 million in payments related to the acquisition of KKR and a $6.4 million
increase in capital expenditures from 1998 to 1999. For the first six months of
1999, net cash provided by financing activities was $4.9 million compared to
$9.9 million for the same period in 1998. During the first six months of 1998,
$11.6 million in net proceeds from the issuance of notes was received, compared
to $5.9 million of net proceeds from working capital borrowings in 1999.
EBITDA. For the first six months of 1999, the Company reported EBITDA
(defined as earnings (loss) before opening costs, gain (loss) on disposition of
properties, gain on sale of division, provision for divestitures and write-down
of long-lived assets, VCU termination expense, restructuring costs, interest,
taxes, depreciation and amortization and extraordinary items) of $18.1 million,
compared to $12.4 million for the same period in 1998. The $5.7 million
improvement was due to the continuing impact of El Torito and Chi-Chi's cost
reduction and reengineering strategies which have improved operating margins,
improving comparable restaurant sales trends and $2.7 million contributed by
KKR. This improved EBITDA is the continuation of the trend that began in 1996
when new management was installed at both El Torito and Chi-Chi's. Since 1995,
the divisional EBITDA of the Company's ongoing Mexican restaurant operations is
set forth in the following table.
<TABLE>
<CAPTION>
Divisional EBITDA
---------------------
Fiscal Year Ended El Torito Chi-Chi's
- ----------------- --------- ---------
($ in thousands)
<S> <C> <C>
December 31, 1995 (a) $13,508 $(10,455)
December 29, 1996 11,956 (4,278)
December 28, 1997 17,627 36
December 27, 1998 22,869 1,426
</TABLE>
(a) Includes 53 weeks of operations and, in accordance with
Company policy at that time, excludes certain unallocated
corporate overhead.
The Company has included information concerning EBITDA herein because it
understands that such information is used by certain investors as one measure of
an issuer's historical ability to service debt. EBITDA should not be considered
as an alternative to, or more meaningful than, operating income (loss) as an
indicator of operating performance or to cash flows from operating
-11-
<PAGE>
activities as a measure of liquidity. Furthermore, other companies may compute
EBITDA differently, and therefore, EBITDA amounts among companies may not be
comparable.
Working Capital Deficiency. The Company operates with a substantial
working capital deficiency because:
. restaurant operations are conducted primarily on a cash (and cash
equivalent) basis with a low level of accounts receivable;
. rapid turnover allows a limited investment in inventories; and
. cash from sales is usually received before related accounts payable
for food, beverages and supplies become due.
The Company had a working capital deficiency of $95.1 million on June 27,
1999.
Credit Facility. The Company's credit facility with Foothill Capital
Corporation (the "Foothill Credit Facility"):
. provides for up to $35 million in revolving cash borrowings and up to
$55 million in letters of credit (less the outstanding amount of
revolving cash borrowings);
. is secured by substantially all of the real and personal property of
the Company;
. contains covenants which restrict, among other things, the Company's
ability to incur debt, pay dividends on or redeem capital stock, make
certain types of investments, make dispositions of assets and engage
in mergers and consolidations; and
. expires on January 10, 2002.
The Company was in compliance with all financial ratios at June 27, 1999.
Letters of credit are issued under the Foothill Credit Facility primarily to
provide security for future amounts payable under the Company's workers'
compensation insurance program ($17.3 million of such letters of credit were
outstanding as of August 11, 1999). $17.5 million in revolving cash borrowings
were outstanding as of August 11, 1999.
The Company continues to be highly leveraged and has significant annual
debt service requirements as follows:
-12-
<PAGE>
<TABLE>
<CAPTION>
Cash
Interest Principal
-------- ---------
($ in millions)
<S> <C> <C>
1999 $14.3 $ 2.5
2000 28.7 2.7
2001 28.6 2.5
2002 5.6 204.0
2003 3.7 1.1
2004 0.6 31.6
</TABLE>
The Company is exploring several financing transactions and other strategic
alternatives in an effort to meet its debt service requirements and has retained
Donaldson, Lufkin & Jenrette Securities Corporation and U.S. Bancorp Libra as
financial advisors to assist in this process. There can be no assurances,
however, that any such transactions will be consummated. There can be no
assurance that the Company will be able to repay or refinance its 9-3/4% Senior
Notes due 2002 and its 10-7/8% Senior Subordinated Discount Notes due 2004, or
that FRI-MRD will be able to repay or refinance its 15% Senior Discount Notes
due 2002 and its 14% Senior Secured Discount Notes due 2002, at their respective
maturities.
