<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 September 24, 2000 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 November 6, 2000, the registrant had issued and outstanding 180,380,513
shares of common stock, $.01 par value per share.
-1-
<PAGE>
PART I. FINANCIAL INFORMATION
-----------------------------
Item 1. Financial Statements
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PRANDIUM, INC.
--------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
($ in thousands)
----------------
<TABLE>
<CAPTION>
September 24, December 26,
2000 1999
------------- ------------
<S> <C> <C>
(Unaudited)
ASSETS
------
Current assets:
Cash and cash equivalents $ 68,104 $ 3,600
Receivables 2,304 2,408
Inventories 2,268 2,672
Other current assets 2,831 3,098
Property held for sale - 55,835
------------- ------------
Total current assets 75,507 67,613
Property and equipment, net 131,856 137,460
Costs in excess of net assets of business acquired, net 65,012 66,293
Other assets 16,545 15,267
------------- ------------
$ 288,920 $ 286,633
============= ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Working capital borrowings $ - $ 21,850
Current portion of long-term debt, including capitalized lease obligations 2,136 1,000
Accounts payable 9,614 9,228
Current portion of self-insurance reserves 3,083 2,601
Other accrued liabilities 49,735 57,711
Income taxes payable 4,437 3,638
------------- ------------
Total current liablities 69,005 96,028
Self-insurance reserves 5,255 6,560
Other long-term liabilities 3,542 3,779
Long-term debt, including capitalized lease obligations, less current portion 236,190 237,871
Commitments and contingencies
Stockholders' deficit:
Common stock - authorized 300,000,000 shares, par value $.01 per share,
180,380,513 shares issued and outstanding on September 24, 2000 and on
December 26, 1999 1,804 1,804
Additional paid-in capital 222,353 222,353
Accumulated deficit (249,229) (281,762)
------------- ------------
Total stockholders' deficit (25,072) (57,605)
------------- ------------
$ 288,920 $ 286,633
============= ============
</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
--------------------------------------
September 24, September 26,
2000 1999
------------- -------------
<S> <C> <C>
Sales $ 78,040 $ 134,264
------------- -------------
Product costs 21,656 35,324
Payroll and related costs 27,985 47,790
Occupancy and other operating expenses 22,284 35,185
Depreciation and amortization 4,476 7,017
General and administrative expenses 5,477 7,637
Opening costs 326 688
Loss on disposition of properties, net 582 1,806
Provision for divestitures and write-down of long-lived assets 1,730 -
------------- -------------
Total costs and expenses 84,516 135,447
------------- -------------
Operating loss (6,476) (1,183)
Interest expense, net 7,131 8,170
Gain on sale of division (60,978) -
------------- -------------
Income (loss) before income tax provision 47,371 (9,353)
Income tax provision 1,272 147
------------- -------------
Net income (loss) $ 46,099 $ (9,500)
============= =============
Net income (loss) per share - basic and diluted $ 0.26 $ (0.05)
============= =============
Weighted average shares outstanding - basic and diluted 180,380,513 180,380,513
============= =============
</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 Nine Months Ended
----------------------------------
September 24, September 26,
2000 1999
---------------------------------
<S> <C> <C>
Sales $ 349,009 $ 408,837
------------ ------------
Product costs 92,010 107,970
Payroll and related costs 124,001 145,225
Occupancy and other operating expenses 92,980 104,720
Depreciation and amortization 18,526 19,932
General and administrative expenses 20,953 24,508
Opening costs 412 2,391
Loss on disposition of properties, net 1,036 2,999
Provision for divestitures and write-down of long-lived assets 1,730 -
------------ ------------
Total costs and expenses 351,648 407,745
------------ ------------
Operating income (loss) (2,639) 1,092
Interest expense, net 24,280 23,063
Gain on sale of division (60,978) -
------------ ------------
Income (loss) before income tax provision 34,059 (21,971)
Income tax provision 1,526 441
------------ ------------
Net income (loss) $ 32,533 $ (22,412)
============ ============
Net income (loss) per share - basic and diluted $ 0.18 $ (0.12)
============ ============
Weighted average shares outstanding - basic and diluted 180,380,513 180,380,513
============ ===========
</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 Nine Months Ended
----------------------------------------
September 24, September 26,
2000 1999
-------------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers, franchisees and licensees $ 350,945 $ 410,153
Cash paid to suppliers and employees (333,661) (401,111)
Interest paid, net (30,517) (15,219)
Opening costs (412) (2,391)
Income taxes paid (727) (569)
--------------- --------------
Net cash used in operating activities (14,372) (9,137)
--------------- --------------
Cash flows from investing activities:
Proceeds from disposal of property and equipment 1,075 1,787
Proceeds from sale of notes receivable, net - 3,246
Proceeds from payments on notes receivable 530 2,076
Cash required for Merger and Hamlet Acquisition - (2,300)
Capital expenditures (10,824) (24,354)
Lease termination payments (695) (2,855)
Other divestment expenditures (1,583) (1,811)
Proceeds from the El Torito Sale, net 113,572 -
Other (1,597) (746)
--------------- --------------
Net cash provided by (used in) investing activities 100,478 (24,957)
--------------- --------------
Cash flows from financing activities:
Proceeds from (repayments of) working capital borrowings, net (21,850) 21,800
Proceeds from equipment financing 2,672 -
Payment of debt issuance costs - (177)
Reductions of long-term debt, including capitalized lease obligations (2,424) (1,521)
--------------- --------------
Net cash provided by (used in) financing activities (21,602) 20,102
--------------- --------------
Net increase (decrease) in cash and cash equivalents 64,504 (13,992)
Cash and cash equivalents at beginning of period 3,600 17,707
--------------- --------------
Cash and cash equivalents at end of period $ 68,104 $ 3,715
=============== ==============
Reconciliation of net income (loss) to net cash used in operating activities:
Net income (loss) $ 32,533 $ (22,412)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization 18,526 19,932
Amortization of debt issuance costs and deferred gain 997 1,164
Loss on disposition of properties 1,036 2,999
Provision for divestitures and write-down of long-lived assets 1,730 -
Gain on sale of division (60,978) -
Accretion of interest on discount notes - 7,147
(Increase) decrease in receivables, inventories and other current assets 1,751 (1,329)
Decrease in accounts payable, self-insurance reserves, other accrued liabilities
and income taxes payable (9,967) (16,638)
--------------- --------------
Net cash used in operating activities $ (14,372) $ (9,137)
=============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements
-5-
<PAGE>
PRANDIUM, INC.
