<PAGE> 1
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 September 1, 1998
(Date of earliest event reported)
SANTA BARBARA RESTAURANT GROUP, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 1-10576 33-0403086
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
1200 North Harbor Boulevard, Anaheim, California 92803
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (714) 491-6400
------------------------------
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed, Since Last Report)
<PAGE> 2
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(a) Financial statements of business acquired. The financial statements
of Timber Lodge Steakhouse, Inc. ("Timber Lodge") and JB's Family Restaurants,
Inc. ("JB's") operated by Santa Barbara Restaurant Group, Inc. (the "Company")
are incorporated by reference herein from pages F-13 through F-18 and pages 102
through 107 respectively, from the Company's Joint Proxy/Prospectus, dated July
10, 1998 (the "Prospectus"), Commission file number 333-58927, a copy of which
was filed with the Commission pursuant to Rule 424 (b)(3), under the Securities
Act of 1933, as amended, on July 31, 1998.
Interim financial statements of Timber Lodge are incorporated by
reference herein from pages 1 through 3 of the Timber Lodge Report on Form 10-Q
Commission file number 033-71176-C, for the period ended June 17, 1998 as filed
with the Commission on August 3, 1998. Interim financial statements of JB's for
the period ended August 10, 1998 are included as an exhibit to this filing.
(b) Pro Forma Financial Information. The pro forma financial
information relative to the acquisition of Timber Lodge and JB's is included as
an exhibit to this filing.
(c) Exhibits.
Exhibit No.
----------
23.1 Consent of Ernst & Young LLP, with respect to the financial
statements of Timber Lodge Steakhouse, Inc.
23.2 Consent of KPMG Peat Marwick LLP, with respect to the
financial statements of JB's Family Restaurants, Inc.
99.2 Audited annual financial statements of Timber Lodge
Steakhouse, Inc., incorporated by reference as described in
Item 7 (a) above.
99.3 Audited annual financial statements of JB's Family
Restaurants, Inc., incorporated by reference as described
in Item 7 (a) above.
99.4 Interim financial statements of Timber Lodge Steakhouse
Inc., incorporated by reference as described in Item 7
(a) above.
99.5 Interim financial statements of JB's Family Restaurants,
Inc. as described in Item 7 (a) above.
99.6 Pro forma financial information relative to Timber Lodge
and JB's as described in Item 7 (b) above.
<PAGE> 3
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 hereunto duly authorized.
Date: November 13, 1998
Santa Barbara Restaurant Group, Inc.
(Registrant)
/s/ THEODORE ABAJIAN
- ---------------------------------------------------
Theodore Abajian
Executive Vice President & Chief Financial Officer
<PAGE> 4
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
23.1 Consent of Ernst & Young LLP, with respect to the financial
statements of Timber Lodge Steakhouse, Inc.
23.2 Consent of KPMG Peat Marwick LLP, with respect to the financial
statements of JB's Family Restaurants, Inc.
99.2 Audited annual financial statements of Timber Lodge Steakhouse,
Inc., incorporated by reference as described in Item 7 (a) above.
99.3 Audited annual financial statements of JB's Family Restaurants,
Inc., incorporated by reference as described in Item 7 (a) above.
99.4 Interim financial statements of Timber Lodge Steakhouse Inc.,
incorporated by reference as described in Item 7 (a) above.
99.5 Interim financial statements of JB's Family Restaurants, Inc. as
described in Item 7 (a) above.
99.6 Pro forma financial information relative to Timber Lodge and JB's
as described in Item 7 (b) above.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated February 13, 1998, with respect to the
financial statements of TimberLodge Steakhouse, Inc. for the year ended December
31, 1997, included in the Santa Barbara Restaurant Group, Inc. Current Report on
Form 8-K dated November 13, 1998, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
November 13, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
JB's Family Restaurants, Inc.
