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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
[NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]
For Year Ended: DECEMBER 31, 1996 Commission File Number: 0-19334
OUTBACK STEAKHOUSE, INC.
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 59-3061413
- -------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
550 North Reo Street, Suite 200, Tampa, Florida 33609
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(Address of principal executive offices) (Zip Code)
(813) 282-1225
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
-----------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value.
-----------------------------------------------------------
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in Definitive Proxy or Information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. / X /
----
As of March 7, 1997, the aggregate market value of the voting stock
held by nonaffiliates of the Registrant was $951,958,337.
As of March 7, 1997, the number of shares outstanding of the
Registrant's Common Stock, $.01 par value was 48,030,588.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year ended
December 31, 1996 are incorporated by reference in Part II, hereof.
Portions of the Registrant's Proxy Statement of Outback Steakhouse, Inc. ("the
Proxy Statement") dated March 20, 1997 for the Annual Meeting of Shareholders
to be held on April 23, 1997 are incorporated by reference in Parts I and III,
hereof.
PART I
ITEM 1. BUSINESS
GENERAL
The Company was incorporated in October 1987 as Multi-Venture Partners,
Inc., a Florida corporation, and in January 1990 the Company changed its name
to Outback Steakhouse Inc. ("Outback Florida"). Outback Steakhouse, Inc., a
Delaware corporation ("Outback Delaware"), was formed in April 1991 as part of
a corporate reorganization completed in June 1991 in connection with the
Company's initial public offering, as a result of which Outback Delaware became
a holding company for Outback Florida. Carrabba's Italian Grill, Inc.
("CIGI"), a Florida corporation, was formed in January 1995. Unless the
context requires otherwise, references to the "Company" mean Outback Delaware,
its wholly owned subsidiaries Outback Florida, CIGI and each of the limited
partnerships and joint ventures controlled by the Company.
In 1996, the Company issued approximately 2,348,000 shares of its
Common Stock to the shareholders of four of its franchisees in exchange for all
of their outstanding interests in 28 Outback Steakhouses in Ohio, Kentucky,
Virginia, Illinois, Missouri, and Tennessee. The Franchise groups include
Garob, Inc. ("Garob"), FBS Enterprises, Inc. ("FBS"), the Fore Management
Group ("Fore Management"), and the Brenica Restaurant Group ("Brenica").
The mergers have been accounted for by the pooling of interests
method using historical amounts and the financial statements presented herein
have been restated to give retroactive effect to the mergers for the applicable
periods presented.
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CONCEPTS AND STRATEGIES
As of December 31, 1996, the Company's restaurant system included 373
full-service restaurants operated under the name Outback Steakhouse, 55 of
which were franchised to unaffiliated franchisees, and 48 full-service
restaurants operated under the name Carrabba's Italian Grills, 36 of which were
Company-owned and twelve of which were operated as development joint ventures.
Outback serves dinner only and features a limited menu of high quality,
uniquely seasoned steaks, prime rib, chops, ribs, chicken, fish and pasta.
Outback also offers specialty appetizers, including the signature "Bloomin'
Onion," desserts and full liquor service. Carrabba's serves dinner only and
features a limited menu of high quality Italian cuisine including a variety of
pastas, chicken, seafood, veal and wood-fired pizza. Carrabba's also offers
specialty appetizers, desserts, coffees and full liquor service. The Company
believes that it differentiates its Outback Steakhouse and Carrabba's
restaurants by:
* emphasizing consistently high quality ingredients and
preparation of a limited number of menu items that appeal to a
broad array of tastes;
* featuring generous portions at moderate prices;
* attracting a diverse mix of customers through a casual dining
atmosphere emphasizing highly attentive service;
* hiring and retaining experienced restaurant management by
providing general managers the opportunity to purchase a 10%
interest in the restaurants they manage; and
* limiting service to dinner (generally from 4:30 p.m. to 11:00
p.m.), which reduces the hours of restaurant management and
employees.
OUTBACK STEAKHOUSE:
Menu. The Outback Steakhouse menu includes several cuts of freshly
prepared, uniquely seasoned and seared steaks, plus prime rib, barbecued ribs,
pork chops, chicken, seafood and pasta. The menu is designed to have a limited
number of selections to permit the greatest attention to quality while offering
sufficient breadth to appeal to all taste preferences. The Company tests new
menu items to replace slower-selling items and regularly upgrades ingredients
and cooking methods to improve quality and consistency of its food offerings.
The menu also includes several specialty appetizers and desserts, together with
full bar service featuring Australian beer and wine. Liquor service accounts
for approximately 14% of Outback Steakhouses' revenues. The price range of
appetizers is $1.95 to $6.45 and
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the price range of entrees is $7.95 to $17.95. The average check per person
was approximately $16 to $17 during 1996. Outback Steakhouses also offer a
low-priced children's menu, and a few select Outback Steakhouses also offer a
high-end menu with prices ranging from $16.95 to $22.95.
Casual Atmosphere. Outback Steakhouses feature a casual dining
atmosphere with a decor suggestive of the rustic atmosphere of the Australian
outback. The decor includes blond woods, large booths and tables and
Australian memorabilia such as boomerangs, surfboards, maps and flags.
Restaurant Management and Employees. The general manager of each
Outback is provided the opportunity to purchase a 10% interest in the
restaurant he or she manages for $25,000 and is required to enter into a
five-year employment agreement. By requiring this level of commitment and by
providing the general manager with a significant stake in the success of the
restaurant, the Company believes that it is able to attract and retain
experienced and highly motivated managers. In addition, since the Company's
restaurants are generally open for dinner only, the Company believes that it
has an advantage in attracting and retaining servers, food preparers and other
employees who find the shorter hours an attractive life-style alternative to
restaurants serving both lunch and dinner.
CARRABBA'S ITALIAN GRILL:
Menu. The Carrabba's Italian Grill menu includes several types of
uniquely prepared Italian dishes including pastas, chicken, seafood, wood-fired
pizza and veal. The menu is designed to have a limited number of selections to
permit the greatest attention to quality while offering sufficient breadth to
appeal to all taste preferences. The Company tests new menu items to replace
slower-selling items and regularly upgrades ingredients and cooking methods to
improve quality and consistency of its food offerings. The menu also includes
several specialty appetizers, desserts, and coffees, together with full bar
service featuring Italian wines and specialty drinks. Liquor service accounts
for approximately 18% of Carrabba's revenues. The price range of appetizers is
$2.25 to $7.95 and the price range of entrees is $6.45 to $15.95. The average
check per person was approximately $16 to $17 during 1996.
Casual Atmosphere. Carrabba's Italian Grills feature a casual dining
atmosphere with a decor suggestive of a traditional Italian exhibition kitchen
where customers can watch their meals prepared. The decor includes dark woods,
large booths and tables and Italian memorabilia featuring Carrabba's family
photos, authentic Italian pottery and cooking utensils.
Restaurant Management and Employees. The general manager of each
Carrabba's Italian Grill is provided the opportunity to purchase a 10%
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interest in the restaurant he or she manages for $25,000 and is required to
enter into a five-year employment agreement. By requiring this level of
commitment and by providing the general manager with a significant stake in the
success of the restaurant, the Company believes that it is able to attract and
retain experienced and highly motivated managers. In addition, since the
Company's restaurants are generally open for dinner only, the Company believes
that it has an advantage in attracting and retaining servers, food preparers
and other employees who find the shorter hours an attractive life-style
alternative to restaurants serving both lunch and dinner.
EXPANSION STRATEGY
During the year ended December 31, 1996, 76 Outback Steakhouses and 25
Carrabba's Italian Grills were added to the Company's restaurant system. The
Company expects to open 65 to 75 Outback Steakhouse restaurants in 1997 and
1998 of which 50 to 55 are expected to be Company-owned, and 20 to 25
Carrabba's Italian Grills, the majority of which will be Company-owned. During
1997, the Company expects to develop new Outbacks in its existing markets and
in select new domestic and international markets including locations in
Connecticut, Guam, Seoul, Korea, Edmonton, Canada, Waikiki, Hawaii, and the
Cayman Islands. The Company also expects to develop Carrabba's Italian Grills
in existing markets and select new markets including locations in New Jersey
and Virginia.
The above statements regarding the Company's expansion plans constitute
forward looking statements. The Company notes that a variety of factors could
cause the actual results and experience to differ from the anticipated results
referred to above. The Company's development schedule for new restaurant
openings is subject to a number of risk factors that could cause actual results
to differ, including:
(i) Ability to secure appropriate real estate sites at acceptable
prices;
(ii) Ability to obtain all required governmental permits including
zoning approvals and liquor licenses on a timely basis;
(iii) Impact of government moratoriums or approval processes which
could result in significant delays;
(iv) Ability to secure all necessary contractors and
sub-contractors;
(v) Union activities such as picketing and hand billing which could
delay construction;
(vi) Weather and acts of God beyond the Company's control resulting
in construction delays.
The Company utilizes controlled partnerships, in which the Company owns
71% to 90%, for the development of restaurants in order to attract experienced
restaurant operators and to provide them with the incentive to actively
supervise the development and operation of several restaurants in a particular
market.
The Company also utilizes development joint ventures, in which the
Company owns 50% and its joint venture partner owns 50%, in select Outback
markets and Carrabba's Italian Grills located in the State of Texas.
Site Selection. The Company currently leases approximately 50% of its
restaurant sites. In the future, the Company expects to construct a
significant number of free standing restaurants on owned or leased sites. The
Company's leased sites are generally located in strip shopping centers. The
Company expects 40% to 50% of new restaurants to be free standing locations
owned by the Company. The Company considers the location of a restaurant to be
critical to its long-term success and devotes significant effort to the
investigation and evaluation of potential sites. The site selection process
focuses on trade area demographics, such as visibility, accessibility and
traffic volume. The Company also reviews potential competition and the
profitability of national chain restaurants operating
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in the area. Senior management inspects and approves each restaurant site. It
takes approximately 90 to 180 days to complete construction and open a new
restaurant.
The Company designs the interior of its restaurants in-house and utilizes
outside architects when necessary. A typical Outback Steakhouse is
approximately 6,200 square feet and features a dining room and an island bar.
The dining area of a typical Outback consists of 35 to 38 tables and seats
approximately 210 people. The bar area consists of six to nine tables and has
seating capacity for approximately 35 people. Appetizers and complete dinners
are served in the bar area.
A typical Carrabba's Italian Grill is approximately 6,200 square feet
and features a dining room, pasta bar and an island full service liquor bar.
The dining area of a typical Carrabba's Italian Grill consists of 34 to 36
tables and seats approximately 160 people. The liquor bar area includes eight
tables and seating capacity for approximately 52 people, and the pasta bar has
seating capacity for approximately 12 people. Appetizers and complete dinners
are served in both the pasta bar and liquor bar.
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RESTAURANT LOCATIONS
The following table sets forth the location of each existing Outback
Steakhouse as of December 31, 1996:
<TABLE>
<CAPTION>
COMPANY-OWNED UNAFFILIATED FRANCHISED
RESTAURANTS RESTAURANTS
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<S> <C> <C>
Arizona (4) Nebraska (3) Alabama (7)
Arkansas (3) Nevada (5) California (22)
Colorado (10) New Jersey (8) Connecticut (2)
Delaware (1) New Mexico (2) Florida (1)
Florida (52) New York (9) Idaho (1)
Georgia (18) North Carolina (16) Massachusetts (5)
Illinois (10) Ohio (16) Mississippi (6)
Indiana (12) Oklahoma (6) New Hampshire (1)
Iowa (3) Pennsylvania (9) Ontario, Canada (1)
Kansas (3) South Carolina (11) Rhode Island (1)
Kentucky (6) Tennessee (9) Tennessee (1)
Louisiana (9) Texas (36) Washington (7)
Maryland (9) Utah (3)
Michigan (13) Virginia (21)
Missouri (7) West Virginia (4)
</TABLE>
The following table sets forth the location of each existing
Carrabba's Italian Grill as of December 31, 1996:
<TABLE>
<CAPTION>
COMPANY-OWNED DEVELOPMENT JOINT
RESTAURANTS VENTURE RESTAURANTS
- ------------- -----------------------
<S> <C>
Colorado (7) Florida (1)
Georgia (5) Texas (11)
Florida (17)
New Jersey (1)
New Mexico (2)
North Carolina (2)
Pennsylvania (1)
South Carolina (1)
</TABLE>
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RESTAURANT OPERATIONS
Management and Employees. The management staff of a typical Outback
Steakhouse or Carrabba's Italian Grill consists of one general manager, one
assistant manager and one kitchen manager. Each restaurant also employs
approximately 50 to 70 hourly employees, many of whom work part-time. The
general manager of each restaurant has primary responsibility for the
day-to-day operation of his or her restaurant and is required to abide by
Company established operating standards.
Purchasing. The Company's management negotiates directly with
suppliers for most food and beverage products to ensure uniform quality and
adequate supplies and to obtain competitive prices. The Company and its
franchisees purchase substantially all food and beverage products from
authorized local or national suppliers. The Company currently purchases
substantially all of its beef from two suppliers. The Company believes that
beef of comparable quality, as well as all other essential food and beverage
products are available, or upon short notice can be made available, from
alternative qualified suppliers.
Supervision and Training. The Company requires its joint venture
partners and restaurant general managers to have significant experience in the
full-service restaurant industry. In addition, the Company has developed a
comprehensive 12-week training course which all operating partners and general
managers are required to complete. The program emphasizes the Company's
operating strategy, procedures and standards. The Company's senior management
meets quarterly with the Company's operating partners to discuss
business-related issues and share ideas. In addition, members of senior
management regularly visit the restaurants to ensure that the Company's
concept, strategy and standards of quality are being adhered to in all aspects
of restaurant operations.
The restaurant general managers, together with the Company's Senior
Vice President of Operations and Vice President of Training, are responsible
for selecting and training the employees for each new restaurant. The training
period for new employees lasts approximately one week and is characterized by
on-the-job supervision by an experienced employee. Ongoing employee training
remains the responsibility of the restaurant manager. Written tests and
observation in the work place are used to evaluate each employee's performance.
Special emphasis is placed on the consistency and quality of food preparation
and service which is monitored through monthly meetings between kitchen
managers and senior management.
Advertising and Marketing. The Company uses radio and television
advertising in selected markets where it is cost-effective. The Company's goal
is to develop a sufficient number of restaurants in each market it serves to
permit the cost-effective use of radio and television advertising. In
addition, the Company engages in a variety of promotional
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activities, such as contributing goods, time and money to charitable, civic and
cultural programs, in order to increase public awareness of the Company's
restaurants.
GENERAL MANAGER PROGRAM
The general manager of each Company-owned restaurant is required, as a
condition of employment, to sign a five- year employment agreement and is given
the opportunity to purchase a 10% interest in the restaurant the general
manager is employed to manage. The Company requires each new unaffiliated
franchisee to provide the same opportunity to the general manager of each new
restaurant opened by that franchisee. To date, the purchase price for the 10%
interest has been fixed at $25,000. During the five-year employment term, each
general manager is prohibited from selling or otherwise transferring his 10%
interest, and after the five-year term of employment, any sale or transfer of
that interest is subject to certain rights of first refusal. In addition, each
general manager is required to sell his 10% interest to his employer or its
general partners upon termination of employment on terms set forth in his
employment agreement. The Company intends to continue the general manager
investment program.
OWNERSHIP STRUCTURES
The Company's ownership interests in Outback Steakhouse restaurants
and Carrabba's Italian Grills are divided into two basic categories: (i)
Company-owned restaurants which are owned directly by the Company, by limited
partnerships or by controlled joint ventures, and (ii) development joint
ventures. The results of operations of Company-owned restaurants are included
in the Company's Consolidated Statements of Income, and the results of
operations of restaurants owned by development joint ventures are accounted for
using the equity method of accounting.
COMPETITION
The restaurant industry is intensely competitive with respect to
price, service, location and food quality, and there are well-established
competitors with substantially greater financial and other resources than the
Company. Some of the Company's competitors have been in existence for a
substantially longer period than the Company and may be better established in
the markets where the Company's restaurants are or may be located. The
restaurant business is often affected by changes in consumer tastes, national,
regional or local economic conditions, demographic trends, traffic patterns and
the type, number and location of competing restaurants. In addition, factors
such as inflation, increased food, labor and benefits costs and the
availability of experienced management and hourly employees may adversely
affect the restaurant industry in general and the Company's restaurants in
particular.
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UNAFFILIATED FRANCHISE PROGRAM
At December 31, 1996, there were 54 domestic franchised Outback
Steakhouse operators and one international Outback Steakhouse operator. Each
domestic franchisee paid an initial franchise fee of $40,000 for each
restaurant and pays a continuing monthly royalty of 3% of gross restaurant
sales and a monthly marketing administration fee of 0.5% of gross restaurant
sales. In addition, until such time as the Company establishes a national
advertising fund or a regional advertising cooperative, all franchisees are
required to expend, on a monthly basis, a minimum of 3% of gross restaurant
sales on local advertising. Once the Company establishes a national
advertising fund or a regional advertising cooperative, covered domestic
franchisees will be required to contribute, on a monthly basis, 3.5% of gross
restaurant sales to the fund or cooperative in lieu of local advertising.
Initial fees and royalties for international franchisees vary by market. There
were no agreements to franchise Carrabba's Italian Grills at December 31, 1996.
All unaffiliated franchisees are required to operate their Outback
Steakhouse restaurants in compliance with the Company's methods, standards and
specifications regarding such matters as menu items, ingredients, materials,
supplies, services, fixtures, furnishings, decor and signs although the
franchisee has full discretion to determine the prices to be charged to
customers. In addition, all franchisees are required to purchase all food,
ingredients, supplies and materials from suppliers approved by the Company.
EMPLOYEES
The Company employs approximately 23,000 persons, 146 of whom are
corporate personnel, 1,310 of whom are restaurant management personnel and the
remainder of whom are hourly restaurant personnel. Of the 146 corporate
employees, 14 are in management and 132 are administrative or office employees.
None of the Company's employees is covered by a collective bargaining
agreement.
TRADEMARKS
The Company regards its Outback Steakhouse service mark, its
Carrabba's Italian Grill service mark and its "Bloomin' Onion" trademark as
having significant value and as being important factors in the marketing of its
restaurants. The Company has also obtained a trademark for several other of
its Outback menu items, and the "No Rules. Just Right." and "Aussie Mood.
Awesome Food." advertising slogans. The Company is aware of names and marks
similar to the service mark of the Company used by other persons in certain
geographic areas in which the Company has restaurants. However, the Company
believes such uses will not adversely affect the Company. The Company's policy
is to pursue registration of its marks whenever possible and to oppose
vigorously any infringement of its marks.
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GOVERNMENT REGULATION
The Company is subject to various federal, state and local laws
affecting its business. Each of the Company's restaurants is subject to
licensing and regulation by a number of governmental authorities, which may
include alcoholic beverage control, health and safety and fire agencies in the
state or municipality in which the restaurant is located. Difficulties in
obtaining or failures to obtain the required licenses or approvals could delay
or prevent the development of a new restaurant in a particular area.
