<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 22, 1999
- --------------------------------------------------------------------------------
CHART HOUSE ENTERPRISES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-9684 33-0147725
- --------------------------------------------------------------------------------
(State of other jurisdiction of (Commission (I.R.S. Employer
Incorporation or organization) File Number) Identification No.)
640 North LaSalle, Suite 295, Chicago, Illinois 60610
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (312) 266-1100
- --------------------------------------------------------------------------------
115 South Acacia Avenue, Solana Beach, California 92075-1803
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
Chart House Enterprises, Inc. (the "Company") hereby amends Item 7 of its
Quarterly Report on Form 10-Q for the period ended March 29, 1999, filed with
the Securities and Exchange Commission on May 5, 1999 and files Exhibits 23.1,
99.1, and 99.2. Item 7, as amended, appears below in its entirety. The Asset
Purchase Agreement, filed as an exhibit to Form 10-K for the fiscal year ended
December 28, 1998, was executed in all material respects as originally filed.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
On April 22, 1999 the Company completed the purchase of the Angelo &
Maxie's Steakhouse restaurant business located in New York, New York from
Diamond Jim's Steakhouse, L.L.C., an unrelated third party. The acquisition was
accounted for under the purchase method of accounting. The purchase was funded
with cash in the amount of approximately $12 million representing the
acquisition of fixed assets and goodwill. Funding was provided from available
credit under the Company's revolving credit facility with BankBoston. The assets
purchased were previously used primarily for purposes of operating a restaurant
and the Company intends to continue to use them for the same purposes.
(a) Financial Statements of Businesses Acquired.
The financial statements of Diamond Jim's Steakhouse, L.L.C. required by
this item are filed as Exhibit 99.1 hereto and are incorporated herein by such
reference:
Financial Statements and Independent Auditors' Report for Diamond Jim's
Steakhouse, L.L.C. for the year ended December 31, 1998 and the fifty-two weeks
ended December 28, 1997.
Financial Statements for Diamond Jim's Steakhouse L.L.C. for the one month and
the three months ended March 31, 1999.
(b) Pro Forma Financial Information.
The pro forma financial information required by this item is filed as
Exhibit 99.2 hereto and is incorporated by such reference:
Unaudited Pro Forma Condensed Balance Sheet as of March 29, 1999.
Unaudited Pro Forma Condensed Income Statement for the Year Ended December 28,
1998.
Unaudited Pro Forma Condensed Income Statement for the Quarter Ended
March 29, 1999.
Notes to Unaudited Pro Forma Condensed Financial Statements.
(c) Exhibits.
Ex. 23.1 Consent of Independent Public Accountants.
Ex. 99.1 Audited Financial Statements, Unaudited Financial Statements.
Ex. 99.2 Unaudited Pro Forma Financial Information.
<PAGE>
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.
CHART HOUSE ENTERPRISES, INC. (Registrant)
Date: July 2, 1999 By: /s/ THOMAS J. WALTERS
--------------------------------
Thomas J. Walters
President and Chief Executive Officer
By: /s/ WILLIAM M. SULLIVAN
--------------------------------
William M. Sullivan
Executive Vice President and Chief
Financial Officer
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report on
Diamond Jim's Steakhouse, L.L.C. dated March 12, 1999 included in or made a part
of this Current Report on Form 8-K/A.
/s/ Joel Popkin & Company, P.C.
New York, New York
July 2, 1999
<PAGE>
EXHIBIT 99.1
DIAMOND JIM'S STEAKHOUSE, L.L.C.
--------------------------------
FINANCIAL STATEMENTS AND
------------------------
INDEPENDENT AUDITORS' REPORT
----------------------------
YEAR ENDED DECEMBER 31, 1998 AND
--------------------------------
FIFTY TWO WEEKS ENDED DECEMBER 28, 1997
---------------------------------------
<PAGE>
DIAMOND JIM'S STEAKHOUSE, L.L.C.