B. Capital Expenditures
Net cash used in investing activities was $14.4 million for the first six
months of 1999, including $16.1 million for capital expenditures, as compared to
net cash used in investing activities of $13.5 million for the same period in
1998. The increase in net cash used in investing activities for the first six
months of 1999 was primarily due to (i) cash required for the acquisition of
KKR, (ii) increased capital expenditures and (iii) increased lease termination
payments.
Capital expenditures of up to approximately $36 million have been
identified for fiscal 1999, including approximately $6 million devoted to normal
improvements of the Company's restaurants. The Company is continuing its
remodeling of both El Torito and Chi-Chi's restaurants and is committing
approximately $18 million to $19 million for this purpose in fiscal 1999. The
Company also anticipates opening up to 10 new El Torito restaurants, including
the new "El Torito Express" concept, and up to five new Koo Koo Roo restaurants.
As of August 11, 1999, the Company has opened two new El Toritos, one new El
Torito Grill, two new El Torito Expresses and two new Koo Koo Roos. The Company
is also upgrading El Torito's in-store point-of-sale ("POS") technology during
fiscal 1999.
From January 1, 1999 to August 11, 1999, the Company completed the
remodeling of ten additional El Torito restaurants in various markets and 28
additional Chi-Chi's restaurants in various markets.
Year 2000
- ---------
Background. In the past, many computers, software programs, and other
information technology ("IT systems"), as well as other equipment relying on
microprocessors or similar circuitry
-13-
<PAGE>
("non-IT systems"), were written or designed using two digits, rather than four,
to define the applicable year. As a result, date-sensitive systems (both IT
systems and non-IT systems) may recognize a date identified with "00" as the
year 1900, rather than the year 2000. This is generally described as the Year
2000 issue. If this situation occurs, the potential exists for system failures
or miscalculations, which could impact business operations.
The Securities and Exchange Commission ("SEC") has asked public companies
to disclose four general types of information related to Year 2000 preparedness:
the company's state of readiness, costs (historical and prospective), risks and
contingency plans. See SEC Release No. 33-7558 (July 29, 1998). Accordingly,
the Company has included the following discussion in this report, in addition to
the Year 2000 disclosures previously filed with the SEC.
State of Readiness. The Company began a concerted effort to address its
Year 2000 issues in fiscal 1997. In fiscal 1998, the Company formalized the
effort with a Y2K Preparedness Council that includes the Chief Executive
Officer, General Counsel, Chief Financial Officer, Vice President of
Public/Investor Relations and Vice President of Information Services. This team
decided in early 1998 that the Company's best course of action was to replace
the IT and non-IT systems that were not Year 2000 compliant with new hardware
and software. In addition to improving processes and allowing wider access to
data, the new systems would be Year 2000 compliant.
The Company believes that it has identified all significant IT and non-IT
systems that require replacement in connection with Year 2000 issues. Internal
resources have been used, and are continuing to be used, to make the required
changes and test Year 2000 readiness. The required modifications of all
significant systems are well underway. The Company plans on completing the
replacement and testing of all significant systems in the fourth quarter of
1999.
In addition, the Company has communicated with suppliers, banks, vendors
and others with whom it does significant business (collectively, its "business
partners") to determine their Year 2000 readiness and the extent to which the
Company is vulnerable to any other organization's Year 2000 issues. Based on
these communications and related responses, the Company is monitoring the Year
2000 preparations and state of readiness of its business partners. Although the
Company is not aware of any significant Year 2000 problems with its business
partners, there can be no guarantee that the systems of other organizations on
which the Company's systems rely will be converted in a timely manner, or that a
failure to convert by another organization, or a conversion that is incompatible
with the Company's systems, would not have a material adverse effect on the
Company.
Costs. The total cost to the Company of Year 2000 activities has not been
and is not anticipated to be material to its financial position or results of
operations in any given year. The Company spent approximately $2.2 million on
the new software and related hardware and installation costs in 1998 . In
addition, the El Torito in-store POS upgrade discussed in Capital Expenditures
above and POS upgrades in the Company's other operating divisions, including
KKR, which are required for Year 2000 compliance, are expected to be completed
by September 1999 at a cost of approximately $6.5 million to $7.0 million, much
of which is anticipated to be lease financed. These costs, as well as the date
on which the Company plans to complete the Year 2000 modifications and testing
processes, are based on management's best estimates, which were derived
utilizing numerous assumptions of future events, including the continued
availability of certain resources, third-party
-14-
<PAGE>
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved, and actual results could differ from those
estimates.
