UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period
ended March 28, 1997
- 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 0-15782
SHOWBIZ PIZZA TIME, INC.
(Exact name of registrant as specified in its charter)
Kansas 48-0905805
(State or other jurisdiction of(I.R. S. Employer
incorporation or organization)Identification No.)
4441 West Airport Freeway
Irving, Texas 75062
(Address of principal executive offices,
including zip code)
(972) 258-8507
(Registrant's telephone number,
including area code)
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 (or
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No -
At March 28, 1997, an aggregate of 18,526,479 shares of the
registrant's Common Stock, par value of $.10 each (being the
registrant's only class of common stock), were outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
ShowBiz Pizza Time, Inc.:
Page
Consolidated balance sheets as of March 28, 1997 (unaudited)
and December 27, 1996 . . . . . . . . . . . . . . . . . . . 2
Consolidated statements of earnings for the three months ended
March 28, 1997 and March 29, 1996 (unaudited) . . . . . . . . . 3
Consolidated statement of shareholders' equity for the three months
ended March 28, 1997 (unaudited) . . . . . . . . . . . . . . . 4
Consolidated statements of cash flows for the three months ended
March 28, 1997 and March 29, 1996 (unaudited) . . . . . . . . . 5
Notes to consolidated financial statements . . . . . . . . . . . 6
Page 1
SHOWBIZ PIZZA TIME, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 28, 1997 AND DECEMBER 27, 1996
(Thousands, except share data)
ASSETS
<TABLE>
March 28, December 27,
1997 1996
--------- -----------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . $10,966 $ 3,402
Accounts receivable, including
receivables from related parties
of $458 and $675, respectively. . . . . . 2,964 3,543
Current portion of notes receivable,
including receivables from
related parties of $208 and $221,
respectively . . . . . . . . . . . . . . . 396 457
Inventories . . . . . . . . . . . . . . . . . 3,864 3,368
Prepaid expenses. . . . . . . . . . . . . . . 3,419 3,185
Current portion of deferred tax asset . . . . 15,003 13,633
------ ------
Total current assets . . . . . . . . . . . . 36,612 27,588
------ ------
Investments in related parties . . . . . . . . 1,516 1,315
------ -----
Property and equipment . . . . . . . . . . . 168,559 163,998
------- -------
Deferred tax asset . . . . . . . . . . . . . 7,049 12,296
------ ------
Other assets:
Notes receivable, less current portion,
including receivables from
related parties of $1,822 and $2,323,
respectively . . . . . . . . . . . . . . 6,775 7,257
Other . . . . . . . . . . . . . . . . . . . 3,641 4,126
----- -----
10,416 11,383
------ -------
$224,152 $216,580
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt . . . . . $ 2,624 $ 1,785
Accounts payable and accrued liabilities. . . 36,750 31,738
------ -------
Total current liabilities. . . . . . . . . 39,374 33,523
------ ------
Long-term debt, less current portion . . . . . 26,402 34,668
------ ------
Deferred credits . . . . . . . . . . . . . . . 3,920 3,795
------ ------
Other liabilities. . . . . . . . . . . . . . . 1,010 1,010
------ ------
Redeemable preferred stock, $60 par
value, redeemable for $2,974 in 2005 . . . . 2,133 2,108
------ ------
Shareholders' equity:
Common stock, $.10 par value;
authorized 50,000,000 shares;
21,635,655 and 21,519,075 shares
issued, respectively . . . . . . . . . . . 2,164 2,152
Capital in excess of par value. . . . . . . . 155,318 153,795
Retained earnings . . . . . . . . . . . . . . 25,460 17,613
Deferred compensation . . . . . . . . . . . . (1,366) (1,821)
Less treasury shares of 3,109,176
at both dates, at cost . . . . . . . . . . (30,263) (30,263)
------ ------
151,313 141,476
------ ------
$224,152 $216,580
======= =======
</TABLE>
See notes to consolidated financial statements.