--------------------------------
FINANCIAL STATEMENTS AND
------------------------
INDEPENDENT AUDITORS' REPORT
----------------------------
YEAR ENDED DECEMBER 31, 1998 AND
--------------------------------
FIFTY TWO WEEKS ENDED DECEMBER 28, 1997
---------------------------------------
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report 1
Financial Statements
Balance Sheets 2
Statements of Income and Members' Capital 3
Statements of Cash Flows 4
Notes to Financial Statements 5-8
</TABLE>
<PAGE>
[LETTERHEAD OF JOEL POPKIN & COMPANY P.C]
INDEPENDENT AUDITORS' REPORT
----------------------------
To The Members
Diamond Jim's Steakhouse, L.L.C.
New York, New York
We have audited the accompanying balance sheets of Diamond Jim's
Steakhouse, L.L.C. as of December 31, 1998 and December 28, 1997, and the
related statements of income, members' capital, and cash flows for the year
ended December 31, 1998 and fifty two weeks ended December 28, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurances about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion the financial statements referred to above presents fairly,
in all material respects, the financial position of Diamond Jim's Steakhouse,
L.L.C. as of December 31, 1998 and December 28, 1997 and the results of their
operations and their cash flows for the year ended December 31, 1998 and fifty
two weeks ended December 28, 1997 in conformity with generally accepted
accounting principles.
/s/ Joel Popkin & Company, P.C.
March 12, 1999
<PAGE>
DIAMOND JIM'S STEAKHOUSE, L.L.C.
BALANCE SHEETS
=================================
ASSETS
------
<TABLE>
<CAPTION>
December 31, December 28,
1998 1997
------------ ------------
<S> <C> <C>
Current assets
Cash (Note 1d) $ 369,083 $ 359,432
Accounts receivable 113,152 118,609
Inventory (Note 1b) 159,139 148,888
---------- ----------
Total current assets 641,374 626,929
Property and equipment, at cost, less
accumulated depreciation and
amortization of $383,021 and $174,700
(Notes 1c and 2) 938,078 1,144,854
Lease buyout costs, net of accumulated
amortization of $126,014 and $78,759
(Note 1c) 200,836 248,091
Other assets 2,870 6,350
---------- ----------
Total assets $1,783,158 $2,026,224
========== ==========
LIABILITIES AND MEMBERS' CAPITAL
--------------------------------
Current liabilities
Accounts payable $ 246,897 $ 194,477
Accrued expenses 111,332 232,157
Income taxes payable (Note 4) 26,400 29,360
Distributions payable to members 210,000 180,000
Sales tax payable 80,863 67,794
Gift certificates payable 22,596 10,955
---------- ----------
Total current liabilities 698,088 714,743
Commitments and contingencies (Note 5)
Members' capital 1,085,070 1,311,481
---------- ----------
Total liabilities and
members' capital $1,783,158 $2,026,224
========== ==========
</TABLE>
See independent auditors' report and
notes to financial statements.
-2-
<PAGE>
DIAMOND JIM'S STEAKHOUSE, L.L.C.
STATEMENTS OF INCOME AND MEMBERS' CAPITAL
=========================================
<TABLE>
<CAPTION>
Fifty Two Weeks
Year Ended Ended
December 31, December 28,
1998 1997
--------------- -------------
<S> <C> <C>
Net sales $ 9,778,875 $ 9,193,699
------------ ------------
Cost of sales 3,730,748 3,523,245
------------ ------------
Gross profit 6,048,127 5,670,454
------------ ------------
Operating expenses
Payroll and benefits 2,455,122 2,258,638
Restaurant and general overhead 1,826,191 1,437,733
Occupancy costs 381,272 358,232
------------ ------------
Total operating expenses 4,662,585 4,054,603
------------ ------------
Income from operations 1,385,542 1,615,851
New York City Unincorporated Business
Tax (Note 4c) 64,552 62,160
------------ ------------
Income before cumulative effect of a
change in accounting principle 1,320,990 1,553,691
Cumulative effect on prior years of
changing to a different depreciation
method net of taxes of $2,000
(Note 7) 47,401 -
------------ ------------
Net income 1,273,589 1,553,691
Members' capital - beginning (Note 6) 1,311,481 1,057,790
Distributions to members ( 1,500,000) ( 1,300,000)
------------ ------------
Members' capital - end $ 1,085,070 $ 1,311,481
============ ============
</TABLE>
See independent auditors' report and
notes to financial statements.
