To Our Shareholders:
Please read this letter in conjunction with the attached report of Form 10-KSB
and Proxy Statement.
We continued to make significant progress in fiscal 1999 with improved
profitability as a result of implementation of our key initiatives for the year;
1) to increase our average check per customer, 2) to increase awareness through
higher levels of advertising and 3) to gain market penetration through
additional restaurants. We have made great strides over the last two years in
improving our restaurant operating margins and increasing our advertising
presence and overall awareness. Our primary goals now are to more clearly
define Good Times' position as the unique alternative to the larger
competitors and continue to build out the Colorado market. We have several
initiatives in place for fiscal 2000 that I anticipate will strengthen our
concept and market position as we continue to grow.
Fiscal 1999 revenues increased to $13,608,000 and systemwide sales increased to
$23,690,000. Comparable store sales for company-operated restaurants increased
10.7% from the prior year as a result of continued growth in the average
expenditure per customer, price increases and the significant increases from the
television advertising and introduction of onion rings in the first quarter.
Income from restaurant operations increased 34% to $2,700,000 from fiscal 1998
and our cash flow from restaurant operations exclusive of franchise revenue as
a percentage of net restaurant sales increased to 23.1% from 19.4% in the prior
year. Net income for the year improved to $58,000 from a net loss of ($226,000)
in fiscal 1998. This year's net income was reduced by an expense of $179,000
related to the condemnation of a development on which we operated a restaurant
and the forced relocation of that store to a new site.
Our continued operating margin improvement in 1999 was the result of the
increase in average sales per restaurant, an overall menu price increase of
approximately 6% and additional labor efficiencies gained through equipment and
training. We anticipate very small increases in our average check this next
year with our core strategies focussed on building customer traffic. During
the year, we were able to rate Good Times on several different attributes that
are important to the quick service hamburger customer through both proprietary
and third party independent consumer research. The results of that research
confirmed that the overall impression of Good Times' performance on taste,
speed, quality, service and value is very favorable compared to the larger
competitors. However, because our advertising levels are a fraction of the
competitors, our challenge is to not only be "better" on these attributes but
to continue to more highly differentiate Good Times so we can compete based on
a unique perception for the consumer. This will involve evolution in both our
product taste profile and menu offerings and our brand personality developed
through our advertising as we grow in Colorado.
Real estate acquisition for new sites at an acceptable price is an ongoing
challenge. With the existing financing agreements we have in place, our growth
will be determined by our ability to acquire affordable sites and our ability to
sustain our average unit sales. We opened one new franchised restaurant in
fiscal 1999 and began development of three company owned restaurants, two of
which opened in October and November 1999. One of these was a converted Boston
Market with a single drive through lane and seating. To date, our experience
with building stores with indoor seating has been mixed without compelling sales
results but we anticipate there will be select opportunities for conversions as
we build out the market. We anticipate opening a total of five to seven new
restaurants in fiscal 2000, most of which will be in our traditional double
drive through format.
We expect to continue our growth in profitability and increase the Company's
value for our shareholders in fiscal 2000. Having made our planned improvement
in our operating margins and average check per customer, our key strategies for
this year center around the further development and differentiation of the Good
Times concept itself for unique consumer appeal and building additional
restaurants. Again, our goal is to not only out perform the competition on
taste, speed and service but to be truly the "uniquely positive alternative" for
the quick service hamburger customer. I look forward to reporting our results
as the year progresses. Thank you for your continued support and interest in
Good Times.
Except for historical information herein, statements in this letter, including
information regarding the business of the Company, may be forward-looking
statements. These statements involve known and unknown risks, which may cause
the Company's actual results to differ materially from forecasted results.
Sincerely,
/s/Boyd E. Hoback
President and Chief Executive Officer
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Good Times Restaurants Inc.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
GOOD TIMES RESTAURANTS INC.
601 Corporate Circle
Golden, Colorado 80401
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held January 20, 2000
To the shareholders of Good Times Restaurants Inc.:
An annual meeting of the shareholders of Good Times Restaurants Inc. will
be held at the corporate office located at 601 Corporate Circle, Golden,
Colorado 80401 on January 20, 2000 at 2:00 p.m. local time, to vote upon the
following matters:
to elect seven directors to serve during the ensuing year or until
their successors are elected and qualified, and
to transact such other business as may properly come before the
meeting.
Details relating to the annual meeting are set forth in the attached proxy
statement. All shareholders of record at the close of business on December 13,
1999 will be entitled to notice of, and to vote at, this meeting or at any
reconvened meeting after any adjournment or postponement thereof.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU DO
NOT PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY. A BUSINESS REPLY ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
THE DELIVERY OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU
ATTEND THE MEETING.
Sincerely,
/S/Susan Knutson
Susan Knutson, Secretary
December 17, 1999
GOOD TIMES RESTAURANTS INC.