Page 2
SHOWBIZ PIZZA TIME, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Thousands, except per share data)
<TABLE>
Three Months Ended
--------------------------------
March 28, 1997 March 29, 1996
-------------- --------------
<S> <C> <C>
Food and beverage revenues . . . . . . . $ 62,454 $ 54,276
Games and merchandise revenues . . . . . 27,826 22,684
Franchise fees and royalties . . . . . . 921 1,141
Interest income, including related
party income of $57 and $66,
respectively . . . . . . . . . . . . . 228 256
Joint venture income . . . . . . . . . . 165 95
------- -------
91,594 78,452
------- -------
Costs and expenses:
Cost of sales . . . . . . . . . . . . . . 42,194 37,460
Selling, general and administrative
expenses, including related party
expenses of $31 in both periods. . . . . . 13,721 11,416
Depreciation and amortization . . . . . . . 6,317 5,881
Interest expense. . . . . . . . . . . . . 690 891
(Gain) loss on property transactions . . . (28) 89
Other operating expenses. . . . . . . . . . 15,367 13,944
------- -------
78,261 69,681
------- -------
Income before income taxes . . . . . . . . 13,333 8,771
------ -------
Income taxes:
Current expense . . . . . . . . . . . . . 1,467 1,114
Deferred expense. . . . . . . . . . . . . 3,933 2,482
------ ------
5,400 3,596
------ ------
Net income . . . . . . . . . . . . . . . . $ 7,933 $ 5,175
======= =======
Earnings per common and common
equivalent share:
Primary:
Net income . . . . . . . . . . . . . . . $ .42 $ .28
======= =======
Weighted average shares outstanding . . . 18,807 18,309
====== ======
Fully diluted:
Net income . . . . . . . . . . . . . . . $ .42 $ .28
======= ======
Weighted average shares outstanding . . . . 18,807 18,377
====== =======
</TABLE>
See notes to consolidated financial statements.
Page 3
SHOWBIZ PIZZA TIME, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
(Thousands, except per share data)
<TABLE>
Common Capital in Deferred Treasury
Stock Excess of Retained Compen- Stock
Shares Par Value Par Value Earnings sation Shares Cost
------- -------- ---------- -------- ------- ------ -----
<S><C> <C> <C> <C> <C> <C> <C>
Balances, December 27, 1996. . .
. 21,519 $ 2,152 $153,795 $ 17,613 $(1,821) 3,109 $(30,263)
Net income . . . . . . . . . . 7,933
Redeemable preferred
stock accretion. . . . . . . (26)
Redeemable preferred stock dividends,
$1.20 per share. . . . . . (60)
Stock options exercised. . .
117 12 1,467
Tax benefit from the exercise of stock
options and stock grants . . . .
56
Amortization of deferred compensation . . . . . . 455
------ ------ ------- -------
Balances, March 28, 1997 . . .
21,636 $2,164 $155,318 $25,460 $(1,366) 3,109 $(30,263)
====== ====== ======== ======= ======= ===== ========
</TABLE>
See notes to consolidated financial statements.
