<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 29, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-22422
POLLO TROPICAL, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 65-0100964
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
7300 N. KENDALL DRIVE, 8TH FLOOR, MIAMI, FLORIDA 33156
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 305/670-7696
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of May 6, 1998: 8,255,329 shares of common stock, par value
$.01.
Page 1 of 16
<PAGE> 2
POLLO TROPICAL, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
QUARTER ENDED MARCH 29, 1998
Page
PART I - FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets
December 28, 1997 and March 29, 1998................................. 3
Condensed Consolidated Statements of Income
Quarters Ended March 30, 1997 and March 29, 1998..................... 4
Condensed Consolidated Statements of Cash Flows
Quarters Ended March 30, 1997 and March 29, 1998..................... 5
Notes to Condensed Consolidated Financial Statements................... 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations ................................. 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .............................. 15
Signature Page ......................................................... 16
Page 2 of 16
<PAGE> 3
POLLO TROPICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 28, March 29,
1997 1998
------------- -------------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ...................................... $ 292,455 $ 1,418,502
Inventories..................................................... 280,595 261,661
Prepaid expenses ............................................... 244,753 299,352
Deferred income taxes........................................... 419,743 399,377
Other current assets............................................ 279,384 285,142
----------- -----------
Total current assets .......................................... 1,516,930 2,664,034
PROPERTY AND EQUIPMENT, net........................................ 35,405,159 35,012,229
INTANGIBLE ASSETS, net ............................................ 467,923 464,657
LEASEHOLD ACQUISITION COSTS, net................................... 1,079,925 1,058,890
NOTE RECEIVABLE, net of current portion............................ 840,032 835,061
DEPOSITS AND DEFERRED COSTS ON FUTURE
RESTAURANT LOCATIONS............................................ 250,727 357,671
OTHER ASSETS....................................................... 793,405 789,847
----------- -----------
Total assets................................................... $40,354,101 $41,182,389
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................................ $ 1,553,056 $ 1,255,342
Accrued liabilities............................................. 2,603,450 2,573,096
Current maturities of long-term debt............................ 126,559 91,941
Income taxes payable............................................ 14,174 655,600
Accrued restaurant closure expenses............................. 2,125,525 2,007,084
----------- -----------
Total current liabilities...................................... 6,422,764 6,583,063
LONG-TERM DEBT, net of current maturities.......................... 1,087,393 25,052
DEFERRED RENT...................................................... 1,483,978 1,534,434
DEFERRED FRANCHISE FEE INCOME...................................... 237,500 187,500
DEFERRED INCOME TAXES.............................................. 1,391,085 1,324,783
----------- -----------
Total liabilities.............................................. 10,622,720 9,654,832
----------- -----------
SHAREHOLDERS' EQUITY:
Preferred stock................................................. -- --
Common stock.................................................... 82,076 82,238
Additional paid-in capital...................................... 22,054,326 22,145,736
Retained earnings............................................... 7,594,979 9,299,583
-------------- ------------
Total shareholders' equity..................................... 29,731,381 31,527,557
----------- -----------
Total liabilities and shareholders' equity..................... $40,354,101 $41,182,389
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 3 of 16
<PAGE> 4
POLLO TROPICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
---------------------------------------
March 30, March 29,
1997 1998
----------- -----------
<S> <C> <C>
REVENUES:
Restaurant sales................................................ $15,621,608 $17,368,990
Franchise revenues.............................................. 180,654 239,748
----------- -----------
15,802,262 17,608,738
----------- -----------
OPERATING EXPENSES:
Cost of sales................................................... 5,524,230 5,797,847
Restaurant payroll.............................................. 3,701,565 4,000,370
Other restaurant operating expenses............................. 2,665,591 3,032,369
General and administrative...................................... 1,462,058 1,453,089
Depreciation and amortization of property and equipment......... 497,745 517,864
Amortization of deferred restaurant pre-opening cost............ 57,265 12,417
Other amortization.............................................. 66,061 45,082
----------- -----------
13,974,515 14,859,038
----------- -----------
INCOME FROM OPERATIONS............................................. 1,827,747 2,749,700
----------- -----------
OTHER INCOME (EXPENSE):