601 Corporate Circle
Golden, Colorado 80401
(303) 384-1400
====================
PROXY STATEMENT
====================
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 20, 1999
==============================
This statement is furnished in connection with the solicitation of proxies
by the board of directors of Good Times Restaurants Inc., a Nevada corporation,
to be voted at the annual meeting of shareholders to be held at 2:00 p.m. local
time on January 20, 2000 at the 601 Corporate Circle, Golden, Colorado 80401, or
at any reconvened meeting after any adjournment or postponement thereof. Good
Times Restaurants anticipates that this proxy statement and accompanying form of
proxy will be first mailed or given to all shareholders on or about December 20,
1999. The shares represented by all proxies that are properly executed and
submitted will be voted at the meeting in accordance with the instructions
indicated thereon. Unless otherwise directed, votes will be cast "For" the
proposals presented. Provided that a majority of all outstanding shares of Good
Times Restaurants common stock are represented in person or by proxy at the
annual meeting (a quorum), the affirmative vote of a majority of the shares
represented at the meeting in person or by proxy will be required to approve any
or all of the proposals.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by delivering written notice of such revocation to, by substituting a
new proxy executed at a later date, or by requesting, in person, at the annual
meeting that the proxy be returned.
All of the expenses involved in preparing, assembling and mailing this proxy
statement and the materials enclosed herewith and all costs of soliciting
proxies will be paid by Good Times Restaurants Inc. In addition to the
solicitation by mail, proxies may be solicited by Good Times Restaurants
officers and regular employees by telephone or personal interview. Such
persons will receive no compensation for their services other than their
regular salaries. Arrangements will also be made with brokerage houses and
other custodians, nominees and fiduciaries to forward solicitation materials to
the beneficial owners of the shares held on the record date, and may reimburse
such persons for reasonable out-of-pocket expenses incurred by them in so doing.
A copy of Good Times Restaurants' Annual Report on Form 10-KSB for the
fiscal year ended September 30, 1999 is included with this proxy statement.
VOTING SECURITIES
The board of directors has fixed the close of business on December 13, 1999
as the record date for the determination of shareholders entitled to notice of
and to vote at the annual meeting. At such date, there were 2,221,507 shares of
the Good Times Restaurants common stock outstanding and entitled to vote. Each
share of common stock entitles the holder thereof to one vote per share on each
matter which may come before the meeting.
A majority of all votes entitled to be cast, represented in person or by
proxy, is necessary to constitute a quorum at the annual meeting. If a quorum
is present, the election of directors will be determined by plurality of the
votes cast.
Abstentions and broker "non-votes" will be treated as shares which are
present for purposes of determining the existence of a quorum. A broker
non-vote occurs when a broker is not permitted to vote on a matter without
instruction from the beneficial owner of the shares and no instruction is
given. Abstentions and broker non-votes will result in the director nominees
receiving fewer votes.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table presents as of December 13, 1999 the stock ownership of
each person known by Good Times Restaurants to be the beneficial owner of five
percent or more of Good Times Restaurants common stock, all directors and
officers individually and all directors and officers of as a group. Good Times
Restaurants is not aware of any contractual arrangements or pledges of Good
Times Restaurants securities which may at a subsequent date result in a change
of control of Good Times Restaurants.
<TABLE>
Number of
Name, Address and Shares Percent of
Position Held Beneficially Owned Class**
_________________ __________________ __________
<S> <C> <C>
The Bailey Company, LLLP 846,512(1) 37.68%
601 Corporate Circle
Golden, CO 80401
The Erie County Investment Co. 888,292 (1) 39.99%
601 Corporate Circle
Golden, CO 80401
Paul T. Bailey 926,992 (2) 41.73%
601 Corporate Circle
Golden, CO 80401
David E. Bailey 18,500 (4) *
601 Corporate Circle
Golden, CO 80401
Director
Geoffrey R. Bailey 37,850 (4) 1.70%
601 Corporate Circle
Golden, CO 80401
Chairman, Director
Dan W. James, II 70,883 (3),(5) 3.18%
601 Corporate Circle
Golden, CO 80401
Director
Boyd E. Hoback 52,881 (6) 2.33%
601 Corporate Circle
Golden, CO 80401
Officer and Director
Richard J. Stark 12,100 (5) *
6075 South Quebec, Suite 103
Englewood, CO 80111
Director
Thomas P. McCarty 7,500 (5) *
8779 Johnson Street
Arvada, CO 80005
Director
Alan A. Teran 16,900 (5) *
2126 Knollwood Drive
Boulder, CO 80302
Director
Robert D. Turrill 16,664 (7) *
601 Corporate Circle
Golden, CO 80401
Officer
Scott G. LeFever 14,605 (7) *
601 Corporate Circle
Golden, CO 80401
Officer
All officers and directors
as a group (9 persons) 247,883 (8) 10.63% (8)
</TABLE>
_______________________
* Less than one percent
** Rule 13d-3 under the Securities Exchange Act of 1934, involving the
determination of beneficial owners of securities, includes as beneficial owners
of securities, among others, any person who directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise has or shares
voting power and/or investment power with respect to such securities; and, any
person who has the right to acquire beneficial ownership of such security within
sixty days through means, including, but not limited to, the exercise of any
option, warrant, right or conversion of a security. Any securities not
outstanding that are subject to such options, warrants, rights or conversion
privileges shall be deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the class owned by such person, but
shall not be deemed to be outstanding for the purpose of computing the
percentage of the class by any other person.