Page 4
SHOWBIZ PIZZA TIME, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Thousands)
<TABLE>
Three Months Ended
-------------------------------------
March 28, 1997 March 29, 1996
-------------- ---------------
<S> <C> <C>
Operating activities:
Net income . . . . . . . . . . . . . $ 7,933 $ 5,175
Adjustments to reconcile net income to cash
provided by operations:
Depreciation and amortization. . . . . . . 6,317 5,881
Deferred tax expense . . . . . . . . . . . 3,933 2,482
(Gain) loss on property transactions . . . (28) 89
Compensation expense under
stock grant plan . . . . . . . . . . . . 455 455
Other. . . . . . . . . . . . . . . . . . . 125 119
Net change in receivables, inventory,
prepaids, payables and
accrued liabilities. . . . . . . . . . . . 4,860 3,821
------ ------
Cash provided by operations. . . . . . . . 23,595 18,022
------- -------
Investing activities:
Purchases of property and equipment. . . . (10,732) (10,892)
Additions to notes receivable. . . . . . . (370) (623)
Payments received on notes receivable. . . 913 728
(Increase) decrease in investments,
deferred charges and other
assets. . . . . . . . . . . . . . . . . 135 (111)
------ ------
Cash used in investing activities . . . . . (10,054) (10,898)
------ -------
Financing activities:
Payments on debt and line of credit. . . . (7,400) (1,700)
Reduction of capital lease obligations . . (27) (19)
Exercise of stock options . . . . . . . . . 1,479 161
Redeemable preferred stock dividends . . . . (60) (60)
Other. . . . . . . . . . . . . . . . . . . . 31 5
------ ------
Cash used in financing activities. . . . . .(5,977) (1,613)
------- ------
Increase in cash and cash equivalents . . . . 7,564 5,511
Cash and cash equivalents,
beginning of period . . . . . . . . . . . 3,402 5,589
------- -------
Cash and cash equivalents, end of period . .$ 10,966 $ 11,100
======== =======
</TABLE>
See notes to consolidated financial statements.
Page 5
SHOWBIZ PIZZA TIME, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 28, 1997 AND MARCH 29, 1996
(Unaudited)
1. Interim financial statements:
In the opinion of management, the accompanying financial
statements for the periods ended March 28, 1997 and March 29, 1996
reflect all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the Company's financial
condition, results of operations and cash flows.
Certain information and footnote disclosures normally included
in the consolidated financial statements prepared in accordance
with generally accepted accounting principles have been omitted.
The unaudited consolidated financial statements referred to above
should be read in conjunction with the financial statements and
notes thereto included in the Company's Form 10-K filed with the
Securities and Exchange Commission for the year ended December 27,
1996. Results of operations for the periods ended March 28, 1997
and March 29, 1996 are not necessarily indicative of the results
for the year.
2. Earnings per common and common equivalent share:
Earnings per common and common equivalent share were computed
based on the weighted average number of common and common
equivalent shares outstanding during the period. Net income
available per common share has been adjusted for the items
indicated below, and earnings per common and common equivalent
share (adjusted for a three for two stock split effected May 22,
1996) were computed as follows (thousands, except per share data):
<TABLE>
Three Months Ended
--------------------
March 28, March 29,
1997 1996
------------ -----------
<S> <C> <C>
Net income . . . . . . . . . . . . . . $ 7,933 $ 5,175
Accretion of redeemable
preferred stock.. . . . . . . . . . (26) (27)
Redeemable preferred
stock dividends . . . . . . . . . . (60) (60)
-------- -------
Adjusted income applicable
to common and common
equivalent shares. . . . . . . . . . $ 7,847 $ 5,088
Primary:
Weighted average number of
common sharesoutstanding . . . . 18,408 18,158
Common stock equivalents:
Stock purchase options. . . . . 399 151
------ ------
Weighted average number of shares
outstanding . . . . . . . . . . 18,807 18,309
======= ======
Earnings per common and common
equivalent share. . . . . . . . . $ .42 $ .28
====== =======
Fully diluted:
Weighted average number of common
shares outstanding. . . . . . . . . 18,408 18,158
====== ======
Common stock equivalents:
Stock purchase options. . . . . 399 219
Weighted average number of shares
outstanding. . . . . . . . . . . 18,807 18,377
====== ======
Earnings per common and common
equivalent share . . . . . . . . $ .42 $ .28
====== =======
</TABLE>
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 128 "Earnings Per Share"
effective for years ending after December 15, 1997. The Company
does not believe that adoption will have a material impact on
historical earnings per share.
Page 6
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
First Quarter 1997 Compared to First Quarter 1996
- -------------------------------------------------
A summary of the results of operations of the Company as a
percentage of revenues for the two quarters is shown below.
