<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 March 28, 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
--------
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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Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No _______
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As of May 7, 1999, the registrant had issued and outstanding 180,380,513 shares
of common stock, $.01 par value per share.
-1-
<PAGE>
PART I. FINANCIAL INFORMATION
--------------------------------
Item 1. FINANCIAL STATEMENTS
- ------
PRANDIUM, INC.
--------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
($ in thousands)
<TABLE>
<CAPTION>
March 28, December 27,
1999 1998
---------------- ---------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 7,309 $ 17,707
Receivables 5,264 9,106
Inventories 4,598 5,020
Other current assets 3,768 3,957
---------------- ---------------
Total current assets 20,939 35,790
Property and equipment, net 199,946 201,314
Reorganization value in excess of amount allocable to identifiable assets, net 34,780 35,129
Costs in excess of net assets of business acquired, net 56,166 56,455
Other assets 17,627 19,498
---------------- ---------------
$ 329,458 $ 348,186
================ ===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------
Current liabilities:
Current portion of long-term debt, including capitalized lease obligations $ 1,971 $ 2,498
Accounts payable 16,606 22,447
Self-insurance reserves 24,851 25,040
Other accrued liabilities 68,400 74,833
Income taxes payable 3,563 3,742
---------------- ---------------
Total current liabilities 115,391 128,560
Other long-term liabilities 3,635 3,612
Long-term debt, including capitalized lease obligations, less current portion 239,950 237,151
Stockholders' deficit:
Common stock - authorized 300,000,000 shares, par value $.01 per share,
180,380,513 shares issued and outstanding in 1999 and 178,105,294 shares
issued and outstanding in 1998 1,804 1,781
Additional paid-in capital 222,353 222,353
Accumulated deficit (253,675) (245,271)
---------------- ---------------
Total stockholders' deficit (29,518) (21,137)
---------------- ---------------
$ 329,458 $ 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
----------------------------------------------
March 28, March 29,
1999 1998
------------------ -----------------
<S> <C> <C>
Sales $ 134,258 $ 113,306
------------------ -----------------
Product costs 35,721 30,763
Payroll and related costs 47,940 40,206
Occupancy and other operating expenses 35,143 30,848
Depreciation and amortization 6,677 5,339
General and administrative expenses 8,638 7,118
Opening costs 687 620
Loss on disposition of properties, net 426 668
------------------ -----------------
Total costs and expenses 135,232 115,562
------------------ -----------------
Operating loss (974) (2,256)
Interest expense, net 7,283 5,827
------------------ -----------------
Loss before income tax provision (8,257) (8,083)
Income tax provision 147 127
------------------ -----------------
Net loss $ (8,404) $ (8,210)
================== =================
Net loss per share - basic $ (0.05) $ (0.07)
and diluted
================== =================
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 CASH FLOWS
-----------------------------------------------
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Quarters Ended
---------------------------------
March 28, March 29,
1999 1998
---------------- ------------
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities:
Cash received from customers, franchisees and licensees $ 134,455 $ 113,690
Cash paid to suppliers and employees (135,055) (112,043)
Interest paid, net (7,034) (6,967)
Opening costs (687) (276)
Income taxes paid (326) (126)
------------- ------------
Net cash used in operating activities (8,647) (5,722)
------------- ------------
Cash flows from investing activities:
Proceeds from disposal of property and equipment 604 44
Proceeds from sale of notes receivable, net 3,246 0
Proceeds from payments on notes receivable 1,645 0
Cash required for the acquisition of KKR (1,556) 0
Capital expenditures (4,687) (3,398)
Lease termination payments (331) (211)
Other (214) 74
------------- ------------
Net cash used in investing activities (1,293) (3,491)
------------- ------------
Cash flows from financing activities:
Net proceeds from issuance of notes 0 11,620
Payment of debt issuance costs (60) (92)
Reductions of long-term debt, including capitalized lease obligations (398) (972)
------------- ------------
Net cash provided by (used in)
financing activities (458) 10,556
------------- ------------
Net increase (decrease) in cash and cash equivalents (10,398) 1,343
Cash and cash equivalents at beginning of period 17,707 32,518
------------- ------------
Cash and cash equivalents at end of period $ 7,309 $ 33,861
============= ============
</TABLE>
See accompanying notes to condensed consolidated financial statements
-4-
<PAGE>
PRANDIUM, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
-----------------------------------------------------------
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Quarters Ended
--------------------------------
March 28, March 29,
1999 1998
------------ ----------
Reconciliation of net loss to net cash used in operating activities:
<S> <C> <C>
Net loss $ (8,404) $ (8,210)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 6,677 5,339
Amortization of debt issuance costs 382 297
Expense of unamortized opening costs 0 344
Loss on disposition of properties 426 668
Accretion of interest on discount notes 3,043 1,908
Decrease in receivables, inventories and other current assets 588 251
Decrease in accounts payable, self-insurance reserves, other accrued
liabilities and income taxes payable (11,359) (6,319)
----------- ----------
Net cash used in operating activities $ (8,647) $ (5,722)
=========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements
-5-
<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 March 28, 1999, the Company operated
313 restaurants in 28 states, approximately 66% of which are located in
California, Ohio, Pennsylvania, Indiana and Michigan, and franchised and
licensed 22 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 ended March 28, 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.