(1) Includes 426,667 shares of common stock which were issued to The Bailey
Company, LLLP as of August 31, 1998 upon conversion of 1,000,000 shares of Good
Times Restaurants's Series A Convertible Preferred Stock owned by The Bailey
Company. The Bailey Company is 99% owned by The Erie County Investment Co. which
should be deemed the beneficial owner of Good Times Restaurants common stock
held by The Bailey Company. The Erie County Investment Company also owns 41,780
shares of Good Times Restaurants common stock in its own name. David Bailey is
a director and the president of The Erie County Investment Company and Geoffrey
Bailey is a director and the executive vice president of Erie County Investment
Company. David Bailey and Geoffrey Bailey disclaim beneficial ownership of the
shares of Good Times Restaurants common stock held by The Bailey Company and
Erie County Investment Company. See footnote (2) below.
(2) Includes 821,512 shares held of record by The Bailey Company and 41,780
shares held of record by Erie County Investment Company. Paul Bailey is the
principal owner of Erie County Investment Company and may be deemed the
beneficial owner of shares held by Erie County Invement Company and The Bailey
Company. Paul Bailey disclaims beneficial ownership of the shares held by Erie
County Investment and The Bailey Company. Paul T. Bailey is the father of David
E. and Geoffrey R. Bailey.
(3) Includes an aggregate of 24,296 shares held in trust for the benefit of
Mr. James.
(4) Includes 6,000 shares underlying presently exercisable stock options.
(5) Includes 7,000 shares underlying presently exercisable stock options.
(6) Includes 43,929 shares underlying presently exercisable stock options.
(7) Includes 13,361 shares underlying presently exercisable stock options.
(8) Does not include shares held beneficially by The Bailey Company and The
Erie County Investment Co. If such shares were included, the number of shares
beneficially held by all officers and directors as a group would be 1,136,175
and the percentage of class would be 51.1%.
All shares held by the officers, directors and principal shareholders listed
above are "restricted securities" or "control securities" and as such are
subject to limitations on resale. The shares may be sold pursuant to Rule 144
under certain circumstances.
DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Board of Directors currently consists of seven (7) members: Geoffrey R.
Bailey, Dan W. James, Boyd E. Hoback, Richard J. Stark, Thomas P. McCarty, Alan
A. Teran and David E. Bailey. The Board proposes that the seven current
directors, listed below as nominees, be re-elected as directors of the Good
Times Restaurants, to hold office until the next annual meeting of shareholders
and until such director's successor is duly elected and qualified. Each
nominee has consented to be named as a nominee and, to the present knowledge of
the Good Times Restaurants, is willing to serve as a director, if elected.
Should any of the nominees not remain a candidate at the end of the Annual
Meeting (a situation which is not expected), proxies with respect to which no
contrary direction is made will be voted in favor of those who remain as
candidates and may be voted for substitute nominees.
The director nominees and executive officers of Good Times Restaurants are
as follows:
<TABLE>
Date Began With
Name Age Positions Company
- ---- --- --------- ---------------
<C> <C> <C> <C>
Geoffrey R. Bailey 48 Chairman of the Board October 1996
Dan W. James, II 52 Director August 1989
Boyd E. Hoback 44 President, Chief Executive September 1987
Officer and Director
Richard J. Stark 59 Director July 1990
Thomas P. McCarty 46 Director April 1994
Alan A. Teran 54 Director April 1994
David E. Bailey 44 Director October 1996
Robert D. Turrill 51 Vice President of Marketing October 1990
Scott G. LeFever 41 Vice President of Operations September 1987
</TABLE>
___________________
This paragraph sets forth certain background information about Good Times
Restaurants and its affiliates, which information is necessary to fully
understand the following executive officer and director descriptions.