Risks. The Company utilizes IT systems and non-IT systems in many aspects
of its business. Year 2000 problems in some of the Company's systems could
possibly disrupt operations at some restaurants, but the Company does not expect
that any such disruption would have a material adverse impact on the Company's
operating results.
The Company is also exposed to the risk that one or more of its suppliers
or vendors could experience Year 2000 problems that could impact the ability of
such suppliers or vendors to provide goods and services. Although this risk is
lessened by the availability of alternative suppliers, the disruption of certain
services, such as utilities, could, depending upon the extent of the disruption,
potentially have a material adverse impact on the Company's operations.
Contingency Plans. Based on the above-described plans, the Company does
not believe that significant contingency plans will be necessary but the Company
is preparing plans to deal with the possibility that some suppliers or vendors
might fail to provide goods and services on a timely basis as a result of Year
2000 problems. The Company expects these contingency plans will generally
include the identification, acquisition and/or preparation of backup systems,
suppliers and vendors. All Year 2000 statements contained herein are designated
as "Year 2000 Readiness Disclosure" pursuant to the Year 2000 Information and
Readiness Disclosure Act of 1998.
Results of Operations.
- ---------------------
The Company's total sales of $140,315,000 for the second quarter of 1999
increased by $20,220,000 or 16.8% as compared to the same period in 1998. For
the first six months of 1999, total Company sales of $274,573,000 increased by
$41,172,000 or 17.6% as compared to the same period in 1998. The increases were
due to (i) the addition of sales from the Koo Koo Roo and Hamburger Hamlet
restaurants which were acquired on October 30, 1998, (ii) sales increases in
the comparable El Torito and Chi-Chi's restaurants and (iii) sales from new
restaurants, partially offset by sales decreases for restaurants sold or closed.
The breakdown of the sales increases for the second quarter and first six months
of 1999 is detailed below:
<TABLE>
<CAPTION>
First Six
Second Quarter Months
Sales Increase Sales Increase
--------------- ---------------
($ in thousands)
<S> <C> <C>
Sales from the KKR Restaurant Division $22,714 $44,768
Increase in Sales of Comparable Restaurants 1,292 3,392
Sales from New Restaurants 1,093 1,614
Decrease in Sales of Restaurants Sold or Closed (4,879) (8,602)
------- -------
$20,220 $41,172
======= =======
</TABLE>
Sales for comparable restaurants of $114,568,000 for the second quarter of
1999 increased by $1,292,000 or 1.1% as compared to the same period in 1998.
For the first six months of 1999,
-15-
<PAGE>
sales of comparable restaurants of $224,573,000 increased by $3,392,000 or 1.5%
as compared to the same period in 1998. As shown below, these increases were due
to increased sales for comparable El Torito and Chi-Chi's restaurants.
<TABLE>
<CAPTION>
Second Quarter First Six Months
Sales Increase Sales Increase
----------------- ----------------
Amount Percent Amount Percent
------ -------- ------ -------
($ in thousands)
<S> <C> <C> <C> <C>
Comparable El Torito $ 558 1.0 % $2,039 1.9 %
Comparable Chi-Chi's 734 1.3 1,353 1.2
------ ------
Total $1,292 1.1 % $3,392 1.5 %
====== ==== ====== ====
</TABLE>
El Torito comparable sales were up 1.0% in the second quarter and 1.9% for
the first six months of 1999 as compared to the same periods in 1998. El
Torito's second quarter advertising continued its 45th Anniversary Celebration.
El Torito's second quarter print campaign introduced the all new "XXL Sizzling
EnchiWOWdas," a reinvention of the traditional Mexican favorite, enchiladas, but
with larger portions served sizzling on a skillet with the choice of Filet
Mignon, Crab or Barbeque Chicken. The campaign was supported by print media and
included special discount offers, such as a "Free Caesar Salad with the Purchase
of any EnchiWOWdas entree." The print advertising also highlighted El Torito's
"Happy Dinner Hour" program which offers guests a 50% discount on the purchase
of a second entree from 3-5 p.m. Monday through Friday. The offers in the print
campaign were designed to generate new guest trial and increase the frequency of
visits of existing guests. The in-restaurant marketing for the promotion
included a specially created table menu featuring the Enchi"WOW"das entrees and
a new line of "Cadillac" margaritas. In addition, El Torito continues to test
new, innovative products in select markets for future systemwide introduction.