--------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Unaudited)
1. Company. Prandium, 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. At September 24, 2000, the Company operated
206 restaurants in 22 states, approximately 62% of which are located in
California, Ohio, Pennsylvania, Indiana and Michigan, and franchised and
licensed 13 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 Fiscal Year Ended December 26, 1999 included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 26, 1999
(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 nine months ended September 24, 2000 are not necessarily
indicative of those for the full year. Certain amounts as previously reported
have been reclassified to conform to the 2000 presentation.
3. Sale of El Torito Division. On June 28, 2000, the Company completed
--------------------------
the sale of substantially all of the El Torito Division to Acapulco Acquisition
Corp. ("Acapulco") in a transaction with an adjusted enterprise value of
approximately $129.5 million (the "El Torito Sale"). At June 28, 2000, the El
Torito Division operated 97 full-service restaurants and four fast-casual
restaurants in eleven states and franchised and licensed eleven restaurants
outside the United States. All but two full-service restaurants and none of the
four fast-casual restaurants were included in the El Torito Sale. As a result of
the El Torito Sale, the Company received, subject to a preliminary $0.7 million
post-closing adjustment based on a closing balance sheet, $128.8 million,
consisting of $114.0 million in cash, the assumption of $9.8 million of long-
term debt, consisting primarily of capitalized lease obligations, and $5.0
million deposited in escrow. The Company recorded a pretax gain of $61.0 million
in the third quarter of fiscal 2000 as a result of this transaction. A portion
of the net cash proceeds was used to pay indebtedness outstanding under the
Foothill Credit Facility (as defined below) of $25.9 million.
The 95 full-service El Torito Division restaurants that were sold generated
sales of $112,409,000 and $163,486,000 for the six months and two days ended
June 27, 2000 (through date of sale) and the nine months ended September 26,
1999, respectively, and produced El Torito Division operating income of
$5,411,000 and $8,364,000, respectively. Such operating income includes charges
for allocated corporate general and administrative expenses of $2,889,000 and
$4,138,000 for the six months and two days ended June 27, 2000 and the nine
months ended September 26, 1999, respectively.
-6-
<PAGE>
4. Strategic Divestment Programs. In the fourth quarter of 1999, three
-----------------------------
non-strategic Koo Koo Roo restaurants were designated for divestment (the "KKR
Strategic Divestment Program"). In conjunction with the KKR Strategic Divestment
Program, the Company recorded a provision for divestitures of $904,000. This
provision consisted of costs associated with lease terminations, subsidized
subleases, brokerage fees and other divestment costs. During the nine months
ended September 24, 2000, these restaurants (including one restaurant divested
in March 2000) had sales of $975,000 and restaurant level operating losses of
$284,000. For the nine months ended September 24, 2000, the Company paid $55,000
for divestment-related costs. The KKR Strategic Divestment Program is scheduled
to be completed by the end of fiscal 2000, and the operating results will be
included in the Company's consolidated statement of operations until the
divestments are completed. As a result of operating losses which have continued
into the fourth quarter of 2000, the Company decided to explore the divestment
of nine additional Koo Koo Roo restaurants. After consideration of the timing
and costs associated with these potential divestments, an additional provision
for divestitures, including the write-down of long-lived assets with a net book
value at September 24, 2000 of approximately $2.8 million, may be recorded in
the fourth quarter of 2000.
In the fourth quarter of 1998, 48 non-strategic Chi-Chi's restaurants were
designated for divestment (the "CC Strategic Divestment Program"). In
conjunction with the CC Strategic Divestment Program, the Company recorded a
provision for divestitures of $22,884,000, including divestment reserves of
$12,256,000. During the fourth quarter of 1999, the Company determined that it
would not be able to satisfactorily negotiate lease terminations or subleases
for 20 operating restaurants of the 48 Chi-Chi's restaurants designated for
divestment. As a result, these 20 restaurants were removed from the CC Strategic
Divestment Program, and $1,048,000 previously recorded in conjunction with the
provision for divestitures was reversed during the fourth quarter of 1999. After
this reversal, eight restaurants (including four restaurants divested in the
first nine months of 2000) with sales of $3,078,000 and restaurant level
operating losses of $678,000 during the nine months ended September 24, 2000,
remain in the CC Strategic Divestment Program. For the nine months ended
September 24, 2000, the Company paid (i) $203,000 for severance costs associated
with certain restaurant and regional managers who were terminated in connection
with the restaurants divested and (ii) $1,689,000 for net costs associated with
lease terminations, subsidized subleases, brokerage fees and other divestment
costs. The CC Strategic Divestment Program is scheduled to be completed by the
end of fiscal 2000, and the operating results of the restaurants in the CC
Strategic Divestment Program will be included in the Company's consolidated
statement of operations until the divestments are completed.