Good Times Restaurants was formed in 1987 and is now the parent company for
Good Times Drive Thru Inc., a wholly owned subsidiary which is engaged in the
business of developing, owning, operating and franchising restaurants under the
name Good Times Drive Thru Burgers(sm). Round the Corner Restaurants, Inc. was
established in 1968 and developed a chain of sit-down gourmet hamburger
restaurants. In 1986, Round the Corner Restaurants, then a closely held
corporation, formed Good Times Drive Thru to develop the Good Times' concept
and business and in 1988 Round the Corner Restaurants distributed Good Times
Drive Thru stock to its shareholders after which Good Times Drive Thru operated
as an independent company. Between 1990 and 1993, Good Times Restaurants, Good
Times Drive Thru and Round the Corner Restaurants entered into a series of
transactions (including the merger of Good Times Restaurants with Good Times
Drive Thru and Round the Corner Restaurants) resulting in Good Times Drive Thru
and Round the Corner Restaurants becoming wholly owned subsidiaries of Good
Times Restaurants. On September 30, 1995, Good Times Restaurants sold 100% of
the stock of Round the Corner Restaurants. As a result of underperforming
restaurants and other financial difficulties, Round the Corner Restaurants
subsequently filed for Chapter 11 bankruptcy protection in October 1996 (see
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS-Round the Corner Restaurants").
GEOFFREY R. BAILEY, CHAIRMAN. Mr. Bailey is a director and executive vice
president of The Erie County Investment Co. He is responsible for the
operations and development of 64 Arby's restaurants owned by The Bailey
Company, a 99% owned subsidiary of Erie. Mr. Bailey is a graduate of the
University of Denver with a Bachelor's Degree in Business Administration.
He joined the Erie County Investment Co. in 1979 and became Chairman of the
Board of Good Times Restaurants in October 1996.
DAN W. JAMES, II, DIRECTOR. Mr. James became a Director of Good Times
Restaurants on December 18, 1990 and served as Chairman from December 16, 1992
to October 1, 1996. He is also a Director of Good Times Drive Thru. Mr. James
is one of the co-founders of Round the Corner Restaurants and served as a
Director of Round the Corner Restaurants from 1968 until 1992. Mr. James
devotes the majority of his time to the management of private investments.
BOYD E. HOBACK, PRESIDENT, CEO AND DIRECTOR. Mr. Hoback had served as Vice
President, Chief Operating Officer and Treasurer of Good Times Restaurants since
December 18, 1990, and as a Director since February 1992. Mr. Hoback held
similar positions with Good Times Drive Thru from its inception in December
1986. On December 16, 1992, Mr. Hoback was elected President and Chief Executive
Officer of Good Times Restaurants. He is also Chairman of the Board of
Directors, President and Chief Executive Officer of Good Times Drive Thru.
Prior to assuming his positions with Drive Thru, Mr. Hoback served as Executive
Vice President of Finance and Development of Round the Corner Restaurants since
1983.
RICHARD J. STARK, DIRECTOR. Mr. Stark is President of Boulder Asset
Management, a firm advising several large individual investors. Prior to
forming Boulder Asset Management in 1984, Mr. Stark served as Chief Investment
Officer of InterFirst Investment Management in Dallas. Previously he was
responsible for all individual money management at Standard &
Poor's/Intercapital in New York.
THOMAS P. MCCARTY, DIRECTOR. Mr. McCarty has spent the last 26 years in the
food service industry including eleven years owning and operating his own group
of restaurants, working for a major food service distributor, working for and
eventually owning a real estate brokerage company which specialized in
restaurant real estate and consulting, and he was recently the vice president
for development of Rock Bottom Restaurants, Inc. Mr. McCarty has a B.S. in
Accounting and a B.S. in Journalism from the University of Colorado.
ALAN A. TERAN, DIRECTOR. Mr. Teran has spent the past 26 years working in
the restaurant industry, including serving as president of Cork & Cleaver. He
was one of the first franchisees of Le Peep Restaurants. Mr. Teran is also a
Director of Boulder Valley Bank and Trust and Morton's Restaurant Group, which
is the operator of Morton's Steak Houses and Bertolini's. Mr. Teran graduated
from the University of Akron in 1968 with a degree in business.
DAVID E. BAILEY, DIRECTOR. Mr. Bailey is a director and President of The
Erie County Investment Co., of which The Bailey Company is a 99% owned
subsidiary. He is also the president of InverWest Development Corporation, a
subsidiary of The Erie County Investment Co. Mr. Bailey is responsible for
managing the day to day operations of The Erie County Investment Co. and its
subsidiaries with primary focus on their real estate and energy businesses. He
received his Bachelor of Finance Degree from the University of Colorado and his
Masters Degree in Business Administration in Construction Management and Real
Estate from the University of Denver in 1993. Mr. Bailey joined The Erie County
Investment Co. in 1980 and became a Director of Good Times Restaurants in
October 1996.