We consent to the inclusion of our report dated March 30, 1998 with respect to
the balance sheets of JB's Family Restaurants, Inc. as of January 26, 1998 and
January 27, 1997, and the results of its operations and its cash flows for the
18 weeks ended January 26, 1998, the 34 weeks ended September 22, 1997, the 28
weeks ended January 27, 1997, the 42 weeks ended July 15, 1996 and the 52 weeks
ended September 25, 1995, which report appears in the Form 8-K of Santa Barbara
Restaurant Group, Inc. dated November 13, 1998.
Our report refers to a business combination accounted for as a purchase that
occurred on July 15, 1996, the result of which renders the financial
information of the periods before and after the acquisition not comparable.
KPMG Peat Marwick LLP
Salt Lake City
November 13, 1998
<PAGE> 1
EXHIBIT 99.5
JB'S FAMILY RESTAURANTS, INC.
BALANCE SHEET
ASSETS
(Dollars in thousands)
<TABLE>
<CAPTION>
SUCCESSOR
-----------
AUGUST 10,
1998
-----------
(unaudited)
<S> <C>
Current assets:
Cash and cash equivalents............................. $ 1,387
Accounts and current portion of notes receivable...... 1,205
Inventories........................................... 633
Other current assets and prepaid expenses............. 874
-------
Total current assets.......................... 4,099
Property and equipment, net............................. 14,276
Property under capital leases, net...................... 6,623
Notes receivable, net................................... 517
Costs in excess of net assets acquired, net............. 3,567
Other assets............................................ 167
-------
$29,249
=======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt..................... $ 29
Current portion of capital lease obligations.......... 879
Accounts payable...................................... 3,359
Other current liabilities............................. 5,484
-------
Total current liabilities..................... 9,751
Long-term debt, excluding current portion............... 616
Capital lease obligations, excluding current portion.... 5,993
Other long-term liabilities............................. 1,883
Stockholder's equity:
Additional paid-in capital............................ 10,895
Retained earnings .................................... 111
-------
Total stockholder's equity.................... $29,249
=======
</TABLE>
See accompanying notes to financial statements.
<PAGE> 2
JB'S FAMILY RESTAURANTS, INC.
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CKE
SUCCESSOR PREDECESSOR
--------- ---------------
28 WEEKS 34 WEEKS
ENDED ENDED
AUGUST 10, SEPTEMBER 22,
1998 1997
--------- -------------
(unaudited)
<S> <C> <C>
Revenues:
Company-operated restaurants:
JB's Restaurants............. $31,628 $43,295
Galaxy....................... 2,867 3,664
HomeTown Buffet.............. -- 26,756
------- -------
34,495 73,715
Franchised and licensed
restaurants:
JB's Restaurants............. 832 797
------- -------
Total revenues.......... 35,327 74,512
------- -------
Operating costs and expenses:
Restaurant operations:
Food and packaging........... 11,193 24,866
Payroll and other employee
benefits................... 13,054 25,832
Occupancy and other operating
expenses................... 7,720 17,104
------- -------
31,967 67,802
Franchised and licensed
restaurants.................. 318 452
Advertising expenses........... 891 1,118
General and administrative
expenses..................... 1,807 2,983
------- -------
Total operating costs
and expenses.......... 34,983 72,355
------- -------
Operating income ................ 344 2,157
Interest expense................. (320) (748)
Other income, net................ 134 216
------- -------
Income before income taxes....... 158 1,625
Income tax expense .............. 47 595
------- -------
Net income ...................... $ 111 $ 1,030
======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE> 3
JB'S FAMILY RESTAURANTS, INC.