5. Segment Information. The Company operates exclusively in the food-
-------------------
service industry. Substantially all revenues result from the sale of menu
products at restaurants operated by the Company. The Company's reportable
segments are based on restaurant operating divisions. Operating income (loss)
includes the operating results before interest. The corporate component of
sales, depreciation and amortization and operating income (loss) represents
operating results of the two full-service and four fast-casual restaurants not
included in the El Torito Sale, as well as corporate general and administrative
expenses. Corporate assets include corporate cash, investments, receivables,
asset portions of financing instruments and the two full-service and four fast-
casual restaurants not included in the El Torito Sale. Segment information for
the El Torito Division has been restated to exclude the results of the two full-
service and four fast-casual restaurants not included in the El Torito Sale.
-7-
<PAGE>
<TABLE>
<CAPTION>
For the Quarters Ended For the Nine Months Ended
---------------------------------- ----------------------------------
September 24, September 26, September 24, September 26,
2000 1999 2000 1999
----------------- --------------- ---------------- ----------------
(Unaudited)
($ in thousands)
<S> <C> <C> <C> <C>
Sales
El Torito Division $ 910 $ 54,058 $ 112,409 $ 163,486
Chi-Chi's Division 54,195 56,894 166,050 174,599
Koo Koo Roo Division 21,272 21,677 65,389 66,445
Corporate 1,663 1,635 5,161 4,307
---------------- ------------- -------------- -------------
Total Sales $ 78,040 $ 134,264 $ 349,009 $ 408,837
================ ============= ============== =============
Depreciation and Amortization
El Torito Division $ 76 $ 2,415 $ 5,367 $ 7,067
Chi-Chi's Division 2,635 2,904 8,005 7,988
Koo Koo Roo Division 1,368 1,374 4,028 3,848
Corporate 397 324 1,126 1,029
---------------- ------------- -------------- -------------
Total Depreciation and Amortization $ 4,476 $ 7,017 $ 18,526 $ 19,932
================ ============= ============== =============
Operating Income (Loss)
El Torito Division $ (2,280) $ 2,725 $ 5,411 $ 8,364
Chi-Chi's Division (2,318) (2,722) (5,166) (4,214)
Koo Koo Roo Division (981) (507) (1,481) (586)
Corporate (897) (679) (1,403) (2,472)
---------------- ------------- -------------- -------------
Total Operating Income (Loss) $ (6,476) $ (1,183) $ (2,639) $ 1,092
================ ============= ============== =============
Interest Expense, net
El Torito Division $ 7 $ 410 $ 1,227 $ 823
Chi-Chi's Division 115 279 945 455
Koo Koo Roo Division 52 26 129 69
Corporate 6,957 7,455 21,979 21,716
---------------- ------------- -------------- -------------
Total Interest Expense, net $ 7,131 $ 8,170 $ 24,280 $ 23,063
================ ============= ============== =============
Capital Expenditures
El Torito Division $ - $ 1,290 $ 934 $ 6,848
Chi-Chi's Division 3,990 5,824 6,144 13,571
Koo Koo Roo Division 1,038 548 2,226 1,682
Corporate 650 589 1,520 2,253
---------------- ------------- -------------- -------------
Total Capital Expenditures $ 5,678 $ 8,251 $ 10,824 $ 24,354
================ ============= ============== =============
September 24, December 26,
2000 1999
-------------- -------------
(Unaudited)
($ in thousands)
Total Assets
El Torito Division $ - $ 55,835
Chi-Chi's Division 107,394 111,077
Koo Koo Roo Division 98,405 100,607
Corporate 83,121 19,114
-------------- -------------
Total Assets $ 288,920 $ 286,633
============== =============
</TABLE>
-8-
<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:
. the continuing development of successful marketing strategies for each
of the Company's concepts;
. the effect of national and regional economic conditions;
. the ability of the Company to satisfy its debt obligations;
. the availability of adequate working capital;
. competitive products and pricing;
. changes in legislation;
. demographic changes;
. the ability to attract and retain qualified personnel;
. changes in business strategy or development plans;
. business disruptions;
. changes in consumer preferences, tastes and eating habits; and
. increases in food and labor costs.
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.
-9-
<PAGE>
Information relating to periods ending prior to October 30, 1998 included
in this report relates to the historical operations of the Company 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.
As used herein, "comparable restaurants" means restaurants operated by the
Company for at least eighteen months and that continued in operation through the
end of the third quarter of 2000.