Interest, net................................................... (218,336) (9,347)
Other income, net............................................... 3,273 8,565
----------- -----------
(215,063) (782)
----------- -----------
INCOME BEFORE INCOME TAXES........................................ 1,612,684 2,748,918
PROVISION FOR INCOME TAXES........................................ 612,659 1,044,314
----------- -----------
NET INCOME........................................................ $ 1,000,025 $ 1,704,604
=========== ===========
NET INCOME PER COMMON SHARE:
Basic.......................................................... $ 0.12 $ 0.21
=========== ===========
Diluted........................................................ $ 0.12 $ 0.20
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 4 of 16
<PAGE> 5
POLLO TROPICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
---------------------------------------
March 30, March 29,
1997 1998
------------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income............................................................... $ 1,000,025 $ 1,704,604
----------- -----------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization........................................... 579,327 575,363
Loss on disposal of property and equipment.............................. 2,343 50,140
Deferred rent........................................................... 48,239 50,456
Amortization of deferred compensation................................... 10,144 5,722
Deferred income taxes................................................... 496,642 (45,936)
Amortization of deferred loan costs..................................... 5,072 5,072
Changes in operating assets and liabilities:
(Increase) decrease in-
Inventories.......................................................... 1,731 18,934
Prepaid expenses..................................................... (174,129) (54,599)
Prepaid income taxes................................................. 86,654 --
Other current assets................................................. 199,073 (787)
Other assets......................................................... (12,293) (30,811)
Increase (decrease) in-
Accounts payable and accrued liabilities............................. (742,211) (328,068)
Deferred franchise fee income........................................ -- (50,000)
Accrued restaurant closure expenses.................................. 906,867 (118,441)
Income taxes payable................................................. -- 654,557
----------- -----------
Total adjustments.................................................... 1,407,459 731,602
----------- -----------
Net cash provided by operating activities............................ 2,407,484 2,436,206
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................................................... (151,024) (172,575)
Payment for intangible assets............................................ (11,189) (6,400)
Increase in deposits and deferred costs on future
restaurant locations.................................................. (81,579) (106,944)
----------- -----------
Net cash used in investing activities................................ (243,792) (285,919)
----------- -----------
</TABLE>
(Continued)
Page 5 of 16
<PAGE> 6
POLLO TROPICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt................................... $ (20,322) $ (22,155)
Net repayments under revolving credit agreement........................ (1,583,999) (1,074,804)
Proceeds from exercise of stock options................................ 2,610 72,719
----------- -----------
Net cash used in financing
activities........................................................ (1,601,711) (1,024,240)
----------- -----------
Net increase in cash and cash
equivalents....................................................... 561,981 1,126,047
Cash and cash equivalents, beginning of period......................... 94,490 292,455
----------- -----------
Cash and cash equivalents, end of period............................... $ 656,471 $ 1,418,502
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for -
Interest........................................................... $ 218,530 $ 9,151
=========== ===========
Income taxes....................................................... $ 23,085 $ 387,000
=========== ===========
SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Tax benefit from exercise of stock options
recorded to additional paid-in capital............................ $ 14,209 $ 13,131
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 6 of 16
<PAGE> 7
POLLO TROPICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 29, 1998
(UNAUDITED)
(1) BASIS OF PRESENTATION
The condensed consolidated balance sheet as of December 28, 1997, which has been
derived from audited financial statements, and the unaudited interim condensed
financial statements included herein, have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information
and note disclosures normally included in annual financial statements prepared
in accordance with generally accepted accounting principles have been condensed
or omitted pursuant to those rules and regulations, although the Company
believes that the disclosures made herein are adequate to make the information
presented not misleading. It is suggested that these financial statements be
read in conjunction with the financial statements and the notes thereto included
in the Company's Annual Report on Form 10-K (File No. 0-22422) for the year
ended December 28, 1997.