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CKE
SUCCESSOR PREDECESSOR
--------- -----------
28 WEEKS 34 WEEKS
ENDED ENDED
AUGUST 10, SEPTEMBER 22,
1998 1997
--------- ------------
(unaudited)
<S> <C> <C>
Net cash flows from operating activities
Net income ................................. $ 111 $ 1,030
Adjustment to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization........... 1,848 3,561
Loss on sale of property and equipment.. -- 12
Net change in receivables inventories
and other current assets.............. (314) 159
Net change in accounts payable, other
current liabilities and intercompany
payables.............................. 892 966
------- --------
Net cash provided by
operating activities................ 2,537 5,728
------- --------
Cash flows from investing activities:
Purchases of:
Property and equipment.................. (657) (3,530)
Proceeds from sale of:
Property and equipment.................. 4,265 --
Net change in other assets................ 121 209
Collections on and sale of notes
receivable, related party receivables
and leases receivable................... 712 71
------- --------
Net cash provided by (used in)
investing activities................ 4,441 (3,250)
------- --------
Cash flows from financing activities:
Net change in bank overdraft.............. (847) (1,514)
Long-term borrowings...................... -- 489
Repayment of long-term debt............... (83) (51)
Repayments of capital lease obligations... (473) (742)
Net change in other long-term liabilities. (607) 90
Dividends paid to CKE..................... (4,674) (3,500)
------- --------
Net cash used in financing activities... (6,684) (5,228)
------- --------
Net increase (decrease) in cash and cash
equivalents............................... 294 (2,750)
Cash and cash equivalents at beginning
of period............................... 1,093 5,869
------- --------
Cash and cash equivalents at end
of period............................... $ 1,387 $ 3,119
======= ========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
JB'S FAMILY RESTAURANTS, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1 - Company
JB's presently owns, operates and franchises the JB's restaurant concept. As of
September 1, 1998, the JB's system included 94 restaurants, of which 72 were
operated by JB's and 22 were operated by JB's franchisees. The JB's restaurants
are located in eight western states with the highest concentration in Arizona.
JB's also owns and operates six Galaxy restaurants, mostly in Utah.
Note 2 - Financial Statements
The interim financial statements in the Form 8-K/A have been prepared in
accordance with Securities and Exchange Commission Regulation S-X. Reference is
made to the Notes to Financial Statements for JB's from pages 108 through 122
from the Prospectus for information with respect to JB's significant accounting
and financial reporting policies, as well as other pertinent information. JB's
believes that all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results of the interim periods
presented have been made. The results of operations for the period ended August
10, 1998 are not necessarily indicative of those for the full year.
<PAGE> 1
EXHIBIT 99.6
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
SECOND QUARTER ENDED FISCAL 1998 (000'S)
<TABLE>
<CAPTION>
HISTORICAL (UNAUDITED)
---------------------------------------------------------
SANTA BARBARA
RESTAURANT SIXTEEN JB'S JBRI
GROUP TIMBER LODGE RESTAURANTS (52 UNITS) PRO FORMA TOTAL
JUNE 30, JUNE 17, AUGUST 10, AUGUST 10, COMBINED PRO FORMA
1998 1998 1998 1998 ADJUSTMENTS COMBINED
------------- ------------ ------------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents ............... $ 335 $ 35 $ 327 $ 1,060 $ 4,500 (a) $ 6,257
Short term investments................... 3,123 -- -- -- -- 3,123
Other current assets .................... 696 1,354 361 2,351 (608)(b) 4,154
------ ------- ------ ------- ------- -------
Total current assets .................... 4,154 1,389 688 3,411 3,892 13,534
Cost in excess of assets acquired ....... -- -- 839 2,728 10,189 (c)(d)(e) 13,756
Other non-current assets ................ 1,362 13,732 4,782 16,801 (2,797)(f) 33,880
------ ------- ------ ------- ------- -------
Total assets ............................ $5,516 $15,121 $6,309 $22,940 $11,284 $61,170
====== ======= ====== ======= ======= =======
Accounts payable ........................ $ 442 $ 860 $ 647 $ 2,702 $ -- $ 4,651
Other current liabilities ............... 139 1,558 1,399 5,003 -- 8,099
------ ------- ------ ------- ------- -------