Approximately 14.5% of the Company's revenues is attributable to the
sale of alcoholic beverages. Alcoholic beverage control regulations require
each of the Company's restaurants to apply to a state authority and, in certain
locations, county or municipal authorities for a license or permit to sell
alcoholic beverages on the premises and to provide service for extended hours
and on Sundays. Typically, licenses must be renewed annually and may be
revoked or suspended for cause at any time. Alcoholic beverage control
regulations relate to numerous aspects of daily operations of the Company's
restaurants, including minimum age of patrons and employees, hours of
operation, advertising, wholesale purchasing, inventory control and handling,
storage and dispensing of alcoholic beverages. The failure of a restaurant to
obtain or retain liquor or food service licenses would adversely affect the
restaurant's operations.
The Company may be subject in certain states to "dram-shop" statutes,
which generally provide a person injured by an intoxicated person the right to
recover damages from an establishment which wrongfully served alcoholic
beverages to the intoxicated person. The Company carries liquor liability
coverage as part of its existing comprehensive general liability insurance and
has never been named as a defendant in a lawsuit involving "dram-shop"
statutes.
The Company's restaurant operations are also subject to federal and
state minimum wage laws governing such matters as working conditions, overtime
and tip credits. Significant numbers of the Company's food service and
preparation personnel are paid at rates related to the federal minimum wage
and, accordingly, further increases in the minimum wage could increase the
Company's labor costs.
The Americans With Disabilities Act prohibits discrimination in
employment and public accommodations on the basis of disability. The Act
became effective in January 1992 with respect to public accommodation and July
1992 with respect to employment. Under the Act, the Company could be required
to expend funds to modify its restaurant to provide service to, or make
reasonable accommodations for the employment of, disabled persons.
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ITEM 2. PROPERTIES
Approximately 50% of the Company's restaurants are located in leased
space. In the future, the Company intends to continue to construct and own a
significant number of new restaurants on owned or leased land. Initial lease
expirations primarily range from five to ten years, with the majority of the
leases providing for an option to renew for at least one additional term. All
of the Company's leases provide for a minimum annual rent, and most leases call
for additional rent based on sales volume at the particular location over
specified minimum levels. Generally, the leases are net leases which require
the Company to pay the costs of insurance, taxes and a portion of lessors'
operating costs. See page 7 for listing of restaurant locations.
The Company's executive offices are located in approximately 28,800
square feet of leased space in Tampa, Florida, under a lease expiring in 1999.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any litigation other than routine
matters which are incidental to the Company's business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
There were no matters submitted for vote of security holders during
the fourth quarter of 1996.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCK MATTERS
Filed herewith as Exhibit 13.03 and incorporated herein by reference.
DIVIDEND POLICY:
The Company has never paid a cash dividend on its Common Stock. The
Board of Directors intends to retain earnings of the Company to support
operations and to finance expansion and does not intend to pay cash dividends
on Common Stock for the foreseeable future. The payment of cash dividends in
the future will depend upon such factors as earnings levels, capital
requirements, the Company's financial condition and other factors deemed
relevant by the Board of Directors.
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(Dollar amounts in thousands,
except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Income Data:
Revenues ........................ $937,400 $733,692 $516,926 $336,885 $190,568
-------- -------- -------- -------- --------
Cost of revenues ................ 363,285 286,762 202,250 132,863 74,064
Labor and other related expenses 214,038 163,747 110,787 72,122 37,588
Restaurant operating expenses.... 195,229 150,409 108,952 72,253 43,798
General & administrative expenses 33,829 26,175 18,996 13,328 9,281
Loss (Income) from operations of
unconsolidated affiliates 102 (442) (1,269) (333)
------- ------- ------- ------- -------
Total costs and expenses 806,483 626,651 439,716 290,233 164,731
------- ------- ------- ------- -------
Income from operations .......... 130,917 107,041 77,210 46,652 25,837
Interest income (expense), net .. (1,096) (1,375) (302) 1,077 1,057
Income before elimination ------- ------- ------- ------- -------
of minority partners' interest
and income taxes .............. 129,821 105,666 76,908 47,729 26,894
Elimination of minority
partners' interest ............ 17,925 15,181 11,930 7,526 4,085
------- ----- ------ ------ ------
Income before income taxes ...... 111,896 90,485 64,978 40,203 22,809
Provision for income taxes ...... 40,283 29,167 21,602 13,922 6,802
------- ------- ------ ------ -------
Net income....................... $71,613 $61,318 $43,376 $26,281 $16,007
======= ======= ======= ======= =======
Earnings per common share........ $ 1.45 $ 1.25 $ 0.91 $ 0.56 $ 0.37
======= ======= ======= ======= =======
Pro forma net income ............ $57,911 $41,196 $24,926 $14,666
======= ======= ======= =======
Pro forma earnings per share .... $ 1.19 $ 0.86 $ 0.53 $ 0.34
======= ======= ======= =======
Weighted average number of
common shares outstanding...... 49,289 48,877 47,674 46,957 43,589
Balance Sheet Data:
Working capital ................. $(32,991) $(10,883) $ 19,273 $ 18,947 $ 50,343
Total assets .................... 469,843 372,271 259,118 174,794 131,436
Long-term debt .................. 47,595 37,905 20,699 11,718 5,570
Interest of minority partners in
consolidated partnerships ..... 1,569 2,698 2,477 1,576 1,826
Stockholders' equity ............ 342,439 266,764 186,697 135,059 103,997
</TABLE>
The financial data referred to above has been restated to reflect the
mergers discussed in Item 1 for all periods.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Filed as Exhibit 13.01 and incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The independent Auditors' Report and Consolidated Financial Statements of
the Company are filed herewith as Exhibit 13.02 and are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item concerning the Company's
executive officers and director is incorporated herein by reference to the
information set forth under the section entitled "Election of Directors" and
"Beneficial Owners and Management" in the Company's Definitive Proxy Statement
dated March 20, 1997.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference
to the information set forth under the section entitled "Executive
Compensation" in the Company's Definitive Proxy Statement dated March 20, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by reference
to the information set forth under the section entitled "Beneficial Owners and
Management" in the Company's Definitive Proxy Statement dated March 20, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated herein by reference
to the information set forth under the section entitled "Compensation Committee
Interlocks and Insider Participation" in the Company's Definitive Proxy
Statement dated March 20, 1997.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a)(1) LISTING OF FINANCIAL STATEMENTS
The following consolidated financial statements of the
Registrant and subsidiaries, included in the Registrant's
Annual Report to Shareholders, are incorporated by reference
in Item 8:
Consolidated Balance Sheets -
December 31, 1996 and 1995
Consolidated Statements of Income -
Years Ended December 31, 1996, 1995, and 1994
Consolidated Statements of Stockholders' Equity -
December 31, 1996, 1995, and 1994
Consolidated Statements of Cash Flows -
Years Ended December 31, 1996, 1995, and 1994
Notes to Consolidated Financial Statements
(b) REPORTS ON FORM 8-K
None.
(c) FINANCIAL STATEMENT SCHEDULES
None.
(d) EXHIBITS
The exhibits in response to this portion of Item 14 are
listed below.
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
3.01 Certificate of Incorporation of the Company (included as an exhibit to Registrant's
Registration Statement on Form S-1, No. 33-40255, and incorporated herein by reference)
3.02 By-laws of the Company (included as an exhibit to Registrant's Registration Statement on
Form S-1, No. 33-40255, and incorporated herein by reference)
4.01 Specimen Stock Certificate (included as an exhibit to Registrant's Registration Statement on
Form S-1, No. 33-40255, and incorporated herein by reference)
4.02 Agreement and Plan of Reorganization dated December 18, 1991 among Outback Delaware, Outback Florida,
American Restaurants of South Florida, Inc. ("ARSF") and the stockholders of ARSF (included as an
exhibit to Registrant's Registration Statement on Form S-1, No.33-44452, and incorporated herein by
reference)
4.03 Agreement and Plan of Reorganization dated July 1, 1992 among Outback Delaware, Outback Florida, Steve
Danker, Inc. ("SDI") and the stockholders of SDI (included as an exhibit to Registrant's Registration
Statement on Form S-1, No. 33-49586 and incorporated herein by reference)
4.04 Agreement and Plan of Reorganization dated March 1, 1993 among Outback Delaware, Outback Florida,
Florida Summit Corporation ("Summit") and the stockholders of Summit (included as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended December 31,1992 and incorporated herein by
reference)
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
4.05 Agreement and Plan of Reorganization dated March 1, 1993 among Outback Delaware, Outback Florida,
Grantham Group, Inc. ("Grantham Group") and the stockholders of Grantham Group (included as an exhibit
to Registrant's Annual Report on Form 10-K for the year ended December 31,1992 and incorporated herein
by reference)
4.06 Agreement and Plan of Reorganization dated March 1, 1993 among Outback Delaware, Outback Florida, F &
B, Inc. ("F & B") FT & B Enterprises/Ohio, Inc. ("FT & B"), Taste Buds, Inc. ("Taste Buds"), Taste
Buds of St. Matthews, Ltd., the stockholders of F & B, FT & B, and Taste Buds, and the partners of
Taste Buds of St. Matthews, Ltd (included as an exhibit to Registrant's Annual Report on Form 10-K for
the year ended December 31,1992 and incorporated herein by reference)
4.07 Joint Venture Agreement dated March 31, 1993 between Outback/Carrabba, Inc. and Mangia Beve, Inc.
(included as an exhibit to Registrant's Annual Report on Form 10-K for the year ended December 31,1993 and
incorporated herein by reference)
4.08 Agreement and Plan of Reorganization Among Outback Steakhouse, Inc., Outback Steakhouse of Florida, Inc.,
Aussie Enterprises, Inc., Attinger & Associates, Inc., Aussie of Louisiana, L.L.P., Aussie of Baton Rouge
No. 1901, L.L.C., Aussie of New Orleans No. 1911, L.L.C., Aussie of Lafayette No. 1921, L.L.C., Aussie
of Shreveport No. 1931, L.L.C., Aussie of Slidell No. 1912, L.L.C., Braxton I. Moody, IV and Bruce
Attinger (included as an exhibit to Registrant's Report on Form 10-Q for the quarter ended March 31, 1994 and
incorporated herein by reference)
4.09 Agreement and Plan of Reorganization dated May 18, 1994 Among Outback Steakhouse, Inc., Outback Steakhouse of
Florida, Inc., Hugh Connerty, Carl Sahlsten, Ridge Sink, Michael Coble, and the Partnerships and their
respective General Partners (included as an exhibit to Registrant's Report on Form 10-Q/A for the quarter
ended March 31, 1994 and incorporated herein by reference)
4.10 Royalty Agreement dated April 1995 among Carrabba's Italian Grill, Inc., Outback Steakhouse, Inc., Mangia Beve,
Inc., Carrabba, Inc., Carrabba Woodway, Inc., John C. Carrabba, III, Damian C. Mandola, and John C.
Carrabba, Jr. (included as an exhibit to Registrant's Report on Form 10-Q for the quarter ended March 31, 1995
and incorporated herein by reference)
4.11 Reorganization Agreement dated January 1, 1995 among Carrabba/Outback Joint Venture, Outback/Carrabba, Inc.,
Outback Steakhouse, Inc., Mangia Beve, Inc., Carrabba, Inc., Carrabba's of Woodway, Inc., John C. Carrabba, III,
Damian C. Mandola, and John C. Carrabba, Jr. (included as an exhibit to Registrant's Report on Form 10-Q for
the quarter ended March 31, 1995 and incorporated herein by reference)
4.12 Agreement and Plan of Reorganization dated March 24, 1995 among Outback Steakhouse, Inc., Outback Steakhouse of
Florida, Inc., Fioretti-Theisen, Inc., and Charles E. Fioretti (included as an exhibit to Registrant's
Registration Statement on Form S-3, No. 33-95498, and incorporated herein by reference)
4.13 Agreement and Plan of Reorganization dated July 31, 1995 among Outback Steakhouse, Inc., Outback Steakhouse of
Florida, Inc., G'Day, Inc., Donald R. Everts, and Claire E. Everts (included as an exhibit to Registrant's
Registration Statement on Form S-3, No. 33-97166, and incorporated herein by reference)
4.14 Agreement for Sale and Purchase of Partnership Interest among Outback Steakhouse, Inc., Shlemon, Inc. and Steve
Shlemon (included as an exhibit to Registrant's Registration Statement on Form S-3, No.333-00176, and
incorporated herein by reference)
4.15 Agreement and Plan of Reorganization dated December 26, 1995 among Outback Steakhouse, Inc., Outback Steakhouse
of Florida, Inc., Hal W. Smith, William E. Rosenthal, Geoff Alston, David M. Brauckmann, Don Elliot, Joseph C.
Penshorn, Waymon D. Williams, Williams J. Bishop, Dan Trierweiler, OB-Little Rock, Inc., Lane Resources Trust
(included as an exhibit to Registrant's Report on Form 8-K dated December 31, 1995 and incorporated herein
by reference)
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
4.16 Agreement and Plan of Reorganization dated December 26, 1995 among Outback Steakhouse, Inc., Outback Steakhouse
of Florida, Inc., Michael Duty, Robert Krug, Henry Harris, Kent Little (included as an exhibit to Registrant's
Report on Form 8-K dated December 31, 1995 and incorporated herein by reference)
4.17 Agreement and Plan of Reorganization dated December 26, 1995 among Outback Steakhouse, Inc., Outback Steakhouse
of Florida, Inc., Frank Attinger, Kevin A. Rowell, F. Beaven Smith (included as an exhibit to Registrant's
Report on Form 8-K dated December 31, 1995 and incorporated herein by reference)
4.18 Agreement and Plan of Reorganization dated February 2, 1996 among Outback Steakhouse, Inc., Outback Steakhouse
of Florida, Inc., Robert Frey, Ronald Sock, David Ferry, Joseph Sumislawski, FMI Restaurants, Inc., Fore
Management West End, Inc., Fore Management, Inc. and Fore Management Leasing, L.P. (included as an exhibit
to Registrant's Report on Form 8-K/A dated December 31, 1995 and incorporated herein by reference)
4.19 Agreement and Plan of Reorganization dated February 2, 1996 among Outback Steakhouse, Inc., Eric P. Bachelor,
Brenica Restaurant Group, Inc., First Four Group, Inc., and various partners (included as an exhibit to
Registrant's Registration Statement on Form S-3, No. 333-4674, and incorporated herein by reference)
4.20 Agreement and Plan of Reorganization, dated May 28, 1996, among Outback Steakhouse, Inc., Outback Steakhouse of
Florida, Inc., Nevada Summit Corporation, and Anthony P. Grappo (included as Exhibit 2.2 to Registration
Statement on Form S-3, No. 333-14597, and incorporated herein by reference)
10.01 Lease for the Company's executive offices (included as and exhibit to Registrant's Registration Statement on
Form S-1, No. 33-44452, and incorporated herein by reference)
10.02 Service and Non-Competition Agreement dated January 2, 1990, between Outback Florida and Chris T. Sullivan
(included as and exhibit to Registrant's Registration Statement on Form S-1, No. 33-40255, and incorporated
herein by reference)
10.03 Service and Non-Competition Agreement dated January 2, 1990, between Outback Florida and Robert D. Basham
(included as and exhibit to Registrant's Registration Statement on Form S-1, No. 33-40255, and incorporated
herein by reference)
10.04 Service and Non-Competition Agreement dated January 2, 1990, between Outback Florida and John Timothy Gannon
(included as and exhibit to Registrant's Registration Statement on Form S-1, No. 33-40255, and incorporated
herein by reference)
10.05 Employment Agreement dated February 2, 1988, between Outback Florida and John Timothy Gannon (included as and
exhibit to Registrant's Registration Statement on Form S-1, No. 33-40255, and incorporated herein by reference)
10.06 Employment Agreement dated January 2, 1990, between Outback Florida and Robert Merritt (included as and exhibit
to Registrant's Registration Statement on Form S-1, No. 33-40255, and incorporated herein by reference)
10.07 Stock Option Agreement dated January 2, 1990, between Outback Florida and Robert Merritt (included as and
exhibit to Registrant's Registration Statement on Form S-1, No. 33-40255, and incorporated herein by reference)
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
10.08 Stock Option Plan (included as and exhibit to Registrant's Registration Statement on Form S-1, No. 33-40255,
and incorporated herein by reference)
10.09 Loan Agreement dated September 14, 1994 between Outback Steakhouse, Inc. and Barnett Bank of Tampa (included
as an exhibit to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated
herein by reference)
10.10 Employment Agreement dated October, 1990 between Paul Avery and Outback Florida (included as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by
reference)
10.11 Stock Option Agreement dated November 30, 1990 between Outback Florida and Paul Avery (included as an exhibit
to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein
by reference)
10.12 Employment Agreement dated March, 1994 between Outback Florida and Joseph J. Kadow (included as an exhibit
to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein
by reference)
10.13 Stock Option Agreement dated April 1, 1994 between Outback Florida and Joseph J. Kadow (included as an exhibit
to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by
reference)
10.14 Amendment to Lease for the Company's executive offices dates June 10, 1994 (included as an exhibit
to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated
herein by reference)
10.15 Amendment to Lease for the Company's executive office dated December 17, 1995 (included as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated
herein by reference)
10.16 Stock Purchase Agreement dated July 18, 1995 among Outback Steakhouse, Inc., Robert D. Basham, J. Timothy
Gannon, and Bommerang Air, Inc. (included as an exhibit to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 and incorporated herein by reference)
10.17 First Amendment to Loan Agreement dated August 14, 1995 between Outback Steakhouse, Inc. and Barnett Bank of
Tampa (included as an exhibit to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995
and incorporated herein by reference)
10.18 Amended and Restated Revolving Promissory Noted dated August 14, 1995 between Outback Steakhouse, Inc. and
Barnett Bank of Tampa (included as an exhibit to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995 and incorporated herein by reference)
10.19 Second Amendment to Loan Agreement dated May 30, 1996 between Outback Steakhouse, Inc. and Barnett Bank
of Tampa (Filed herewith)
10.20 Amended and Restated Revolving Promissory Note dated May 30, 1996 between Outback Steakhouse, Inc. and
Barnett Bank of Tampa (Filed herewith)
10.21 First Amendment to Second Amended and Restated Loan Agreement dated May 30, 1996 between Outback Steakhouse,
Inc. and Barnett Bank of Tampa (filed herewith)
10.22 Amended and Restated Commercial Promissory Note dated May 30, 1996 between Outback Steakhouse, Inc. and
Barnett Bank of Tampa (filed herewith)
13.01 Management's Discussion and Analysis (filed herewith)
13.02 Independent Auditors' Report and Consolidated Financial Statements (filed herewith)
13.03 Market for the Registrant's Common Stock and Related Stock Matters (filed herewith)
21.01 List of Subsidiaries (filed herewith)
23.01 Independent Auditors Consent (filed herewith)
27.01 Financial Data Schedule (filed herewith)
- ------------------------
</TABLE>
19
<PAGE> 20
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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.
OUTBACK STEAKHOUSE, INC.