Also contributing to El Torito's improving sales trends are the continued
positive results of the remodel program which started in 1997. As of the end of
fiscal June 1999, El Torito had completed 41 remodels.
Comparable sales for Chi-Chi's in the second quarter of 1999 were up 1.3%
as compared to the same period in 1998. The first major media advertising
campaign of 1999 began in March and continued through April featuring two newly
created items, "Fajitas Humongous for Two" and "Mucho Platter for Two."
Comparable sales for May were up 5.4% when compared to the same period last
year. Sales for May 5, 1999 were up 21.6% over May 5, 1998, which was up 25%
over May 5, 1997, as Chi-Chi's continues to build participation in the Cinco de
Mayo holiday in its markets. The second 1999 advertising campaign supported by
major media started in early May featuring the "Del Rio Trio," a collection of
Mexican entrees priced at $9.99. Concurrently, Chi-Chi's introduced a new
seasonal Margarita, "Wild Berry," which generated 19.5% of all Margarita sales
during its six-week availability, the highest response for a flavored Margarita
introduction in three years. In June, a program to build Margarita sales was
implemented, supported by an employee incentive contest. In addition, during
the quarter, Chi-Chi's celebrated 18 remodel grand re-openings, bringing the
total number of remodeled restaurants up to 68. Five of these new openings
included an enhanced exterior to complement the remodeled interior.
-16-
<PAGE>
Koo Koo Roo's marketing activities for the second quarter began with the
continuation of the Chargrilled Chicken Chop introduction. This product was
first introduced in the latter part of the first quarter of 1999. This new
product introduction was supported with a targeted print campaign in all
markets. Following the Chargrilled Chicken Chop promotion, Koo Koo Roo
introduced new Combo Meals. Each Combo Meal included an entree, any two sides
and a beverage for $5.99. Customers could choose between four entrees:
Original Skinless Flame Broiled Chicken Breast or Leg & Thigh, Rotisserie Leg &
Thigh or 1/4 lb. hand-carved roasted sliced turkey. The Combo Meal promotion
was supported with four-color print advertising in all markets.
Hamburger Hamlet, in the second quarter, introduced its Spring Menu of
Hamlet At Night. This new menu included entrees such as Halibut Macadamia,
Santa Fe Chicken and Grilled Pork Chop. This menu also introduced a new
appetizer--Crab Cakes, and a new dessert--Hamlet's Lime Pie. This new menu is
available after 5 p.m. every day to increase Hamburger Hamlet's dinner business.
The Spring Menu was supported with four-color solo direct mail pieces
distributed around the West Coast locations.
Product costs of $36,925,000 for the second quarter of 1999 increased by
$4,892,000 or 15.3% as compared to the same period in 1998. For the first six
months of 1999, product costs of $72,646,000 increased by $9,850,000 or 15.7% as
compared to the same period in 1998. The increases are primarily due to the
acquisition of the Koo Koo Roo and Hamburger Hamlet restaurants on October 30,
1998 which accounts for $7,059,000 or 144.3% of the increase for the second
quarter of 1999 and $13,823,000 or 140.3% of the increase for the first six
months of 1999, partially offset by the impact of the 28 restaurants sold or
closed since the beginning of 1998. As a percentage of sales, product costs
decreased to 26.3% in the second quarter of 1999 as compared to 26.7% in the
same period of 1998 and decreased to 26.5% for the first six months of 1999 as
compared to 26.9% in the same period in 1998.
Payroll and related costs of $49,495,000 for the second quarter of 1999
increased by $7,783,000 or 18.7% as compared to the same period in 1998. For
the first six months of 1999, payroll and related costs of $97,435,000 increased
by $15,517,000 or 18.9% as compared to the same period of 1998. The increases
are primarily due to the acquisition of the Koo Koo Roo and Hamburger Hamlet
restaurants on October 30, 1998 which accounts for $7,691,000 or 98.8% of the
increase for the second quarter of 1999 and $15,346,000 or 98.9% of the increase
for the first six months of 1999, the impact of the minimum wage increase in
California on March 1, 1998 and the impact of improved management staffing in
many of the Company's restaurants. As a percentage of sales, payroll and
related costs increased to 35.3% in the second quarter of 1999 as compared to
34.7% in the same period of 1998 and increased to 35.5% for the first six months
of 1999 as compared to 35.1% in the same period of 1998. The increases in
payroll and related costs as a percentage of sales were offset in part by a
continuing focus on improving labor scheduling and efficiencies.