ROBERT D. TURRILL, V.P. OF MARKETING. Mr. Turrill has been involved in all
phases of operations with direct responsibility for menu development, purchasing
and cost control, research and multi-media advertising for Round the Corner
Restaurants. Subsequent to the merger of Good Times Restaurants and Round the
Restaurants in 1992, Mr. Turrill devoted a portion of his time to the
development of a marketing program for Good Times Drive Thru. As Good Times
Drive Thru continued to expand, Mr. Turrill's time devoted to Good Times Drive
Thru increased significantly. Therefore, Mr. Turrill was transferred from
Round the Corner Restaurants to the newly created Company position of Vice
President of Marketing, effective October 1, 1994. Mr. Turrill is also a
principal in Great Burgers, Inc., the franchisee of the Round the Corner
Restaurants food court in Dallas, Texas.
SCOTT G. LEFEVER, V.P. OF OPERATIONS. Mr. LeFever has been involved in all
phases of operations with direct responsibility for unit service performance,
personnel and cost controls. Mr. LeFever was Director of Operations for Round
the Corner Restaurants from 1983 to 1987. He then became Director of Operations
for Good Times Drive Thru from 1987 to 1992 during which time he helped develop
the Good Times Drive Thru operating systems. Mr. LeFever was reassigned to the
position of Good Times Drive Thru's Vice President of Operations in August 1995
and devotes his time to the operational management of Good Times Drive Thru.
Mr. LeFever is also a principal in Great Burgers, Inc.
Officers serve at the discretion of the board of directors. Good Times
Restaurants does not currently have a nominating committee of the board of
directors or committees performing similar functions. Good Times Restaurants
does however have a compensation committee and an audit committee of the board
of directors, both of which consist of Mr. Stark, Mr. Teran, Mr. McCarty and
Geoffrey Bailey and the audit committee also includes Mr. Hoback. A majority of
the directors in both committees are independent directors. Members of the
compensation and audit committees each receive $100 per meeting attended,
however where both compensation and audit committee meetings are held at the
same gathering only $100 is paid to each attendee with respect to such
gathering.
There are no family relationships among the directors or executive officers
except for Geoffrey Bailey and David Bailey, who are brothers and principals of
The Bailey Company, a franchisee and joint venture partner of Good Times
Restaurants. David Bailey is also a director and the president and Geoffrey
Bailey is a director and the executive vice president of The Erie County
Investment Co., which owns 99% of The Bailey Company. There are no arrangements
or understandings between any director and any other person pursuant to which
that director was elected except for David Bailey and Geoffrey Bailey who were
elected of the board of directors pursuant to the Series A Convertible Preferred
Stock Purchase and Sale Agreement (see "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTION - The Bailey Company").
Five meetings of the board of directors, one meeting of the compensation
committee and one meeting of the audit committee (including regularly scheduled
and special meetings) were held during the last full fiscal year. No member of
the board of directors attended fewer than 75% of the meetings.
Each non-employee director receives $300 for each board of directors meeting
attended.
COMPLIANCE WITH SECTION 15(A) OF THE EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires Good Times
Restaurants' officers and directors, and persons who own more than ten percent
of any registered class of any Good Times Restaurants equity security, to file
reports of ownership and changes in ownership with the SEC. Officers, directors
and greater than ten percent shareholders are required by SEC regulations to
furnish Good Times Restaurants with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, Good Times Restaurants
believes that during the fiscal year ended September 30, 1999, all filing
requirements applicable to its officers, directors, and greater than ten percent
beneficial owners were complied with on a timely basis.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows all cash compensation paid by Good Times
Restaurants or any of its subsidiaries, as well as other compensation paid or
accrued during the fiscal years indicated, to the Chief Executive Officer of
Good Times Restaurants as of the end of the last fiscal year (the "Named
Executive Officer"). No other executive officer of Good Times Restaurants
received an annual salary and bonus for such periods in excess of $100,000.
<TABLE>
Summary Compensation Table
__________________________
Long-Term
Annual Compensation Compensation
___________________ ____________
<C> <C> <C> <C> <C> <C> <C>
Name Shares Other(6)
& Principal Fiscal Other Annual Underlying (Common
Position Year Salary Bonus(1) Compensation(2) Options Stock)
___________ ______ ______ _______ ______________ __________ _______
Boyd E. Hoback 1999 $112,500 12,000 $10,000 51,000(3) 335
President & CEO 1998 $110,000 -0- $10,000 40,800(4) 810
1997 $110,000 -0- $10,000 8,800(5) 827
</TABLE>
______________
(1) The Board of Directors approved a bonus plan for Mr. Hoback that was
contingent upon certain performance criteria. The plan provides for a
bonus of up to 30% of salary for Mr. Hoback.
(2) Consists of an officers expense allowance.
(3) Consists of incentive stock options to purchase 39,951 shares and non-
statutory stock options to purchase 11,049 shares.