-3-
<PAGE>
DIAMOND JIM'S STEAKHOUSE, L.L.C.
STATEMENTS OF CASH FLOWS
=================================
<TABLE>
<CAPTION>
Fifty Two Weeks
Year Ended Ended
December 31, December 28,
1998 1997
------------- -------------
<S> <C> <C>
Operating activities
Net income $ 1,273,589 $ 1,553,691
Adjustments to reconcile net income
to net cash provided by operating
activities
Cumulative effect of change in
accounting for depreciation 49,401 -
Depreciation and amortization 209,655 197,135
(Increase) decrease in
Accounts receivable 5,457 (108,513)
Inventory (10,251) (58,013)
Other current assets - 10,671
Increase (decrease) in
Accounts payable 52,420 (627,621)
Accrued expenses (120,825) 197,602
Distributions payable to members 30,000 60,000
Income taxes payable (2,960) 29,360
Sales tax payable 13,069 7,010
Gift certificate payable 11,641 10,955
------------ ------------
Total adjustments 237,607 (281,414)
------------ ------------
Net cash provided by operating
activities 1,511,196 1,272,277
------------ ------------
Investing activities
Capital expenditures (1,545) (44,928)
------------ ------------
Net cash used in investing activities (1,545) (44,928)
------------ ------------
Financing activities
Distributions to members (1,500,000) (1,300,000)
------------ ------------
Net cash used in financing activities (1,500,000) (1,300,000)
------------ ------------
Net increase (decrease) in cash 9,651 (72,651)
Cash - beginning 359,432 432,083
------------ ------------
Cash - end $ 369,083 $ 359,432
============ ============
Supplemental information
- ------------------------
Income taxes paid $ 32,712 $ 40,220
============ ============
</TABLE>
See independent auditors' report and
notes to financial statements.
-4-
<PAGE>
DIAMOND JIM'S STEAKHOUSE, L.L.C.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND DECEMBER 28, 1997
=======================================
Note 1 - Summary of Significant Accounting Policies
------------------------------------------
(a) Business
--------
The Company, a limited liability company opened a restaurant and
cigar bar in New York City on October 31, 1996. The restaurant and
cigar bar does business under the name of Angelo and Maxie's
Steakhouse.
The Company switched from reporting on a 52-53 week basis to a
calendar year beginning in 1998. There has been no material effect
on the financial statements due to this change.
(b) Inventory
---------
Inventories of food, liquor and other beverages are stated at the
lower of cost (first-in, first-out method) or market.
(c) Depreciation and Amortization
-----------------------------
For financial statement purposes, property and equipment are being
depreciated using the straight line method over the estimated
useful lives of the assets, ranging from 5 to 7 years. Leasehold
improvements are being amortized over the shorter of the useful
life of the improvement or the remaining term of the lease.
Maintenance and repairs are charged to operations as incurred.
Additions and betterments are capitalized. Upon retirement or
disposal of fixed assets, the cost and accumulated depreciation are
eliminated.
Lease buyout costs are being amortized on a straight line basis
over the remaining term of the lease.
(d) Concentration of Credit Risk
----------------------------
Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of temporary cash
investments. The Company places its temporary cash investments
with high quality financial institutions.
-5-
<PAGE>
DIAMOND JIM'S STEAKHOUSE, L.L.C.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND DECEMBER 28,1997
======================================
Note 1 - Summary of Significant Accounting Policies (cont'd)
------------------------------------------
(e) Income Taxes
------------
The Company has elected to be treated as a partnership for federal
and state income tax purposes. A partnership is not a taxing
entity for federal or state income tax purposes. Accordingly, no
federal or state income tax has been recorded. All income or
losses will be reported on the individual members' income tax
returns. However, the partnership is responsible for the New York
City Unincorporated Business Tax which has been reflected in these
financial statements.