By /s/ Chris T. Sullivan
------------------------------
Chris T. Sullivan, Chairman
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<S> <C> <C>
/s/ Chris T. Sullivan Chairman, Chief Executive March 29, 1997
- ------------------------- Officer and Director
Chris T. Sullivan (Principal Executive
Officer)
/s/ Robert S. Merritt Senior Vice President, March 29, 1997
- ------------------------- Chief Financial Officer,
Robert S. Merritt Treasurer and Director
(Principal Financial Officer
and Principal Accounting
Officer)
/s/ Robert D. Basham President, Chief Operating March 29, 1997
- ------------------------- Officer and Director
Robert D. Basham
/s/ J. Timothy Gannon Senior Vice President and March 29, 1997
- ------------------------- Director
J. Timothy Gannon
/s/ John A. Brabson, Jr. Director March 29, 1997
- -------------------------
John A. Brabson, Jr.
Director March , 1997
- -------------------------
Charles H. Bridges
Director March , 1997
- --------------------------
W.R. Carey, Jr.
__________________________ Director March , 1997
Debbi Fields
</TABLE>
20
<PAGE> 21
<TABLE>
<S> <C> <C>
Director March , 1997
- -------------------------
Edward L. Flom
/s/ Nancy Schneid Director March 29, 1997
- -------------------------
Nancy Schneid
/s/ Lee Roy Selmon Director March 29, 1997
- -------------------------
Lee Roy Selmon
</TABLE>
21
<PAGE> 1
EXHIBIT 10.19
SECOND AMENDMENT TO LOAN AGREEMENT
DATED MAY 30, 1996
BETWEEN
OUTBACK STEAKHOUSE, INC.
AND
BARNETT BANK OF TAMPA
<PAGE> 2
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT ("this Agreement") dated as of
the 30th day of May, 1996, is made and executed by and between BARNETT BANK OF
TAMPA, a state chartered bank, and its successors and assigns (collectively, the
"Bank"), and OUTBACK STEAKHOUSE, INC., a Delaware corporation (the "Borrower").
BACKGROUND
A. On or about September 14, 1994, the Bank and the Borrower made
and executed certain Loan Agreement (as from time to time modified and amended,
the "Loan Agreement") relating to a $35,000,000.00 revolving line of credit (the
"Facility"), replacing in its entirety the "Prior Loan Agreement" as defined in
the Preamble to the Loan Agreement.
B. Effective as of August 14, 1995, the Facility was further
increased at Borrower's request from $35,000,000.00 to $50,000,000.00, pursuant
to the terms and provisions of a certain First Amendment to Loan Agreement dated
as of even date therewith.
C. Borrower has requested that the Facility be further increased
from $50,000,000.00 to $75,000,000.00, and the Bank is willing to do so upon the
terms and conditions set forth in the Loan Agreement.
D. To evidence the Facility, as increased, the Borrower has of
even date herewith executed and delivered to the Bank a certain Second Amended
and Restated Revolving Promissory Note in the principal amount of $75,000,000.00
(the "Second Restated Note"), which Second Restated Note amends, restates,
increases and replaces that certain Amended and Restated Revolving Promissory
Note dated August 14, 1995, executed by the Borrower in favor of the Bank in the
principal amount of $50,000,000.00 (the "First Restated Note").
E. Barnett Bank and Borrower now desire to amend the Loan
Agreement as hereinafter set forth.
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Bank and the Borrower hereby agree that the Loan Agreement is amended as
follows:
OPERATIVE PROVISIONS
1. The recitals of fact set forth above (the "Background") are
true and correct.
2. All capitalized terms used herein but not otherwise defined
herein shall have the
<PAGE> 3
meanings ascribed to such terms in the Loan Agreement or the First Amendment,
or, if any such term is not defined in the Loan Agreement or First Amendment,
then such term shall have the meaning ascribed to such term herein.
3. Subsections 1.2.10, 1.2.26, 1.2.27 and 1.2.34 contained in the
Loan Agreement are hereby deleted in their entirety and the following
substituted therefor:
1.2.10 "Commitment Period" shall mean the period from and
including the date of the Loan Agreement to but not including June 30,
1999, or such earlier date as the Commitment shall terminate as
provided herein.
1.2.26 "Maximum Facility Commitment" shall mean Seventy Five
Million Dollars ($75,000,000.00).
1.2.27 "Note" shall mean, in all instances, the Second
Restated Note, as defined in the preamble of this Agreement.
4. Article 1 is hereby amended by the inclusion of the following
Section 1.2.33(a):
1.2.33(a) "Prior Loan" shall mean that certain revolving line
of credit extended by Bank to Borrower pursuant to that certain Second
Amended and Restated Loan Agreement dated as of August 14, 1995, as
amended by First Amendment to Second Amended and Restated Loan
Agreement executed by Borrower and Bank as of even date herewith, and
the note or notes from time to time evidencing such revolving loan.
5. All references in the Loan Agreement to the $50-Million Loan
and/or the $50-Million Loan Agreement shall be deemed to refer, in all
instances, respectively to the $75-Million Loan and/or the $75-Million Loan
Agreement, as applicable.
6. Sections 4.14 and 4.16 contained in the Loan Agreement are
hereby deleted in their entirety and the following substituted therefore:
4.14 Consolidated Tangible Net Worth. Maintain the Borrower's
Consolidated Tangible Net Worth in an amount not less than (i)
$250,000,000.00 for the Borrower's fiscal year ending in 1996, (ii)
$300,000,000.00 for the Borrower's fiscal year ending in 1997, and
(iii) $375,000,000.00 for the Borrower's fiscal year ending in 1998;
Compliance with the foregoing Consolidated Tangible Net Worth covenant
shall be measured as of the end of each fiscal year.
4.16 Maximum Capital Expenditures. Not expend for all capital
expenditures, excluding pre-opening costs, in excess of (i)
$165,000,000.00 for the Borrower's fiscal year ending in 1996, (ii)
$190,000,000.00 for the Borrower's fiscal year ending in 1997, and
(iii) $210,000,000.00 for the Borrower's fiscal year ending in 1998.
Compliance with the
2.
<PAGE> 4
foregoing covenant shall be measured as of the end of each fiscal year.
7. Section 4.17 of Article 4 is hereby amended and restated in
its entirety, as follows:
4.17 Maximum Debt to EBITDA Ratio. The Borrower will maintain
its EBITDA Ratio at a maximum of 1.50:1.00 as of the end of each
quarter during the term of this Agreement. For the purpose of this
Agreement "Debt to EBITDA Ratio" shall mean (i) the Borrower's total
liabilities, including interests of minority partners in consolidated
partnerships, less deferred tax liabilities and subordinated debt, as
disclosed on the balance sheet of Borrower at any particular date,
divided by (ii) earnings before interest, taxes, depreciation and
amortization ("EBITDA"), for the preceding twelve-month period, ending
on the test date.
8. Exhibit "F" to the Loan Agreement is hereby deleted and
Exhibit "F" attached hereto is substituted therefor.
9. Except as expressly modified hereby, the Loan Agreement and
all other documents executed in connection with the Loan, except the Second
Restated Note, remain unchanged and in full force and effect and are hereby
ratified and reconfirmed by the Borrower. The Borrower certifies and confirms to
the Bank that all representations and warranties set forth in the Loan Agreement
are true and correct as of the date hereof.
IN WITNESS WHEREOF, the Borrower and the Bank have cause this Agreement
to be duly executed under seal by their duly authorized officers, all as of the
day and year first above written.
WITNESSES: OUTBACK STEAKHOUSE, INC., a Delaware
corporation
/s/ George Breen By: /s/ Robert S. Merritt
- ----------------------------- ----------------------------------
Name: Robert S. Merritt
/s/ Charlie Thomas Title: Senior Vice President
- -----------------------------
As to Borrower
(Corporate Seal)
"BORROWER"
3.
<PAGE> 5
BARNETT BANK OF TAMPA, a state
chartered bank
/s/ George Breen By: /s/ Lynn E. Billingsley
- ----------------------------- ----------------------------------
Name: Lynn E. Billingsley
/s/ Charlie Thomas Title: Senior Vice President
- -----------------------------
As to Bank
"BANK"
4.
<PAGE> 6
EXHIBIT "F"
OFFICER'S CERTIFICATE REGARDING FINANCIAL STATEMENTS
The undersigned officer hereby certifies that the (annual) (quarterly)
financial statements included in the attached (10K) (10Q) fairly present the
financial conditions of the Borrower in accordance with GAAP and all material
matters which would be required to be recognized and disclosed under GAAP have
been recognized and disclosed. No Event of Default exists on the date hereof,
nor has a default described in the Loan Agreement occurred which, with the
passage of time or the giving of notice, or both, would constitute and Event of
Default. The Borrower is not in default or violation of any of the terms and
conditions of the $75 Million Loan Agreement or the Prior Laon Agreement (as
defined in the Loan Agreement).
Attached hereto are accurate and correct calculations indicating
compliance with Sections 4.14 through 4.17 of the $75 Million Loan Agreement or
Sections 4.14 through 4.17 of the Prior Loan Agreement.
Date:_________________, 199__ ______________________________
Robert S. Merritt
Chief Financial Officer
<PAGE> 7
COMPLIANCE WITH SECTION 4.14 THROUGH 4.17
1. Compliance with Section 4.14: (Annually)
a. Consolidated Stockholder Equity $_________________
less b. Goodwill and Other Intangible Assets $_________________
CONSOLIDATED TANGIBLE NET WORTH $_________________
2. Compliance with Section 4.15: (Quarterly)
Total Liabilities $_________________
_______________________________________________ = _______:_________
Consolidated Tangible LEVERAGE RATIO
Net Worth $_________________
3. Compliance with Section 4.16: (Annually)
Fiscal Year Capital Expenditures
(excluding pre-opening costs) $_________________
CAPITAL EXPENDITURES
4. Compliance with Section 4.17: (Quarterly)
Total Liabilities Less Subord.
Debt & Deferred Tax Liabil. $________________
_______________________________________________ = _______:_________
Earnings Before Interest, Taxes DEBT TO EBITDA RATIO
Deprec. & Amortization $________________
<PAGE> 1
EXHIBIT 10.20
AMENDED AND RESTATED
REVOLVING PROMISSORY NOTE
$75,000,000.00 Valdosta, Georgia
(the "Principal Amount") May 30, 1996
FOR VALUE RECEIVED, the undersigned, OUTBACK STEAKHOUSE, INC., a
Delaware corporation (the "Borrower"), promises to pay to the order of BARNETT
BANK OF TAMPA, a state chartered bank ("Lender"), at its office at 101 East
Kennedy Boulevard, Tampa, Florida 33602 or at such other place as the holder of
this Note from time to time may designate to Borrower in writing, the principal
sum of SEVENTY-FIVE MILLION AND NO/100 DOL LARS ($75,000,000.00) together with
interest on the principal balance of this obligation from time to time remaining
unpaid, at the rates and at the times provided in this Note. All payments
required by this Note must be by legal tender of the United States of America.
The principal amount of this obligation has been and will be disbursed
by Lender to Borrower in accordance with the terms and conditions of that
certain Loan Agreement dated as of September 14, 1994, between Borrower and
Lender, as amended by (i) First Amendment to Loan Agreement executed by Borrower
and Lender as of August 14, 1995, and (ii) Second Amendment to Loan Agreement of
even date herewith executed by Borrower and Lender (collectively, the "Loan
Agreement"). Pursuant to the terms of the Loan Agreement, Borrower may borrow
portions of the principal amount of this Note, repay all or a portion of such
borrowing and reborrow, provided that, in any event, the maximum principal
amount outstanding under this Note at any time shall not exceed $75,000,000.00.
All capitalized terms used herein but not otherwise defined herein shall have
the meanings ascribed to such terms in the Loan Agreement. This Note amends,
restates, increases and replaces, in its entirety, that certain Amended and
Restated Revolving Promissory Note dated August 14, 1995, executed by Borrower
in favor of Lender in the original principal amount of $50,000,000.00.
As used in this Note, the following terms shall have the following
meanings:
1. Advance or Advances. Prime Rate Advances, Floating LIBO Rate
Advances and/or LIBO Rate Advances, individually or collectively as applicable.
2. Business Day. Any day other than a Saturday, Sunday or other
day on which commercial banks in the State of Florida are authorized or required
by law to close.
3. Floating LIBO Rate. A fluctuating rate of interest per annum
equal to the LIBO Margin plus the rate obtained by dividing (a) the rate of
interest per annum at which deposits in United States dollars are offered in the
London Interbank Market on the date for which the Floating LIBO Rate is being
calculated in an amount substantially equal to the Floating LIBO Rate Advance
and with a term equal to ninety (90) days, by (b) an amount equal to 1 minus the
Floating LIBO Reserve Requirement for such date.
<PAGE> 2
4. Floating LIBO Rate Advance. Any portion of the principal
amount of this Note outstanding which bears interest at the Floating LIBO Rate.
5. Floating LIBO Reserve Requirement. For any Floating LIBO Rate
Advance, the rate at which reserves (including, without limitation, any
marginal, supplemental or emergency reserves) are required to be maintained by
Lender on the date for which interest is being calculated, against U.S. dollar
nonpersonal time deposits in the United States with a term equal to ninety (90)
days, expressed as a decimal.
6. Leverage Ratio. As defined in Section 4.15 of the Loan
Agreement.
7. LIBO Interest Period. The period commencing on the date so
specified in Borrower's notice to Lender of any election to have the LIBO Rate
apply to a LIBO Rate Advance and ending on the date specified in such notice,
which ending date (a) shall be thirty (30), sixty (60), ninety (90), or one
hundred eighty (180) days after the commencement date, and (b) shall not be
beyond the Maturity Date. If any LIBO Interest Period would end on a date which
is not a Business Day, such LIBO Interest Period shall be extended to the next
succeeding Business Day.
8. LIBO Margin. The number of basis points which shall, at any
point in time, constitute the LIBO Margin determined in accordance with the
following table:
<TABLE>
<CAPTION>
LIBO Margin Leverage Ratio
(measured as of each quarter end)
<S> <C>
75 basis points <0.35:1.00
-
85 basis points >0.35:1.00 and <0.50:1.00
-
95 basis points >0.50:1.00 and <0.75:1.00
-
</TABLE>
The Leverage Ratio shall be measured as of the end of each calendar quarter
based upon financial information provided by Borrower in accordance with the
provisions of the Loan Agreement. Changes in the LIBO Margin shall be effective
as of the date upon which Lender receives the quarterly or annual financial
information disclosing a change in the Leverage Ratio which results in a change
in the LIBO Margin.
9. LIBO Rate. An interest rate per annum equal to the LIBO Margin
plus the rate per annum obtained by dividing (a) the rate of interest per annum
at which deposits in United States dollars are offered in the London Interbank
Market two (2) Business Days prior to the commencement of a LIBO Interest
Period, by (b) an amount equal to 1 minus the LIBO Reserve Percentage for such
LIBO Interest Period.
2.
<PAGE> 3
10. LIBO Rate Advance. That portion of the principal amount
outstanding under this Note with respect to which Borrower elects to have the
LIBO Rate apply during any LIBO Interest Period.
11. LIBO Reserve Percentage. For any LIBO Rate Advance, the rate
at which reserves (including, without limitation, any marginal, supplemental or
emergency reserves) are required to be maintained by Lender two (2) Business
Days prior to the commencement of a LIBO Interest Period against Eurocurrency
liabilities having a term substantially equal to such LIBO Interest Period,
expressed as a decimal.
12. LIBO Roll-Over Date. The last day of any LIBO Interest
Period.
13. Maturity Date. June 30, 1999.
14. Prime Rate. The lending rate from time to time announced by
Barnett Banks, Inc., Lender's parent company ("BBI"), as its prime rate.
15. Prime Based Rate. A fluctuating rate of interest per annum
equal to the Prime Rate minus one percent (1%).
16. Prime Rate Advance. Any portion of the principal amount of
this Note outstanding which bears interest at the Prime Based Rate.
Interest shall be calculated on the daily outstanding balance of each
type of Advance. Interest shall be computed on the basis of a year of 360 days
for the actual number of days elapsed through the actual payment due date.
Changes in the Prime Rate and/or the Floating LIBO Rate shall be effective as of
the date of change in the applicable rate. Interest on Prime Rate Advances and
Floating LIBO Rate Advances shall be paid quarterly in arrears commencing on
June 30, 1996 and continuing on each September 30, December 30, March 30 and
June 30 thereafter prior to the Maturity Date. Interest on LIBO Rate Advances
shall be paid on the last date of each applicable LIBO Interest Period. The
outstanding principal balance of this Note, plus unpaid accrued interest, shall
be due and payable on the Maturity Date.
Borrower shall have the option from time to time, in the manner
hereinafter set forth, to convert the interest rate on portions of the
outstanding principal balance of this Note from the Prime Based Rate to either
(a) the Floating LIBO Rate (the "Floating LIBO Rate Option") or (b) the LIBO
Rate (the "LIBO Rate Option"). To exercise the Floating LIBO Rate Option,
Borrower shall give Lender written notice of Borrower's Floating LIBO Rate
election prior to 12:00 Noon, local time, on the Business Day that Borrower
elects to have the Floating LIBO Rate apply, which notice shall specify the
portion of the outstanding principal balance of the Note, with respect to which
Borrower is making such election, and the date upon which the Floating LIBO Rate
is to commence. Changes in the Floating LIBO Rate caused by changes in the LIBO
Margin shall be effective as of
3.
<PAGE> 4
the date of change in the LIBO Margin. Borrower may elect to terminate the
applicability of the Floating LIBO Rate to all or a portion of the Floating LIBO
Rate Advance by giving Lender written notice (i) prior to 12:00 Noon, local
time, on the Business Day that Borrower elects to have the Floating LIBO Rate
terminate if the Prime Based Rate is to apply thereafter or (ii) at the time
required for a LIBO Rate Option election if Borrower elects to have the LIBO
Rate apply, which notice shall specify the principal amount with respect to
which the Floating LIBO Rate is to terminate.
To exercise the LIBO Rate Option, Borrower shall give Lender
irrevocable written notice of Borrower's LIBO Rate election at least three (3)
Business Days prior to the commencement of a LIBO Interest Period, which notice
shall specify the portion of the outstanding principal balance of this Note,
with respect to which Borrower is making such election, and the date upon which
such LIBO Interest Period is to commence and its duration. Such LIBO Rate shall
be applicable to such LIBO Rate Advance during the LIBO Interest Period
specified by Borrower in such notice. Changes in the LIBO Rate caused by changes
in the LIBO Margin shall be effective as of the date of change in the LIBO
Margin. It is agreed that (i) the interest rate applicable to any portion of the
outstanding principal balance of the Note, or advance about to be made with
respect to the Loan Agreement, with respect to which Borrower has elected a LIBO
Rate, shall revert from the LIBO Rate applicable thereto to the Prime Based Rate
as of the LIBO Roll-Over Date applicable thereto, unless Borrower timely
exercises the LIBO Rate Option or the Floating LIBO Rate Option with respect
thereto, and (ii) Lender shall not be under any duty or obligation to notify
Borrower that the interest rate on any LIBO Rate Advance is about to revert from
a LIBO Rate to the Prime Based Rate. Unless otherwise agreed to the contrary by
Lender, the LIBO Rate Option may only be exercised by Borrower with respect to
portions of the outstanding principal balance of this Note which (i) bear or
will bear interest at the Prime Based Rate or the Floating LIBO Rate, and (ii)
are equal to or in excess of $500,000.00. Borrower's option to elect the LIBO
Rate shall terminate as of a date which shall be thirty (30) days prior to the
Maturity Date. Borrower's right to elect the LIBO Rate shall be conditioned upon
Borrower not being in default under this Note or the Loan Agreement. Borrower
shall not be entitled to elect the LIBO Rate more frequently than once in any
thirty (30) day period.