(4) Consists of incentive stock options to purchase 30,880 shares and non-
statutory stock options to purchase 9,920 shares.
(5) Consists of incentive stock options that were cancelled.
(6) Consists of 401(k) stock grants to match 25% employee contribution.
STOCK OPTIONS
On April 23, 1992, the board of directors adopted an incentive stock option
plan (the "1992 ISO Plan"), as amended on March 31, 1994, covering 150,000
shares of Good Times Restaurants common stock and a non-statutory stock option
plan (the "1992 NSO Plan") as amended on March 31, 1994, covering 60,000 shares
of common stock. The 1992 ISO Plan and 1992 NSO Plan have been subsequently
amended to increase the authorized number of shares under the 1992 ISO Plan to
525,000 and the authorized number of shares under the 1992 NSO Plan to 125,000.
The employees of Good Times Restaurants who in the judgment of the board of
directors are primarily responsible for the management, promotion and protection
of the interests of Good Times Restaurants are eligible to be granted options
under the 1992 ISO Plan. As of September 30, 1999 there were approximately 34
employees who were eligible to be granted options under the 1992 ISO Plan, all
of whom have been granted options thereunder. Key employees, directors of Good
Times Restaurants and such other persons who in the judgment of the board of
directors of Good Times Restaurants are primarily responsible for the promotion
and protection of the interests of Good Times Restaurants are eligible to be
granted options under the 1992 NSO Plan. Only members of the board of directors
and certain officers of Good Times Restaurants have been granted options under
the 1992 NSO Plan. All options granted under either plan are exercisable at
prices not less than the fair market value of the common stock on the date of
grant. The plans are administered by the board of directors or a committee of
two or more directors, as determined by the board of directors. The terms of
the options granted may not exceed ten years with respect to the 1992 ISO Plan
and five years with respect to the 1992 NSO Plan.
All options are non-transferable other than by will or by the laws of
descent and distribution and may be exercised during the optionee's lifetime
only by the optionee.
The following table shows the stock option grants during the fiscal year
ended September 30, 1999 to the Named Executive Officer. 43,929 options are
fully vested as of September 30, 1999.
INDIVIDUAL OPTION GRANTS IN LAST FISCAL YEAR
(Individual Grants)
<TABLE>
<C> <C> <C> <C> <C>
Number of Percent of total
shares options
underlying granted to Exercise
options employees in price Expiration
Name granted (#) fiscal year ($/Sh) date
____ ___________ ___________ ______ __________
Boyd E. Hoback 9,590 13.22% $2.31 10/01/2008
30,361 41.82% $3.50 10/01/2008
11,049 11.47% $2.31 10/01/2003
</TABLE>
OPTIONS EXERCISES AND VALUES
The Named Executive Officer did not exercise any stock options during the
last fiscal year. The fiscal year end value of unexercised options follows:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<C> <C> <C> <C> <C>
Value of
Number of unexercised in-
unexercised the-money
options at options at
Shares FY-end (#) FY-end ($)
acquired Value exercisable/ exercisable/
Name on exercise(#) realized ($) unexercisable unexercisable
__________ _____________ ___________ _____________ _____________
Boyd E. Hoback -0- $-0- 43,929/47,871 29,555/12,766(1)
</TABLE>
(1) Based on the closing bid price for Good Times Restaurants common stock
as reported on the Nasdaq SmallCap Market System at September 30, 1999 of $3.125
per share.
COMPENSATION COMMITTEE POLICIES
In order to retain and motivate executive officers and additional executive
talent, the Compensation Committee seeks to maintain compensation programs
competitive with those provided by leading companies in the multi-unit
restaurant business with similar business focus and dynamics as Good Times
Restaurants. The Committee has adopted a compensation strategy to provide (1)
base salaries which are competitive but not above industry averages,
(2) above-average total annual cash opportunities, through incentives based on
operating results, (3) significant long-term incentives based on stock
appreciation, and (4) other benefits for executives which are competitive but
not above industry norms. The primary components of the executive compensation
package consist of base salary, annual incentive bonus awards and stock option
awards as follows:
BASE SALARY. In reviewing each executive officer's base salary, the
Compensation Committee takes into consideration the executive officer's
responsibilities and performance, salaries for comparable positions at other
companies, and fairness issues relating to pay for other Company executives. In
making salary recommendations or decisions, the committee exercises its
discretion and judgment based on those factors.
INCENTIVE BONUS AWARDS. Good Times Restaurants has an incentive bonus plan
which covers all of the executive officers. The plan is subject to annual
amendment at the discretion of the Compensation Committee. The Compensation
Committee measures the performance of Good Times Restaurants against an annual
business plan prepared by management and reviewed and approved by the Board of
Directors. The Committee has the discretion whether and in what amounts to
award any incentive bonuses based on individual performance, unusual business
factors, other mitigating factors and performance against the annual plan.