Liquidity and Capital Resources
-------------------------------
A. Liquidity
The Company reported net cash used in operating activities of $14.4 million
for the nine months ended September 24, 2000 and $9.1 million for the nine
months ended September 26, 1999. 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). The Company's viability
has been and will continue to be dependent upon its ability to generate
sufficient operating cash flow or cash flow from other sources to meet its
obligations on a timely basis, and to comply with the terms of its financing
agreements.
EBITDA. For the first nine months of 2000, 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 $19.1 million,
compared to $26.4 million for the same period in 1999. This reduced level of
EBITDA is primarily the result of (i) the sale of the El Torito Division on June
28, 2000 which resulted in $4.8 million less EBITDA in the first nine months of
2000 versus the same period in 1999; (ii) the introduction of Chi-Chi's Menu
2000 which negatively impacted EBITDA in the second quarter of 2000 by $2.4
million; and (iii) decreases in comparable restaurant sales in Koo Koo Roo
concept restaurants for the first nine months of 2000. As a result of the sale
of the El Torito Division, the Company will be operating at lower EBITDA levels
for the foreseeable future.
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 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.
Statement of Cash Flows. For the nine months ended September 24, 2000, net
cash used in operating activities was $14.4 million compared to $9.1 million for
the same period in 1999. This change was primarily due to the $15.3 million in
additional interest paid, partially offset by the $8.2 million improvement in
cash received from customers, franchisees and licensees net of cash paid to
suppliers and employers and $2.0 million in reduced opening costs. For the
first nine months of 2000, net cash provided by investing activities was $100.5
million compared to $25.0 million used in investing activities for the same
period in 1999. This change was primarily due to net proceeds received from the
El Torito Sale of $113.6 million, along with a reduction in capital expenditures
of $13.5 million. For the first nine months of 2000, net cash used in financing
activities was $21.6 million compared to $20.1 million provided by financing
activities for the same period in 1999. During the first nine months of 2000,
$21.9 million in working capital borrowings were repaid versus $21.8 million in
net working capital borrowings received during the first nine months of 1999.
Working Capital Deficiency. The Company normally 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 applied to the payment of related accounts payable
for food, beverages and supplies which are generally purchased on
trade credit terms.
-10-
<PAGE>
The Company had a working capital balance of $6.5 million on September 24,
2000 due to significant cash balances generated by the El Torito Sale.
Credit Facility and Other Long-Term Debt. On January 10, 1997, the Company
entered into a five-year, $35 million credit facility with Foothill Capital
Corporation (the "Foothill Credit Facility") to provide for the ongoing working
capital needs of the Company. As a result of the acquisition of KKR on October
30, 1998, the Company increased the Foothill Credit Facility to $55 million. In
connection with the El Torito Sale, (i) the Company used a portion of the cash
proceeds from the sale to repay $25.9 million outstanding under the Foothill
Credit Facility and (ii) the Foothill Credit Facility was amended and restated
to adjust all restrictive covenants to reflect the El Torito Sale and reduce the
credit facility to a maximum of $20 million (subject to certain limitations) of
letters of credit and revolving cash borrowings. The Foothill Credit Facility:
. 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, however, if by October 2, 2001 the
Company's senior and subordinated debt maturities for those issues
that currently mature in 2002 are not extended by at least one year,
then (i) any revolving borrowings must be repaid and (ii) letters of
credit must be cash collateralized on October 2, 2001.
The Company was in compliance with all financial ratios at September 24,
2000. 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 ($10.1 million of such letters of credit
were outstanding as of November 6, 2000). No working capital borrowings were
outstanding as of November 6, 2000.
After completion of the El Torito Sale, the Company continues to be highly
leveraged and have significant annual debt service requirements. In addition to
requirements under the Foothill Credit Facility, the Company's debt service
requirements are as follows:
Cash
Full Year Interest Principal
--------- -------- ---------
($ in Millions)
2000 $28.7 $ 1.4
2001 28.5 1.2
2002 15.7 203.6
2003 3.5 0.5
2004 1.8 31.1
Although management believes that the proceeds available to the Company as
a result of the El Torito Sale should be sufficient to meet its operating and
debt service requirements through the
-11-
<PAGE>
end of fiscal 2001, there can be no assurance that the Company will be able to
repay or refinance its 9-3/4% Senior Notes due February 1, 2002 and its 10-7/8%
Senior Subordinated Discount Notes due February 1, 2004, or that FRI-MRD
Corporation will be able to repay or refinance its 15% Senior Discount Notes due
January 24, 2002 and its 14% Senior Secured Discount Notes due January 24, 2002,
at their respective maturities. The Company continues to explore various
alternatives to restructure or further reduce its debt.
B. Capital Expenditures
Net cash provided by investing activities was $100.5 million for the first
nine months of 2000, including $10.8 million used for capital expenditures, as
compared to net cash used in investing activities of $25.0 million for the same
period in 1999. The change in net cash provided by (used in) investing
activities for the first nine months of 2000 was primarily due to (i) net
proceeds from the completion of the El Torito Sale and (ii) lower capital
expenditures in 2000.
Capital expenditures for the first nine months of 2000 were $10.8 million
including $0.9 million for El Torito. During the first quarter of 2000, capital
expenditures were maintained at a minimum maintenance level. During the second
and third quarters of 2000, the Company spent $3.7 million and $5.7 million,
respectively, on capital expenditures including approximately $737,000 for El
Torito. The Company is remodelling 15 Chi-Chi's during fiscal 2000 as well as
two Hamburger Hamlets. Additionally, the Company has opened three new Koo Koo
Roo locations in fiscal 2000; these restaurants opened on February 1st in Toluca
Lake, California, July 8th in West Los Angeles and October 14th in Irvine,
California. The Company plans to spend between $17 million and $18 million in
capital expenditures for fiscal 2000.