In the event, and on each occasion, that on the day two (2) Business
Days prior to the commencement of any LIBO Interest Period, Lender shall have
determined (which determination shall be conclusive and binding upon Borrower)
that (i) the LIBO Rate is not available for dollar deposits in an amount
approximately equal to the amount with respect to which Borrower exercises the
LIBO Rate Option, or (ii) the rate at which such dollar deposits are being
offered will not adequately and fairly reflect the cost to Lender of making or
maintaining a LIBO Rate with respect to such portion of the outstanding
principal balance of this Note during such LIBO Interest Period, or (iii)
reasonable means do not exist for ascertaining a LIBO Rate, or (iv) a LIBO Rate
with respect thereto would be in excess of the maximum interest rate which
Borrower may by law pay, such portion of the outstanding principal balance of
this Note shall continue to bear interest at the Prime Based Rate.
If any change in any law or regulation or in the interpretation thereof
by any governmental authority charged with the administration or interpretation
thereof shall make it unlawful for Lender
4.
<PAGE> 5
or BBI, to make or maintain LIBO Rate Advances or Floating LIBO Rate Advances or
to give effect to their respective obligations as contemplated hereby, then, the
option to elect the LIBO Rate or the Floating LIBO Rate shall immediately
terminate and upon notice by Lender to Borrower any LIBO Rate Advance shall be
automatically converted to another Eurodollar market rate selected by Lender,
provided such conversion does not increase Lender's cost, or if no other
Eurodollar market rate is acceptable to Lender, to the Prime Based Rate and
Borrower shall pay to Lender an amount equal to the prepayment premium which
would be due with respect to any LIBO Rate Advance pursuant to the provisions of
this Note hereinafter set forth upon a prepayment of the same prior to the LIBO
Roll-Over Date applicable thereto. Any notice given by Lender to Borrower
pursuant to this paragraph shall, if lawful, be effective on the last day of any
existing LIBO Interest Periods.
Borrower recognizes that the cost to Lender of making or maintaining
LIBO Rates with respect to the LIBO Rate Advances may be, from time to time
affected by the matters set froth in Paragraphs 1 and 2, below, and Borrower
agrees that Lender, in quoting or establishing a LIBO Rate at the commencement
of a LIBO Interest Period, may take into consideration such additional amount or
amounts resulting from the following as Lender shall determine will compensate
Lender for such additional costs:
1. The imposition of, or changes in, the reserve requirements
promulgated by the Board of Governors of the Federal Reserve System of the
United States, including, but not limited to, any reserve on Eurocurrency
Liabilities as defined in Regulation D at the ratios provided in such Regulation
from time to time, it being agreed that any LIBO Rate Advances shall be deemed
to constitute Eurocurrency Liabilities, as defined by such Regulation, and it
being further agreed that such Eurocurrency Liabilities shall be deemed to be
subject to such reserve requirements without benefit of or credit for
prorations, exceptions, or offsets that may be available to Lender or BBI from
time to time under such Regulation; or
2. Any change, after the date of this Note, in applicable law or
regulation or in the interpretation or administration thereof by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of law) or by any court changing the basis of
taxation of payments to Lender or BBI of the principal of or interest on any
LIBO Rate Advances or any other fees or amounts payable under this Note or the
Loan Agreement (other than taxes imposed on the overall net income of Lender or
BBI by any state, or by any political subdivision or taxing authority therein),
or imposing, modifying or applying any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, credit
extended by, or any other acquisition of funds for loans by Lender or BBI or
imposing on Lender or BBI or the London Interbank Market any other condition
affecting this Note or the Loan Agreement or any LIBO Rate Advances so as to
increase the cost to Lender or BBI of making or maintaining a LIBO Rate with
respect to any LIBO Rate Advance or to reduce the amount of any sum received or
receivable by Lender under this Note or the Loan Agreement (whether of
principal, interest or otherwise), by an amount deemed by Lender to be material,
but without duplication for payments required under clause (1) above.
5.
<PAGE> 6
Notwithstanding the foregoing, once a LIBO Rate has been established by Lender
for a particular LIBO Rate Advance, the LIBO Rate so established shall apply,
without increase, during the applicable LIBO Interest Period, notwithstanding
the fact that the cost to Lender of making or maintaining LIBO Rates may be
increased as a result of an event set forth in Paragraph 1 or 2, above.
Borrower shall indemnify Lender against any loss or expense that Lender
may sustain or incur as a consequence of any default by Borrower in the payment
of any portion of the principal balance of this Note bearing interest at a LIBO
Rate, as and when due and payable, or the occurrence of any event specified in
the provisions of this Note or the Loan Documents, including, but not limited
to, any loss or reasonable expense sustained or incurred in liquidating or
reemploying deposits from third parties acquired to effect or maintain any LIBO
Rate with respect to any LIBO Rate Advance. Lender shall provide to Borrower a
statement explaining the amount of any such loss or expense, which statement
shall be conclusive absent manifest error.
Borrower shall from time to time, within ten (10) days after receipt
from Lender of a letter indicating (i) the respective portions of the
outstanding principal balance of this Note as of the date of such letter which
bear interest at the Prime Based Rate, the Floating LIBO Rate and the LIBO Rate,
(ii) the LIBO Rates applicable to each LIBO Rate Advance, and (iii) the
respective LIBO Roll-Over Dates applicable to each LIBO Rate Advance, confirm to
Lender, by execution and delivery to Lender within such time period of a copy of
such letter, that the facts stated thereon are accurate, or if inaccurate, the
nature, and extent and particulars of the inaccuracy. In the event Lender does
not receive such confirmation or specification of inaccuracies within the time
period above provided, the matters stated in Lender's letter shall be
conclusively deemed to be accurate.
Borrower shall have the right, provided that it is not in default under
this Note or the Loan Agreement, to prepay the principal balance of this Note,
in whole or in part, at any time, upon payment of all interest and other sums
then due and payable pursuant to the provisions of this Note or the Loan
Agreement. No prepayment premium shall be payable with respect to any portions
of the principal balance of this Note which constitute Prime Rate Advances or
Floating LIBO Rate Advances. If any portion of the principal balance of this
Note being prepaid constitutes one or more LIBO Rate Advances, then, with
respect to each such LIBO Rate Advance being prepaid, Borrower shall pay to
Lender contemporaneously with any such prepayment of this Note, an amount equal
to the amount of the prepayment multiplied by a per annum interest rate equal to
the difference between the LIBO Rate applicable thereto, and the 360 day
equivalent interest yield (hereinafter called the "Reinvestment Rate") on any
United States Treasury obligations selected by Lender in an aggregate amount
approximately equal to such portion of the principal balance of this Note, and
with maturities comparable to the LIBO Roll-Over Date applicable thereto,
calculated over a period of time from the date of prepayment to and including
such LIBO Roll-Over Date. If the LIBO Rate on such LIBO Rate Advance being
prepaid is equal to or less than the Reinvestment Rate, no prepayment premium
shall be due. Any payment of the principal balance of this Note after
acceleration of the applicable maturity date of this Note, or the commencement
of any proceedings to enforce this Note or the Loan Agreement, as a result of
the occurrence of an Event of Default under the Loan Agreement, shall be deemed
a voluntary prepayment for the purposes of this paragraph and a prepayment
premium
6.
<PAGE> 7
calculated pursuant to the provisions of this paragraph shall be payable with
respect thereto based upon the LIBO Rates applicable to any LIBO Rate Advances
immediately prior to such default and acceleration. Any partial prepayment of
the principal balance of this Note shall be applied first to the payment in full
of outstanding Prime Rate Advances and Floating LIBO Rate Advances, and then in
reduction of the various outstanding LIBO Rate Advances, in such order and
manner so as to minimize the prepayment premium due with respect thereto as
calculated pursuant to the provisions of this paragraph. Lender shall certify to
Borrower the amount and basis of determination of such prepayment premium, it
being agreed that (a) the calculation of such prepayment premium may be based on
any United States Treasury obligations selected by Lender in its sole discretion
and (b) Lender shall not be obligated or required to have actually reinvested
the prepaid principal balance of this Note in any such United States Treasury
obligations as a condition precedent to receiving a prepayment premium
calculated as aforesaid. Borrower shall, upon receipt of such certification and
contemporaneously with any such prepayment of the principal balance of this
Note, remit to Lender the prepayment premium, if any, due in connection
therewith as calculated pursuant to the provisions of this paragraph. Lender
shall not be obligated to accept any prepayment of the principal balance of this
Note unless it is accompanied by the prepayment premium, if any, due in
connection therewith as calculated pursuant to the provisions of this paragraph.
If any payment required by this Note is not paid within ten (10) days
after the date such payment is due, then the holder of this Note, at such
holder's option, may elect to declare the entire unpaid principal balance of
this Note, plus accrued interest, immediately due and payable. Borrower shall
pay a late charge equal to the greater of (a) $100.00, or (b) five percent (5%)
of the amount of any payment which is not received by Lender on or before the
tenth (10th) day following the date such payment is due, to compensate for
Lender's loss of use of funds and for the expense of handling the delinquency,
which late charge must be received by Lender with the payment then due.
If, following any default by Borrower under this Note, the holder of
this Note employs attorneys, to enforce collection of this obligation, in whole
or in part, then Borrower will pay, a reasonable fee for such attorneys' and any
legal assistants' services, regardless of whether suit is instituted and, if a
suit or other action or proceeding is instituted to enforce payment of all or
any portion of this obligation, for all trial and appellate proceedings, if any.
Borrower also will pay (i) all other costs of collection incurred, and (ii), all
costs and reasonable attorneys' and legal assistants' fees incurred by the
holder for all administrative, trial, and appellate proceedings involving this
obligation.
The remedies of Lender as provided herein and in the Loan Agreement
shall be cumulative and concurrent, and may be pursued singly, successively or
together, at the sole discretion of Lender, and may be exercised as often as
occasion therefor shall arise. No act of omission or commission of Lender,
including specifically any failure to exercise any right, remedy or recourse,
shall be effective as a waiver thereof unless it is set forth in a written
document executed by Lender and then only to the extent specifically recited
therein. A waiver or release with reference to one event shall not be construed
as continuing, as a bar to, or as a waiver or release of, any subsequent right,
remedy or recourse as to any subsequent event.
7.
<PAGE> 8
Notwithstanding any provision of this Note or the Loan Agreement to the
contrary, the parties intend that no provision of this Note or the Loan
Documents be interpreted, construed, applied, or enforced so as to permit or
require the payment or collection of interest in excess of the maximum rate as
hereafter may be permitted by the law applicable to this transaction (the
"Maximum Permitted Rate"). If, however, any such provision is so interpreted,
construed, applied, or enforced, then the parties intend: (i) that such
provision automatically shall be reformed nunc pro tunc so as to require payment
only of interest at the Maximum Permitted Rate; and (ii) if the holder of this
Note has received interest payments in excess of such Maximum Permitted Rate,
that the amount of such excess be credited nunc pro tunc in reduction of the
principal amount of this obligation, together with interest at such Maximum
Permitted Rate.
In connection with all calculations to determine the Maximum Permitted
Rate, the parties intend: first, that all charges be excluded to the extent that
they are properly excludable under the usury laws of the State of Florida or the
United States of America, as they from time to time are determined to apply to
this obligation; and, second, that all charges that may be "spread" in the
manner provided by Section 687.03(3), Florida Statutes (1995), or any similar
successor law, be spread in the manner provided by such statute.
This Note will be interpreted, construed, applied, and enforced
according to the laws of the State of Florida, regardless of where executed or
delivered, where payment is made, where any action or other proceeding involving
this Note is instituted, or whether the laws of the State of Florida otherwise
would apply the laws of another jurisdiction. The provisions of this Note bind,
and are for the benefit of, the respective heirs, successors, and assigns of
Lender and all persons and entities executing this Note as Borrower, jointly and
severally.
Presentment, protest, notice of protest, notice of dishonor, and all
suretyship defenses, unless expressly reserved by any subsequent endorser, are
hereby waived by all parties now or hereafter liable for payment of all or any
portion of this obligation, whether as makers, endorsers, guarantors, or
otherwise, and regardless of accommodation status.
[INTENTIONALLY LEFT BLANK]
8.
<PAGE> 9
IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of
the date stated above.
OUTBACK STEAKHOUSE, INC., a
Delaware corporation
By: /s/ Robert S. Merritt
------------------------------------
Name: Robert S. Merritt
Title: Senior Vice President
STATE OF GEORGIA )
COUNTY OF LOWNDES )
THE FOREGOING INSTRUMENT was acknowledged before me this 30th day of
May, 1996, by ROBERT S. MERRITT as Senior Vice President of OUTBACK STEAKHOUSE,
INC., a Delaware corporation, on behalf of the corporation. He is either ____
personally known to me or X has produced his FDL as identification.
/s/ Marie Elizabeth McKellar
-------------------------------------
(Affix Seal) Print Name: Marie Elizabeth McKellar
Notary Public - State of Georgia
My Commission Expires:
My Commission No.: Notary Public,
Lowndes County, Georgia My Commission
Expires January 10, 2000
9.
<PAGE> 1
EXHIBIT 10.21
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AGREEMENT
DATED MAY 30, 1996
BETWEEN
OUTBACK STEAKHOUSE, INC.
AND
BARNETT BANK OF TAMPA
<PAGE> 2
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT dated as of the 30th day of May,
1996, is made and executed by and between BARNETT BANK OF TAMPA, a state
chartered bank, and its successors and assigns (collectively, the "Bank"), and
OUTBACK STEAKHOUSE, INC., a Delaware corporation (the "Borrower").
BACKGROUND
A. On or about January 13, 1994, the Bank and the Borrower made
and executed a certain First Amended and Restated Loan Agreement (the "Prior
Loan Agreement") relating to a $5,000,000.00 commercial revolving line of
credit.
B. On or about September 14, 1994, the Bank and the Borrower
executed and entered into the covenants of that certain First Amendment to First
Amended and Restated Loan Agreement (the "First Amendment").
C. The Borrower requested that the Bank increase the existing
$5,000,000.00 revolving line of credit available under the Restated Loan
Agreement so as to provide a $7,500,000.00 revolving line of credit to support
or collateralize the issuance by Bank of letters of credit, finance general
corporate needs and support or collateralize loans to franchisees of the
Borrower (as from time to time extended and/or increased, the "Facility"), and
Bank approved said increase, subject to the terms and provisions of a certain
Second Amended and Restated Loan Agreement dated as of August 14, 1995 (as from
time to time modified and amended, the "Restated Loan Agreement"), which
replaced and superseded the Prior Loan Agreement in its entirety.
D. To evidence the increased Facility, the Borrower as of
August 14, 1995, executed and delivered to the Bank a certain Amended and
Restated Commercial Promissory Note in the principal amount of $7,500,000.00
(the "Prior Note"), which Prior Note amended, restated, increased and replaced
that certain Commercial Promissory Note dated January 13, 1994, executed by the
Borrower in favor of the Bank in the principal amount of $5,000,000.00.
E. Borrower has requested that Bank further extend the maturity
of the Facility and Bank has agreed so to do, and to evidence the Facility as
extended, the Borrower as of even date herewith has executed and delivered to
the Bank a certain Amended and Restated Commercial Promissory Note in the
principal amount of $7,500,000.00 (the "Renewal Note"), which Renewal Note
amends, restates, increases and replaces the Prior Note executed by the Borrower
in favor of the Bank in the principal amount of $7,500,000.00, in its entirety.
F. The Bank and the Borrower now desire to modify, amend, and
renew the Restated Loan Agreement, as hereinafter set forth.
<PAGE> 3
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Bank and the Borrower hereby agree that the Restated Loan Agreement is amended
as follows:
OPERATIVE PROVISIONS
1. The recitals of fact set forth above (the "Background") are
true and correct.
2. All capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed to such terms in the Restated Loan
Agreement or, if any such term is not defined in the Restated Loan Agreement.
3. Subsections 1.2.10, 1.2.19, 1.2.20, 1.2.27 and 1.2.28
contained in the Restated Loan Agreement are hereby deleted in their entirety
and the following substituted therefor:
1.2.10 "Commitment Period" shall mean the period from and
including the date of the Loan Agreement to but not including June 30,
1998, or such earlier date as the Commitment shall terminate as
provided herein.
1.2.19 "$75-Million Loan Agreement" shall mean the Loan
Agreement dated September 14, 1994, as amended by (i) First Amendment
to Loan Agreement executed by Borrower and Bank dated as of August 14,
1995, and (ii) Second Amendment to Loan Agreement executed by Borrower
and Bank of even date herewith of even date herewith, relating to the
$75-Million Revolving Loan.
1.2.20 "$75-Million Revolving Loan" shall mean that certain
revolving line of credit extended by Bank to Borrower pursuant to that
certain Loan Agreement dated September 14, 1994, as amended by First
Amendment to Loan Agreement executed by Borrower and Bank dated August
14, 1995, and by Second Amendment to Loan Agreement executed by
Borrower and Bank dated as of even date herewith, and the note or notes
evidencing such revolving loan.
1.2.27 "Note" shall mean the Restated Note, as defined in the
preamble of this Amendment.
1.2.28 "Loans" shall mean the Facility and the $75-Million
Revolving Loan, collectively.
2.
<PAGE> 4
4. Sections 4.14 and 4.16 contained in the Loan Agreement are
hereby deleted in their entirety and the following substituted therefor:
4.14 Consolidated Tangible Net Worth. Maintain the Borrower's
Consolidated Tangible Net Worth in an amount not less than (i)
$250,000,000.00 for the Borrower's fiscal year ending in 1996, (ii)
$300,000,000.00 for the Borrower's fiscal year ending in 1997, and
(iii) $375,000,000.00 for the Borrower's fiscal year ending in 1998;
Compliance with the foregoing Consolidated Tangible Net Worth covenant
shall be measured as of the end of each fiscal year.
4.16 Maximum Capital Expenditures. Not expend for all capital
expenditures, excluding pre-opening costs, in excess of (i)
$165,000,000.00 for the Borrower's fiscal year ending in 1996, (ii)
$190,000,000.00 for the Borrower's fiscal year ending in 1997, and
(iii) $210,000,000.00 for the Borrower's fiscal year ending in 1998.
Compliance with the foregoing covenant shall be measured as of the end
of each fiscal year.
5. Section 4.17 of Article 4 is hereby amended and restated in
its entirety, as follows:
4.17 Maximum Debt to EBITDA Ratio. The Borrower will maintain
its EBITDA Ratio at a maximum of 1.50:1.00 as of the end of each
quarter during the term of this Agreement. For the purpose of this
Agreement "Debt to EBITDA Ratio" shall mean (i) the Borrower's total
liabilities, including interests of minority partners in consolidated
partnerships, less deferred tax liabilities and subordinated debt, as
disclosed on the balance sheet of Borrower at any particular date,
divided by (ii) earnings before interest, taxes, depreciation and
amortization ("EBITDA"), for the preceding twelve-month period ending
on the test date.