(f) Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Note 2 - Property and Equipment
----------------------
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Equipment $ 305,300 $ 303,752
Furniture and fixtures 205,646 205,646
Computer equipment 32,361 32,361
Leasehold improvements 777,795 777,795
---------- ----------
1,321,102 1,319,554
Less: accumulated depreciation 383,024 174,700
---------- ----------
Total $ 938,078 $1,144,854
========== ==========
</TABLE>
Depreciation expense of property and equipment charged to operations
was $158,923 in 1998 and $145,821 in 1997.
Note 3 - Related Party Transactions
--------------------------
Pursuant to an operating agreement the Company pays management fees and
guaranteed payments to certain members and/or companies affiliated with
these members. Total fees paid were $330,919 in 1998 and $269,170 in
1997.
-6-
<PAGE>
DIAMOND JIM'S STEAKHOUSE, L.L.C.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND DECEMBER 28, 1997
=======================================
Note 4 - Income Tax Matters
------------------
(a) Deferred Taxes
--------------
The deferred tax liability consists of the differences between
accounting income and taxable income primarily relating to the
capitalization of lease-buyout costs for financial statement
purposes.
(b) Income Tax Payable
------------------
Income taxes payable consist of the following:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
New York City Unincorporated $ 20,300 $19,760
Business Tax payable
Deferred taxes payable 6,100 9,600
-------- -------
Total $ 26,400 $29,360
======== =======
</TABLE>
(c) Income Tax Expense
------------------
The components of the provision for New York City Unincorporated
Business Tax consists of the following:
<TABLE>
<CAPTION> 1998 1997
-------- -------
<S> <C> <C>
Current $ 66,052 $52,560
Deferred (3,500) 9,600
-------- -------
Total $ 62,552 $62,160
======== =======
</TABLE>
Note 5 - Commitments and Contingencies
-----------------------------
(a) Lease Commitments
-----------------
The Company conducts it operations from a facility pursuant to an
operating lease expiring May 31, 2008. Among other things the
lease provides for escalations based upon increases in real estate
taxes over a base year. Rent expense during 1998 and 1997 was
$366,927 and $342,857 respectively. At December 31, 1998, future
minimum obligations under the lease are as follows:
<TABLE>
<S> <C>
1999 $ 324,300
2000 324,300
2001 324,300
2002 324,300
2003 348,623
Thereafter 1,516,103
----------
$3,161,926
==========
</TABLE>
-7-
<PAGE>
DIAMOND JIM'S STEAKHOUSE, L.L.C.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND DECEMBER 28, 1997
=======================================
Note 5 - Commitments and Contingencies (Cont'd)
-----------------------------
(b) Sales Tax Audit
---------------
The Company is currently undergoing a New York State sales tax
audit for the period from inception through May 31, 1998.
Management does not anticipate a material adverse effect on the
financial statements due to this audit.
(c) Legal Actions
-------------
The Company is involved in various complaints and charges in the
normal course of business. The Company intends to vigorously
defend against these actions. The Company believes that is has
strong defenses, and that there is no basis for the claims alleged
in the complaints. In the opinion of management these actions
should not ultimately have a material adverse effect on the
financial position or results of operations.
Note 6 - Correction of Errors
--------------------
Members' capital at January 1, 1997 has been restated to reflect an
error which relates to the understatement of income as reported in the
Company's previously issued 1996 compiled financial statements. Lease
buyout costs were previously expensed as incurred instead of
capitalized and amortized over the life of the lease. The effect on
income would have been to increase 1996 income by approximately
$71,921.
The previously issued 1997 compiled financial statements showed net
income of $1,513,687. This has been corrected to reflect additional
income of $43,476 due to the lease buyout adjustment and $3,472 of net
additional expenses relating to various other matters.