Total current liabilities ............... 581 2,418 2,046 7,705 -- 12,750
Long-term debt and capital lease
obligations, excluding current portion -- -- 1,289 5,320 -- 6,609
Other non-current liabilities ........... 55 1,258 -- 1,883 2,584 (e)(n) 5,780
------ ------- ------ ------- ------- -------
Total liabilities ....................... 636 3,676 3,335 14,908 2,584 25,139
Stockholders' equity .................... 4,880 11,445 2,974 8,032 8,700 (g) 36,031
------ ------- ------ ------- ------- -------
Total liabilities and stockholders' equity $5,516 $15,121 $6,309 $22,940 $11,284 $61,170
====== ======= ====== ======= ======= =======
</TABLE>
<PAGE> 2
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
SIX MONTHS ENDED FISCAL 1998 (000'S EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL (UNAUDITED)
---------------------------------------------------------
SANTA BARBARA
RESTAURANT SIXTEEN JB'S JBRI
GROUP TIMBER LODGE RESTAURANTS (52 UNITS) PRO FORMA TOTAL
JUNE 30, JUNE 17, AUGUST 10, AUGUST 10, COMBINED PRO FORMA
1998 1998 1998 1998 ADJUSTMENTS COMBINED
------------- ------------ ------------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total Revenues ........................... $2,495 $14,476 $8,154 $26,324 $ 0 $51,449
Operating Expenses:
Food and packaging .................... 560 5,404 2,728 8,170 0 16,862
Payroll and other employee benefits ... 449 4,233 3,083 9,634 0 17,399
Occupancy and other expense (l) ....... 417 3,572 1,879 5,974 (112)(h) 11,730
General and administrative expenses (m) 649 797 610 2,022 127 (i) 4,205
------ ------- ------ ------- ----- -------
Total operating expense....... 2,075 14,006 8,300 25,800 15 50,196
Operating income (loss) .................. 420 470 (146) 524 (15) 1,253
Interest income (expense) ................ 118 (9) (66) (252) 0 (209)
Other income (expense), net .............. (5) 29 7 126 0 157
------ ------- ------ ------- ----- -------
Income (loss) before income taxes......... 533 490 (205) 398 (15) 1,201
Provision (benefit) for income taxes ..... 0 147 (60) 117 (155)(j) 49
------ ------- ------ ------- ----- -------
Net income (loss) ........................ $ 533 $ 343 $ (145) $ 281 $ 140 $ 1,152
====== ======= ====== ======= ===== =======
Basic earnings per share ................. $ 0.09
Diluted earnings per share ............... $ 0.09
Basic weighted average shares ............ 12,704
Diluted weighted average shares .......... 12,980
Shares outstanding ....................... 12,704
Book value per share ..................... $ 2.84
</TABLE>
<PAGE> 3
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED 1997 (000'S EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Historical
Historical Historical Sixteen JBRI
GB Foods Timber Lodge Restaurants (52 units) Pro Forma Total
December 31, December 31, January 26, January 26, Combined Pro Forma
1997 1997 1998 1998 Adjustments Combined
------------ ------------ ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total Revenues ......................... $5,237 $26,536 $13,970 $45,431 $ 0 $91,174
Operating Expenses:
Food and packaging .................. 1,152 9,944 4,524 14,232 0 29,852
Payroll and other employee benefits.. 870 7,600 5,460 17,301 0 31,231
Occupancy and other expense (l)...... 822 5,607 3,727 11,318 (200)(h) 21,274
General and administrative expenses (m) 1,667 1,971 771 2,550 254 (i) 7,213
------ ------- ------- ------- ----- -------
Total operating expense ..... 4,511 25,122 14,482 45,401 54 89,570
Operating income (loss) ................. 726 1,414 (512) 30 (54) 1,604
Interest income (expense) ............... 143 (89) (197) (619) 0 (762)
Other income (expense), net ............. (15) 69 67 201 0 322
------ ------- ------- ------- ----- -------
Income (loss) before income taxes........ 854 1,394 (642) (388) (54) 1,164
Provision (benefit) for income taxes .... 412 (249) (150) 85 (j) 98
------ ------- ------- ------- ----- -------
Net income (loss) ....................... $ 854 $ 982 $ (393) $ (238) $(139) $ 1,066
====== ======= ======= ======= ===== =======
Basic earnings per share ................ $ 0.09
Diluted earnings per share .............. $ 0.08
Basic weighted average shares ........... 12,420
Diluted weighted average shares ......... 13,466
Shares outstanding ...................... 12,699
</TABLE>
<PAGE> 4
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(a) To record the exercise of 1,000,000 common stock purchase warrants by
Fidelity for $5 million and the payment of an additional $500,000 of
acquisition costs to be incurred to complete the Merger (see notes d
and e).