6. Exhibit "F" to the Loan Agreement is hereby deleted and
Exhibit "F" attached hereto is substituted therefor.
7. Except as expressly modified hereby, the Loan Agreement and
all other documents executed in connection with the Loan, except the Restated
Note, remain unchanged and in full force and effect and are hereby ratified and
reconfirmed by the Borrower. The Borrower certifies and confirms to the Bank
that all representations and warranties set forth in the Loan Agreement are true
and correct as of the date hereof.
3.
<PAGE> 5
IN WITNESS WHEREOF, the Borrower and the Bank have cause this Agreement
to be duly executed under seal by their duly authorized officers, all as of the
day and year first above written.
WITNESSES: OUTBACK STEAKHOUSE, INC., a Delaware
corporation
/s/ George Breen By: /s/ Robert S. Merritt
- ---------------------------------- ------------------------------------
Name: Robert S. Merritt
Title: Senior Vice President
/s/ Charlie Thomas
- ----------------------------------
As to Borrower
(Corporate Seal)
"BORROWER"
BARNETT BANK OF TAMPA, a state chartered
bank
/s/ George Breen By: /s/ Lynn E. Billingsley
- ---------------------------------- ------------------------------------
Name: Lynn E. Billingsley
Title: Senior Vice President
/s/ Charlie Thomas
- ----------------------------------
As to Bank
"BANK"
4.
<PAGE> 6
EXHIBIT "F"
OFFICER'S CERTIFICATE REGARDING FINANCIAL STATEMENTS
The undersigned officer hereby certifies that the (annual) (quarterly)
financial statements included in the attached (10K) (10Q) fairly present the
financial conditions of the Borrower in accordance with GAAP and all material
matters which would be required to be recognized and disclosed under GAAP have
been recognized and disclosed. No Event of Default exists on the date hereof,
nor has a default described in the Loan Agreement occurred which, with the
passage of time or the giving of notice, or both, would constitute and Event of
Default. The Borrower is not in default or violation of any of the terms and
conditions of the $75 Million Loan Agreement or the Prior Laon Agreement (as
defined in the Loan Agreement).
Attached hereto are accurate and correct calculations indicating
compliance with Sections 4.14 through 4.17 of the $75 Million Loan Agreement or
Sections 4.14 through 4.17 of the Prior Loan Agreement.
Date:_________________, 199__ ______________________________
Robert S. Merritt
Chief Financial Officer
<PAGE> 7
COMPLIANCE WITH SECTION 4.14 THROUGH 4.17
1. Compliance with Section 4.14: (Annually)
a. Consolidated Stockholder Equity $_________________
less b. Goodwill and Other Intangible Assets $_________________
CONSOLIDATED TANGIBLE NET WORTH $_________________
2. Compliance with Section 4.15: (Quarterly)
Total Liabilities $_________________
_______________________________________________ = _______:_________
Consolidated Tangible LEVERAGE RATIO
Net Worth $_________________
3. Compliance with Section 4.16: (Annually)
Fiscal Year Capital Expenditures
(excluding pre-opening costs) $_________________
CAPITAL EXPENDITURES
4. Compliance with Section 4.17: (Quarterly)
Total Liabilities Less Subord.
Debt & Deferred Tax Liabil. $________________
_______________________________________________ = _______:_________
Earnings Before Interest, Taxes DEBT TO EBITDA RATIO
Deprec. & Amortization $________________
<PAGE> 1
EXHIBIT 10.22
AMENDED AND RESTATED
COMMERCIAL PROMISSORY NOTE
$7,500,000.00 Valdosta, Lowndes County, Georgia
(the "Principal Amount") As of May 30, 1996
FOR VALUE RECEIVED, the undersigned, OUTBACK STEAKHOUSE, INC., a
Delaware corporation (the "Borrower"), promises to pay to the order of BARNETT
BANK OF TAMPA, a state chartered bank ("Lender"), at its office at 101 East
Kennedy Boulevard, Tampa, Florida 33602 or at such other place as the holder of
this Note from time to time may designate to Borrower in writing, the principal
sum of SEVEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($7,500,000.00)
together with interest on the principal balance of this obligation from time to
time remaining unpaid, at the rates and at the times provided in this Note. All
payments required by this Note must be by legal tender of the United States of
America.
The principal amount of this obligation has been and will be disbursed
by Lender to Borrower in accordance with the terms and conditions of that
certain First Amended and Restated Loan Agreement dated January 13, 1994,
between Borrower and Lender, as amended by First Amendment to Loan Agreement
dated as of September 14, 1994, as amended and restated in its entirety by that
certain Second Amended and Restated Loan Agreement dated as of August 14, 1995,
as amended by that certain First Amendment to Second Amended and Restated Loan
Agreement dated as of even date herewith executed by Borrower and Lender (as
from time to time restated, modified and/or amended, the "Loan Agreement").
Pursuant to the terms of the Loan Agreement, Borrower may borrow portions of the
principal amount of this Note, repay all or a portion of such borrowing and
reborrow, provided that, in any event, the maximum principal amount outstanding
under this Note at any time shall not exceed $7,500,000.00. All capitalized
terms used herein but not otherwise defined herein shall have the meanings
ascribed to such terms in the Loan Agreement. This Note amends, restates,
increases and replaces, in its entirety, that certain Amended and Restated
Revolving Commercial Promissory Note dated August 14, 1995, executed by Borrower
in favor of Lender in the original revolving principal amount of $7,500,000.00.
As used in this Note, the following terms shall have the following
meanings:
1. Advance or Advances. Prime Rate Advances, Floating LIBO Rate
Advances and/or LIBO Rate Advances, individually or collectively as applicable.
2. Business Day. Any day other than a Saturday, Sunday or other
day on which commercial banks in the State of Florida are authorized or required
by law to close.
3. Demand Date. That date which is (i) in the case of demand
following the occurrence of an Event of Default under the Loan Agreement, five
(5) days, or (ii) if no such Event of Default has occurred and is then
continuing, thirty (30) days, after the date of written
<PAGE> 2
notice to the Borrower in which the Lender makes demand upon the Borrower for
repayment of the outstanding principal amount of this Note, plus unpaid accrued
interest.
4. Floating LIBO Rate. A fluctuating rate of interest per annum
equal to the LIBO Margin plus the rate obtained by dividing (a) the rate of
interest per annum at which deposits in United States dollars are offered in the
London Interbank Market on the date for which the Floating LIBO Rate is being
calculated in an amount substantially equal to the Floating LIBO Rate Advance
and with a term equal to ninety (90) days, by (b) an amount equal to 1 minus the
Floating LIBO Reserve Requirement for such date.
5. Floating LIBO Rate Advance. Any portion of the principal
amount of this Note outstanding which bears interest at the Floating LIBO Rate.
6. Floating LIBO Reserve Requirement. For any Floating LIBO Rate
Advance, the rate at which reserves (including, without limitation, any
marginal, supplemental or emergency reserves) are required to be maintained by
Lender on the date for which interest is being calculated, against U.S. dollar
nonpersonal time deposits in the United States with a term equal to ninety (90)
days, expressed as a decimal.
7. Leverage Ratio. As defined in Section 4.15 of the Loan
Agreement.
8. LIBO Interest Period. The period commencing on the date so
specified in Borrower's notice to Lender of any election to have the LIBO Rate
apply to a LIBO Rate Advance and ending on the date specified in such notice,
which ending date (a) shall be thirty (30), sixty (60), ninety (90), or one
hundred eighty (180) days after the commencement date, and (b) shall not be
beyond the Maturity Date. If any LIBO Interest Period would end on a date which
is not a Business Day, such LIBO Interest Period shall be extended to the next
succeeding Business Day.
9. LIBO Margin. The number of basis points which shall, at any
point in time, constitute the LIBO Margin determined in accordance with the
following table:
<TABLE>
<CAPTION>
LIBO Margin Leverage Ratio
(measured as of each quarter end)
<S> <C>
75 basis points <0.35:1.00
-
85 basis points >0.35:1.00 and <0.50:1.00
-
95 basis points >0.50:1.00 and <0.75:1.00
-
</TABLE>
The Leverage Ratio shall be measured as of the end of each calendar quarter
based upon financial information provided by Borrower in accordance with the
provisions of the Loan Agreement. Changes in the LIBO Margin shall be effective
as of the date upon which Lender receives the
2.
<PAGE> 3
quarterly or annual financial information disclosing a change in the Leverage
Ratio which results in a change in the LIBO Margin.
10. LIBO Rate. An interest rate per annum equal to the LIBO Margin
plus the rate per annum obtained by dividing (a) the rate of interest per annum
at which deposits in United States dollars are offered in the London Interbank
Market two (2) Business Days prior to the commencement of a LIBO Interest
Period, by (b) an amount equal to 1 minus the LIBO Reserve Percentage for such
LIBO Interest Period.
11. LIBO Rate Advance. That portion of the principal amount
outstanding under this Note with respect to which Borrower elects to have the
LIBO Rate apply during any LIBO Interest Period.
12. LIBO Reserve Percentage. For any LIBO Rate Advance, the rate
at which reserves (including, without limitation, any marginal, supplemental or
emergency reserves) are required to be maintained by Lender two (2) Business
Days prior to the commencement of a LIBO Interest Period against Eurocurrency
liabilities having a term substantially equal to such LIBO Interest Period,
expressed as a decimal.
13. LIBO Roll-Over Date. The last day of any LIBO Interest
Period.
14. Prime Rate. The lending rate from time to time announced by
Barnett Banks, Inc., Lender's parent company ("BBI"), as its prime rate.
15. Prime Based Rate. A fluctuating rate of interest per annum
equal to the Prime Rate minus one percent (1%).
16. Prime Rate Advance. Any portion of the principal amount of
this Note outstanding which bears interest at the Prime Based Rate.
Interest shall be calculated on the daily outstanding balance of each
type of Advance. Interest shall be computed on the basis of a year of 360 days
for the actual number of days elapsed through the actual payment due date.
Changes in the Prime Rate and/or the Floating LIBO Rate shall be effective as of
the date of change in the applicable rate. Interest on Prime Rate Advances and
Floating LIBO Rate Advances shall be paid quarterly in arrears commencing on
June 30, 1996 and continuing on each September 30, December 30, March 30 and
June 30 thereafter prior to the Demand Date. Interest on LIBO Rate Advances
shall be paid on the last date of each applicable LIBO Interest Period.
The outstanding principal balance of this Note, plus unpaid accrued
interest, shall be due and payable on the Demand Date. Notwithstanding the
foregoing sentence, in the event that the Lender demands repayment of the
principal amount of this Note for any reason, other than the occurrence of a
default or Event of Default, outstanding Prime Rate Advances and Floating LIBO
Rate Advances
3.
<PAGE> 4
shall be due and payable on the Demand Date and outstanding LIBO Rate Advances
shall be due and payable on the last day of the respective LIBO Interest Period
applicable to any such LIBO Rate Advances.
The Borrower shall have the option from time to time, in the manner
hereinafter set forth, to convert the interest rate on portions of the
outstanding principal balance of this Note from the Prime Based Rate to either
(a) the Floating LIBO Rate (the "Floating LIBO Rate Option") or (b) the LIBO
Rate (the "LIBO Rate Option"). To exercise the Floating LIBO Rate Option, the
Borrower shall give the Lender written notice of the Borrower's Floating LIBO
Rate election prior to 12:00 Noon, local time, on the Business Day that the
Borrower elects to have the Floating LIBO Rate apply, which notice shall specify
the portion of the outstanding principal balance of the Note, with respect to
which the Borrower is making such election, and the date upon which the Floating
LIBO Rate is to commence. Changes in the Floating LIBO Rate caused by changes in
the LIBO Margin shall be effective as of the date of change in the LIBO Margin.
The Borrower may elect to terminate the applicability of the Floating LIBO Rate
to all or a portion of the Floating LIBO Rate Advance by giving the Lender
written notice (i) prior to 12:00 Noon, local time, on the Business Day that the
Borrower elects to have the Floating LIBO Rate terminate if the Prime Based Rate
is to apply thereafter or (ii) at the time required for a LIBO Rate Option
election if the Borrower elects to have the LIBO Rate apply, which notice shall
specify the principal amount with respect to which the Floating LIBO Rate is to
terminate.
To exercise the LIBO Rate Option, the Borrower shall give the Lender
irrevocable written notice of the Borrower's LIBO Rate election at least three
(3) Business Days prior to the commencement of a LIBO Interest Period, which
notice shall specify the portion of the outstanding principal balance of this
Note, with respect to which the Borrower is making such election, and the date
upon which such LIBO Interest Period is to commence and its duration. Such LIBO
Rate shall be applicable to such LIBO Rate Advance during the LIBO Interest
Period specified by the Borrower in such notice. Changes in the Floating LIBO
Rate caused by changes in the LIBO Margin shall be effective as of the date of
change in the LIBO Margin. It is agreed that (i) the interest rate applicable to
any portion of the outstanding principal balance of the Note, or advance about
to be made with respect to the Loan Agreement, with respect to which the
Borrower has elected a LIBO Rate, shall revert from the LIBO Rate applicable
thereto to the Prime Based Rate as of the LIBO Roll-Over Date applicable
thereto, unless the Borrower timely exercises the LIBO Rate Option or the
Floating LIBO Rate Option with respect thereto, and (ii) the Lender shall not be
under any duty or obligation to notify the Borrower that the interest rate on
any LIBO Rate Advance is about to revert from a LIBO Rate to the Prime Based
Rate. Unless otherwise agreed to the contrary by the Lender, the LIBO Rate
Option may only be exercised by the Borrower with respect to portions of the
outstanding principal balance of this Note which (i) bear or will bear interest
at the Prime Based Rate or the Floating LIBO Rate, and (ii) are equal to or in
excess of $500,000.00. The Borrower's right to elect the LIBO Rate shall be
conditioned upon the Borrower not being in default under this Note or the Loan
Agreement. The Borrower shall not be entitled to elect the LIBO Rate more
frequently than once in any thirty (30) day period.
4.
<PAGE> 5
In the event, and on each occasion, that on the day two (2) Business
Days prior to the commencement of any LIBO Interest Period, the Lender shall
have determined (which determination shall be conclusive and binding upon the
Borrower) that (i) the LIBO Rate is not available for dollar deposits in an
amount approximately equal to the amount with respect to which the Borrower
exercises the LIBO Rate Option, or (ii) the rate at which such dollar deposits
are being offered will not adequately and fairly reflect the cost to the Lender
of making or maintaining a LIBO Rate with respect to such portion of the
outstanding principal balance of this Note during such LIBO Interest Period, or
(iii) reasonable means do not exist for ascertaining a LIBO Rate, or (iv) a LIBO
Rate with respect thereto would be in excess of the maximum interest rate which
the Borrower may by law pay, such portion of the outstanding principal balance
of this Note shall continue to bear interest at the Prime Based Rate.
If any change in any law or regulation or in the interpretation thereof
by any governmental authority charged with the administration or interpretation
thereof shall make it unlawful for the Lender or BBI, to make or maintain LIBO
Rate Advances or Floating LIBO Rate Advances or to give effect to their
respective obligations as contemplated hereby, then, the option to elect the
LIBO Rate or the Floating LIBO Rate shall immediately terminate and upon notice
by the Lender to the Borrower any LIBO Rate Advance shall be automatically
converted to another Eurodollar market rate selected by the Lender, provided
such conversion does not increase the Lender's cost, or if no other Eurodollar
market rate is acceptable to the Lender, to the Prime Based Rate and the
Borrower shall pay to the Lender an amount equal to the prepayment premium which
would be due with respect to any LIBO Rate Advance pursuant to the provisions of
this Note hereinafter set forth upon a prepayment of the same prior to the LIBO
Roll-Over Date applicable thereto. Any notice given by the Lender to the
Borrower pursuant to this paragraph shall, if lawful, be effective on the last
day of any existing LIBO Interest Periods.
The Borrower recognizes that the cost to the Lender of making or
maintaining LIBO Rates with respect to the LIBO Rate Advances may be, from time
to time affected by the matters set forth in Paragraphs 1 and 2, below, and the
Borrower agrees that the Lender, in quoting or establishing a LIBO Rate at the
commencement of a LIBO Interest Period, may take into consideration such
additional amount or amounts resulting from the following as the Lender shall
determine will compensate the Lender for such additional costs:
1. The imposition of, or changes in, the reserve requirements
promulgated by the Board of Governors of the Federal Reserve System of the
United States, including, but not limited to, any reserve on Eurocurrency
Liabilities, as defined in Regulation D, at the ratios provided in such
Regulation from time to time, it being agreed that any LIBO Rate Advances shall
be deemed to constitute Eurocurrency Liabilities, as defined by such Regulation,
and it being further agreed that such Eurocurrency Liabilities shall be deemed
to be subject to such reserve requirements without benefit of or credit for
prorations, exceptions, or offsets that may be available to the Lender or BBI
from time to time under such Regulation; or
5.
<PAGE> 6
2. Any change, after the date of this Note, in applicable law or
regulation or in the interpretation or administration thereof by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of law) or by any court changing the basis of
taxation of payments to the Lender or BBI of the principal of or interest on any
LIBO Rate Advances or any other fees or amounts payable under this Note or the
Loan Agreement (other than taxes imposed on the overall net income of the Lender
or BBI by any state, or by any political subdivision or taxing authority
therein), or imposing, modifying or applying any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
credit extended by, or any other acquisition of funds for loans by the Lender or
BBI or imposing on the Lender or BBI or the London Interbank Market any other
condition affecting this Note or the Loan Agreement or any LIBO Rate Advances so
as to increase the cost to the Lender or BBI of making or maintaining a LIBO
Rate with respect to any LIBO Rate Advance or to reduce the amount of any sum
received or receivable by the Lender under this Note or the Loan Agreement
(whether of principal, interest or otherwise), by an amount deemed by the Lender
to be material, but without duplication for payments required under clause (1)
above.
Notwithstanding the foregoing, once a LIBO Rate has been established by the
Lender for a particular LIBO Rate Advance, the LIBO Rate so established shall
apply, without increase, during the applicable LIBO Interest Period,
notwithstanding the fact that the cost to the Lender of making or maintaining
LIBO Rates may be increased as a result of an event set forth in Paragraph 1 or
2, above.
The Borrower shall indemnify the Lender against any loss or expense
that the Lender may sustain or incur as a consequence of any default by the
Borrower in the payment of any portion of the principal balance of this Note
bearing interest at a LIBO Rate, as and when due and payable, or the occurrence
of any event specified in the provisions of this Note or the Loan Documents,
including, but not limited to, any loss or reasonable expense sustained or
incurred in liquidating or reemploying deposits from third parties acquired to
effect or maintain any LIBO Rate with respect to any LIBO Rate Advance. The
Lender shall provide to the Borrower a statement explaining the amount of any
such loss or expense, which statement shall be conclusive absent manifest error.