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position of the
Company and the results of operations and cash flows for the periods indicated.
Results of operations for the quarter ended March 29, 1998 are not necessarily
indicative of the results to be expected for the year ending January 3, 1999.
(2) ACCOUNTING POLICIES
During interim periods the Company follows the accounting policies set forth in
its consolidated financial statements included in its Annual Report on Form 10-K
(File No. 0-22422). Reference should be made to such financial statements for
information on such accounting policies and further financial details. Certain
prior year amounts have been reclassified to conform to the current year
presentation.
(3) NEWLY ISSUED ACCOUNTING STANDARD
In April 1998, the Financial Accounting Standards Board issued Statement of
Position ("SOP") No. 98-5, "Reporting on the Cost of Start-Up Activities". SOP
98-5 requires that the costs of start-up activities, including organization
costs, be expensed as incurred. The Company plans to adopt SOP 98-5 when
required in the first quarter of Fiscal 1999, although early adoption is
permitted. Initial adoption of SOP 98-5 should be as of the beginning of the
fiscal year in which first adopted, and will be reported as the cumulative
effect of a change in accounting principle in the first quarter of Fiscal 1999.
At the present time, the Company cannot predict the amount of the cumulative
effect of the change in accounting principle that will be recorded in the first
quarter of Fiscal year 1999, however, had the Company adopted the new standard
at the beginning of Fiscal year 1998, the cumulative effect of the change in
accounting principle that would have been recorded in the accompanying Condensed
Consolidated Statements of Income for the quarter ended March 29, 1998, would
not have been material to income before cumulative effect of a change in
accounting principle. Had the provisions of SOP 98-5 been applicable to the
accompanying condensed consolidated financial statements, income before
cumulative effect of a change in accounting principle as calculated in
accordance with the provisions of SOP 98-5 would not have been materially
different than the historical amount reported herein.
Page 7 of 16
<PAGE> 8
(4) NET INCOME PER SHARE
In Fiscal 1997, the Company adopted Statement of Financial Accounting Standards
No. 128, "Earnings per Share" ("SFAS 128"). Prior to the adoption of SFAS 128,
the Company reported primary earnings per share, which equaled diluted earnings
per share pursuant to SFAS 128. The following is a reconciliation of the shares
used in the computations for the periods presented:
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
----------------------
MARCH 30, MARCH 29,
1997 1998
--------- ---------
<S> <C> <C>
Weighted average shares used in basic computation.............. 8,153,854 8,216,170
Stock options and warrants..................................... 20,794 179,281
--------- ---------
Weighted average shares used in diluted computation............ 8,174,648 8,395,451
========= =========
</TABLE>
The net income amount used as the numerator in calculating basic and diluted
earnings per share equals net income in the accompanying Condensed Consolidated
Statements of Income.
Page 8 of 16
<PAGE> 9
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q under "Management's Discussion and Analysis
of Financial Condition and Results of Operations" constitute "Forward Looking
Statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results,
performance, or achievements of Pollo Tropical, Inc. stores to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. Such factors include, among others,
the following: competition; success of operating initiatives; advertising and
promotional efforts; adverse publicity; acceptance of new product offerings;
availability, locations, and terms of sites for store development and the real
estate market conditions in general; changes in business strategy or development
plans; availability and terms of capital; food, labor, and employee benefit
costs; changes in government regulations; regional weather conditions; and other
factors referenced in this Form 10-Q or in the Company's Annual Report on Form
10-K for the year ended December 28, 1997.