(b) To eliminate pre-existing unamortized preopening costs of $608,000
reflected on the Timber Lodge balance sheet.
(c) To record the excess consideration paid by Timber Lodge over the
preliminary estimate of the fair value of the net assets acquired of the
Sixteen Restaurants. The excess consideration amounts to $2,543,000 and
will be amortized over 40 years. Timber Lodge issued 687,890 new shares to
CKE valued at $6.80 per share.
<TABLE>
<CAPTION>
<S> <C>
Total consideration (687,890 shares at $6.80 per share)...................... $4,678,000
----------
Historical stockholders' equity of the Sixteen Restaurants as reflected on
pro forma balance sheet ................................................... 2,974,000
Less the elimination of pre-existing unamortized costs in excess of net
assets acquired ........................................................... (839,000)
----------
Estimated Fair Value of new assets acquired ................................. 2,135,000
----------
Excess consideration over estimated fair value .............................. $2,543,000
==========
</TABLE>
(d) To record the excess consideration paid by SBRG over the estimated fair
value of net Timber Lodge assets acquired, plus the acquisition costs
incurred to complete the Merger. SBRG issued 4,127,638 new shares which,
based on the average closing price of SBRG common stock five
days before and after the approval of the merger (September 1, 1998), are
valued at $5.10 per share. The excess consideration is $8,496,000 and will
be amortized over 40 years.
<TABLE>
<CAPTION>
<S> <C>
Total consideration (4,127,638 shares at $5.10 per share).................... $21,051,000
-----------
Historical stockholders' equity of Timber Lodge as reflected on pro forma
balance sheet ............................................................ 11,445,000
Total consideration paid by Timber Lodge for the Sixteen Restaurants
(note c) .................................................................. 4,678,000
Less a reduction to the carrying amount of the Timber Lodge property and
equipment (note f) ........................................................ (2,104,000)
Less the elimination of pre-existing unamortized preopening costs
(note b) .................................................................. (608,000)
Reserve (see note n) ........................................................ (556,000)
-----------
Estimated Fair Value of Timber Lodge assets after the acquisition of
Sixteen Restaurants ....................................................... 12,855,000
-----------
Excess consideration over estimated fair value............................... 8,196,000
Additional acquisition and registration costs ............................... 300,000
-----------
$ 8,496,000
===========
</TABLE>
<PAGE> 5
(e) To record the excess consideration paid by SBRG over the estimated fair
value of net JBRI assets acquired, plus acquisition costs incurred. The
consideration paid by SBRG was one million shares of SBRG common stock
valued at $5.10 per share. The excess consideration is $2,717,000 and will
be amortized over 40 years.
<TABLE>
<CAPTION>
<S> <C>
Total consideration (1,000,000 shares at $5.10 per share).................... $5,100,000
----------
Historical stockholders' equity of JBRI as reflected on pro forma balance
sheet ..................................................................... 8,032,000
Less the elimination of pre-existing unamortized costs in excess of net
assets acquired............................................................ (2,728,000)
Less an increase to the pre-exiting liability for retirement payments to
reflect the estimated net present value of the underlying obligation ...... (500,000)
Less a reduction to the carrying amount of the JBRI property and
equipment (note f) ........................................................ (693,000)
Reserve (see note n) ........................................................ (1,528,000)
----------
Estimated Fair Value of new assets acquired ................................. 2,583,000
----------
Excess consideration over estimated fair value .............................. 2,517,000
Additional acquisition costs ................................................ 200,000
----------
$2,717,000
==========
</TABLE>
(f) Net reduction in the historical carrying amounts of Timber Lodge and JBRI
property and equipment of $2,104,000 and $693,000, respectively, to
properly reflect their estimated fair values.