The Borrower shall from time to time, within ten (10) days after
receipt from the Lender of a letter indicating (i) the respective portions of
the outstanding principal balance of this Note as of the date of such letter
which bear interest at the Prime Based Rate, the Floating LIBO Rate and the LIBO
Rate, (ii) the LIBO Rates applicable to each LIBO Rate Advance, and (iii) the
respective LIBO Roll-Over Dates applicable to each LIBO Rate Advance, confirm to
the Lender, by execution and delivery to the Lender within such time period of a
copy of such letter, that the facts stated thereon are accurate, or if
inaccurate, the nature, and extent and particulars of the inaccuracy. In the
event the Lender does not receive such confirmation or specification of
inaccuracies within the time period above provided, the matters stated in the
Lender's letter shall be conclusively deemed to be accurate.
The Borrower shall have the right, provided that it is not in default
under this Note or the Loan Agreement, to prepay the principal balance of this
Note, in whole or in part, at any time, upon payment of all interest and other
sums then due and payable pursuant to the provisions of this Note
6.
<PAGE> 7
or the Loan Agreement. No prepayment premium shall be payable with respect to
any portions of the principal balance of this Note which constitute Prime Rate
Advances or Floating LIBO Rate Advances. If any portion of the principal balance
of this Note being prepaid constitutes one or more LIBO Rate Advances, then,
with respect to each such LIBO Rate Advance being prepaid, the Borrower shall
pay to the Lender contemporaneously with any such prepayment of this Note, an
amount equal to the amount of the prepayment multiplied by a per annum interest
rate equal to the difference between the LIBO Rate applicable thereto, and the
360 day equivalent interest yield (hereinafter called the "Reinvestment Rate")
on any United States Treasury obligations selected by the Lender in an aggregate
amount approximately equal to such portion of the principal balance of this
Note, and with maturities comparable to the LIBO Roll-Over Date applicable
thereto, calculated over a period of time from the date of prepayment to and
including such LIBO Roll-Over Date. If the LIBO Rate on such LIBO Rate Advance
being prepaid is equal to or less than the Reinvestment Rate, no prepayment
premium shall be due. Any payment of the principal balance of this Note after
acceleration of the applicable maturity date of this Note, or the commencement
of any proceedings to enforce this Note or the Loan Agreement, as a result of
the occurrence of an Event of Default under the Loan Agreement, shall be deemed
a voluntary prepayment for the purposes of this paragraph and a prepayment
premium calculated pursuant to the provisions of this paragraph shall be payable
with respect thereto based upon the LIBO Rates applicable to any LIBO Rate
Advances immediately prior to such default and acceleration. Any partial
prepayment of the principal balance of this Note shall be applied first to the
payment in full of outstanding Prime Rate Advances and Floating LIBO Rate
Advances, and then in reduction of the various outstanding LIBO Rate Advances,
in such order and manner so as to minimize the prepayment premium due with
respect thereto as calculated pursuant to the provisions of this paragraph. The
Lender shall certify to the Borrower the amount and basis of determination of
such prepayment premium, it being agreed that (a) the calculation of such
prepayment premium may be based on any United States Treasury obligations
selected by the Lender in its sole discretion and (b) the Lender shall not be
obligated or required to have actually reinvested the prepaid principal balance
of this Note in any such United States Treasury obligations as a condition
precedent to receiving a prepayment premium calculated as aforesaid. The
Borrower shall, upon receipt of such certification and contemporaneously with
any such prepayment of the principal balance of this Note, remit to the Lender
the prepayment premium, if any, due in connection therewith as calculated
pursuant to the provisions of this paragraph. The Lender shall not be obligated
to accept any prepayment of the principal balance of this Note unless it is
accompanied by the prepayment premium, if any, due in connection therewith as
calculated pursuant to the provisions of this paragraph.
If any payment required by this Note is not paid within ten (10) days
after the date such payment is due, then the holder of this Note, at such
holder's option, may elect to declare the entire unpaid principal balance of
this Note, plus accrued interest, immediately due and payable. The Borrower
shall pay a late charge equal to the greater of (a) $100.00, or (b) five percent
(5%) of the amount of any payment which is not received by the Lender on or
before the tenth (10th) day following the date such payment is due, to
compensate for the Lender's loss of use of funds and for the expense of handling
the delinquency, which late charge must be received by the Lender with the
payment then due.
7.
<PAGE> 8
If, following any default by the Borrower under this Note, the holder
of this Note employs attorneys, to enforce collection of this obligation, in
whole or in part, then the Borrower will pay, a reasonable fee for such
attorneys' and any legal assistants' services, regardless of whether suit is
instituted and, if a suit or other action or proceeding is instituted to enforce
payment of all or any portion of this obligation, for all trial and appellate
proceedings, if any. the Borrower also will pay (i) all other costs of
collection incurred, and (ii), all costs and reasonable attorneys' and legal
assistants' fees incurred by the holder for all administrative, trial, and
appellate proceedings involving this obligation.
The remedies of the Lender as provided herein and in the Loan Agreement
shall be cumulative and concurrent, and may be pursued singly, successively or
together, at the sole discretion of the Lender, and may be exercised as often as
occasion therefor shall arise. No act of omission or commission of the Lender,
including specifically any failure to exercise any right, remedy or recourse,
shall be effective as a waiver thereof unless it is set forth in a written
document executed by the Lender and then only to the extent specifically recited
therein. A waiver or release with reference to one event shall not be construed
as continuing, as a bar to, or as a waiver or release of, any subsequent right,
remedy or recourse as to any subsequent event.
Notwithstanding any provision of this Note or the Loan Agreement to the
contrary, the parties intend that no provision of this Note or the Loan
Documents be interpreted, construed, applied, or enforced so as to permit or
require the payment or collection of interest in excess of the maximum rate as
hereafter may be permitted by the law applicable to this transaction (the
"Maximum Permitted Rate"). If, however, any such provision is so interpreted,
construed, applied, or enforced, then the parties intend: (i) that such
provision automatically shall be reformed nunc pro tunc so as to require payment
only of interest at the Maximum Permitted Rate; and (ii) if the holder of this
Note has received interest payments in excess of such Maximum Permitted Rate,
that the amount of such excess be credited nunc pro tunc in reduction of the
principal amount of this obligation, together with interest at such Maximum
Permitted Rate.
In connection with all calculations to determine the Maximum Permitted
Rate, the parties intend: first, that all charges be excluded to the extent that
they are properly excludable under the usury laws of the State of Florida or the
United States of America, as they from time to time are determined to apply to
this obligation; and, second, that all charges that may be "spread" in the
manner provided by Section 687.03(3), Florida Statutes (1993), or any similar
successor law, be spread in the manner provided by such statute.
This Note will be interpreted, construed, applied, and enforced
according to the laws of the State of Florida, regardless of where executed or
delivered, where payment is made, where any action or other proceeding involving
this Note is instituted, or whether the laws of the State of Florida otherwise
would apply the laws of another jurisdiction. The provisions of this Note bind,
and are for the benefit of, the respective heirs, successors, and assigns of the
Lender and all persons and entities executing this Note as the Borrower, jointly
and severally.
8.
<PAGE> 9
Presentment, protest, notice of protest, notice of dishonor, and all
suretyship defenses, unless expressly reserved by any subsequent endorser, are
hereby waived by all parties now or hereafter liable for payment of all or any
portion of this obligation, whether as makers, endorsers, guarantors, or
otherwise, and regardless of accommodation status.
IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of
the date stated above.
OUTBACK STEAKHOUSE, INC., a
Delaware corporation
By: /s/ Robert S. Merritt
-----------------------------------
Name: Robert S. Merritt
Title: Senior Vice President
(CORPORATE SEAL)
STATE OF GEORGIA )
COUNTY OF LOWNDES )
THE FOREGOING INSTRUMENT was acknowledged before me this 30th day of
May, 1996, by ROBERT S. MERRITT as Senior Vice President of OUTBACK STEAKHOUSE,
INC., a Delaware corporation, on behalf of the corporation. He is either ____
personally known to me or X has produced his FDL as identification.
/s/ Marie Elizabeth McKellar
------------------------------------
(Affix Seal) Print Name: Marie Elizabeth McKellar
Notary Public - State of Georgia
My Commission Expires:
My Commission No.: Notary Public,
Lowndes County, Georgia My Commission
Expires January 10, 2000
9.
<PAGE> 1
EXHIBIT 13.01
FINANCIALS
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- --------------------------------------------------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
At December 31, 1996, Outback Steakhouse, Inc. and Affiliates (the "Company")
had 318 Outback Steakhouse restaurants in which it had a direct ownership
interest ("Company-owned"), and 55 Outback Steakhouse restaurants operated by
unaffiliated franchisees. The system also included 36 Company-owned Carrabba's
Italian Grills and twelve Carrabba's Italian Grills operated by joint ventures
in which the Company had a 45% interest ("Development Joint Ventures").
All of the Company-owned restaurants are organized as partnerships in
which the Company is a general partner. The Company's ownership interests range
from 71% to 90%, and the minority interests are owned by the restaurant
managers and area operating partners. The results of operations of
Company-owned restaurants are included in the consolidated operating results of
the Company. The portion of the income attributable to the minority interests
of restaurant managers and area operating partners is eliminated in the line
item in the Company's Consolidated Statements of Income entitled "Elimination
of minority partners' interest."
The Development Joint Venture restaurants are organized as general
partnerships in which the Company owns 50% of the partnership and its joint
venture partner owns 50%. The restaurant manager of each restaurant owned by a
Development Joint Venture purchases a 10% interest in the restaurant he or she
manages. The Company is responsible for 50% of the costs of new restaurants
operated as Development Joint Ventures and the Company's joint venture partner
is responsible for the other 50%. The income derived from restaurants operated
as Development Joint Ventures is presented in the line item"Loss (income) from
operations of unconsolidated affiliates" in the Company's Consolidated
Statements of Income.
The Company derives no direct income from the operations of franchised
restaurants other than franchise fees and royalties, which are included in the
Company's revenues.
<PAGE> 2
<TABLE>
<CAPTION>
COMPANY REVENUES SYSTEM - WIDE SALES
- ------------------------------------ ------------------------------------
(in thousands of dollars) (in thousands of dollars)
<S> <C> <S> <C>
91 $ 91,000 91 $ 91,000
92 $ 190,568 92 $ 195,508
93 $ 336,885 93 $ 348,000
94 $ 516,926 94 $ 557,000
95 $ 733,692 95 $ 827,000
96 $ 937,400 96 $1,077,000
</TABLE>
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
The following table sets forth, for the periods indicated, (i) the percentages
which the items in the Company's Consolidated Statements of Income bear to total
revenues or restaurant sales, as indicated, and (ii) selected operating data:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------
STATEMENTS OF INCOME DATA: 1996 1995 1994
- --------------------------------------------------------------------------- -------- -------- --------
<S> <C> <C> <C>
Revenues:
Restaurant sales ..................................................... 99.3% 99.5% 99.7%
Franchise fees ....................................................... 0.7 0.5 0.3
-------- -------- --------
100.0 100.0 100.0
======== ======== ========
Costs and expenses:
Cost of sales(1) ..................................................... 39.0 39.3 39.2
Labor and other related(1) ........................................... 23.0 22.4 21.5
Other restaurant operating(1) ........................................ 21.0 20.6 21.1
General and administrative ........................................... 3.6 3.6 3.7
Loss (income) from operations of unconsolidated affiliates ........... (0.1) (0.3)
Income from operations .................................................... 13.9 14.6 15.0
Interest income (expense), net ............................................ (0.1) (0.2) (0.1)
-------- -------- --------
Income before elimination of minority partners' interest
and provision for income taxes ....................................... 13.8 14.4 14.9
Elimination of minority partners' interest ................................ 1.9 2.1 2.3
-------- -------- --------
Income before income taxes ................................................ 11.9 12.3 12.6
Provision for income taxes (2) ............................................ 4.3 4.4 4.6
-------- -------- --------
Net income(2) ............................................................. 7.6% 7.9% 8.0%
======== ======== ========
SYSTEM-WIDE SALES (MILLIONS OF DOLLARS):
- ---------------------------------------------------------------------------
Outback Steakhouses
Company-owned restaurants ............................................ $ 892 $ 716 $ 516
Franchised and joint venture restaurants ............................. 125 82 33
-------- -------- --------
$ 1,017 $ 798 $ 549
-------- -------- --------
Carrabba's Italian Grills
Company-owned restaurants ............................................ $ 39 $ 14
Joint venture restaurants ............................................ 21 15 $ 8
-------- -------- --------
$ 60 $ 29 $ 8
-------- -------- --------
System-wide total ......................................................... $ 1,077 $ 827 $ 557
======== ======== ========
NUMBER OF RESTAURANTS (AT END OF PERIOD):
Outback Steakhouses
Company-owned restaurants 318 258 193
Franchised and joint venture restaurants ............................. 55 39 21
-------- -------- --------
373 297 214
-------- -------- --------
Carrabba's Italian Grills
Company-owned restaurants ............................................ 36 13
Joint venture restaurants ............................................ 12 10 10
-------- -------- --------
48 23 10
-------- -------- --------
System-wide total ......................................................... 421 320 224
======== ======== ========
</TABLE>
- ----------
(1) As a percentage of restaurant sales.
(2) Amounts are pro forma for 1995 and 1994. See Note 11 of Notes to
Consolidated Financial Statements.
[11]
<PAGE> 3
<TABLE>
<CAPTION>
NET INCOME EARNINGS PER SHARE
- ------------------------------------ ------------------------------------
(in thousands of dollars)
<S> <C> <S> <C>
91 $ 6,064 91 $ .17
92 $ 14,666 92 $ .34
93 $ 24,926 93 $ .53
94 $ 41,196 94 $ .86
95 $ 57,911 95 $1.19
96 $ 71,613 96 $1.45
</TABLE>
================================================================================
FISCAL YEARS 1996, 1995 AND 1994
- --------------------------------------------------------------------------------
REVENUES. Total revenues increased by 27.8% between 1995 and 1996, and by 41.9%
between 1994 and 1995. The increase in revenues in 1996 was attributable to the
opening of new restaurants partially offset by a 1.1% decrease in comparable
store sales. The decrease in comparable store sales resulted from lower customer
check averages in the second quarter of 1996, the impact of the Olympics in July
and August, and reduced customer counts resulting from increased competition in
the last quarter of 1996. The increase in revenues in 1995 as compared with 1994
was attributable to the opening of new restaurants and a 1.1% increase in
comparable store sales. The increase in comparable store sales reflected an
increase in customer counts and a 1.2% menu price increase in September 1995.
COSTS AND EXPENSES. Costs of sales, consisting of food and beverage costs,
decreased by 0.3% of restaurant sales to 39.0% in 1996 as compared with 39.3% in
1995. Of the decrease, 0.1% resulted from an increase in the proportion of
Carrabba's Italian Grills ("Carrabba's") in operation which have lower average
food costs than Outback Steakhouses. The remainder of the decrease resulted from
commodity cost decreases for shrimp and produce, partially countered by price
increases in meat and dairy. Cost of sales increased as a percentage of
restaurant sales to 39.3% in 1995 as compared with 39.2% in 1994. Commodity cost
increases in shrimp, produce and baby back ribs in 1995 were partially offset by
favorable meat prices and menu price changes in September 1995.
Labor and other related expenses include all direct and indirect labor
costs incurred in operations. Labor expenses as a percentage of restaurant
sales increased by 0.6% to 23.0% in 1996 as compared with 22.4% in 1995. Of the
increase, 0.4% was attributable to an increase in the proportion of Carrabba's
in operation which have higher average labor costs than Outback Steakhouses.
The remainder of the increase resulted from higher labor costs in new markets,
an increase in wage rates in certain markets, and an overall increase in back
of the house wage rates due to a competitive labor market. Labor expenses as a
percentage of restaurant sales increased to 22.4% in 1995 from 21.5% in 1994.
This increase was attributable to the cost of the Company's health insurance
plan implemented in February 1995, higher labor costs in new markets, and
increased wage rates in certain other markets.
Restaurant operating expenses include all other unit-level operating
costs, the major components of which are operating supplies, rent, repairs and
maintenance, advertising expenses, utilities, depreciation and amortization and
other occupancy costs. A substantial portion of these expenses are fixed or
indirectly variable. These costs as a percentage of restaurant sales increased
by 0.4%, to 21.0%, during 1996 as compared with 20.6% in 1995. This increase
was attributable to an increase in the proportion of Carrabba's in operation
which have higher operating expenses as a percentage of restaurant sales than
Outback Steakhouses due to lower average unit volumes. In 1995 as compared with
1994, restaurant operating expenses decreased by 0.5% to 20.6% of restaurant
sales. This decrease was attributable to improved operating efficiencies
achieved by mature restaurants combined with lower occupancy expenses as the
proportion of owned versus leased restaurants increased in 1995.
General and administrative expenses as a percentage of revenues was 3.6%
in both 1996 and 1995 and 3.7% in 1994. The decrease from 1994 to 1995 was due
to the opening of new restaurants.
LOSS (INCOME) FROM OPERATIONS OF UNCONSOLIDATED AFFILIATES. Loss (income) from
operations of unconsolidated affiliates represents the Company's portion of net
income or loss from Carrabba's Italian Grills and Outback Steakhouses operated
as Development Joint Ventures. The loss from Development Joint Ventures was
$102,000 in 1996 compared with income of $442,000 in 1995 and $1,269,000 in
1994. These decreases were attributable to
[12]
<PAGE> 4
<TABLE>
<CAPTION>
LONG - TERM DEBT
------------------------------------
(in thousands of dollars)
<S> <C>
91 $ 3,298
92 $ 5,570
93 $11,718
94 $20,699
95 $37,905
96 $47,595
</TABLE>
================================================================================
losses from Carrabba's Texas operations, and to fewer Outback Steakhouses
operating as Development Joint Ventures as a result of the restructuring of the
Company's Nevada operations in April 1996.
INCOME FROM OPERATIONS. As a result of the increase in revenues, the changes in
the relationship between revenues and expenses discussed above and the opening
of new restaurants, income from operations increased by $23,876,000 to
$130,917,000 in 1996 as compared with $107,041,000 in 1995, and by $29,831,000
to $107,041,000 in 1995 as compared with $77,210,000 in 1994.
INTEREST INCOME (EXPENSE), NET. Net interest expense was $1,096,000 in 1996 as
compared with $1,375,000 in 1995 and $302,000 in 1994. The year to year changes
in interest expense reflected changes in available cash and cash equivalents and
investment securities earning interest, fluctuations in interest rates on the
Company's line of credit, and changes in borrowing needs as funds have been
expended to finance new restaurants. See Note 5 of Notes to Consolidated
Financial Statements.
ELIMINATION OF MINORITY PARTNERS' INTEREST. This line item represents the
portion of income from operations included in consolidated operating results
attributable to the ownership interests of restaurant managers and area
operating partners in Company-owned restaurants. As a percentage of revenues
these costs were 1.9%, 2.1% and 2.3% in 1996, 1995 and 1994, respectively. The
decrease in this ratio from year to year reflected changes in overall restaurant
operating margins combined with changes in minority partners' ownership
interests as a result of the restructuring of the Company's Dallas and Houston
joint ventures in 1995.