Year 2000
---------
The Company believes it has successfully addressed the potential business
risks associated with the Year 2000. The Year 2000 issue involved the use of a
two-digit year field instead of a four-digit year field in computer systems. If
computer systems could not distinguish between the year 1900 and the year 2000,
system failures or other computer errors could have resulted. To date, the
Company is not aware of the occurrence of any significant Year 2000 problems
being reported in connection with its business. Some business risks associated
with the Year 2000 issue may remain throughout 2000. However, it is not
anticipated that future Year 2000 issues, if any, will have a material adverse
effect on the Company.
The total cost to the Company of addressing Year 2000 issues was
approximately $9.0 million, a significant portion of which was lease financed.
This amount was incurred for new software and related hardware and installation
costs during 1998 and 1999 in the Company's corporate offices and operating
restaurants.
Recent Accounting Pronouncements
--------------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative instruments,
-12-
<PAGE>
including derivative instruments embedded in other contracts, and hedging
activities. SFAS 133, as amended by SFAS 137 and SFAS 138, is effective for all
fiscal quarters of fiscal years beginning after December 15, 2000. The Company
has no instruments or transactions subject to SFAS 133.
Results of Operations.
---------------------
The Company's total sales of $78,040,000 for the third quarter of 2000
decreased by $56,224,000 or 41.9% as compared to the same period in 1999. For
the first nine months of 2000, total Company sales of $349,009,000 decreased by
$59,828,000 or 14.6% as compared to the same period in 1999. These decreases
were due to (i) the loss of sales from the El Torito Division which was sold by
the Company on June 28, 2000, (ii) sales decreases in comparable restaurants and
(iii) sales decreases for restaurants sold or closed, partially offset by sales
from new restaurants. The breakdown of the sales decreases for the third
quarter and first nine months of 2000 is detailed below:
<TABLE>
<CAPTION>
Change in Change in
Third Quarter First Nine Months
Sales Sales
------------------- --------------------
($ in thousands)
<S> <C> <C>
Sales of the El Torito Division $(53,148) $(51,077)
Decrease in Sales of Comparable Restaurants (1,003) (1,810)
Decrease in Sales of Restaurants Sold or Closed (2,823) (8,750)
Sales from New Restaurants 750 1,809
-------- --------
Total $(56,224) $(59,828)
======== ========
</TABLE>
Sales for comparable restaurants of $74,178,000 for the third quarter of
2000 decreased by $1,003,000 or 1.3% as compared to the same period in 1999. For
the first nine months of 2000, sales of comparable restaurants of $226,820,000
decreased by $1,810,000 or 0.8% as compared to the same period in 1999. As shown
below, these decreases were due to decreased sales for comparable Koo Koo Roo
and Chi-Chi's division restaurants for the third quarter and decreases in
comparable Koo Koo Roo division sales for the first nine months, partially
offset by increased sales for Chi-Chi's division restaurants for the same
period.
<TABLE>
<CAPTION>
Change in Change in
Third Quarter Sales First Nine Months Sales
-------------------------- ----------------------------
Amount Percent Amount Percent
----------- ----------- ------------ -----------
($ in thousands)
<S> <C> <C> <C> <C>
Comparable Chi-Chi's $ (103) (0.2)% $ 609 0.4 %
Comparable KKR/Hamlet (900) (4.3) (2,419) (3.7)
------- -------
Total $(1,003) (1.3)% $(1,810) (0.8)%
======= ===== ======= =====
</TABLE>
Comparable sales for Chi-Chi's were down 0.2% for the third quarter of 2000
when compared to the same period in 1999. Seven of the thirteen weeks of the
quarter had positive
-13-
<PAGE>
comparable sales including the last four weeks which averaged increases of 3.3%
when compared to 1999 on an unweighted basis. Chi-Chi's advertised its new menu
on network or cable television in markets covering approximately 75% of its
restaurants for eight of the thirteen weeks of the third quarter. Another 13% of
its restaurants were supported by radio advertising and the remaining markets
received freestanding inserts in their local newspaper. Beginning August 23rd,
Chi-Chi's rolled out a SalsaBug program that features new Volkswagen Beetles,
decorated with a giant sombrero and the Chi-Chi's logo, visiting high traffic
areas in many of the markets. The program will continue through December 3, 2000
and focuses on both Chi-Chi's new Weekday Fiesta Cantina program and its
carryout menu. Concurrently, a sweepstakes with three Beetles as grand prizes is
featured in posters at the restaurants, in freestanding newspaper inserts and in
the flyers handed out by the SalsaBug drivers.
Costs related to the introduction of Chi-Chi's Menu 2000 negatively
impacted EBITDA for the second quarter and first nine months of 2000. Gross
margin was negatively impacted by introductory food and labor costs including
training totalling approximately $1.8 million. Expenses for menus, uniforms and
small equipment were approximately $600,000.