<TABLE>
Three Months Ended
---------------------------------
March 28, 1997 March 29, 1996
-------------- -------------
<S> <C> <C>
Revenue. . . . . . . . . . . . . . . 100.0% 100.0%
----- -----
Costs and expenses:
Cost of sales. . . . . . . . . . . 46.0 47.7
Selling, general and
administrative. . . . . . . . . 15.0 14.6
Depreciation and amortization. . . 6.9 7.5
Interest expense . . . . . . . . . .8 1.1
Loss on property transactions .1
Other operating expenses . . . . . 16.7 17.8
------ ------
85.4 88.8
------ -----
Income before income taxes 14.6 11.2
Income tax expense . . . . . . . 5.9 4.6
------ ------
Net income . . . . . . . . . . . 8.7% 6.6%
====== =====
</TABLE>
Revenues
---------
Revenues increased to $91.6 million in the first quarter of
1997 from $78.5 million in the first quarter of 1996 primarily due
to an increase of 10.1% in comparable store sales of the Company's
Chuck E. Cheese's restaurants which were open during all of the
first quarters of both 1997 and 1996. In addition, the Company
purchased 19 restaurants from its largest franchisee in September
1996. Management believes that several factors contributed to the
comparable store sales increase with the primary factor being sales
increases at repositioned stores. Menu prices increased
approximately 2.8% between the periods.
Costs and Expenses
------------------
Costs and expenses as a percentage of revenues decreased to
85.4% in the first quarter of 1997 from 88.8% in the first quarter
of 1996.
Cost of sales decreased as a percentage of revenues to 46.0%
in the first quarter of 1997 from 47.7% in the comparable period of
1996. Cost of food, beverage, prize and merchandise items as a
percentage of restaurant sales decreased to 16.5% in the first
quarter of 1997 from 17.2% in the first quarter of 1996 primarily
due to an increase in menu prices and lower cost of cheese between
the two periods. Restaurant labor expenses as a percentage of
restaurant sales decreased to 26.8% during the first quarter of
1997 from 27.9% in the first quarter of 1996 primarily due to an
increase in comparable store sales and more effective utilization
of hourly employees.
Selling, general and administrative expenses as a percentage
of revenues increased to 15.0% in the first quarter of 1997 from
14.6% in the comparable period of 1996 primarily due to start-up
costs related to the outsourcing and evaluation of a toll-free
birthday reservation system and management development expenses
incurred in the first quarter of 1997.
Depreciation and amortization expenses as a percentage of
revenues declined to 6.9% from 7.5% primarily due to the increase in
comparable store sales, a change effected in the first quarter of 1997
in the estimated useful lives of certain fixed assets and the acquisition
of restaurants in 1996 with lower depreciation expense than existing
restaurants. Depreciation expense was reduced approximately $542,000 in
the first quarter of 1997 due to the change in the estimated useful
lives of certain fixed assets based on a review of historical asset
utilization.
Page 7
Interest expense decreased to approximately $690,000 in the
first quarter of 1997 from $891,000 in the first quarter of 1996
due primarily to a decrease in outstanding debt since the first
quarter of 1996.
Other operating expenses decreased as a percentage of revenues
to 16.7% in the first quarter of 1997 from 17.8% in the first
quarter of 1996 primarily due to the increase in comparable store
sales and the fact that a significant portion of operating costs
are fixed.
Net Income
----------
The Company had net income of $7.9 million in the first
quarter of 1997 compared to $5.2 million in the first quarter of
1996 due to the changes in revenues and expenses discussed above.
The Company's primary and fully diluted earnings per share was $.42
per share in the first quarter of 1997 compared to $.28 per share
in the first quarter of 1996.
Financial Condition, Liquidity and Capital Resources
Cash provided by operations increased to $23.6 million in the
first three months of 1997 from $18.0 million in the comparable
period of 1996. Cash outflows from investing and financing
activities for the first three months of 1997 were $10.1 million
and $6.0 million, respectively. The Company's primary requirements
for cash relate to planned capital expenditures and debt service.