PRO FORMA PROVISION FOR INCOME TAXES. The provision for income taxes, in all
three years presented reflected expected income taxes at the federal statutory
rate and state income tax rates, net of the federal benefit. The effective
income tax rate for pro forma income taxes was 36% in both 1996 and 1995 and
36.6% in 1994. The decrease in the effective tax rate from 1994 was attributable
to changes in the federal income tax statutes in 1995.
NET INCOME AND EARNINGS PER COMMON SHARE. Net income for 1996 was $71,613,000,
an increase of 23.7% over pro forma net income of $57,911,000 in 1995. Pro forma
net income for 1994 was $41,196,000. Earnings per common share increased to
$1.45 for 1996 from pro forma earnings per common share of $1.19 in 1995, an
increase of 21.9%.Pro forma earnings per common share increased to $1.19 for
1995 as compared with $0.86 in 1994, an increase of 38.4%.
[13]
<PAGE> 5
<TABLE>
<CAPTION>
TOTAL ASSETS STOCKHOLDERS EQUITY
- ------------------------------------ ------------------------------------
(in thousands of dollars) (in thousands of dollars)
<S> <C> <S> <C>
91 $ 48,010 91 $ 32,769
92 $131,436 92 $103,997
93 $174,794 93 $139,059
94 $259,118 94 $186,697
95 $372,271 95 $266,764
96 $469,843 96 $342,439
</TABLE>
================================================================================
LIQUIDITY AND CAPITAL RESOURCES
The following table presents a summary of the Company's cash flows for the
last three fiscal years:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Net cash provided by operating activities ........... $ 122,799 $ 100,758 $ 75,976
Net cash used in investing activities ............... (126,631) (119,104) (86,845)
Net cash (used in) provided by financing activities.. (7,596) 24,063 5,858
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents. $ (11,428) $ 5,717 $ (5,011)
========= ========= =========
</TABLE>
The Company requires capital principally for the development of Company-owned
and Development Joint Venture restaurants. Capital expenditures totalled
approximately $130,987,000, $121,552,000 and $84,320,000 in 1996, 1995 and
1994, respectively. The Company either leases its restaurants under operating
leases for initial periods ranging from five to 15 years or purchases free
standing restaurants where it is cost effective. As of December 31, 1996, there
were approximately 192 restaurants developed on properties which were owned by
the Company. See Note 9 of Notes to Consolidated Financial Statements.
At December 31, 1996 the Company has two unsecured lines of credit
totalling $82,500,000. Approximately $3,300,000 is committed for the issuance
of letters of credit, some of which are to secure loans made by the bank to
certain franchisees, and $45,320,000 has been drawn by the Company to finance
capital expenditures. See Note 5 of Notes to Consolidated Financial Statements.
The Company's goal is to add new restaurants to the Outback system in each
of 1997 and 1998, primarily through the development of 50 to 55 Company-owned
Outback Steakhouses and 15 to 20 franchised Outback Steakhouses each year. The
Company also intends to add 20 to 25 Carrabba's Italian Grills, the majority of
which will be Company-owned restaurants in each of 1997 and 1998. The Company
estimates that its capital expenditures for the development of new restaurants
will be approximately $128 million in each of 1997 and 1998 and intends to
finance this development with income from operations and the unused portion of
the revolving line of credit referred to above. The Company anticipates that
80% to 90% of the Company-owned restaurants to be opened in 1997 will be
free-standing units.
The Company notes that a variety of factors could cause the actual results
and experience to differ from the anticipated results referred to in the
previous paragraph. The Company's forward looking statements regarding its
development schedule for new restaurant openings are subject to a number of
risk factors including:
(i) Ability to secure appropriate real estate sites at acceptable
prices;
(ii) Ability to obtain all required governmental permits including zoning
approvals and liquor licenses on a timely basis;
(iii) Impact of government moratoriums or approval processes which could
result in significant delays;
(iv) Ability to secure all necessary contractors and sub-contractors;
(v) Union activities such as picketing and hand billing which could
delay construction;
(vi) Weather and acts of God beyond the Company's control resulting in
construction delays.
IMPACT OF INFLATION
The Company has not operated in a highly inflationary period and does not
believe that inflation has had a material effect on sales or expenses during
the last three years. To the extent permitted by competition, the Company
expects to mitigate increased costs by increasing menu prices.
[14]
<PAGE> 1
EXHIBIT 13.02
INDEPENDENT AUDITORS' REPORT
- -----------------------------------------------------------------------------
To the Board of Directors and
Stockholders of Outback Steakhouse, Inc.
Tampa, Florida
We have audited the accompanying consolidated balance sheets of Outback
Steakhouse, Inc. and Affiliates (the "Company") as of December 31, 1996 and
1995, and the related consolidated statements of income, stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
1996. 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 assurance 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, such consolidated financial statements present fairly, in
all material respects, the financial position of Outback Steakhouse, Inc. and
Affiliates as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
- -------------------------
DELOITTE & TOUCHE LLP
Tampa, Florida
February 21, 1997
[15]
<PAGE> 2
OUTBACK STEAKHOUSE, INC.
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------
1996 1995
-------- --------
ASSETS (in thousands)
<S> <C> <C>
Current Assets
Cash and cash equivalents .......................................... $ 15,661 $ 27,089
Short-term investment securities ................................... 1,176
Inventories ........................................................ 16,637 6,474
Other current assets ............................................... 8,810 12,984
-------- --------
Total current assets ............................................ 41,108 47,723
PROPERTY, FIXTURES AND EQUIPMENT, NET .................................. 397,759 290,630
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES ............... 13,968 17,250
OTHER ASSETS ........................................................... 17,008 16,668
-------- --------
$469,843 $372,271
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable ................................................... $ 27,824 $ 20,285
Sales taxes payable ................................................ 6,027 4,358
Accrued expenses ................................................... 19,208 13,331
Unearned revenue ................................................... 20,334 17,632
Current portion of long-term debt .................................. 706 3,000
-------- --------
Total current liabilities ....................................... 74,099 58,606
DEFERRED INCOME TAXES .................................................. 1,141 1,298
LONG-TERM DEBT ......................................................... 47,595 37,905
INTEREST OF MINORITY PARTNERS IN CONSOLIDATED PARTNERSHIPS ............. 1,569 2,698
OTHER LONG-TERM LIABILITIES ............................................ 3,000 5,000
-------- --------
Total liabilities ............................................... 127,404 105,507
-------- --------
COMMITMENTS AND CONTINGENCIES (NOTES 5 AND 9)
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, 100,000 shares
authorized; 48,009 and 47,503 shares issued and outstanding
as of December 31, 1996 and 1995, respectively ................. 480 475
Additional paid-in capital ......................................... 111,941 107,884
Retained earnings .................................................. 230,018 158,405
-------- --------
Total stockholders' equity ...................................... 342,439 266,764
-------- --------
$469,843 $372,271
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
[16]
<PAGE> 3
OUTBACK STEAKHOUSE, INC.
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
--------- --------- ---------
(in thousands, except per share data)
<S> <C> <C> <C>
REVENUES .......................................................... $ 937,400 $ 733,692 $ 516,926
--------- --------- ---------
COSTS AND EXPENSES
Cost of revenues .............................................. 363,285 286,762 202,250
Labor and other related ....................................... 214,038 163,747 110,787
Other restaurant operating .................................... 195,229 150,409 108,952
General and administrative .................................... 33,829 26,175 18,996
Loss (income) from operations of unconsolidated affiliates .... 102 (442) (1,269)
--------- --------- ---------
806,483 626,651 439,716
--------- --------- ---------
INCOME FROM OPERATIONS ............................................ 130,917 107,041 77,210
NON-OPERATING INCOME (EXPENSE) .................................... (1,096) (1,375) (302)
--------- --------- ---------
INCOME BEFORE ELIMINATION OF MINORITY PARTNERS' INTEREST
AND PROVISION FOR INCOME TAXES ................................ 129,821 105,666 76,908
ELIMINATION OF MINORITY PARTNERS' INTEREST ........................ 17,925 15,181 11,930
--------- --------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES .......................... 111,896 90,485 64,978
PROVISION FOR INCOME TAXES ........................................ 40,283 29,167 21,602
--------- --------- ---------
NET INCOME ........................................................ $ 71,613 $ 61,318 $ 43,376
========= ========= =========
EARNINGS PER COMMON SHARE ......................................... $ 1.45 $ 1.25 $ 0.91
--------- --------- ---------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING .............. 49,289 48,877 47,674
========= ========= =========
PRO FORMA:
PROVISION FOR INCOME TAXES ........................................ 32,574 23,782
--------- ---------
NET INCOME ........................................................ $ 57,911 $ 41,196
========= =========
EARNINGS PER COMMON SHARE ......................................... $ 1.19 $ 0.86
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
[17]
<PAGE> 4
OUTBACK STEAKHOUSE, INC.
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON COMMON ADDITIONAL
STOCK STOCK PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
------ ------ --------- -------- -----
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993 .. 46,111 $ 461 $ 83,139 $ 55,459 $ 139,059
Issuance of Common Stock .... 488 4 6,006 6,010
Distributions ............... (1,748) (1,748)
Net income .................. 43,376 43,376
------ ------- -------- --------- ---------
Balance, December 31, 1994 .. 46,599 465 89,145 97,087 186,697
Issuance of Common Stock .... 904 10 18,739 18,749
Net income .................. 61,318 61,318
------ ------- -------- --------- ---------
Balance, December 31, 1995 .. 47,503 475 107,884 158,405 266,764
Issuance of Common Stock .... 506 5 4,057 4,062
Net income .................. 71,613 71,613
------ ------- -------- --------- ---------
BALANCE, DECEMBER 31, 1996 .. 48,009 $ 480 $111,941 $ 230,018 $ 342,439
====== ======= ======== ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
[18]
<PAGE> 5
CASH FLOW
OUTBACK STEAKHOUSE, INC.
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995 1994
--------- --------- ---------
(in thousands)
<S> <C> <C> <C>
Net income ........................................................................ $ 71,613 $ 61,318 $ 43,376
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation .................................................................. 23,858 15,699 11,362
Amortization .................................................................. 11,670 10,151 6,604
(Gain) loss from sale of investment securities ................................ (133) 29
Minority partners' interest in consolidated partnerships' income .............. 17,925 15,181 11,930
Loss (income) from operations of unconsolidated affiliates .................... 102 (442) (1,269)
CHANGE IN ASSETS AND LIABILITIES:
Increase in inventories ....................................................... (10,163) (1,246) (859)
Increase in other current assets .............................................. 4,174 1,636 (9,212)
Increase in other assets ...................................................... (12,010) (13,997) (9,146)
Increase in accounts payable, sales taxes
payable and accrued expenses .............................................. 15,085 7,916 16,760
Increase in unearned revenue .................................................. 2,702 4,426 6,525
Decrease in other long-term liabilities ....................................... (2,000)
(Decrease) increase in deferred income taxes .................................. (157) 249 (124)
--------- --------- ---------
Net cash provided by operating activities ..................................... 122,799 100,758 75,976
--------- --------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of investment securities ............................................ $ (163)
Sales of investment securities ................................................ $ 1,176 $ 5,012 9,613
Capital expenditures .......................................................... (130,987) (121,552) (84,320)
Payments from unconsolidated affiliates ....................................... 732 1,472
Distribution to unconsolidated affiliates ..................................... (312) (344) (539)
Change in investments in and advances to unconsolidated affiliates ............ 3,492 (2,952) (12,908)
--------- --------- ---------
Net cash used in investing activities ......................................... (126,631) (119,104) (86,845)
--------- --------- ---------
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:
Adjustments from stock transactions ........................................... $ 4,062 $ 18,749 $ 6,010
Proceeds from issuance of long-term debt ...................................... 48,037 35,198 24,580
Proceeds from minority partners' contributions ................................ 2,100 2,150 1,775
Distributions to minority partners' and shareholders .......................... (21,154) (17,042) (10,907)
Repayments of long-term debt .................................................. (40,641) (14,992) (15,600)
--------- --------- ---------
Net cash (used in) provided by financing activities ........................... (7,596) 24,063 5,858
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents .............................. (11,428) 5,717 (5,011)
Cash and cash equivalents at the beginning of the period .......................... 27,089 21,372 26,383
--------- --------- ---------
Cash and cash equivalents at the end of the period ................................ $ 15,661 27,089 21,372
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest ........................................................ $ 2,419 $ 1,586 $ 1,332
Cash paid for income taxes .................................................... 53,261 29,100 24,625
</TABLE>
See Notes to Consolidated Financial Statements.
[19]
<PAGE> 6
OUTBACK STEAKHOUSE, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - Outback Steakhouse, Inc. and Affiliates (the "Company")
was formed for the purpose of developing casual dining restaurants. The
Company's restaurants are generally organized as partnerships, with the Company
as the general partner.
Profits and losses of each partnership are shared based on respective
partnership interest percentages, as are cash distributions and capital
contributions with certain defined exceptions.
Additional Outback Steakhouse restaurants in which the Company has no
direct investment are operated under franchise agreements.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the
accounts and operations of the Company and affiliated partnerships in which the
Company is a general partner and owns more than a 50% interest. All material
balances and transactions between the consolidated entities have been
eliminated.
Unconsolidated affiliates are accounted for using the equity method.
CASH AND CASH EQUIVALENTS - Cash equivalents consist of investments which are
readily convertible to cash with maturities of three months or less.
INVESTMENT SECURITIES - Investment securities are classified as "available for
sale" and reported at amortized cost which approximates market value.
INVENTORIES - Inventories consist of food and beverages, and are stated at the
lower of cost (first-in, first-out) or market. The Company will periodically
make advance purchases of various inventory items to ensure adequate supply or
obtain favorable pricing. At December 31, 1996, inventories included
approximately $7,300,000 in advance purchases.
PREOPENING COSTS - Preopening costs, consisting of marketing and training costs,
are amortized primarily over twelve months.
UNEARNED REVENUES - Unearned revenues represent gift certificates sold but not
yet redeemed. Sales are recognized upon redemption of the gift certificates.
PROPERTY, FIXTURES AND EQUIPMENT - Property, fixtures and equipment are stated
at cost. Depreciation and amortization are provided on a straight line basis
over the estimated useful service lives of the related assets which range from 3
to 39.5 years.
Periodically, the Company evaluates the recoverability of the net carrying
value of its property, fixtures and equipment by estimating its fair value. The
fair value is compared to the carrying amount in the consolidated financial
statements. A deficiency in fair value relative to carrying amount is an
indication of the need for a writedown due to impairment. If the total of
future undiscounted cash flows were less than the carrying amount of the
property, fixtures and equipment, such carrying amount would be written down to
the fair value, and a loss on impairment recognized by a charge to earnings.
The Company's accounting policy complies with Statement of Financial Accounting
Standards No. 121.
CONSTRUCTION IN PROGRESS - The Company capitalizes all direct costs incurred in
the construction of its restaurants. Upon opening, these costs are depreciated
or amortized and charged to expense based upon their property classification.
The amount of interest capitalized was $1,084,000 in 1996, $400,000 in 1995, and
insignificant in 1994.
INCOME TAXES - The Company uses the asset and liability method which recognizes
the amount of current and deferred taxes payable or refundable at the date of
financial statements as a result of all events that have been recognized in the
financial statements as measured by the provisions of enacted tax laws.
The minority partners' interest in affiliated partnerships includes no
provision or liability for income taxes as any tax liability related thereto is
the responsibility of the individual minority partners.
[20]
<PAGE> 7
OUTBACK STEAKHOUSE INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (continued)
EARNINGS PER COMMON SHARE - Earnings per common share is computed by dividing
net income by the weighted average number of shares of common stock and dilutive
options outstanding during the year.
RECLASSIFICATION - Certain amounts shown in the 1994 and 1995 financial
statements have been reclassified to conform with the 1996 presentation.
CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES - 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
estimated.
2. OTHER CURRENT ASSETS
Other current assets consisted of the following:
<TABLE>
<CAPTION>
December 31,
------------------
1996 1995
------- -------
(in thousands)
<S> <C> <C>
Deposits (including income tax deposits) ............................. $ 755 $ 6,310
Accounts receivable .................................................. 1,898 1,667
Prepaid expenses ..................................................... 4,961 3,100
Other current assets ................................................. 1,196 1,907
------- -------
$ 8,810 $12,984
======= =======
</TABLE>
3. PROPERTY, FIXTURES AND EQUIPMENT
Property, fixtures and equipment consisted of the following:
<TABLE>
<CAPTION>
December 31,
-------------------
1996 1995
-------- --------
(in thousands)
<S> <C> <C>
Land ................................................................. $ 85,255 $ 64,923
Buildings and building improvements .................................. 153,212 96,676
Furniture and fixtures ............................................... 36,794 22,592
Equipment ............................................................ 92,800 67,345
Leasehold improvements ............................................... 74,858 67,232
Construction in progress ............................................. 18,084 11,248
Accumulated depreciation ............................................. (63,244) (39,386)
-------- --------
$397,759 $290,630
======== ========
</TABLE>
[21]
<PAGE> 8
OUTBACK STEAKHOUSE, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. OTHER ASSETS
Other assets consisted of the following:
<TABLE>
<CAPTION>
December 31,
------------------
1996 1995
------- -------
(in thousands)
<S> <C> <C>
Preopening costs, net ................................................ $ 8,818 $ 8,134
Intangible assets (including liquor licenses) ........................ 4,485 3,009
Other assets ......................................................... 3,705 5,525
------- -------
$17,008 $16,668
======= =======
</TABLE>
5. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
December 31,
------------------
1996 1995
------- -------
(in thousands)
<S> <C> <C>
Notes payable to banks, collateralized by various items
including stock, investment securities, property,
fixtures and equipment, interest at rates ranging from
8.825% to 9.9% at December 31, 1996 .............................. $ 1,336 $14,794
Notes payable to leasing companies, collateralized by equipment,
interest rates ranging from 8% to 13.2% .......................... 127 409
Note payable to corporation, collateralized
by real estate, interest at 9.0% ................................. 455 553
Other notes payable, unsecured,
interest ranging from 5.36% to 7.99% ............................. 1,063 749
Revolving line of credit, interest ranging from
6.19% to 6.37% at December 31, 1996 (see below) ................. 45,320 24,400
------- -------
48,301 40,905
Less current portion ................................................. 706 3,000
------- -------
Long-term debt ....................................................... $47,595 $37,905
======= =======
</TABLE>
Approximately $1,336,000 and $14,794,000 of the notes payable outstanding at
December 31, 1996 and 1995, respectively, were assumed by the Company in
connection with the mergers discussed in Note 10. The majority of the notes
payable outstanding at December 31, 1995 were paid down with the Company's
revolving line of credit during 1996.
The Company has an unsecured revolving line of credit which permits
borrowing up to a maximum of $75,000,000 at a rate of 75 basis points over the
30, 60, 90 or 180 day London Interbank Offered Rate (LIBOR) (5.5% to 5.6% at
December 31, 1996). At December 31, 1996, the unused portion of the revolving
line of credit was $29,680,000. The line matures in June 1999.