In the third quarter of 2000, comparable sales for Koo Koo Roo were down
8.4% as compared to the same period in 1999. Marketing activities for the
quarter included the continuation of Skinless BBQ Chicken and the introduction
of the new tag line -"Chicken with Exceptional Taste." Koo Koo Roo's new
campaign, launched at the end of the third quarter, utilized radio, outdoor and
print advertising and in-store merchandising materials. Comparable sales for
Hamburger Hamlet were up 2.6% for the third quarter of 2000 as compared to the
same period in 1999. During the third quarter, a new "Hamlet at Night" menu was
introduced which included new entrees, appetizers and desserts.
Product costs of $21,656,000 for the third quarter of 2000 decreased by
$13,668,000 or 38.7% as compared to the same period in 1999. For the first nine
months of 2000, product costs of $92,010,000 decreased by $15,960,000 or 14.8%
as compared to the same period in 1999. As a percentage of sales, product costs
increased from 26.3% in the third quarter of 1999 to 27.8% in the same period of
2000, but were flat at 26.4% in the first nine months of 2000 as compared to the
same period in 1999. The decreases are primarily due to the El Torito Sale which
accounts for $12,902,000 of the decreases and favorable commodity prices, most
notably in cheese, partially offset by inefficiencies related to the start-up of
Chi-Chi's Menu 2000.
Payroll and related costs of $27,985,000 for the third quarter of 2000
decreased by $19,805,000 or 41.4% as compared to the same period in 1999. For
the first nine months of 2000, payroll and related costs of $124,001,000
decreased by $21,224,000 or 14.6% as compared to the same period in 1999. As a
percentage of sales, payroll and related costs increased from 35.6% in the third
quarter of 1999 to 35.9% in the same period of 2000, but were flat at 35.5% in
the first nine months of 2000 as compared to the same period in 1999. The change
in payroll and related costs was primarily due to the El Torito Sale which
accounts for $18,759,000 of the decreases and reduced management costs related
to divested Chi-Chi's restaurants, primarily offset by Chi-Chi's Menu 2000
training costs.
-14-
<PAGE>
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 is no tip credit. In California, the state's minimum
wage was increased to $5.75 on March 1, 1998. In response to the minimum wage
increase on March 1, 1998, the Company raised menu prices at its El Torito
restaurants in an effort to recover the higher payroll costs. Similarly, in
March 1998, KKR also raised menu prices for its Koo Koo Roo restaurants. No
minimum wage increases are scheduled for 2000 at this time, but it is
anticipated that the United States Congress will pass a minimum wage increase
later this year. In October 2000, the California Industrial Welfare Commission
voted to increase that state's minimum wage by 50c on January 1, 2001 with
another 50c increase to occur on January 1, 2002. As the Company completes its
strategic plan for 2001, it will consider initiatives to mitigate the effects of
this minimum wage increase.
Occupancy and other operating expenses of $22,284,000 for the third quarter
of 2000 decreased by $12,901,000 or 36.7% as compared to the same period in
1999. For the first nine months of 2000, occupancy and other operating expenses
of $92,980,000 decreased by $11,740,000 or 11.2% as compared to the same period
in 1999. As a percentage of sales, occupancy and other operating expenses
increased to 28.6% in the third quarter of 2000 as compared to 26.2% in the same
period in 1999 and increased to 26.6% in the first nine months of 2000 as
compared to 25.6% in the same period in 1999. Both variances were the result of
the El Torito Sale which accounts for $13,086,000 of the decreases, partially
offset by costs associated with the introduction of Chi-Chi's Menu 2000 and
increased operating expenses in the El Torito division during the first six
months of 2000.
Depreciation and amortization of $4,476,000 for the third quarter of 2000
decreased by $2,541,000 or 36.2% as compared to the same period in 1999. For the
first nine months of 2000, depreciation and amortization of $18,526,000
decreased by $1,406,000 or 7.1% as compared to the same period in 1999. These
decreases were due to the El Torito Sale which accounts for $2,339,000 of the
decreases, partially offset in the nine month period by the impact of the
Company's ongoing capital expenditure programs.
General and administrative expenses of $5,477,000 for the third quarter of
2000 decreased by $2,160,000 or 28.3% as compared to the same period of 1999.
For the first nine months of 2000, general and administrative expenses of
$20,953,000 decreased by $3,555,000 or 14.5% as compared to the same period in
1999. As a percentage of sales, general and administrative expenses increased to
7.0% in the third quarter of 2000 as compared to 5.7% in the same period of
1999, but remained unchanged at 6.0% in the first nine months of 2000 as
compared to the same period in 1999. The increase as a percentage of sales for
the quarter primarily reflects general and administrative expenses spread over
fewer restaurants due to the El Torito Sale. The Company is in the process of
eliminating approximately 50 positions in its corporate offices as it
reorganizes after the El Torito Sale. Management continues to closely evaluate
the Company's general and administrative cost structure for additional savings
opportunities in light of the completion of the El Torito Sale.
-15-
<PAGE>
The Company reported a loss on disposition of properties of $0.6 million in
the third quarter of 2000 and $1.0 million for the first nine months of 2000 as
compared to a loss of $1.8 million for the third quarter in 1999 and $3.0
million for the first nine months of 1999.