Quarter Ended
March 29, 1998
---------------
(Pro Forma)
($ in thousands,except
per share data)
Consolidated Statements of Operations Information
Sales $135,642
Net loss from continuing operations $(22,744
Pro forma basic and diluted loss per common share $ (0.13)
Pro forma weighted average number of common
shares outstanding (in thousands) 178,105
-6-
<PAGE>
The allocation of purchase price to the fair value of tangible assets
acquired and liabilities assumed is 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 that there will be
significant changes necessary to arrive at the final 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 quarter ended March 28, 1999, the
Company utilized (i) $63,000 for severance costs associated with certain
restaurant managers in connection with the restaurants divested and (ii)
$110,000 for net costs associated with lease terminations, subsidized subleases,
brokerage fees and other divestment costs. Thirty-nine of the restaurants were
still in operation at the end of the first quarter of 1999, and, accordingly,
only $1,818,000 of the divestiture reserves have been utilized as of March 28,
1999. The Strategic Divestment Program is scheduled to be completed over a 12 to
18 month period and the operating results will be included in the Company's
consolidated statement of operations until the divestments are completed.
5. SEGMENT INFORMATION. The Company operates exclusively in the food-
-------------------
service industry. Substantially all revenues result from the sale of menu
products at restaurants operated by the Company. The Company's reportable
segments are based on restaurant operating divisions. Operating income (loss)
includes the operating results before interest. The corporate component of
operating income (loss) represents corporate general and administrative
expenses. Corporate assets include corporate cash, investments, receivables and
asset portions of financing instruments.
-7-
<PAGE>
<TABLE>
<CAPTION>
FOR THE QUARTERS ENDED
-----------------------------------
MARCH 28, MARCH 29,
1999 1998
------------ -------------
(UNAUDITED)
($ IN THOUSANDS)
<S> <C> <C>
SALES
El Torito Division $ 53,426 $ 51,809
Chi-Chi's Division 58,778 61,497
Koo Koo Roo Division 22,054 0
------------ -------------
Total Sales $ 134,258 $ 113,306
============ =============
DEPRECIATION AND AMORTIZATION
El Torito Division $ 2,434 $ 2,434
Chi-Chi's Division 2,518 2,522
Koo Koo Roo Division 1,472 0
Corporate 253 383
------------ -------------
Total Depreciation and Amortization $ 6,677 $ 5,339
============ =============
OPERATING INCOME (LOSS)
El Torito Division $ 1,563 $ 1,485
Chi-Chi's Division (1,789) (3,175)
Koo Koo Roo Division (346) 0
Corporate (402) (566)
------------ -------------
Total Operating Loss $ (974) $ (2,256)
============ =============
INTEREST EXPENSE, NET
El Torito Division $ 159 $ 261
Chi-Chi's Division 74 176
Koo Koo Roo Division 24 0
Corporate 7,026 5,390
------------ -------------
Total Interest Expense, net $ 7,283 $ 5,827
============ =============
CAPITAL EXPENDITURES
El Torito Division $ 2,548 $ 1,997
Chi-Chi's Division 1,587 1,258
Koo Koo Roo Division 499 0
Corporate 53 143
------------ -------------
Total Capital Expenditures $ 4,687 $ 3,398
============ =============
MARCH 28, DECEMBER 27,
1999 1998
------------ -------------
(UNAUDITED)
($ IN THOUSANDS)
TOTAL ASSETS
El Torito Division $ 98,934 $ 100,056
Chi-Chi's Division 109,857 112,328
Koo Koo Roo Division 101,739 108,410
Corporate 18,928 27,392
------------ -------------
Total Assets $ 329,458 $ 348,186
============ =============
</TABLE>
<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 first quarter of 1999.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
A. LIQUIDITY
The Company reported net cash used in operating activities for the quarters
ended March 28, 1999 and March 29, 1998 of $8.6 million and $5.7 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.