The Company has a $7,500,000 unsecured line of credit bearing interest at
the rate of 75 basis points over LIBOR. Approximately $3,300,000 of the line of
credit is committed for the issuance of letters of credit, $703,000 of which is
to secure loans made by the bank to certain franchisees.
The aggregate payments of long-term debt outstanding at December 31,
1996, for the next five years, are summarized as follows: 1997 - $706,000;
1998 - $610,000; 1999 - $45,958,000; 2000 - $295,000; 2001 - $52,000.
The carrying amount of long-term debt at December 31, 1996 approximates
fair value.
[22]
<PAGE> 9
OUTBACK STEAKHOUSE, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. ACCRUED EXPENSES
<TABLE>
<CAPTION>
Accrued expenses consisted of the following:
December 31,
------------------------
1996 1995
------- -------
(in thousands)
<S> <C> <C>
Accrued payroll ............................ $ 4,624 $ 3,423
Accrued advertising ........................ 2,876 1,517
Accrued rent ............................... 1,148 1,490
Accrued insurance .......................... 4,490 2,090
Accrued ESOP contribution .................. 1,150 1,375
Other ...................................... 4,920 3,436
------- -------
$19,208 $13,331
======= =======
</TABLE>
7. STOCKHOLDERS' EQUITY
On February 18, 1994, a three-for-two split of the Company's Common Stock was
effected through distribution of one additional share for every two shares
already issued. All applicable share and per share data has been restated to
give retroactive effect to the stock split.
8. INCOME TAXES
Income tax expense consisted of the following:
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------
1996 1995 1994
------- ------- --------
(in thousands)
<S> <C> <C> <C>
Federal:
Current ............................. $29,838 $23,296 $ 18,193
Deferred ............................ 3,765 995 (293)
------- ------- --------
33,603 24,291 17,900
------- ------- --------
State:
Current ............................. 6,268 4,623 3,738
Deferred ............................ 412 253 (36)
------- ------- --------
6,680 4,876 3,702
------- ------- --------
$40,283 $29,167 $ 21,602
======= ======= ========
</TABLE>
[23]
<PAGE> 10
OUTBACK STEAKHOUSE, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Income Taxes (continued)
The Company's effective tax rate differs from the federal statutory rate
for the following reasons:
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Income taxes at federal statutory rate .................... 35.0% 35.0% 35.0%
State taxes, net of federal benefit ...................... 3.8 3.9 4.0
Earnings not subject to corporate income taxes ............ (3.8) (3.3)
Other, net ................................................ (2.8) (2.9) (2.4)
---- ---- ----
Total ...................................................... 36.0% 32.2% 33.3%
==== ==== ====
</TABLE>
As discussed in Note 10, in certain periods presented, the Company's net income
included earnings attributable to Aussie Enterprises, Inc. ("Aussie
Enterprises"), Connerty, Inc. ("Connerty"), the Hal Smith Restaurant Group (the
"Hal Smith Group"), Garob, Inc. ("Garob"), FBS Enterprises, Inc. ("FBS"), the
Fore Management Group ("Fore Management"), and the Brenica Restaurant Group
("Brenica"). These companies had elected under Subchapter S of the Internal
Revenue Code to have their shareholders pay any federal income tax due on their
earnings. Although income prior to the mergers attributable to the merging
companies is included in the Company's consolidated financial statements, the
Company is not required to pay income taxes on the income since they are the
responsibility of the shareholders of the merging companies.
The income tax effects of temporary differences that give rise to
significant portions of deferred tax assets and liabilities are as
follows:
Deferred income tax assets:
<TABLE>
<CAPTION>
December 31,
-----------------
1996 1995
------- ------
(in thousands)
<S> <C> <C>
Insurance reserves ............................... $ 3,147 $2,725
Amortization ..................................... 200
Advertising expense reserves ..................... 854
Intangibles ...................................... 9,760 2,813
------- ------
$13,761 $5,738
======= ======
</TABLE>
Deferred income tax liabilities:
<TABLE>
<CAPTION>
December 31,
-----------------
1996 1995
------- ------
(in thousands)
<S> <C> <C>
Depreciation ..................................... $10,683 $3,847
Marketing and training costs ..................... 4,219 2,995
------- ------
$14,902 $6,842
======= ======
</TABLE>
[24]
<PAGE> 11
OUTBACK STEAKHOUSE, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES - The Company leases restaurant and office facilities and
certain equipment under operating leases having terms expiring between 1997 and
2012. The restaurant facility leases primarily have renewal clauses of five to
20 years exercisable at the option of the Company. Certain of these leases
require the payment of contingent rentals based on a percentage of gross
revenues, as defined. Total rental expense for the years ended December 31,
1996, 1995 and 1994 was approximately $18,353,000, $16,054,000 and $13,035,000,
respectively, and included contingent rent of approximately $2,369,000,
$2,048,000 and $1,570,000, respectively.
Future minimum lease payments on operating leases (including leases for
restaurants scheduled to open in 1997), are as follows (in thousands):
<TABLE>
<S> <C>
1997 ...................................................... $13,825
1998 ...................................................... 13,356
1999 ...................................................... 12,430
2000 ...................................................... 11,781
2001 ...................................................... 9,906
Thereafter ................................................ 29,570
-------
Total minimum lease payments .............................. $90,868
=======
</TABLE>
The Company has a line of credit of which approximately $703,000 is
committed to secure loans made by banks to certain franchisees. See Note 5.
The Company is subject to legal proceedings claims and liabilities which
arise in the ordinary course of business. In the opinion of management, the
amount of the ultimate liability with respect to those actions will not
materially affect the Company's financial position or results of operations.
10. BUSINESS COMBINATIONS
In April 1994, the Company issued 831,000 shares of Common Stock to the
shareholders of Aussie Enterprises, the Company's franchisee in Louisiana in
connection with the merger of Aussie Enterprises into the Company.
In May 1994, the Company issued 1,700,000 shares of Common Stock to
Connerty, Inc. the Company's franchisee in Georgia and Jacksonville, Florida,
in connection with the merger of Connerty's interest in Outback restaurants
into the Company.
In December 1995, the Company issued 1,329,000 shares of Common Stock to
the Hal Smith Group, the Company's franchisee in Oklahoma, Nebraska, Arkansas,
and Kansas, in connection with the merger of the Hal Smith Group into the
Company.
In 1996, the Company issued approximately 2,348,000 shares of Common Stock
to the shareholders of four of its franchisees in exchange for all of their
outstanding interests in 28 Outback Steakhouses in Ohio, Kentucky, Virginia,
Illinois, Missouri, and Tennessee. The franchise groups include Garob, FBS,
Fore Management and Brenica.
The mergers discussed above have been accounted for by the pooling of
interest method using historical amounts and the financial statements presented
herein have been restated to give retroactive effect to the mergers for the
applicable periods presented.
[25]
<PAGE> 12
OUTBACK STEAKHOUSE, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. PRO FORMA EARNINGS AND EARNINGS PER SHARE
As discussed in Note 8, no income tax expense has been provided in the Company's
historical consolidated financial statements on income attributable to the
merging companies discussed in Note 10. Pro forma net income includes an
adjustment to increase the provision for income taxes to reflect the anticipated
tax as if the merging companies had not elected to be taxed under Subchapter S
of the Internal Revenue Code.
12. STOCK OPTION PLAN
The Company's amended and Restated Stock Option Plan (the "Stock Option Plan")
was approved by the shareholders of the Company in April 1992, and has
subsequently been amended as deemed appropriate by the Company's Board of
Directors or shareholders. There are currently 10,000,000 shares of the
Company's Common Stock which may be issued and sold upon exercise of stock
options ("Options"). The maximum term of Options granted is ten years, and
optionees generally vest in the Options over a five year period.
The purpose of the Stock Option Plan is to attract competent personnel, to
provide long-term incentives to Directors and key employees, and to discourage
employees from competing with the Company.
Options under the Stock Option Plan may be Options which qualify under
Section 422 of the Internal Revenue Code ("Incentive Stock Options") or Options
which do not qualify under Section 422 ("Nonqualified Options"). The term of
Options granted are generally 5 years and the price cannot be less than the
fair market value of the shares covered by the Option.
At December 31, 1996, Options to purchase 5,901,346 shares of the
Company's Common Stock had been granted to employees of the Company at prices
ranging from $0.28 to $38.33 per share which was the estimated fair market
value at the time of each grant. As of December 31, 1996, Options for 1,886,381
shares were exercisable.
Options to purchase 686,756, 1,429,000 and 827,000 of the Company's Common
Stock were issued to employees during 1996, 1995 and 1994 with exercise prices
ranging from $25.34 to $38.33, $23.38 to $32.15 and $23.75 to $30.88 for each
respective period.
Activity in the Company's Stock Option Plan was:
<TABLE>
<CAPTION>
Weighted
average
Shares Exercise Price
--------- --------------
<S> <C> <C>
Outstanding at December 31, 1994 ................. 3,815,979 $11.30
Granted ...................................... 1,429,000 25.78
Exercised .................................... (628,029) 16.74
Forfeited .................................... (28,200) 23.28
---------
Outstanding at December 31, 1995 ................. 4,588,750 15.90
Granted ...................................... 686,756 27.87
Exercised .................................... (349,033) 17.44
Forfeited .................................... (15,699) 28.09
---------
Outstanding at December 31, 1996 ................. 4,910,774 21.13
=========
</TABLE>
[26]
<PAGE> 13
OUTBACK STEAKHOUSE, INC.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. STOCK OPTION PLAN (CONTINUED)
Had the compensation cost for the Company's Stock Option Plan been determined
based on the fair value at the grant dates for awards under the plan consistent
with the method of FASB Statement 123, the Company's net income and earnings per
share on a pro forma basis would have been (in thousands, except per share
data):
<TABLE>
December 31,
--------------------------------
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
Net income $68,154 $50,923 $ 37,159
Earnings per common share $ 1.38 $ 1.04 $ 0.78
</TABLE>
The preceding pro forma results were calculated with the use of the Black
Scholes option-pricing model. The following assumptions were used for the years
ended December 31, 1996, 1995 and 1994, respectively: (1) risk-free interest
rates of 6.05%, 5.83%, and 5.45%; (2) dividend yield of 0.0%, 0.0%, and 0.0%;
(3) expected lives of 3.5, 3.5, and 3.5 years; and (4) volatility of 25%, 25%,
and 30%. Results may vary depending on the assumptions applied within the
model.
13. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table presents selected quarterly financial data for the
periods indicated (in thousands, except per share data):
<TABLE>
<CAPTION>
1996 MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
<S> <C> <C> <C> <C>
Revenues ................................................... $216,102 $236,481 $236,730 $248,087
Income from operations ..................................... 31,732 33,748 31,351 34,086
Income before provision for income taxes ................... 26,546 28,719 27,242 29,389
Net income ................................................. 16,857 18,236 17,712 18,808
Earnings per share ......................................... 0.34 0.37 0.36 0.38
1995 ....................................................... MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
Revenues ................................................... $162,623 $182,723 $191,259 $197,087
Income from operations ..................................... 23,957 27,349 25,535 30,200
Income before provision for income taxes ................... 20,080 22,845 21,856 25,704
Net income ................................................. 13,283 15,290 14,716 18,029
Earnings per share ......................................... 0.28 0.31 0.30 0.36
Pro forma net income ....................................... 12,670 14,396 14,133 16,712
Pro forma earnings per share ............................... 0.26 0.30 0.29 0.34
1994 ....................................................... MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
Revenues ................................................... $114,544 $127,414 $132,664 $142,304
Income from operations ..................................... 16,773 20,201 19,755 20,481
Income before provision for income taxes ................... 13,952 16,883 16,682 17,461
Net income ................................................. 9,065 11,107 11,027 12,177
Earnings per share ......................................... 0.19 0.23 0.23 0.26
Pro forma net income ....................................... 8,766 10,586 10,488 11,356
Pro forma earnings per share ............................... 0.19 0.22 0.22 0.23
</TABLE>
[27]
<PAGE> 1
EXHIBIT 13.03
OUTBACK STEAKHOUSE, INC.
The Common Stock of the Company is traded in the over-the-counter market and is
quoted on the NASDAQ National Market System under the symbol OSSI. The following
table sets forth, for the fiscal years ended December 31, 1994, 1995, and 1996,
the high and low per share prices of the Company's Common Stock as reported by
NASDAQ, after giving effect to the 1994 stock split. See Note 7 of Notes to the
Consolidated Financial Statements.
<TABLE>
<CAPTION>
1994 HIGH LOW
- --------------------------------------------------
<S> <C> <C>
First Quarter .................................... 29.50 23.33
Second Quarter ................................... 28.75 22.75
Third Quarter .................................... 30.88 23.75
Fourth Quarter ................................... 32.00 22.63
1995
- --------------------------------------------------
First Quarter .................................... 29.25 22.88
Second Quarter ................................... 30.13 23.38
Third Quarter .................................... 35.50 28.50
Fourth Quarter ................................... 37.80 29.25
1996
- --------------------------------------------------
First Quarter .................................... 40.63 29.75
Second Quarter ................................... 40.75 34.00
Third Quarter .................................... 35.00 23.00
Fourth Quarter ................................... 29.63 21.50
</TABLE>
The Company has never paid a cash dividend on its Common Stock. As of January
24, 1997 there were approximately 2,742 registered shareholders of record of the
Company's Common Stock.
REPORTS ON FORM 10-K
A copy of the Company's annual report to the Securities and Exchange Commission
on Form 10-K will be furnished to any shareholder without charge upon written
request. Address to Investor Relations Department at the address below:
Outback Steakhouse, Inc.,
550 N. Reo Street, Suite 200, Tampa, FL 33609
Stock Transfer Agent and Registrar, Bank of New York,101 Barclay Street, 12
West, New York, NY 10286
Independent Accountants, Deloitte & Touche LLP,
Tampa, Florida
COMPANY NEWS
The Company's news releases, including quarterly earnings announcements, are
available at no charge through Company News-On-Call. To receive a faxed copy of
recent news releases, call 1-800-758-5804. Enter the Outback six digit code of
673313 and the requested release will be faxed within minutes of inquiry. This
service is available 24 hours a day, 7 days a week.
Additional information, including a business description, annual report
and restaurant locations, can be accessed through Company News-On-Call Plus on
the PR Newswire Web site at http://www.prnewswire.com.
ANNUAL MEETING
The annual meeting of shareholders will be held on Wednesday, April 23, 1997 at
10:00 a.m. local time at the Tampa Convention Center, 333 South Franklin Street,
Tampa, Florida.
[28]
<PAGE> 2
- --------------------------------------------------------------------------------
OFFICERS
OUTBACK STEAKHOUSE, INC. AND AFFILIATES
<TABLE>
<S> <C> <C>
Chris T. Sullivan Trudy I. Cooper Carl W. Sahisten
Chairman of the Board Vice President, President - Carrabba's Italian Grill
Chief Executive Officer Training and Development
Robert D. Basham Nancy Schneid Steven T. Shlemon
President and Chief Operating Officer Vice President, Marketing Vice President and Director of Operations
Carrabba's Italian Grill
J. Timothy Gannon Steven C. Stanley Address for all officers:
Sr. Vice President Vice President, Construction 550 North Reo Street, Suite 200,
Tampa, Florida 33609
Robert S. Merritt Joseph J. Kadwo [Description of people in photo]
Sr. Vice President, Vice President,
Chief Financial Officer and Treasurer General Counsel and Secretary
Paul E. Avery Lauren C. Cooper
Sr. Vice President, Operations Vice President and Controller
BOARD OF DIRECTORS OUTBACK STEAKHOUSE, INC.
Chris T. Sullivan John A. Brabson, Jr. Edward L. Flom
Chairman of the Board and Chairman of the Board, Lykes Bros. Inc. Former Chairman
Chief Executive Officer Chairman, Chief Executive Officer and and Chief Executive Officer
President, Peoples Gas Systems, Inc. Florida Steel Corporation
Robert Basham Charles H. Bridges Nancy Schneid
President and Chief Operating Officer Former Chairman and Chief Executive Vice President, Marketing
Officer, Francois L. Schwartz, Inc. Outback Steakhouse, Inc.
J. Timothy Gannon W.R. "Max" Carey, Jr. Lee Roy Selmon
Sr. Vice President President Associate Athletic Director
Corporate Resource Development University of South Florida
Robert S. Merritt Debbi Fields
Sr. Vice President, Founder and Former Chairperson
Chief Financial Officer and Treasurer Mrs. Fields Cookies
</TABLE>
<PAGE> 1
EXHIBIT 21.01
OUTBACK STEAKHOUSE, INC.
A DELAWARE CORPORATION
WHOLLY OWNED SUBSIDIARIES
MARCH 26, 1997
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY DIRECTORS OFFICERS
- -------------------------------------- -------------------------- -------------------------------------------------------
<S> <C> <C> <C>
Outback Steakhouse of Florida, Inc. Chris T. Sullivan Chris T. Sullivan . . . Chairman of the Board and
a Florida corporation Robert D. Basham Chief Executive Officer
550 North Reo Street, Suite 200 J. Timothy Gannon Robert D. Basham . . . President and Chief
Tampa, Florida 33609 Robert S. Merritt Operating Officer
J. Timothy Gannon . . . Sr. Vice President
Robert S. Merritt . . . Sr. Vice President, Chief
Financial Officer and
Treasurer
Joseph J. Kadow . . . . Vice President, General
Counsel, and Secretary
Carrabba's Italian Grill, Inc. Chris T. Sullivan Chris T. Sullivan . . . Chairman of the Board and
a Florida corporation Robert D. Basham Chief Executive Officer
550 North Reo Street, Suite 200 Robert S. Merritt Carl H. Sahlsten . . . President
Tampa, Florida 33609 Carl H. Sahlsten Robert D. Basham . . . Sr. Vice President and Chief
Operating Officer
Robert S. Merritt . . . Sr. Vice President, Chief
Financial Officer and
Treasurer
Steve Shlemon . . . . . Vice President--and Director
of Operations
Joseph J. Kadow . . . . Secretary
</TABLE>
<PAGE> 1
EXHIBIT 23.01
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors and Stockholders of
Outback Steakhouse, Inc.
Tampa, Florida
We consent to the incorporation by reference in this Annual Report of Outback
Steakhouse, Inc., (the "Company") on Form 10-K of our report on the
Consolidated Financial Statements of the Company dated February 21, 1997
included in the Company's Annual Report to Shareholders.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Tampa, Florida
March 28, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 15,661
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 16,637
<CURRENT-ASSETS> 41,108
<PP&E> 461,003
<DEPRECIATION> 63,244
<TOTAL-ASSETS> 469,843
<CURRENT-LIABILITIES> 74,099
<BONDS> 47,595
0
0
<COMMON> 480
<OTHER-SE> 341,959
<TOTAL-LIABILITY-AND-EQUITY> 469,843
<SALES> 931,348
<TOTAL-REVENUES> 937,400
<CGS> 363,285
<TOTAL-COSTS> 772,552
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,096
<INCOME-PRETAX> 111,896
<INCOME-TAX> 40,283
<INCOME-CONTINUING> 71,613
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,613
<EPS-PRIMARY> 1.45
<EPS-DILUTED> 1.45
</TABLE>