The Company is subject to Federal and state laws governing matters such as
minimum wages, overtime and other working conditions. Approximately half of the
Company's employees are paid at rates related to the minimum wage. Therefore,
increases in the minimum wage or decreases in the allowable tip credit (tip
credits reduce the minimum wage that must be paid to tipped employees in certain
states) increase the Company's labor costs. This is especially true in
California, where there
-17-
<PAGE>
is no tip credit. Effective September 1, 1997, the Federal minimum wage was
increased from $4.75 to $5.15. However, a provision of the new measure
effectively froze the minimum wage for tipped employees at then current levels
by increasing the allowable tip credit in those states which allow for a tip
credit. Furthermore, in California, the state's minimum wage was most recently
increased to $5.75 on March 1, 1998. In response to the minimum wage increases
on March 1, 1997 and March 1, 1998, the Company raised menu prices at its El
Torito restaurants in an effort to recover the higher payroll costs. Chi-Chi's
also raised menu prices in October and December 1997 as a result of the
cumulative impact of these minimum wage increases. Similarly, in March 1998, KKR
also raised menu prices for its Koo Koo Roo restaurants. No minimum wage
increases are scheduled for 1999 at this time, but pressure continues for
further increases in both the Federal and California executive and legislative
branches.
Occupancy and other operating expenses of $34,392,000 for the second
quarter of 1999 increased by $3,061,000 or 9.8% as compared to the same period
in 1998. For the first six months of 1999, occupancy and other operating
expenses of $69,535,000 increased by $7,356,000 or 11.8% as compared to the
same period in 1998. The increases are primarily due to the acquisition of the
Koo Koo Roo and Hamburger Hamlet restaurants on October 30, 1998 which accounts
for $5,015,000 or 163.8% of the increase for the second quarter of 1999 and
$10,039,000 or 136.5% of the increase for the first six months of 1999,
partially offset by the impact of the 28 restaurants sold or closed since the
beginning of 1998. As a percentage of sales, occupancy and other operating
expenses decreased to 24.5% in the second quarter of 1999 as compared to 26.1%
in the same period in 1998 and decreased to 25.3% for the first six months of
1999 as compared to 26.6% in the same period in 1998. This decrease primarily
reflects (i) the impact of El Torito and Chi-Chi's cost reduction strategies,
(ii) the impact of improving comparable restaurant sales trends and (iii) lower
occupancy and other operating expenses as a percentage of sales in the Koo Koo
Roo and Hamburger Hamlet restaurants.
Depreciation and amortization of $6,238,000 for the second quarter of 1999
increased by $955,000 or 18.1% as compared to the same period in 1998. For the
first six months of 1999, depreciation and amortization of $12,915,000 increased
by $2,293,000 or 21.6% as compared to the same period in 1998. The increases
are primarily due to the acquisition of the Koo Koo Roo and Hamburger Hamlet
restaurants on October 30, 1998 which accounts for $1,002,000 or 104.9% of the
increase for the second quarter of 1999 and $2,474,000 or 107.9% of the increase
for the first six months of 1999, partially offset by the impact of (i) the 28
restaurants sold or closed since the beginning of 1998 and (ii) the reduced
depreciable basis from the write-down of certain long-lived assets in the fourth
quarter of 1998.
General and administrative expenses of $8,233,000 for the second quarter of
1999 increased by $1,235,000 or 17.6% as compared to the same period in 1998.
For the first six months of 1999 general and administrative expenses of
$16,871,000 increased by $2,755,000 or 19.5% as compared to the same period in
1998. General and administrative expenses of $1,508,000 for the second quarter
of 1999 and $2,976,000 for the first six months of 1999 were incurred by or
allocated to the Koo Koo Roo and Hamburger Hamlet restaurant operations. As a
percentage of sales, general and administrative expenses increased slightly to
5.9% in the second quarter of 1999 as compared to 5.8% in the same period of
1998 and increased slightly to 6.1% for the first six months of 1999 as
-18-
<PAGE>
compared to 6.0% in the same period of 1998. Management continues to closely
evaluate the Company's general and administrative cost structure for savings
opportunities.
The Company reported a loss on disposition of properties of $0.8 million in
the second quarter of 1999 and $1.2 million for the first six months of 1999 as
compared to a loss of $0.7 million for the second quarter in 1998 and $1.4
million for the first six months of 1998. These amounts primarily reflect
losses associated with restaurant divestments and closures in such periods.
Interest expense, net for the second quarter of 1999 of $7,610,000
increased by $1,611,000 or 26.9% as compared to the same period in 1998.