The Company expects that it will satisfy such requirements from
cash provided by operations and, if necessary, funds available
under its line of credit.
The Company remodeled 15 restaurants in the first three months
of 1997 and 126, 87 and 10 restaurants in 1996, 1995 and 1994,
respectively under a repositioning program. The Company
anticipates completing its repositioning program by remodeling its
remaining seven restaurants in the second quarter. Expenditures
relating to the repositioning program have been financed primarily
by cash flow from operations and borrowings under the Company's
line of credit.
The Company plans to open approximately six new stores
in 1997 and 12 to 14 new stores in 1998. The Company currently
anticipates its cost of opening such new stores to average
approximately $1.3 to $1.4 million per store. In addition to such new
store openings, the Company plans to expand 10 to 15 existing
stores in 1997 by an average of 1,000 to 4,000 square feet per
store. The Company also anticipates adding new game packages to as
many as 100 stores in 1997 at an average cost of approximately
$150,000 per store. As of March 28, 1997, the Company opened one
new restaurant, expanded two restaurants and added new game
packages to 21 restaurants. The Company currently estimates that
capital expenditures in 1997, including expenditures for the
remodeling of existing stores, new store openings, existing store
expansions and equipment investments, will be approximately $40 to
$50 million. The Company plans to finance these expenditures
through cash flow from operations and, if necessary, borrowings
under the Company's line of credit.
The Company's total credit facility of $43 million consists of
$28 million in term notes and a $15 million line of credit. Term
notes totaling $18 million provide annual interest of 10.02%
maturing in 2001 and term notes totaling $10 million provide annual
interest equal to LIBOR plus 3.5% maturing in 2000. Interest under
the $15 million line of credit is dependent on earnings and debt
levels of the Company and ranges from prime plus 0% to .5% or, at
the Company's option, LIBOR plus 2%to 3%. Currently, any
borrowings under this line of credit would be at prime plus 0% or
LIBOR plus 2%. As of March 28, 1997, there were no borrowings
under the line of credit. The Company is required to comply with
certain financial ratio tests during the terms of the loan
agreements.
Page 8
The Company believes it will realize substantial benefit from
utilization of approximately $33 million in net operating loss
carryforwards to reduce its federal income tax liability. Such net
operating loss carryforwards expire from years 1999 through 2002.
Although the use of such carryforwards could, under certain
circumstances, be limited, the Company is presently unaware of the
occurrence of any event which would result in the imposition of
such limitation. The Company has adopted an amendment to its
Restated Articles of Incorporation which is intended to prevent
changes in ownership of its common stock that would cause such
limitation. In addition, the Company has investment tax credit,
job tax credit and alternative minimum tax credit carryforwards of
approximately $8 million of which $5.8 million expires from years
1997 through 2008. Tax credit carryforwards can be utilized by the
Company only after all net operating loss carryforwards have been
realized. If the improvement in the Company's results of operations
does not continue, a portion of the net operating loss and tax
credit carryforwards could expire prior to utilization resulting in
a charge against income. Taxable income for the five years ended
December 27, 1996 was approximately $66 million. Based on current
results of repositioned restaurants, the Company currently projects
future taxable income levels sufficient to realize its net
operating loss and tax credit carryforwards prior to their
expiration after considering an allowance of $1.1 million for the
estimated expiration of tax credit carryforwards in 1997. However,
there can be no assurance that the levels of taxable income will be
sufficient to realize these benefits.
Page 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time the Company is involved in litigation, most of
which is incidental to its business. In the Company's opinion, no litigation
in which the Company currently is a party is likely to have a material
adverse effect on the Company's results of operations, financial condition
or cash flows.
Item 2. Changes in Securities.
None to report during quarter for which this report is filed.
Item 3. Defaults Upon Senior Securities.
None to report during quarter for which this report is filed.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during
the first quarter of 1997.
Item 5. Other Information.