Note 7 - Change in Depreciation Method
-----------------------------
Depreciation and amortization relating to property and equipment has
been computed by the straight line method in 1998. Prior to 1998
depreciation and amortization was recorded by various accelerated
methods. The straight line method of depreciation was adopted to
better reflect the estimated useful lives of the assets and has been
applied retroactively to acquisitions and improvements of prior years.
The adjustment of $49,401 under the new method is included in 1998.
-8-
<PAGE>
DIAMOND JIM'S STEAKHOUSE, L.L.C.
d/b/a ANGELO AND MAXIE'S STEAKHOUSE
BALANCE SHEET
MARCH 31, 1999
--------------
<TABLE>
<S> <C>
ASSETS
------
Current Assets:
Cash $ 262,261
Accounts Receivable 88,959
Inventory 133,582
Prepaid Expenses 10,146
-------------
Total current assets 494,948
Fixed Assets:
Equipment and improvements 531,307
Less: accumulated depreciation (265,905)
-------------
265,402
Other Assets:
Start up and intangible costs 779,795
Less: accumulated amortization (48,198)
-------------
731,597
-------------
Total Assets $ 1,491,947
=============
LIABILITIES AND MEMBERS' EQUITY
-------------------------------
Current Liabilities:
Accounts payable $ 209,781
Accrued payroll and other expenses 85,011
Partners' distributions payable 100,000
Sales tax payable 63,889
Gift certificates payable 20,729
-------------
Total current liabilities 479,410
Members' Equity 1,012,537
-------------
Total Liabilities and Members' Equity $ 1,491,947
=============
</TABLE>
<PAGE>
DIAMOND JIM'S STEAKHOUSE, L.L.C.
d/b/a ANGELO AND MAXIE'S STEAKHOUSE
STATEMENT OF MEMBERS' EQUITY
<TABLE>
<CAPTION>
PROFIT FOR
3/31/98 1/1/99 3 MONTHS 3/31/99
% INTEREST MEMBER BALANCE ENDED 3/31/99 DISTRIBUTIONS BALANCE
---------- ------ ---------- ------------- ------------- ----------
<C> <S> <C> <C> <C> <C>
40.000 Marc Packer $ 428,738 $ 96,278 $ 120,000 $ 405,016
13.000 Richard Wolf 116,936 31,290 39,000 109,226
11.675 Stanley Shor of Florida, Inc. 110,545 28,101 35,025 103,621
6.000 Todd Semon 80,053 14,442 18,000 76,495
6.000 William and Sandra Dantchik 80,053 14,442 18,000 76,495
6.000 Victor Kassner 80,053 14,442 18,000 76,495
5.000 Kim Kurlanchik 44,509 12,035 15,000 41,544
5.000 Matthew Lavey 44,509 12,035 15,000 41,544
3.000 Alvin and Pearl Wolf 40,028 7,221 9,000 38,249
3.000 Matthew Chanin 40,028 7,221 9,000 38,249
1.000 Barry Corwin 3,317 2,407 3,000 2,724
0.325 Howard Levine 3,074 782 975 2,881
-------- ---------- ----------- ----------- ----------
100.000 $1,071,843 $ 240,694 $ 300,000 $1,012,537
======== ========== =========== =========== ==========
</TABLE>
<PAGE>
DIAMOND JIM'S STEAKHOUSE, L.L.C.
d/b/a ANGELO AND MAXIE'S STEAKHOUSE
COMBINED STATEMENT OF INCOME
----------------------------
<TABLE>
<CAPTION>
One Month Ended Three Months Ended
March 31, 1999 March 31, 1999
---------------- ------------------
<S> <C> <C>
Net income - restaurant $ 97,966 $ 270,689
Net income - cigar store 1,295 918
--------------- -----------------
Total operating income 99,261 271,607
Interest income 325 1,137
Non-operating expenses (7,250) (21,750)
--------------- -----------------
Net other income and expenses (6,925) (20,613)
--------------- -----------------
Net income before taxes 92,336 250,994
Taxes on income 4,000 10,300
--------------- -----------------
Net income $ 88,336 $ 240,694
=============== =================
</TABLE>
<PAGE>
EXHIBIT 99.2
CHART HOUSE ENTERPRISES, INC. AND SUBSIDIARIES
INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The unaudited pro forma condensed balance sheet as of March 29, 1999 gives
effect to the acquisition had it occurred on March 29,1999. The unaudited pro
forma condensed income statements for the quarter ended March 29,1999 and the
year ended December 28, 1998 give effect to the acquisition had it occurred at
the beginning of these respective periods.