Interest expense, net for the first six months of 1999 of $14,893,000 increased
by $3,067,000 or 25.9% as compared to the same period in 1998. The increase is
primarily the result of (i) the issuance of $14 million face value of FRI-
MRD's Senior Discount Notes in January 1998 and the additional accretion of
interest thereon in 1999, (ii) the issuance of $24 million face value of FRI-
MRD's Senior Secured Discount Notes on October 30, 1998 and the accretion of
interest thereon and (iii) reduced interest income on invested cash balances.
Seasonality.
- -----------
The Company, as a whole, does not experience significant seasonal
fluctuations in sales. However, the Company's sales tend to be slightly greater
during the spring and summer months.
Selected Division Operating Data.
- --------------------------------
Until October 30, 1998, the Company primarily operated full-service Mexican
restaurants in two divisions under the El Torito, Chi-Chi's, Casa Gallardo and
other names. On October 30, 1998, the Company acquired the Koo Koo Roo and
Hamburger Hamlet restaurant operations. At June 27, 1999, the Company's El
Torito restaurant division operated 98 full-service and fast-casual restaurants,
the Company's Chi-Chi's restaurant division operated 154 full-service
restaurants and the Company's Koo Koo Roo restaurant division operated 56 fast-
casual and full-service restaurants.
The following table sets forth certain information regarding the Company,
its El Torito, Chi-Chi's, and Koo Koo Roo restaurant divisions.
-19-
<PAGE>
<TABLE>
<CAPTION>
For the Quarters Ended
------------------------------------------------
June 27, June 28, June 29,
1999 1998 1997
------------ ------------ ------------
($ in thousands, except average check amount)
<S> <C> <C> <C>
El Torito Restaurant Division
- -----------------------------
Restaurants Open at End of Period:
Owned/operated 98 94 97
Franchised and Licensed 9 8 7
Sales $ 58,674 $ 57,583 $ 58,780
Restaurant Level Cashflow (a) 10,276 9,943 9,345
Divisional EBITDA (b) 7,514 6,985 6,187
Percentage increase (decrease)
in comparable restaurant sales 1.0 % 0.3 % 0.4 %
Average check (excluding
alcoholic beverage sales) $ 10.87 $ 10.10 $ 9.80
Chi-Chi's Restaurant Division
- -----------------------------
Restaurants Open at End of Period:
Owned/operated 154 179 180
Franchised and Licensed 13 13 18
Sales $ 58,927 $ 62,512 $ 64,323
Restaurant Level Cashflow (a) 6,278 4,809 4,539
Divisional EBITDA (b) 2,415 1,102 1,048
Percentage increase (decrease)
in comparable restaurant sales 1.3% (1.4)% (9.2)%
Average check (excluding
alcoholic beverage sales) $ 9.41 $ 8.20 (c) $ 7.87 (c)
Koo Koo Roo Restaurant Division (d)
- -----------------------------------
Restaurants Open at End of Period:
Owned/operated 56 0 0
Franchised and Licensed 3 0 0
Sales $ 22,714 $ 0 $ 0
Restaurant Level Cashflow (a) 2,949 0 0
Divisional EBITDA (b) 1,429 0 0
Percentage increase (decrease)
in comparable restaurant sales N.A. N.A. N.A.
Average check (Koo Koo Roo
restaurants only) $ 9.06 $ N.A. $ N.A.
Total Company
- -------------
Restaurants Open at End of Period:
Owned/operated 308 273 277
Franchised and Licensed 25 21 25
Sales $ 140,315 $ 120,095 $ 123,103
EBITDA (e) 11,270 8,021 7,196
</TABLE>
<TABLE>
<CAPTION>
For the Six Months Ended
-----------------------------------------------------------------
June 27, June 28, June 29,
1999 1998 1997
------------ ------------- -------------
($ in thousands, except average check amount)
<S> <C> <C> <C>
El Torito Restaurant Division
- -----------------------------
Restaurants Open at End of Period:
Owned/operated 98 94 97
Franchised and Licensed 9 8 7
Sales $ 112,100 $ 109,392 $ 112,380
Restaurant Level Cashflow (a) 18,498 17,030 16,579
Divisional EBITDA (b) 12,130 11,298 10,436
Percentage increase (decrease)
in comparable restaurant sales 1.9% (0.5)% (0.5)%
Average check (excluding
alcoholic beverage sales) $ 10.61 $ 9.95 $ 9.66
Chi-Chi's Restaurant Division
- -----------------------------
Restaurants Open at End of Period:
Owned/operated 154 179 180
Franchised and Licensed 13 13 18
Sales $ 117,705 $ 124,009 $ 125,701
Restaurant Level Cashflow (a) 10,899 8,937 8,017
Divisional EBITDA (b) 3,419 1,204 358
Percentage increase (decrease)
in comparable restaurant sales 1.2% (0.2)% (10.9)%
Average check (excluding
alcoholic beverage sales) $ 9.14 $ 8.21 (c) $ 7.91 (c)
Koo Koo Roo Restaurant Division (d)
- -----------------------------------
Restaurants Open at End of Period:
Owned/operated 56 0 0
Franchised and Licensed 3 0 0
Sales $ 44,768 $ 0 $ 0
Restaurant Level Cashflow (a) 5,560 0 0
Divisional EBITDA (b) 2,651 0 0
Percentage increase (decrease)
in comparable restaurant sales N.A. N.A. N.A.