None to report during quarter for which this report is filed.
Item 6. Exhibits and Reports on Form 8-K.
EXHIBIT INDEX
---------------
a) Exhibits
Exhibit
Number Description
------- -----------
10(a) Amendment No. 2 to the Amended and
Restated Employment Agreement, March
3, 1997, between Richard M. Frank and
the Company.
10(b) Modification Agreement (to the Loan
Agreement dated January 18, 1996) in
the stated amount of $2,000,000,
dated February 21, 1997, between Bank
One, Texas, N.A. and the Company.
(b) Reports on Form 8-K
The Company filed one Form 8-K and one Form 8-K/A dated March
10, 1997 and March 19, 1997, respectively. Included in such
Form 8-K's was the announcement that the Company had entered
into new employment agreements with Richard M. Frank, the
Company's Chief Executive Officer, and Michael H. Magusiak, the
Company's President, dated March 3, 1997 and January 3, 1997,
respectively. Also, included in such Form 8-K's was the
announcement that the Company had filed a Registration Statement
on Form S-3 (Registration No. 333-22229) with the Securities and
Exchange Commission relating to an offering of shares of its
common stock, par value $.10 per share, owned by The Hallwood
Group Incorporated and its affiliates. In connection with the
sale of the shares by Hallwood, the Company announced that it
anticipated that Charles A. Crocco, Jr., Anthony J. Gumbinner,
Robert L. Lynch, J. Thomas Talbot and Brian M. Troup, each of
whom is affiliated with Hallwood, would resign from the
Company's Board of Directors upon the closing of the offering.
Such directors did resign effective March 26, 1997.
Page 10
SIGNATURES
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.
SHOWBIZ PIZZA TIME, INC.
Dated: May 9, 1997 By: /s/ Larry G. Page
---------------------
Larry G. Page
Executive Vice President
and Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Description Page No.
- ------- ----------- --------
10(a) Amendment No. 2 to the Amended and Restated Employment
Agreement, March 3, 1997, between Richard M. Frank and
the Company.
10(b) Modification Agreement (to the Loan Agreement dated
January 18, 1996) in the stated amount of $2,000,000.,
dated February 21, 1997, between Bank One, Texas, N.A.
and the Company.
Exhibit 10(a)
AMENDMENT NO. 2 TO THE
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
BY AND BETWEEN RICHARD M. FRANK AND
SHOWBIZ PIZZA TIME, INC.
This Amendment No. 2 (the "Amendment") is executed as
of this 3rd day of March, 1997, by and between Richard M. Frank
("Employee") and ShowBiz Pizza Time, Inc., a Kansas corporation
("Employer").
RECITALS:
WHEREAS, on April 14, 1993, Employee and Employer entered
into that certain Amended and Restated Employment Agreement,
which was effective as of January 2, 1993 (the "Agreement"),
whereby the Employee agreed to serve as Chairman of the Board and
Chief Executive Officer of the Employer through the last day of
the fiscal year of the Employer ending on or about December 31,
1997; and
WHEREAS, Employer desires to amend said Agreement to
increase the automobile allowance for Employee:
NOW, THEREFORE, the Agreement is hereby amended in the
following respects:
Paragraph 8 is hereby amended to read as follows:
"8. Automobile. Employer shall pay to
Employee the sum of One thousand Three
Hundred Dollars ($1,300.00) per month
(subject to adjustment from time to time in
direct proportion to generally applicable
adjustment by the Company to its automobile
allowances) to reimburse Employee for the use
of Employee's automobile in the performance
of his duties under this Agreement and
Employer shall further pay directly or by
reimbursement to Employee (as Employer and
Employee may from time to time agree) the
premiums upon a policy of collision and
liability insurance covering such automobile.
All other costs and expenses incurred in the
operation and maintenance of Employee's
automobile, including but not limited to the
cost of all fuel, oil, maintenance and
repairs, shall be paid solely by Employee."