The unaudited pro forma condensed financial statements have been prepared
utilizing
. Diamond Jim's Steakhouse, L.L.C. audited financial statements as of and for
the year ended December 31, 1998
. the Company's audited financial statements as of and for the year ended
December 28, 1998
. Diamond Jim's Steakhouse, L.L.C. unaudited financial statements for the
period ended March 31, 1999
. the Company's unaudited financial statements for the period ended March 29,
1999
The Company has made the assumption that Diamond Jim's Steakhouse, L.L.C.'s
financial statements would not have been significantly different had they been
prepared for the year ended December 28, 1998 or for the period ended March 29,
1999.
These unaudited pro forma condensed financial statements may not be
indicative of the results that actually would have occurred if the acquisition
had taken place at the beginning of the periods presented, or of the future
financial position or future results of operations of the Company.
The unaudited pro forma condensed financial statements should be read in
conjunction with the historical financial statements and related notes of the
Company.
<PAGE>
CHART HOUSE ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA FINANCIAL INFORMATION
INCOME STATEMENTS in 000's
<TABLE>
<CAPTION>
Chart House Diamond Jim's
Enterprises, Inc. Steakhouse, L.L.C.
Historical Historical Pro Forma Pro Forma
12/28/98 12/31/98 Adjustments Results
<S> <C> <C> <C> <C>
Revenue $ 145,188 $ 9,779 $ 154,967
----------------------------------------------------------------------
Costs and Expenses:
Cost of sales 47,388 3,731 51,119
Payroll and related taxes 42,078 2,363 44,441
Other operating 34,955 1,545 36,500
Depreciation/Amortization 6,601 253 675 a 7,529
Gain on sale of assets (1,534) - (1,534)
SG&A 14,353 613 (494) b 14,472
Interest expense, net 776 - 858 c 1,634
----------------------------------------------------------------------
Income before taxes 571 1,274 (1,039) 806
Income tax - - 94 d 94
----------------------------------------------------------------------
Net income $ 571 $ 1,274 $ (1,133) $ 712
======================================================================
Earnings per share - basic and diluted $ 0.05 e $ 0.06
================= =========
</TABLE>
<TABLE>
<CAPTION>
Chart House Diamond Jim's
Enterprises, Inc. Steakhouse, L.L.C.
Historical Historical Pro Forma Pro Forma
3/29/99 3/31/99 Adjustments Results
<S> <C> <C> <C> <C>
Revenue $ 34,631 $ 2,261 $ 36,892
----------------------------------------------------------------------
Costs and Expenses:
Cost of sales 11,099 856 11,955
Payroll and related taxes 10,406 587 10,993
Other operating 7,904 365 8,269
Depreciation/Amortization 1,837 28 169 a 2,034
SG&A 2,986 185 (138) b 3,033
Interest expense, net 275 (1) 212 c 486
----------------------------------------------------------------------
Income before taxes 124 241 (243) 122
Income tax - - - d -
----------------------------------------------------------------------
Net income $ 124 $ 241 $ (243) $ 122
======================================================================
Earnings per share - basic and diluted $ 0.01 e $ 0.01
================= =========
</TABLE>
<PAGE>
CHART HOUSE ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA FINANCIAL INFORMATION
BALANCE SHEET in 000's
<TABLE>
<CAPTION>
Chart House Diamond Jim's
Enterprises, Inc. Steakhouse, L.L.C.