As a result of a continued review of operating results, the Company
identified three unprofitable fast-casual restaurants that were retained after
the sale of El Torito which may either take too long to recover profitability or
may not recover at all, despite current operational improvement programs. In
connection with this analysis, the Company analyzed the carrying value of the
long-lived assets of these restaurants and recorded a write-down of long-lived
assets of $1.7 million to reduce the assets' carrying value to their estimated
fair market value.
On October 30, 2000, the Company marked the two-year anniversary of the
acquisition of the Koo Koo Roo and Hamburger Hamlet restaurant operations.
Since the acquisition, the Koo Koo Roo restaurants have achieved operating
results lower than those anticipated by management. The Koo Koo Roo operations
have been impacted by negative comparable restaurant sales for 1999 and for the
first nine months of 2000. During the fourth quarter of 2000, as the Company
determines its strategic plans and objectives for 2001 and the future,
management will continue to evaluate the future prospects for this concept and
the recoverability of costs in excess of net assets of business acquired, net
amounting to approximately $48.1 million at September 24, 2000.
Interest expense, net for the third quarter of 2000 of $7,131,000 decreased
by $1,039,000 or 12.7% as compared to the same period in 1999. Interest
expense, net for the first nine months of 2000 of $24,280,000 increased by
$1,217,000 or 5.3% as compared to the same period in 1999. The decrease is
primarily the result of lower working capital borrowings during the third
quarter. The increase in the first nine months is primarily the result of
interest on working capital borrowings, of which smaller balances were
outstanding during the first six months of 1999, and interest on equipment
financings. Interest expense for the quarter and nine months ended September
24, 2000 includes the write-off of $516,000 in debt issuance costs due to the
amendment of the Foothill Credit Facility.
The Company recorded a pretax gain of $60,978,000 in the third quarter of
2000 as a result of the sale of the El Torito Division.
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.
Interest Rate Risk
------------------
The Company's primary exposure to financial market risks is the impact that
interest rate changes could have on the Foothill Credit Facility, of which no
working capital borrowings were outstanding as of November 6, 2000. Borrowings
under the Foothill Credit Facility bear interest at the prime rate as announced
by Wells Fargo Bank plus 1.875% for borrowings less than or equal to $10 million
and at the prime rate plus 2.875% for borrowings greater than $10 million.
-16-
<PAGE>
Selected Division Operating Data.
--------------------------------
The following table sets forth certain information regarding (i) the
Company; (ii) its ongoing Chi-Chi's restaurant division, Koo Koo Roo restaurant
division (acquired on October 30, 1998) and other operating restaurants; and
(iii) the El Torito restaurant division divested on June 28, 2000. At September
24, 2000, the Company's Chi-Chi's restaurant division operated 143 full-service
restaurants and the Company's Koo Koo Roo restaurant division operated 57 fast-
casual and full-service restaurants.
-17-
<PAGE>
<TABLE>
<CAPTION>
For the Quarters Ended For the Nine Months Ended
---------------------------------------- -----------------------------------------
Sept. 24, Sept. 26, Sept. 27, Sept. 24, Sept. 26, Sept. 27,
2000 1999 1998 2000 1999 1998
------------ ----------- ------------- ------------- ------------ ------------
($ in thousands, except average check amount)
<S> <C> <C> <C> <C> <C> <C>
Chi-Chi's Restaurant Division
-----------------------------
Restaurants Open at End of Period:
Owned/operated 143 152 171 143 152 171
Franchised and Licensed 13 13 12 13 13 12
Sales $ 54,195 $ 56,894 $ 61,515 $ 166,050 $ 174,599 $ 185,524
Restaurant Level Cashflow (a) 4,156 5,290 4,474 13,727 16,189 13,411
Divisional EBITDA (b) 999 1,900 96 3,964 5,319 1,300
Percentage increase (decrease) in
comparable restaurant sales (0.2)% (1.0)% 3.1% 0.4% 0.5% 0.9%
Average check (excluding
alcoholic beverage sales) $ 10.00 $ 9.24 $ 8.58(c) $ 9.68 $ 9.17 $ 8.33(c)
Koo Koo Roo Restaurant Division (d)
-----------------------------------
Restaurants Open at End of Period:
Owned/operated 57 56 0 57 56 0
Franchised and Licensed - 1 0 - 1 0
Sales $ 21,272 $ 21,677 $ 0 $ 65,389 $ 66,445 $ 0
Restaurant Level Cashflow (a) 2,083 2,335 0 7,451 7,895 0
Divisional EBITDA (b) 571 927 0 2,865 3,578 0
Percentage decrease in
comparable restaurant sales (4.3)% N.A. N.A. (3.7)% N.A. N.A.
Average check
(Koo Koo Roo restaurants only) $ 9.37 $ 9.11 $ N.A. $ 9.28 $ 8.98 $ N.A.
Other Operating Restaurants (e)
-------------------------------
Restaurants Open at End of Period:
Owned/operated 6 5 N.A. 6 5 N.A.
Franchised and Licensed - - N.A. - - N.A.
Sales $ 1,663 $ 1,635 $ N.A. $ 5,161 $ 4,307 $ N.A.
Restaurant Level Cashflow (a) (1) 62 N.A. 172 236 N.A.
Divisional EBITDA (b) (657) (23) N.A. (621) (43) N.A.