Average check (Koo Koo Roo
restaurants only) $ 8.90 $ N.A. $ N.A.
Total Company
- -------------
Restaurants Open at End of Period:
Owned/operated 308 273 277
Franchised and Licensed 25 21 25
Sales $ 274,573 $ 233,401 $ 238,081
EBITDA (e) 18,086 12,392 10,714
</TABLE>
(a) Restaurant Level Cashflow with respect to any operating division represents
Divisional EBITDA (as defined below) before general and administrative
expenses and any net franchise profit or miscellaneous income (expense)
reported by the respective division.
(b) Divisional EBITDA with respect to any operating division is defined as
earnings (loss) before opening costs, gain (loss) on disposition of
properties, interest, taxes, depreciation and amortization.
(c) Restated to conform to the 1999 presentation.
(d) Koo Koo Roo and Hamburger Hamlet restaurant operations were acquired on
October 30, 1998.
(e) EBITDA is defined as earnings (loss) before opening costs, gain (loss) on
disposition of properties, gain on sale of division, provision for
divestitures and write-down of long-lived assets, VCU termination expense,
restructuring costs, interest, taxes, depreciation and amortization and
extraordinary items. The Company has included information concerning EBITDA
herein because it understands that such information is used by certain
investors as one measure of an issuer's historical ability to service debt.
EBITDA should not be considered as an alternative to, or more meaningful
than, operating income (loss) as an indicator of operating performance or to
cash flows from operating activities as a measure of liquidity. Furthermore,
other companies may compute EBITDA differently, and therefore, EBITDA
amounts among companies may not be comparable.
-20-
<PAGE>
PART II. OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
- ------
The Company is involved in various litigation matters incidental to its
business. The Company does not believe that any of the existing claims or
actions will have a material adverse effect upon the consolidated financial
position or results of operations of the Company.
Item 2. Changes in Securities and Use of Proceeds
- ------
None.
Item 3. Defaults Upon Senior Securities
- ------
None.
Item 4. Submission of Matters to a Vote of Security Holders
- ------
None.
Item 5. Other Information
- ------
The annual meeting of stockholders was held on June 11, 1999. Stockholders
voted in person or by proxy for the following purposes:
(a) Stockholders voted to elect Kevin S. Relyea, A. William Allen, III,
Peter P. Copses, George G. Golleher, David B. Kaplan and Antony P.
Ressler as directors, each to serve until the next annual meeting of
stockholders and until his successor is duly elected and qualified.
There were no broker non-votes. Votes for each director were as
follows:
<TABLE>
<CAPTION>
Votes For Votes Against
----------- -------------
<S> <C> <C>
Kevin S. Relyea 168,844,091 808,490
A. William Allen, III 168,826,176 826,405
Peter P. Copses 168,743,346 909,235
George G. Golleher 168,834,535 818,046
David B. Kaplan 168,738,246 914,335
Antony P. Ressler 168,745,151 907,430
</TABLE>
(b) Stockholders voted to approve and ratify the appointment of KPMG LLP
as the Company's independent accountants for the fiscal year ending
December 26, 1999. 169,089,732 shares were voted for this proposal,
248,706 were voted against, there were 314,143 abstentions and no
broker non-votes.
-21-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- ------
(a) Exhibits
2 (a) Agreement and Plan of Merger, dated as of June 9, 1998 by and
among the Company, Fri-Sub, Inc. and Koo Koo Roo, Inc.
("KKR"). (Filed as Exhibit 2.1 to the Company's Form S-4 filed
with the SEC on July 1, 1998.)