Historical Historical Pro Forma Pro Forma
3/29/99 3/31/99 Adjustments Results
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash $ 246 $ 262 $ (262) f $ 246
Accounts Receivable 2,636 89 (89) f 2,636
Inventories 1,933 134 - 2,067
Prepaid Expenses and Other Current Assets 388 10 - 398
Current Portion of Deferred Tax Asset 685 - 685
-----------------------------------------------------------------------
Current Assets 5,888 495 (351) f 6,032
Net Property and Equipment 66,632 265 772 g 67,669
Other Assets and Goodwill 16,725 732 10,285 h 27,742
-----------------------------------------------------------------------
Total Assets $ 89,245 $ 1,492 $ 10,706 $ 101,443
=======================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current Portion of Capital Lease Obligations 688 - - 688
Accounts Payable 3,234 210 (210) 3,234
Accrued Liabilities 12,595 269 1,655 i 14,519
-----------------------------------------------------------------------
Total Current Liabilities 16,517 479 1,445 18,441
Long-Term Obligations 12,850 - 10,274 j 23,124
Stockholders' Equity:
Common Stock 118 - - 118
Additional Paid-In Capital 61,103 - - 61,103
Retained Earnings (1,343) 1,013 (1,013) k (1,343)
-----------------------------------------------------------------------
Total Stockholders' Equity 59,878 1,013 (1,013) 59,878
Total Liabilities and Stockholders' Equity $ 89,245 $ 1,492 $ 10,706 $ 101,443
=======================================================================
</TABLE>
<PAGE>
CHART HOUSE ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA INFORMATION
a Reflects depreciation and amortization based on the allocated purchase
price of net assets acquired. Equipment is being depreciated over useful
lives of five to seven years. Leasehold improvements are being amortized
over 10 years, the term of the lease. Goodwill is being amortized over 20
years.
b Reflects elimination of professional fees, management fees and guaranteed
payments to partners of Diamond Jim's Steakhouse, L.L.C. The elimination of
redundant expenses was one of many catalysts influencing the decision to
acquire.
c Reflects interest expense for the amount of borrowings incurred to execute
the transaction. The calculation assumes the borrowings are outstanding for
the entire period. The Company's weighted borrowing rate under their
revolving credit agreement was 8.35% and 8.25% in 1998 and 1999,
respectively.
d The Company has significant net operating losses and tax credit
carryforwards that have resulted in no income tax expense for both periods
presented. This adjustment assumes the potential for income tax expense, at
a 40% blended rate, as a result of the acquired pretax income less the pro
forma adjustments to pretax income.
e There was no change in outstanding shares as a result of the acquisition.
f Reflects elimination of current assets not included in the acquisition.
g Diamond Jim's Steakhouse, L.L.C. changed its method of depreciation and
amortization of fixed assets from the straight line method to various
accelerated methods. The Company uses the straight line method for book
purposes. In order to adjust Diamond Jim's Steakhouse, L.L.C.'s historical
statements to properly reflect the Company's accounting method, a fair
value adjustment was made to fixed assets. The adjustment is based on the
cost of the assets recorded in the audited financial statements as of
December 31, 1998 less accumulated depreciation/amortization calculated on
a straight line basis, from the date placed in service until March 29,
1999. Useful life for equipment was five to seven years. Useful lives for
leasehold improvements were 39 years (the term of the lease held by Diamond
Jim's Steakhouse, L.L.C.). The impact of the the change in accounting
method on the historical income statement dated March 31, 1999 was not
material.
h Reflects the pro forma goodwill recorded calculated as the excess of
purchase price over net assets required plus costs of the transaction,
primarily financial advisory and legal fees. This adjustment also includes
the elimination of other assets not included in the acquisition. The
goodwill amount is subject to potential accrual and/or deferred tax
adjustments.
i Liabilities incurred in conjunction with the acquisition including deferred
payments to the previous owners, estimated contingent legal liabilities,
and unpaid costs of the transaction as noted in Note h.
j Reflects the Company's additional borrowings as a result of the
acquisition.
k Reflects the elimination of Diamond Jim's Steakhouse, L.L.C.'s equity
accounts.