-9-
<PAGE>
Statement of Cash Flows. For the quarter ended March 28, 1999, net cash
used in operating activities was $8.6 million compared to $5.7 million for the
quarter ended March 29, 1998. This increase was primarily due to the $2.2
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 $0.1 million, $0.4 million
and $0.2 million, respectively. For the first quarter of 1999, net cash used in
investing activities was $1.3 million compared to $3.5 million for the same
period in 1998. In the first quarter of 1999, proceeds from the sale of notes
receivable of $3.2 million and proceeds from payments on notes receivable of
$1.6 million more than offset $1.6 million in payments related to the
acquisition of KKR and a $1.3 million increase in capital expenditures from 1998
to 1999. For the first quarter of 1999, net cash used in financing activities
was $0.5 million compared to net cash provided by financing activities of $10.6
million for the same period in 1998. During the first quarter of 1998, $11.6
million in net proceeds from the issuance of notes was received.
EBITDA. For the first quarter 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 $6.8 million,
compared to $4.4 million for the same period in 1998. The $2.4 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 $1.2 million contributed by
KKR. This improved EBITDA is the continuation of the trend that began in 1996
when new management was installed at both El Torito and Chi-Chi's. Since 1995,
the divisional EBITDA of the Company's ongoing Mexican restaurant operations is
set forth in the following table.
Divisional EBITDA
-----------------
Fiscal Year Ended El Torito Chi-Chi's
----------------------- --------- ----------
($ in thousands)
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
(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 activities as
a measure of liquidity. Furthermore, other companies may compute EBITDA
differently, and therefore, EBITDA amounts among companies may not be
comparable.
-10-
<PAGE>
Working Capital Deficiency. The Company operates with a substantial
working capital deficiency because (i) restaurant operations are conducted
primarily on a cash (and cash equivalent) basis with a low level of accounts
receivable, (ii) rapid turnover allows a limited investment in inventories and
(iii) 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 $94.5 million on March 28, 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 is in compliance with all financial ratios at March 28, 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 ($16.8 million of such letters of credit were
outstanding as of May 7, 1999). There were $1.5 million of revolving cash
borrowings outstanding as of May 7, 1999.
The Company continues to be highly leveraged and has significant annual
debt service requirements as follows:
Cash
Interest Principal
-------- ---------
($ in millions)
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
In order to continue to fund the Company's anticipated capital expenditure
programs, management has begun considering various alternatives to reduce near-
term debt service requirements and extend current maturity dates. 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
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<PAGE>
2002 and its 14% Senior Secured Discount Notes due 2002, at their respective
maturities. The Company continues to consider additional sources of cash, such
as the sale of non-core assets.
B. CAPITAL EXPENDITURES
Net cash used in investing activities was $1.3 million for the first
quarter of 1999, including $4.7 million for capital expenditures, as compared to
net cash used in investing activities of $3.5 million for the same period in
1998. The decrease in net cash used in investing activities for the first
quarter of 1999 was primarily due to proceeds from (i) disposal of property and
equipment, (ii) sale of notes receivable, net and (iii) payments on notes
receivable.