Page 9 of 16
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's operating results continued to improve during the first quarter
ended March 29, 1998 reflecting the effective execution of the Company's
strategic plan. The Company posted its eighth consecutive quarter of positive
same store sales. For the first quarter of 1998 same store sales increased 7.6%
compared with the same period of the prior year. The Company believes that the
sustained improvement in the same store sales is primarily due to the focused
execution of its key marketing strategies including everyday value pricing on
selected menu items, separate advertising campaigns aimed toward its dual-target
audiences, successful new product introductions and improved customer service.
As a result of the continued emphasis on marketing, operational and cost control
initiatives, and reductions in the commodity price of chicken, the Company's
operating margins have improved substantially to 15.8% as a percentage of
restaurant sales for the first quarter of 1998 compared with 11.7% for the same
period of the prior year. The Company plans to open a total of four to five
additional Company owned restaurants during the last four months of Fiscal 1998.
One additional franchised unit opened in Ecuador and one additional franchised
unit opened in the Dominican Republic during the first quarter of 1998,
continuing the Company's growth in Central and South America and the Caribbean
through franchising. The Company further expects franchisees to open six
additional units by the end of 1998. The Company receives exclusivity fees upon
signing of area development agreements. Such fees are recognized as revenue when
franchise restaurants open or when such agreements terminate. Additionally, the
Company receives a franchise fee when franchise restaurants become operational,
and the Company receives continuing royalties based on sales. As the Company
does not control the timing of franchise openings and/or terminations of
agreements, the recognition of franchise revenues cannot be accurately predicted
and, therefore, may fluctuate significantly on a quarter to quarter basis. The
Company has developed, and continues to develop, its corporate infrastructure in
order to manage and administer its franchise program.
Page 10 of 16
<PAGE> 11
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain
selected income statement data as a percentage of restaurant sales, except
general and administrative expenses, which is shown as a percentage of total
revenues, and certain restaurant data:
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
--------------------------
MARCH 30, MARCH 29,
1997 1998
--------- ---------
<S> <C> <C>
INCOME STATEMENT DATA:
Cost of sales...................................................... 35.4% 33.4%
Restaurant payroll................................................. 23.7 23.0
Other restaurant operating expenses................................ 17.1 17.5
General and administrative......................................... 9.3 8.3
Depreciation and amortization of property
and equipment.................................................. 3.2 3.0
Amortization of deferred restaurant
pre-opening costs.............................................. .4 .1
Other amortization................................................. .4 .3
Income from operations............................................. 11.7 15.8
Other income (expense), net........................................ (1.4) --
Net income......................................................... 6.4 9.8
RESTAURANT DATA:
Aggregate restaurant sales increase from
prior period...................................................... 8% 11%
Number of restaurants open at end of
period............................................................ 35 36
</TABLE>
Page 11 of 16
<PAGE> 12
QUARTER ENDED MARCH 29, 1998 COMPARED TO QUARTER ENDED MARCH 30, 1997
RESTAURANT SALES. Restaurant sales for the quarter ended March 29, 1998
increased $1.8 million (11%) to $17.4 million from $15.6 million for the
comparable quarter of the prior year. This increase was due primarily to a sales
increase in restaurants open for the entire quarter for both years. Same store
sales for the quarter ended March 29, 1998 increased 7.6% from the comparable
quarter of the prior year. This increase in restaurant sales was also due to the
additional restaurant sales generated by two new restaurants added during 1997.
During the quarter, 36 restaurants operated for the full quarter, as compared to
the prior year quarter when 34 restaurants operated for the full quarter and two
operated for part of the quarter.
FRANCHISE REVENUES. Franchise revenues for the quarter ended March 29,
1998 increased $59,000 to $240,000 from $181,000 for the comparable quarter of
the prior year. Franchise revenues generally consist of initial franchise fees
which are recognized when a restaurant opens, continuing royalties and fees from
operating franchised restaurants, and forfeiture of exclusivity fees when area
development agreements are terminated. This increase was primarily due to
increased royalties as 16 franchise restaurants operated for the full quarter
and two operated for part of the quarter, as compared to the prior year quarter
when seven franchise restaurants operated for the full quarter and three
operated for part of the quarter. The increase in royalties was partially offset
by a decrease in initial franchise fees as two franchise restaurants were opened
during the quarter ended March 29, 1998, as compared to three franchise
restaurants opened in the prior year quarter.