Ongoing Operations
------------------
Restaurants Open at End of Period:
Owned/operated 206 213 171 206 213 171
Franchised and Licensed 13 14 12 13 14 12
Sales $ 77,130 $ 80,206 $ 61,515 $ 236,600 $ 245,351 $ 185,524
Restaurant Level Cashflow (a) 6,238 7,687 4,474 21,350 24,320 13,411
Divisional EBITDA (b) 913 2,804 96 6,208 8,854 1,300
Divested Operations (f)
-----------------------
Restaurants Open at End of Period:
Owned/operated - 94 95 - 94 95
Franchised and Licensed - 8 8 - 8 8
Sales $ 910 $ 54,058 $ 53,778 112,409 $ 163,486 $ 163,170
Restaurant Level Cashflow (a) (123) 8,278 8,719 18,668 26,602 25,749
Divisional EBITDA (b) (256) 5,592 5,723 12,984 17,742 17,021
Total Company
-------------
Restaurants Open at End of Period:
Owned/operated 206 307 266 206 307 266
Franchised and Licensed 13 22 20 13 22 20
Sales $ 78,040 $ 134,264 $ 115,293 $ 349,009 $ 408,837 $ 348,694
EBITDA (g) 638 8,328 5,761 19,065 26,414 18,153
</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. Corporate
general and administrative expenses that would have been allocated to the
El Torito Division prior to the sale of that division are being charged to
Other Operating Restaurants in 2000 so as not to distort the year-over-year
comparisons of the Chi-Chi's and Koo Koo Roo Restaurant Divisions.
(c) Restated to conform to the 2000 and 1999 presentation.
(d) Koo Koo Roo and Hamburger Hamlet restaurant operations were acquired on
October 30, 1998.
(e) Results for these restaurants are included in the results of Divested
Operations (El Torito Division) for 1998.
(f) Divested Operations represents the results of the El Torito Division until
it was divested on June 28, 2000.
(g) 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.
- 18 -
<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
------
None.
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.)
2 (b) Stock Purchase Agreement dated as of March 27, 2000, by and
among the Company, FRI-MRD Corporation and Acapulco
Acquisition Corp. (Filed as Exhibit 2(b) to the Company's
Form 10-K filed with the SEC on March 29, 2000.)
2 (c) Amendment No. 1 to Stock Purchase Agreement dated as of June
28, 2000, by and among the Company, FRI-MRD Corporation and
Acapulco Acquisition Corp. (Filed as Exhibit 2.2 to the
Company's Form 8-K filed with the SEC on July 5, 2000.)
3 (a) Sixth Restated Certificate of Incorporation of the Company.
(Filed as Exhibit 3(a) to the Company's Form 10-Q filed with
the SEC on May 12, 1999.)
-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.)
10 (a) Amended and Restated Loan and Security Agreement by and among
Prandium, Inc., FRI-MRD Corporation, Chi-Chi's, Inc., each of
their subsidiaries, and Foothill Capital Corporation, dated as
of July 19, 2000. (Filed as Exhibit 10.1 to the Company's Form
8-K filed with the SEC on July 24, 2000.)
10 (b) Amended, Restated and Consolidated General Continuing
Guaranty, dated as of July 19, 2000, by and among Prandium,
Inc., FRI-MRD Corporation, FRI-Admin Corporation, Koo Koo Roo,
Inc., The Hamlet Group, Inc. and Foothill Capital Corporation.
(Filed as Exhibit 10.2 to the Company's Form 8-K filed with
the SEC on July 24, 2000.)
10 (c) Amended and Restated Subordination Agreement, dated as of
July 19, 2000, by and among Foothill Capital Corporation, FRI-
MRD Corporation and Prandium, Inc. (Filed as Exhibit 10.3 to
the Company's Form 8-K filed with the SEC on July 24, 2000.)
10 (d) Amended, Restated and Consolidated Security Agreement, dated
as of July 19, 2000, by and among Foothill Capital
Corporation, Prandium, Inc., FRI-MRD Corporation, FRI-Admin
Corporation, Koo Koo Roo, Inc., The Hamlet Group, Inc. and
each of the subsidiaries of Chi-Chi's, Inc. identified on the
signature pages thereto. (Filed as Exhibit 10.4 to the
Company's Form 8-K filed with the SEC on July 24, 2000.)
10 (e) Amended, Restated and Consolidated Stock Pledge Agreement,
dated as of July 19, 2000, by and among Prandium, Inc., FRI-
MRD Corporation, Chi-Chi's, Inc. and Foothill Capital
Corporation. (Filed as Exhibit 10.5 to the Company's Form 8-K
filed with the SEC on July 24, 2000.)
10 (f) Amended and Restated Trademark Security Agreement, dated as
of July 19, 2000, by and among Chi-Chi's, Inc. and Foothill
Capital Corporation. (Filed as Exhibit 10.6 to the Company's
Form 8-K filed with the SEC on July 24, 2000.)
*27 Financial Data Schedule.
(b) Reports on Form 8-K.
On July 5, 2000, the Company filed a report on Form 8-K announcing the
completion of the El Torito Sale.
-21-
<PAGE>
On July 24, 2000, the Company filed a report on Form 8-K announcing
that the Foothill Credit Facility had been amended and restated.
On August 24, 2000, the Company filed a report on Form 8-K/A amending
the report on Form 8-K filed on July 5, 2000.
--------
* Filed herewith.
-22-
<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: November 8, 2000
-23-