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 11 new El Torito restaurants, including
the new "El Torito Express" concept, and five new Koo Koo Roo restaurants, and
the Company is also planning to upgrade El Torito's in-store point-of-sale
("POS") technology during fiscal 1999.
From January 1, 1999 to May 7, 1999, the Company completed the remodeling
of seven additional El Torito restaurants in various markets and 14 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 ("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 team that includes the Chief Executive Officer, General Counsel,
Chief Financial Officer 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 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.
-12-
<PAGE>
The Company believes that it has identified all significant 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 by September 1999. The Company is in the process of
identifying all non-IT systems that require replacement or update. Non-IT
systems that may have a significant impact on the Company are expected to be
replaced or updated by September 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 compliancy, 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 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 as 1999
unfolds, the Company will begin 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
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<PAGE>
contingency plans will generally include the identification, acquisition and/or
preparation of backup systems, suppliers and vendors.
RESULTS OF OPERATIONS.
- ---------------------
The Company's total sales of $134,258,000 for the first quarter of 1999
increased by $20,952,000 or 18.5% as compared to the same period in 1998. The
increase was due to (i) the addition of sales from the Koo Koo Roo and Hamburger
Hamlet restaurants which were acquired on October 30, 1998, (ii) sales increases
in the comparable El Torito and Chi-Chi's restaurants and (iii) sales from new
restaurants, partially offset by sales decreases for restaurants sold or closed.
The breakdown of the sales increase for the first quarter of 1999 is detailed
below:
<TABLE>
<CAPTION>
First Quarter
Sales Increase
----------------
($ in thousands)
<S> <C>
Sales from the KKR Restaurant Division $22,054
Increase in Sales of Comparable Restaurants 2,100
Sales from New Restaurants 521
Decrease in Sales of Restaurants Sold or Closed (3,723)
-------
$20,952
=======
</TABLE>
Sales for comparable restaurants of $110,005,000 for the first quarter of
1999 increased by $2,100,000 or 1.9% as compared to the same period in 1998. As
shown below, this increase was due to increased sales for comparable El Torito
and Chi-Chi's restaurants.
<TABLE>
<CAPTION>
First Quarter
Sales Increase
----------------
Amount Percent
------ --------
<S> <C> <C>
($ in thousands)
Comparable El Torito $1,481 3.0 %
Comparable Chi-Chi's 619 1.1
------
Total $2,100 1.9 %
====== ====
</TABLE>
El Torito comparable sales were up 3.0% in the first quarter of 1999 as
compared to the same period in 1998. The first quarter advertising program
launched the start of a year-long celebration of El Torito's 45th Anniversary.
The first quarter print campaign introduced the 45th Anniversary celebration,
focusing on El Torito's innovative products while inviting guests to join in the
celebration by trying one of the Fiesta Favorites Chef's Specials. The campaign
was supported by print media and included special discount offers designed to
generate new guest trial and increase the frequency of existing guests. The in-
restaurant marketing for the promotion included vertical banners for the lobby
and specially created two-sided table menus featuring an innovative line of
"Ultima" margaritas on one side and photos of the "Fiesta Favorites" Chef's
Specials on the other side. In addition, El Torito continues to test new,
innovative products in select markets for future system-wide
-14-
<PAGE>
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 the first quarter of 1999, El Torito had completed 38 remodels.
Comparable Chi-Chi's sales in the first quarter of 1999 were up 1.1% as
compared to the same period in 1999 despite inclement winter weather in the
Midwest and Northeast which had a significant negative impact on sales in many
markets. Chi-Chi's marketing activities for the quarter began with a radio
campaign in late January offering any two "Chi-Chi's Favorites" for $9.99. This
campaign was followed by the distribution of a freestanding insert featuring a
"Get Away to Mexico" sweepstakes that included three product offers designed to
attract customers. The final campaign for the quarter featured the newly-created
"Fajitas Humongous for 2" and "Mucho Platter for 2." This campaign was supported
by television or radio in most markets. Also contributing to Chi-Chi's improving
comparable sales trends are the favorable results of the remodel program which
continued in 1999 with five grand re-openings during the first quarter. As of
the end of the first quarter of 1999, Chi-Chi's had completed 45 remodels.