During the quarter ended March 29, 1998, one franchise restaurant
opened in the Dominican Republic, and one franchise restaurant opened in
Ecuador. Between March 29, 1998 and the date of this filing, there were no
additional franchise restaurants opened, leaving the total number of franchise
restaurants open as of the date of this filing at 18. The Company anticipates
the opening of six additional international franchise restaurants during the
remainder of Fiscal 1998.
COST OF SALES. Cost of sales which consists of food, beverage, and
paper and supply costs, decreased 200 basis points for the quarter ended March
29, 1998 to 33.4%, as a percentage of restaurant sales, from 35.4% for the
comparable quarter of the prior year. This decrease was primarily due to a 9%
decrease in the average market price for chicken for the quarter ended March 29,
1998 compared to the same quarter of the prior year.
RESTAURANT PAYROLL. Restaurant payroll expense, which consists of
restaurant management and hourly employee wages, payroll taxes, workers'
compensation insurance and group health insurance, decreased 70 basis points for
the quarter ended March 29, 1998 to 23.0%, as a percentage of restaurant sales,
from 23.7% for the comparable quarter of the prior year. This decrease was
primarily due to efficiencies from the relative fixed nature of certain
payroll costs resulting from higher sales volumes for the quarter ended March
29, 1998, as compared to the comparable quarter of the prior year.
Page 12 of 16
<PAGE> 13
OTHER RESTAURANT OPERATING EXPENSES. Other restaurant operating
expenses consist of all restaurant operating costs other than cost of sales and
payroll expenses and includes occupancy costs, utilities and advertising
expenses. These expenses increased 40 basis points for the quarter ended March
29, 1998 to 17.5%, as a percentage of restaurant sales, from 17.1% for the
comparable quarter of the prior year. The largest component of this change was
advertising expense, which increased 50 basis points to 4.6%, as a percentage of
restaurant sales, from 4.1% during the comparable quarter of the prior year.
This increase was due to the timing of certain advertising expenditures between
both quarters.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative ("G &
A") expenses decreased 100 basis points for the quarter ended March 29, 1998 to
8.3%, as a percentage of total revenues, from 9.3% for the comparable quarter of
the prior year. This decrease was due to the fixed cost nature of general and
administrative costs relative to the higher sales volume experienced during the
first quarter of 1998 as compared to the comparable quarter of the prior year.
DEPRECIATION AND AMORTIZATION OF PROPERTY AND EQUIPMENT. Depreciation
and amortization of property and equipment decreased 20 basis points for the
quarter ended March 29, 1998 to 3.0%, as a percentage of restaurant sales, from
3.2% for the comparable quarter of the prior year. This decrease was due to the
fixed cost nature of depreciation costs relative to the higher sales volume
experienced during the first quarter of 1998 as compared to the comparable
quarter of the prior year.
AMORTIZATION OF DEFERRED RESTAURANT PRE-OPENING COSTS. Amortization of
deferred pre-opening costs decreased 30 basis points for the quarter ended March
29, 1998 to 0.1%, as a percentage of restaurant sales, from 0.4% for the
comparable quarter of the prior year. This decrease was the result of fewer new
restaurants opened during the twelve months ended March 29, 1998 as compared to
new restaurants opened during the twelve months ended March 30, 1997.
OTHER AMORTIZATION. Other amortization consists of amortization of
intangibles such as trademarks, organization costs, leasehold acquisition costs
and deferred franchise expenses. Other amortization slightly decreased 10 basis
points for the quarter ended March 29, 1998 to 0.3%, as a percentage of
restaurant sales, from 0.4% for the same quarter of the prior year.