STOCK OPTION GRANTS. Employees selected by the Compensation Committee may
receive an annual grant of stock options under the 1992 ISO Plan or 1992 NSO
Plan (but typically under the 1992 ISO Plan) to purchase shares of common
stock. Officers' annual grants are computed by (1) dividing the officer's
annual salary and bonus by the current market price of the common stock and
(2) multiplying that amount by a factor ranging from zero to two. The
Committee may also grant special stock option awards to new members of
management and for existing members of management at their discretion.
Mr. Hoback entered into an employment agreement with Good Times Restaurants
in May, 1996 that provides for his employment as president and chief executive
officer for three years from the date of the agreement at a minimum salary of
$110,000 per year, terminable by Good Times Restaurants only for cause. The
agreement is renewable annually by the Board of Directors and is under review
for extension through September 2001.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Drive Thru and RTC historically have been under-capitalized and have found
it difficult to obtain required financing without the assistance of certain of
their officers and directors, primarily in the form of guarantees of payment of
restaurant leases by Mr. James and a former director of Good Times Restaurants.
These principally involved obligations of RTC. Neither Mr. James nor the former
director receive any compensation in connection with these guarantees. While
none of the related party transactions may be deemed to have been negotiated at
arms' length, all such transactions were approved by the independent members of
the RTC Board of Directors and, in the opinion of Company management, all such
transactions were fair and are upon terms which were at least as favorable as
could have been obtained from independent third parties. To the extent that Mr.
James and the former director continue to be guarantors of such obligations,
Good Times Restaurants has agreed to indemnify each of them from any losses
that they may incur resulting from such guarantees.
THE BAILEY COMPANY
On May 31, 1996, Good Times Restaurants entered into a Series A Convertible
Preferred Stock Purchase Agreement with The Bailey Company for the purchase by
The Bailey Company of one million shares of Series A Convertible Preferred
Stock. The aggregate purchase price for such shares was $1 million. Good Times
Restaurants used the funds received for the development of additional Good Times
restaurants. So long as The Bailey Company holds two-thirds of the Series A
Convertible Preferred Stock and/or the common stock acquired by the conversion
thereof (i) The board of directors may not authorize the issuance of additional
shares of preferred stock without the concurrence of The Bailey Company and (ii)
The Bailey Company has the right to elect two directors to the board of
directors, one of which has the right to serve as Chairman of the Board. David
E. Bailey and Geoffrey R. Bailey are the current directors elected by The Bailey
Company to the board of directors, and Geoffrey R. Bailey serves as Chairman of
the Board. David E. Bailey is the president and a director and Geoffrey R.
Bailey is the executive vice president and a director of The Erie County
Investment Co. which owns 77% of The Bailey Company and should be deemed the
beneficial owner of all Good Times Restaurants capital stock held by The Bailey
Company.
Effective August 31, 1998, The Bailey Company converted all one million
shares of Series A Convertible Preferred Stock into 426,667 shares of common
stock pursuant to the applicable conversion ratio as extended by the board of
directors in consideration for The Bailey Company's agreement to guarantee
certain loans to Good Times Restaurants. On September 25, 1998 The Bailey
Company and The Erie County Investment Co. entered into an agreement with Good
Times Restaurants pursuant to which The Bailey Company and The Erie County
Investment Co. have agreed to guarantee certain loans to Good Times Restaurants
up to the aggregate principal amount of $8,700,000, but not at any one time to
exceed $6 million. Good Times Restaurants is obligated to pay The Bailey Company
and The Erie County Investment Co. quarterly percentage fees for their
guarantees based upon the average outstanding principal and interest of loans
guaranteed by them during each calendar quarter. Such fees are payable by
Good Times Restaurants either in cash at the rate of .5% or in shares of Good
Times Restaurants common stock at the rate of .75%. Any common stock so issued
is entitled to registration rights to the same extent that the common stock
issued upon conversion of the Series A Convertible Preferred Stock is entitled
pursuant to a Registration Rights Agreement dated May 31, 1996 between Good
Times Restaurants and The Bailey Company.
On March 12, 1997 Good Times Restaurants and The Bailey Company formed a
limited partnership, which is owned 50% by each entity, to own and operate Good
Times Drive Thru Burgers(sm) Restaurants. Good Times Restaurants is the general
partner and The Bailey Company is a limited partner of the limited partnership.
Currently, the limited partnership owns one restaurant located in Fort Collins,
Colorado.
On April 1, 1998 Good Times Restaurants moved its corporate headquarters to
a building which is owned by The Bailey Company and in which The Bailey Company
also has its corporate headquarters. Good Times Restaurants signed a twelve
month lease which includes two one-year extension options with The Bailey
Company at a competitive market rate. The lease covers 3,356 square feet of
office space.