IN WITNESS WHEREOF, the parties have executed this Amendment
No. 2 effective as of January 1, 1997.
EMPLOYER:
--------
SHOWBIZ PIZZA TIME, INC.
By: /s/ Michael H. Magusiak
---------------------------
EMPLOYEE:
---------
By: /s/ Richard M. Frank
----------------------------
Exhibit 10(b)
MODIFICATION AGREEMENT
-----------------------
Date: February 21, 1997
Bank: BANK ONE, TEXAS, N.A.,
a national banking association
Bank's Address: 1717 Main Street
Third Floor
Dallas, Texas 75201
Borrower: SHOWBIZ PIZZA TIME, INC.,
a Kansas corporation
Borrower's Address: 4441 W. Airport Freeway
Irving, Texas 75062
R E C I T A L S:
A. Bank and Borrower entered into a loan evidenced by the
following documents, inter alia,:
1. Loan Agreement dated January 18, 1996 by and between Borrower
and Bank.
2. Promissory Note dated January 18. 1996 in the original
principal amount of $2,000,000 signed by Borrower and payable
to Bank.
3. Deed of Trust, Security Agreement and Assignment of Rents and
Leases dated January 18, 1996 signed by Borrower filed at
Volume 96043, Page 2030, Deed of Trust Records, Dallas County,
Texas.
4. Real Estate Mortgage, Security Agreement, Assignment of Leases
and Rents and Fixture Filing dated January 18, 1996 by and
between Borrower, Debtor and Bank, filed under Document No.
960011290, Real Estate Records of Allen County, Indiana.
5. Mortgage and Security Agreement dated January 18, 1996 by and
between Borrower and Bank, filed at Book 8327, Page 464, Real
Estate Records of Duval County, Florida.
6. Mortgage and Security Agreement dated January 18, 1996 by and
between Borrower and Bank, filed at Book 3958, Page 0313, Real
Estate Records of Escambia County, Florida.
7. Security Agreement dated January 18, 1996 by and between
Borrower and Bank.
B. Bank is the owner and holder of the Notes, Loan Agreement, and
other Loan Documents.
C. Borrower has requested that Bank modify Section 3 of the Loan
Agreement to eliminate a "dragnet" or "mother hubbard" clause
and Bank is willing to do so on the terms set out in this
Agreement.
IT IS AGREED:
1. Definitions. The definition of terms used in the Loan
Agreement shall have the same meanings in this Agreement unless
otherwise defined. The term "Loan Documents" in Section 1 of the
Loan Agreement shall be amended to include this Agreement.
2. Modification. The first paragraph of Section 3 of the
Loan Agreement is modified by deleting the phrase "... and any and
all other indebtedness or obligations from time to time owing by
Borrower to Bank...". The first paragraph of Section 3 is restated
as follows:
3. Collateral. As collateral and security for the
indebtedness evidenced by the Notes, Borrower shall grant, and
hereby grants, to Bank, its successors and assigns, a first and
prior lien and security interest in and to the property described
hereinbelow, together with any and all PRODUCTS AND PROCEEDS
thereof (the "Collateral"):
3. Acknowledgment of Indebtedness. Borrower acknowledges
that as of the date of this Agreement, it is well and truly
indebted to Bank pursuant to the terms of the Notes, as modified
hereby. Borrower hereby promises to pay to Bank the indebtedness
evidenced by the Notes in accordance with the terms thereof, as
modified hereby, and shall observe, comply with, and perform all of
the obligations, terms, and conditions under or in connection with
the Notes and all other Loan Documents.
4. Ratification of Loan Documents. Except as provided
herein, the terms and provisions of the Notes and the other Loan
Documents shall remain unchanged and shall remain in full force and
effect. Any modification herein of the Notes, Loan Agreement and
the other Loan Documents shall in no way impair the security of the
Loan Documents for the payment of the Notes. The Loan Agreement,
the Notes and the other Loan Documents as modified and amended
hereby are hereby ratified and confirmed in all respects.