Additionally, Chi-Chi's was honored to receive the "Choice in Chains" award as
"America's Favorite Mexican Restaurant" for the seventh consecutive year. This
award is the result of consumer preference research conducted by Restaurants &
-------------
Institutions magazine.
- ------------
In the first quarter of 1999, Koo Koo Roo launched a new product called the
Chargrilled Chicken Chop. The product introduction was supported by a targeted
print campaign, focusing on the new item and the overall product quality of Koo
Koo Roo. To encourage new trial and increase frequency among existing guests,
special limited discount offers were utilized. The in-restaurant merchandising
for the new Chargrilled Chicken Chop included exterior banners, entrance posters
and displays on the cash registers.
Product costs of $35,721,000 for the first quarter of 1999 increased by
$4,958,000 or 16.1% as compared to the same period in 1998 due to the
acquisition of the Koo Koo Roo and Hamburger Hamlet restaurants on October 30,
1998 which accounts for $6,764,000 or 136.4% of the increase, partially offset
by the impact of the 19 restaurants sold or closed since the beginning of 1998.
As a percentage of sales, product costs decreased to 26.6% in the first quarter
of 1999 as compared to 27.2% in the same period of 1998, due in part to the
impact of El Torito and Chi-Chi's cost reduction strategies.
Payroll and related costs of $47,940,000 for the first quarter of 1999
increased by $7,734,000 or 19.2% as compared to the same period in 1998 due to
the acquisition of the Koo Koo Roo and Hamburger Hamlet restaurants on October
30, 1998 which accounts for $7,655,000 or 99.0% of the increase and the impact
of the minimum wage increase in California on March 1, 1998. As a percentage of
sales, payroll and related costs increased slightly from 35.5% in the first
quarter of 1998 to 35.7% in the same period of 1999. The increase in payroll and
related costs as a percentage of sales was 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
-15-
<PAGE>
certain states) increase the Company's labor costs. This is especially true in
California, where there 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
current levels by increasing the allowable tip credit in those states which
allow for a tip credit. Furthermore, in California, voters approved a
proposition on November 5, 1996 that increased the state's minimum wage to $5.00
on March 1, 1997 and further increased the state's minimum wage 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 $35,143,000 for the first quarter
of 1999 increased by $4,295,000 or 13.9% as compared to the same period in 1998.
The increase for the first quarter is due to the acquisition of the Koo Koo Roo
and Hamburger Hamlet restaurants on October 30, 1998 which accounts for
$5,024,000 or 117.0% of the increase, partially offset by the impact of the 19
restaurants sold or closed since the beginning of 1998. As a percentage of
sales, occupancy and other operating expenses decreased to 26.2% in the first
quarter of 1999 as compared to 27.2% 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 $6,677,000 for the first quarter of 1999
increased by $1,338,000 or 25.1% as compared to the same period in 1998 due to
the acquisition of the Koo Koo Roo and Hamburger Hamlet restaurants on October
30, 1998 which accounts for $1,472,000 or 110.0% of the increase, partially
offset by the impact of (i) the 19 restaurants sold or closed since the
beginning of 1998 and (ii) the write-down of certain long-lived assets in the
fourth quarter of 1998.
General and administrative expenses of $8,638,000 for the first quarter of
1999 increased by $1,520,000 or 21.4% as compared to the same period of 1998.
General and administrative expenses of $1,468,000 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 6.4% in the
first quarter of 1999 as compared to 6.3% in the same period of 1998. Management
continues to closely evaluate the Company's general and administrative cost
structure for savings opportunities and expects that, as a result of the
acquisition of the Koo Koo Roo and Hamburger Hamlet restaurants, general and
administrative expenses will decrease as a percentage of sales.
The Company reported a loss on disposition of properties of $0.4 million in
the first quarter of 1999 as compared to a loss of $0.7 million for the first
quarter in 1998. These amounts reflect losses associated with restaurant
divestments and closures in such periods.