3 (a) Sixth Restated Certificate of Incorporation of the Exhibit
3(a) to the Company's Form 10-Q filed Company. (Filed as with
the SEC on May 12, 1999.)
3 (b) Second Amended and Restated Bylaws of the Company. Exhibit
3(c) to the Company's Form 10-K filed (Filed as with the SEC
on March 29, 1999.)
4 (a) Indenture Dated as of January 27, 1994
Re: $300,000,000 9-3/4% Senior Notes Due 2002. (Filed as
Exhibit 4(a) to the Company's Form 10-K filed with the SEC on
March 28, 1994.)
4 (b) Indenture Dated as of January 27, 1994
Re: $150,000,000 10-7/8% Senior Subordinated Discount Notes
Due 2004. (Filed as Exhibit 4(b) to the Company's Form 10-K
filed with the SEC on March 28, 1994.)
4 (c) First Supplemental Indenture, dated as of July 3, 1996,
between the Registrant and IBJ Schroder Bank & Trust Company,
a New York Banking corporation, as Trustee. (Filed as Exhibit
10.1 to the Company's Form 8-K filed with the SEC on July 9,
1996.)
4 (d) First Supplemental Indenture, dated as of July 3, 1996,
between the Registrant and Fleet National Bank, as successor
by merger to Fleet National Bank of Massachusetts, formerly
known as Shawmut Bank, N.A., as Trustee. (Filed as Exhibit
10.2 to the Company's Form 8-K filed with the SEC on July 9,
1996.)
4 (e) Note Agreement Dated as of August 12, 1997
Re: Up to $75,000,000 FRI-MRD Corporation Senior Discount
Notes Due January 24, 2002. (Filed as Exhibit 4(e) to the
Company's Form 10-Q filed with the SEC on November 12, 1997.)
4 (f) Joinder Agreement Dated as of January 14, 1998
Re: FRI-MRD Corporation Senior Discount Notes due January 24,
2002. (Filed as Exhibit 4(f) to the Company's Form 10-K filed
with the SEC on March 30, 1998.)
-22-
<PAGE>
4 (g) First Amendment dated as of June 9, 1998 to the Note Agreement
dated August 12, 1997. (Filed as Exhibit 4.7 to the Company's
Form S-4 filed with the SEC on July 1, 1998.)
4 (h) Note Agreement dated as of June 9, 1998 Re: $24,000,000 FRI-
MRD Corporation Senior Secured Discount Notes due January 24,
2002. (Filed as Exhibit 4.8 to the Company's Form S-4 filed
with the SEC on July 1, 1998.)
4 (i) First Amendment dated as of October 30, 1998 to the Note
Agreement dated as of June 9, 1998. (Filed as Exhibit 4(i) to
the Company's Form 10-Q filed with the SEC on November 12,
1998.)
4 (j) Waiver dated as of January 29, 1999 to the Note Agreements
dated as of August 12, 1997 and June 9, 1998. (Filed as
Exhibit 4(j) to the Company's Form 10-K filed with the SEC on
March 29, 1999.)
*27 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
- --------
* Filed herewith.
-23-
<PAGE>
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.
Prandium, Inc.
(Registrant)
By: /S/ Robert T. Trebing, Jr.
--------------------------
Robert T. Trebing, Jr.
Executive Vice President and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
Date: August 11, 1999
-24-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR 6 MONTHS ENDING JUNE
27, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10Q FOR
THE QUARTER ENDED JUNE 27, 1999
</LEGEND>
<CIK> 0000813856
<NAME> ??
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-START> DEC-28-1999
<PERIOD-END> JUN-27-1999
<CASH> 4,187
<SECURITIES> 0
<RECEIVABLES> 4,867
<ALLOWANCES> 0
<INVENTORY> 4,550
<CURRENT-ASSETS> 17,262
<PP&E> 291,554
<DEPRECIATION> 94,389
<TOTAL-ASSETS> 331,317
<CURRENT-LIABILITIES> 112,340
<BONDS> 0
0
0
<COMMON> 1,804
<OTHER-SE> (35,830)
<TOTAL-LIABILITY-AND-EQUITY> 331,317
<SALES> 274,573
<TOTAL-REVENUES> 274,573
<CGS> 72,646
<TOTAL-COSTS> 272,298
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,893
<INCOME-PRETAX> (12,618)
<INCOME-TAX> 294
<INCOME-CONTINUING> (12,912)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<EPS-DILUTED> (0.07)
</TABLE>