5. No Waiver. Borrower acknowledges that the execution of
this Agreement by Bank is not intended nor shall it be construed as
(i) an actual or implied waiver of any default under the Notes or
any other Loan Document or (ii) an actual or implied waiver of any
condition or obligation imposed upon Borrower pursuant to the Notes
or any other Loan Document, except to the extent expressly set
forth herein.
6. Expenses. Contemporaneously with the execution and
delivery hereof, Borrower shall pay, or cause to be paid, all costs
and expenses incident to the preparation hereof and the
consummation of the transactions specified herein, including
without limitation fees and expenses of legal counsel to Bank.
7. Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if all parties
hereto had signed the same document. All such counterparts shall
be construed together and shall constitute one instrument; but in
making proof hereof it shall only be necessary to produce one such
counterpart.
8. Benefit. The terms and provisions hereof shall be
binding upon and inure to the benefit of the parties hereto, their
heirs, representatives, successors and permitted assigns.
9. Authority. Borrower hereby represents and warrants to
Bank as follows: (a) Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Kansas and all other states where it is doing business, and has
all requisite power and authority to execute and deliver this
Agreement; and (b) the execution, delivery, and performance of this
Agreement by Borrower have been duly authorized by all necessary
action by Borrower, and constitute legal, valid and binding
obligations of Borrower, enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors'
rights and except to the extent specific remedies may generally be
limited by equitable principles.
10. Entire Agreement. THIS AGREEMENT, THE NOTES AND THE
WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, this Agreement is executed effective as of
the date first above written.
BANK ONE, TEXAS, N,A.
By: /s/ Paul C. Koch
--------------------------
Name: Paul C. Koch
Title: Vice President
SHOWBIZ PIZZA TIME, INC.
By: /s/ Larry G. Page
--------------------------
Name: Larry G. Page
Title: Executive Vice President,
Chief Financial Officer and Treasurer
STATE OF TEXAS &
&
COUNTY OF DALLAS &
This instrument was acknowledged before me on February 21,
1997, by Paul C. Koch, Vice President of BANK ONE, TEXAS, N.A., a
national banking association, on behalf of said national
association.
/s/ Ellen M. Brown
---------------------
Notary Public, State of Texas
Ellen M. Brown
----------------------
(Please Print Name of Notary)
My Commission expires:
5/7/2000
- ---------------------
STATE OF TEXAS &
&
COUNTY OF DALLAS &
This instrument was acknowledged before me on February 21,
1997, by Larry G. Page, Executive Vice President, Chief Financial
Officer and Treasurer of SHOWBIZ PIZZA TIME, INC., a Kansas
corporation, on behalf of said corporation.
/s/ Angie Ybarra
---------------------
Notary Public, State of Texas
Angie Ybarra
---------------------
(Please Print Name of Notary)
My Commission expires:
3-21-2000
- ---------------------
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-28-1996
[PERIOD-END] MAR-28-1997
[CASH] 10,966
[SECURITIES] 0
[RECEIVABLES] 2,979
[ALLOWANCES] 3,864
[INVENTORY] 3,347
[CURRENT-ASSETS] 36,612
[PP&E] 274,559
[DEPRECIATION] 106,000
[TOTAL-ASSETS] 224,152
[CURRENT-LIABILITIES] 39,374
[BONDS] 26,402
[COMMON] 2,164
[PREFERRED-MANDATORY] 2,133
[PREFERRED] 0
[OTHER-SE] 149,149
[TOTAL-LIABILITY-AND-EQUITY] 224,152
[SALES] 90,280
[TOTAL-REVENUES] 91,594
[CGS] 42,194
[TOTAL-COSTS] 78,261
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 690
[INCOME-PRETAX] 13,333
[INCOME-TAX] 5,400
[INCOME-CONTINUING] 7,933
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 7,933
[EPS-PRIMARY] .42
[EPS-DILUTED] .42
</TABLE>