Interest expense, net for the first quarter of 1999 of $7,283,000 increased
by $1,456,000 or 25.0% as compared to the same period in 1998. The first quarter
increase is primarily the result of
-16-
<PAGE>
(i) the issuance of $14 million face value of FRI-MRD's Senior Discount Notes in
January 1998 and the accretion of interest thereon for a full quarter in 1999,
(ii) the issuance of $24 million face value of FRI-MRD's Senior Secured Discount
Notes on October 30, 1998 and the accretion of interest thereon and (iii)
reduced interest income on invested cash balances.
SEASONALITY.
- -----------
The Company, as a whole, does not experience significant seasonal
fluctuations in sales. However, the Company's sales tend to be slightly greater
during the spring and summer months.
SELECTED DIVISION OPERATING DATA.
- --------------------------------
Until October 30, 1998, the Company primarily operated full-service Mexican
restaurants in two divisions under the El Torito, Chi-Chi's, Casa Gallardo and
other names. On October 30, 1998, the Company acquired the Koo Koo Roo and
Hamburger Hamlet restaurant operations. At March 28, 1999, the Company's El
Torito restaurant division operated 95 full-service and fast-casual restaurants,
the Company's Chi-Chi's restaurant division operated 163 full-service
restaurants and the Company's Koo Koo Roo restaurant division operated 55 fast-
casual and full-service restaurants.
The following table sets forth certain information regarding the Company,
its El Torito, Chi-Chi's, and Koo Koo Roo restaurant divisions.
-17-
<PAGE>
<TABLE>
<CAPTION>
For the Quarters Ended
--------------------------------------------------------
March 28, March 29, March 30,
1999 1998 1997
---------- ---------- ----------
($ in thousands, except average check amount)
<S> <C> <C> <C>
El Torito Restaurant Division
- -----------------------------
Restaurants Open an End of Period:
Owned/operated
Franchised and Licensed 95 94 97
Sales 8 10 7
Restaurant Level Cashflow (a) $ 53,426 $ 51,809 $ 53,600
Divisional EBITDA (b) 8,222 7,087 7,234
Percentage increase (decrease) in comparable 4,616 4,313 4,249
restaurant sales 3.0 % (1.2)% (1.5)%
Average check (excluding alcoholic beverage sales) $ 10.53 $ 9.92 $ 9.55
Chi-Chi's Restaurant Division
- -----------------------------
Restaurants Open at End of Period:
Owned/operated 163 179 182
Franchised and Licensed 12 16 18
Sales $ 58,778 $ 61,497 $ 61,378
Restaurant Level Cashflow (a) 4,621 4,128 3,478
Divisional EBITDA (b) 1,004 102 (690)
Percentage increase (decrease) in comparable 1.1 % 1.2 % (12.7)%
restaurant sales
Average check (excluding alcoholic beverage
sales) $ 9.06 $ 8.23 (c) $ 7.98 (c)
Koo Koo Roo Restaurant Division (d)
- ------------------------------------
Restaurants Open at End of Period:
Owned/operated 55 0 0
Franchised and Licensed 2 0 0
Sales $ 22,054 $ 0 $ 0
Restaurant Level Cashflow (a) 2,611 0 0
Divisional EBITDA (b) 1,222 0 0
Percentage increase (decrease) in
comparable restaurant sales N.A. N.A. N.A.
Average check (Koo Koo Roo restaurant
sales $ 8.84 $ N.A. $ N.A.
Total Company
- -------------
Restaurants Open at End of Period:
Owned/operated 313 273 279
Franchised and Licensed 22 26 25
Sales $ 134,258 $ 113,306 $ 114,978
EBITDA (e) 6,816 4,371 3,518
</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.
<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
- ------
On April 16, 1999, the Company changed its corporate name from "Koo Koo
Roo Enterprises, Inc." to "Prandium, Inc." The name change was effected by the
merger of a newly-formed, wholly-owned subsidiary of the Company with and into
the Company, pursuant to Section 253 of the General Corporation Law of the State
of Delaware (the "Name Change Merger"). The Company was the surviving
corporation of the Name Change Merger, the only effect of which was to change
the corporate name of the Company to "Prandium, Inc." Effective at the close of
business on April 16, 1999, the Over the Counter Bulletin Board ticker symbol
for the Company's common stock was changed from "KKRE " to "PDIM."