The Bailey Company is also the owner of two franchised Good Times Drive Thru
Burgers(sm) Restaurants which are located in Thornton and Loveland, Colorado.
ROUND THE CORNER RESTAURANTS
In October 1996 Round the Corner Restaurants filed for Chapter 11 bankruptcy
protection. Good Times Restaurants was Round the Corner Restaurants' only
secured creditor and held a lien on the assets of a profitable Round the Corner
Restaurants restaurant. In August 1997, Good Times Restaurants entered into a
settlement agreement with Round the Corner Restaurants to settle all claims and
differences between them. The settlement agreement provided for the payment to
Good Times Restaurants from Round the Corner Restaurants of $300,000 and for the
assignment to Good Times Restaurants of the two Round the Corner Restaurants
restaurant leases which are guaranteed by Good Times Restaurants. Good Times
Restaurants has the right to operate the restaurants without charge under the
"Round the Corner Restaurants" name. The settlement agreement was approved by
the Bankruptcy Court on December 19, 1997 and Good Times Restaurants was
subsequently paid the $300,000 settlement amount. Good Times Restaurants has
recorded an accumulated loss of $567,000 in connection with the Round the Corner
Restaurants bankruptcy.
INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has selected Hein + Associates as the independent
certified public accountants to audit the financial statements of Good Times
Restaurants for its 2000 fiscal year. Hein + Associates has served as Good Times
Restaurants' independent accountants since inception and is familiar with its
business and financial procedures. To the knowledge of management, neither such
firm nor any of its members has any direct or material indirect financial
interest in Good Times Restaurants nor any connection with Good Times
Restaurants in any capacity otherwise than as independent accountants.
A representative of Hein + Associates is expected to be present at the
annual meeting to answer appropiate questions and will be afforded an
opportunity to make a statement regarding the financial statements.
FUTURE SHAREHOLDER PROPOSALS
Any Good Times Restaurants shareholder proposal for the annual meeting of
shareholders in 2001 must be received by the Good Times Restaurants by August
15, 2000 for the proposal to be included in the Good Times Restaurants proxy
statement and form of proxy for that meeting. If notice of a proposal for which
a shareholder will conduct his or her own proxy solicitation is not received by
Good Times Restaurants by November 1, 2000, proxies solicited by the Good Times
Restaurants board of directors may use their discretionary authority when the
matter is raised at the meeting, without including any discussion of the matter
in the proxy statement.
OTHER MATTERS
The board of directors does not know of any other matters to be brought
before the annual meeting. If any other matters not mentioned in this proxy
statement are properly brought before the annual meeting, the individuals named
in the enclosed proxy intend to vote such proxy in accordance with their best
judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS
December 17, 1999
GOOD TIMES RESTAURANTS INC.
601 Corporate Circle
Golden, Colorado 80401
PROXY
This Proxy is Solicited by the Board of Directors For the Annual Meeting of
Shareholders on January 20, 2000.
The undersigned hereby appoints Boyd E. Hoback, with power of substitution,
as proxy for the undersigned to vote all shares of Good Times Restaurants common
stock which the undersigned is entitled to vote at the annual meeting of the
shareholders to be held on January 20, 2000, and at any reconvened meeting after
any adjournment thereof, as directed below and at his discretion on any other
matters that may properly be presented at the meeting.
Election of Directors: Management has nominated the following seven persons
to stand for election. The Good Times Restaurants Board of Directors recommends
a vote "For" all of the nominated directors. To date no one has been nominated
by anyone other than management.
Nominees: Geoffrey R. Bailey, Dan W. James, Boyd E. Hoback, Richard J. Stark,
Thomas P. McCarty, Alan A. Teran and David E. Bailey:
For all Withheld for All
[ ] [ ]
Withheld for the following only (write the nominees name(s) in the space
below):
______________________________________________________________________________
This proxy when properly executed will be voted in the manner directed by
the undersigned.
If this proxy is properly executed but no voting direction is given, this
proxy will be voted "For" all nominees.
This proxy also confers discretionary authority to the proxy to vote on any
other matters that may properly be presented at the meeting. As of the date of
the accompanying proxy statement, Good Times Restaurants management did not know
of any other matters to be presented at the meeting. If any other matters are
properly presented at the meeting, this proxy will be voted in accordance with
the recommendations of Good Times Restaurants management.
Please sign exactly as your name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the president or other
authorized officer. If a partnership or limited liability company, please sign
in such name by an authorized person.
Please complete, date and sign this proxy card and return it promptly in the
accompanying envelope.
Shares Owned:________________ Dated:______________
_____________________________ _________________________________
Signature of Shareholder Signature if held jointly
(Sign exactly as name appears
on certificate)