OTHER INCOME (EXPENSES). The Company incurred interest costs of
$21,729 during the quarter ended March 29, 1998. This decrease in interest costs
was primarily the result of the lower average balance of debt outstanding under
the revolving line of credit during the quarter ended March 29, 1998 as compared
to the comparable quarter of the prior year. Interest costs were offset by
$12,382 in interest income primarily consisting of interest income on invested
cash balances. During the same quarter of the prior year, the Company incurred
interest costs of $218,531. Such interest costs were not significantly offset by
interest income.
Page 13 of 16
<PAGE> 14
LIQUIDITY AND CAPITAL RESOURCES
As is customary in the restaurant industry, the Company is able to
operate with a working capital deficit because its restaurant sales are in cash,
it receives trade credit from its vendors and its operations do not require
significant investment in receivables or inventories. Historically, the Company
has used the majority of its available capital for the development of new
restaurants. Consequently, prior to the Initial Public Offering in 1993 and
since the quarter ended April 3, 1994, the Company has operated with working
capital deficits.
During the quarter ended March 29, 1998, the Company generated an
aggregate of $2.4 million of cash flow from operations and reduced its long-term
indebtedness by $1.1 million. During such period, the Company did not open any
new restaurants. Capital expenditures for the quarter totaled $173,000. During
Fiscal 1997, the Company entered into three purchase agreements for future
restaurant sites with an aggregate purchase price of $1.7 million. The
anticipated closing dates for the purchase agreements will be during Fiscal
1998.
The Company has a $25 million line of credit facility from a commercial
bank, which provides for advances of up to $25,000,000; however, the lender has
no obligation to make further advances after July 13, 1998. Borrowing capacity
under the Loan can also be used to secure letters of credit, $150,000 of which
were outstanding as of March 29, 1998. As of the quarter ended March 29, 1998,
there was no balance outstanding on the line of credit facility.
The Company anticipates that the funds under its existing credit
facility combined with cash flow from operations will be sufficient to fund its
planned new restaurant openings and other cash needs throughout Fiscal 1998.
Page 14 of 16
<PAGE> 15
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NO. DESCRIPTION
------- -----------
27.1 Article 5 of Regulation S-X
Financial Data Schedule for
1st Quarter 10-Q (for SEC use only)
(b) During the quarter ended March 29, 1998, the Company filed a
Form 8-K report on March 13, 1998, which reported on the press
release discussing the proposed merger of the Company, and the
press release discussing the lawsuit instituted by purported
shareholders of the Company concerning the proposed merger.
All other items under Part II are not applicable.
Page 15 of 16
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
POLLO TROPICAL, INC.
/s/ Larry J. Harris
-------------------------------------
LARRY J. HARRIS
Chief Executive Officer
/s/ William Carl Drew
-------------------------------------
WILLIAM CARL DREW
Chief Financial Officer
/s/ Vivian Lopez-Blanco
-------------------------------------
VIVIAN LOPEZ-BLANCO
Controller
DATE: May 12, 1998
Page 16 of 16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1999
<PERIOD-START> DEC-29-1997
<PERIOD-END> MAR-29-1998
<CASH> 1,418,502
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 261,661
<CURRENT-ASSETS> 2,664,034
<PP&E> 43,038,916
<DEPRECIATION> 8,026,687
<TOTAL-ASSETS> 41,182,389
<CURRENT-LIABILITIES> 6,583,063
<BONDS> 0
0
0
<COMMON> 82,238
<OTHER-SE> 31,445,319
<TOTAL-LIABILITY-AND-EQUITY> 41,182,389
<SALES> 17,368,990
<TOTAL-REVENUES> 17,608,738
<CGS> 5,797,847
<TOTAL-COSTS> 9,061,191
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,729
<INCOME-PRETAX> 2,748,918
<INCOME-TAX> 1,044,314
<INCOME-CONTINUING> 1,704,604
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,704,604
<EPS-PRIMARY> .21
<EPS-DILUTED> .20
</TABLE>