In addition, on April 16, 1999, the Company announced that Lee A. Iacocca
resigned from its Board of Directors to devote his complete attention to his new
venture, EV Global Motors, where he is Chairman and Chief Executive Officer.
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 Company.
-19-
<PAGE>
3 (b) Second Amended and Restated Bylaws of the Company. (Filed as
Exhibit 3(c) to the Company's Form 10-K filed 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.)
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.)
-20-
<PAGE>
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.
On February 2, 1999, the Company filed a report on Form 8-K
announcing the delisting of its common stock from the Nasdaq
National Market and the commencement of trading on the Over the
Counter Bulletin Board.
On February 3, 1999, the Company refiled a report on Form 8-K
announcing the completion of the acquisition of the Koo Koo Roo and
Hamburger Hamlet restaurant operations.
______
* Filed herewith.
-21-
<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: May 12, 1999
-22-
<PAGE>
EXHIBIT 3
SIXTH RESTATED
CERTIFICATE OF CORPORATION
OF
PRANDIUM, INC.
-----------------------
Pursuant to Section 245 of the General
Corporation Law of the State of Delaware
-----------------------
The undersigned, Todd E. Doyle certifies that he is the Executive Vice
President and General Counsel of Prandium, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), and does
hereby further certify as follows:
1. The name of the corporation is Prandium, Inc. (hereinafter, the
"Corporation"). The name under which the Corporation was originally incorporated
was The Restaurant Enterprises Group, Inc. and the date of filing of the
original Certificate of Incorporation of the Corporation with the Secretary of
State of the State of Delaware was September 15, 1986.
2. This Sixth Restated Certificate of Incorporation was duly adopted
by the Board of Directors of the Corporation in accordance with the provisions
of Section 245 of the General Corporation Law of the State of Delaware.
3. This Sixth Restated Certificate of Incorporation only restates
and integrates and does not further amend the provisions of the Corporation's
Certificate of Incorporation as heretofore amended or supplemented and there is
no discrepancy between those provisions and the provisions of this Sixth
Restated Certificate of Incorporation.
4. The Sixth Restated Certificate of Incorporation shall become
effective at 5.01 p.m. (Delaware time) on April 16, 1999.
V. The Corporation does hereby restate and integrate, without
further amendment, pursuant to Section 245 of the General Corporation Law of the
State of Delaware, its Sixth Restated Certificate of Incorporation, as amended
or supplemented to date, to read in its entirety as set forth below:
<PAGE>
SIXTH RESTATED
CERTIFICATE OF INCORPORATION
OF
PRANDIUM, INC.
FIRST: The name of the Corporation is Prandium, Inc. (hereinafter, the
-----
"Corporation").
SECOND: The address of the registered office of the Corporation in the
------
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at that address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
-----
or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware
Code (the "GCL").
FOURTH: The total number of shares of stock which the Corporation
------
shall have authority to issue is 300,000,000 shares of Common Stock, each having
a par value of one cent ($.01), and 50,000,000 shares of Preferred Stock, each
having a par value of one cent ($.01).
The Board of Directors is expressly authorized to provide for the
issuance of all or any shares of the Preferred Stock in one or more classes or
series, and to fix for each such class or series such voting powers, full or
limited, or no voting powers, and such distinctive designations, preferences and
relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issuance of such class or series and as may be permitted by
the GCL, including, without limitation, the authority to provide that any such
class or series may be (i) subject to redemption at such time or times and at
such price or prices; (ii) entitled to receive dividends (which may be
cumulative or non-cumulative) at such rates, on such conditions, and at such
times, and payable in preference to, or in such relation to, the dividends
payable on any other class or classes or any other series; (iii) entitled to
such rights upon the dissolution of, or upon any distribution of the assets of,
the Corporation; or (iv) convertible into, or exchangeable for, shares of any
other class or classes of stock, or of any other series of the same or any other
class or classes of stock, of the Corporation at such price or prices or at such
rates
2
<PAGE>
of exchange and with such adjustments; all as may be stated in such resolution
or resolutions.