<PAGE> 6
(g) The net increase in pro forma combined stockholders' equity of SBRG
consists of the following:
<TABLE>
<CAPTION>
<S> <C>
Issued common stock for the acquisition of Timber Lodge (4,127,638 shares
at $5.10 per share)........................................................ $ 21,051,000
Issued common stock for the Exercise of Fidelity Warrants (1,000,000 shares
of $5.00 warrants)......................................................... 5,000,000
Issued common stock for the acquisition of JBRI (1,000,000 shares at
$5.10 per share)........................................................... 5,100,000
Less the elimination of the historical stockholders' equity of JBRI.......... (8,032,000)
Less the elimination of the historical stockholders' equity of Timber Lodge (11,445,000)
Less the elimination of the historical stockholders' equity of Sixteen
Restaurants................................................................ (2,974,000)
------------
$ 8,700,000
============
</TABLE>
(h) To record the reduction of depreciation expense associated with the
reduction to the carrying amounts of the Timber Lodge and JBRI property and
equipment (see note f). For the six months ended Fiscal 1998, the Timber
Lodge and JBRI depreciation expense was reduced by $77,000 and $35,000,
respectively. For Fiscal year ended 1997, the Timber Lodge and JBRI
dpreciation expense was reduced by $130,000 and $70,000, respectiely.
(i) To record the amortization of the excess consideratin paid over the
estimated fair value of the net assets acquired of Timber Lodge, the
Sixteen Restaurants and JBRI as described in notes (c), (d) and (e).
Amortization for the six months ended Fiscal 1998 and fiscal year ended
1997 is $127,000 and $254,000, respectively. These amounts have been
reduced by $45,000 and 90,000, respectively to eliminate the amortization
of pre-existing costs in excess of net assets acquired as such pre-existing
costs in excess of net assets acquired are eliminated (see notes c and e).
(j) To adjust the tax provisions to reflect the state taxes due for Timber
Lodge, JBRI and the Sixteen Restaurants. All Federal and California income
taxes have been offset against the SBRG net operating loss carryforwards
utilizing approximately $1,201,000 and $1,164,000 of the carryforwards in
the six months ended June 30, 1998 and the fiscal year ended 1997,
respectively.
<PAGE> 7
(k) The following adjustments were made to the SBRG's historical shares
outstanding:
<TABLE>
<CAPTION>
Timber Lodge JBRI Fidelity Pro Forma
Six Months Ended Fiscal 1998 Historical Acquisition Acquisition Warrant Shares
---------------------------- ---------- ------------ ----------- -------- ----------
<S> <C> <C> <C> <C> <C>
Basic weighted average shares 6,575,518 4,127,638 1,000,000 1,000,000 12,703,156
Diluted weighted average shares 7,501,899 4,127,638 1,000,000 350,000(1) 12,979,537
Shares outstanding 6,576,485 4,127,638 1,000,000 1,000,000 12,704,123
</TABLE>
<TABLE>
<CAPTION>
Timber Lodge JBRI Fidelity Pro Forma
Fiscal Year Ended 1997 Historical Acquisition Acquisition Warrant Shares
----------------------- ---------- ------------ ----------- -------- ----------
<S> <C> <C> <C> <C> <C>
Basic weighted average shares 6,292,691 4,127,638 1,000,000 1,000,000 12,420,329
Diluted weighted average shares 7,752,000 4,127,638 1,000,000 586,000(1) 13,465,638
Shares outstanding 6,571,000 4,127,638 1,000,000 1,000,000 12,698,638
</TABLE>
Note 1. The diluted weighted average share adjustment for the issuance of the
Fidelity Warrant has been adjusted to take into account the warrant
shares already included in the historical weighted average share amounts
using the treasury stock method of 650,000 and 414,000 for the second
quarter of fiscal 1998 and for fiscal year ended 1997, respectively.
(l) Occupancy and other operating expenses include franchise and licensing
expense and depreciation and amortization.
(m) General and administrative expenses include advertising and litigation
settlement and related costs.
(n) To establish a reserve for the net present value of the estimated excess of
future minimum lease payments over operating cash flows on certain
underperforming restaurants acquired. The reserves recorded for Timber
Lodge and JBRI are $556,000 and $1,528,000, respectively.