FIFTH: The following provisions are inserted for the management of the
-----
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the stockholders
to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
(3) The number of directors of the Corporation shall be as from time
to time fixed by, or in the manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot unless the
By-Laws so provide.
(4) No director shall be personally liable to the Corporation or any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the GCL or (iv) for any
transaction from which the director derived an improper personal benefit.
Any repeal or modification of this Article Fifth by the stockholders of the
Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or
modification with respect to acts or omissions occurring prior to such
repeal or modification.
(5) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the GCL, this Certificate of Incorporation, and any By-Laws
adopted by the stockholders; provided, however, that no By-Laws hereafter
adopted by the stockholders shall invalidate any prior act of the
3
<PAGE>
directors which would have been valid if such By-Laws had not been adopted.
(6) The Corporation shall indemnify its directors and officers to the
fullest extent authorized or permitted by law, as now or hereafter in
effect, and such right to indemnification shall continue as to a person who
has ceased to be a director or officer of the Corporation and shall inure
to the benefit of his or her heirs, executors and personal and legal
representatives; provided, however, that, except for proceedings to enforce
-------- -------
rights to indemnification, the Corporation shall not be obligated to
indemnify any director or officer (or his or her heirs, executors or
personal or legal representatives) in connection with a proceeding (or part
thereof) initiated by such person unless such proceeding (or part thereof)
was authorized or consented to by the Board of Directors. The right to
indemnification conferred by this Article Fifth shall include the right to
be paid by the Corporation the expenses incurred in defending or otherwise
participating in any proceeding in advance of its final disposition.
The Corporation may, to the extent authorized from time to
time by the Board of Directors, provide rights to indemnification and to
the advancement of expenses to employees and agents of the Corporation
similar to those conferred in this Article Fifth to directors and officers
of the Corporation.
The rights to indemnification and to the advance of expenses
conferred in this Article Fifth shall not be exclusive of any other right
which any person may have or hereafter acquire under this Fifth Restated
Certificate of Incorporation, the By-Laws of the Corporation, any statute,
agreement, vote of stockholders or disinterested directors or otherwise.
Any repeal or modification of this Article Fifth by the
stockholders of the Corporation shall not adversely affect any rights to
indemnification and to the advancement of expenses of a director or officer
of the Corporation existing at the time of such repeal or modification with
respect to any acts or omissions occurring prior to such repeal or
modification.
SIXTH: Meetings of stockholders may be held within or without the
-----
State of Delaware, as the By-Laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the GCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
4
<PAGE>
SEVENTH: The Corporation reserves the right to amend, alter, change or
-------
repeal any provision contained in this Fifth Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
EIGHTH: In furtherance and not in limitation of the powers conferred upon
------
it by the laws of the State of Delaware, the Board of Directors shall have the
power to adopt, amend, alter or repeal the Corporation's By-Laws.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Sixth Restated
Certificate of Incorporation to be executed in its corporate name this 16th day
of April, 1999.
PRANDIUM, INC.
/s/ Todd E. Doyle
-----------------------------
Todd E. Doyle
Executive Vice President and
General Counsel
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR 3 MONTHS ENDING MARCH
28, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-Q FOR
THE QUARTER ENDED MARCH 28, 1999.
</LEGEND>
<CIK> 0000813856
<NAME> PRANDIUM, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-START> DEC-28-1998
<PERIOD-END> MAR-28-1999
<CASH> 7,309
<SECURITIES> 0
<RECEIVABLES> 5,264
<ALLOWANCES> 0
<INVENTORY> 4,598
<CURRENT-ASSETS> 20,939
<PP&E> 290,515
<DEPRECIATION> 90,569
<TOTAL-ASSETS> 329,458
<CURRENT-LIABILITIES> 115,391
<BONDS> 239,950
1,804
0
<COMMON> 0
<OTHER-SE> (31,322)
<TOTAL-LIABILITY-AND-EQUITY> 329,458
<SALES> 134,258
<TOTAL-REVENUES> 134,258
<CGS> 35,721
<TOTAL-COSTS> 135,232
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,283
<INCOME-PRETAX> (8,257)
<INCOME-TAX> 147
<INCOME-CONTINUING> (8,404)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,404)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
