<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-QSB/A-1
filed August 12, 1997
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---- EXCHANGE ACT OF 1934
For the quarterly period ended June 18, 1997
---- 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: 0-22786
TIMBER LODGE STEAKHOUSE, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Minnesota 41-1810126
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
4021 Vernon Avenue South
St. Louis Park, Minnesota 55416
(Address of Principal Executive Offices)
(612) 929-9353
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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.
X Yes No
---- ----
As of June 1, 1997 there were outstanding 3,598,581 shares of the
issuer's Common Stock, $.01 par value per share.
<PAGE>
TABLE OF CONTENTS
Page
----
PART I
ITEM 1. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . 5
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . 7
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
i
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TIMBER LODGE STEAKHOUSE, INC.
BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
JUNE 18, JANUARY 1,
1997 1997
-------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . $ 599,214 $ 1,178,373
Accounts receivable . . . . . . . . . . . . . . . . . . . . . 228,209 136,576
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 229,373 203,268
Pre-opening costs . . . . . . . . . . . . . . . . . . . . . . 331,556 168,933
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . 64,300 64,300
Prepaid expenses and other current assets . . . . . . . . . . 610,628 366,240
-------------- --------------
Total current assets . . . . . . . . . . . . . . . . . . . 2,063,280 2,117,690
Property and equipment, net. . . . . . . . . . . . . . . . . . . 11,957,594 10,970,370
Note receivable, related party . . . . . . . . . . . . . . . . . 346,000 396,000
Deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . 23,200 23,200
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 193,469 190,182
-------------- --------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 14,583,543 $ 13,697,442
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . $ 1,197,148 $ 1,127,673
Short-term borrowing. . . . . . . . . . . . . . . . . . . . . 968,425 --
Accrued salaries and wages. . . . . . . . . . . . . . . . . . 341,096 262,346
Sales tax payable . . . . . . . . . . . . . . . . . . . . . . 90,594 136,327
Gift certificates payable . . . . . . . . . . . . . . . . . . 222,442 535,997
Income tax payable. . . . . . . . . . . . . . . . . . . . . . 81,508 295,690
Accrued expenses and other liabilities. . . . . . . . . . . . 27,271 97,569
-------------- --------------
Total current liabilities. . . . . . . . . . . . . . . . . 2,928,484 2,455,602
Deferred rent. . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,283 1,248,224
-------------- --------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . 4,128,767 3,703,826
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares -- 10,000,000
Issued shares -- 3,598,581 at June 18, 1997 and
3,566,833 at January 1, 1997 . . . . . . . . . . . . . . . 35,986 35,668
Additional paid-in capital. . . . . . . . . . . . . . . . . . 8,811,158 8,793,814
Retained earnings . . . . . . . . . . . . . . . . . . . . . . 1,607,632 1,164,134
-------------- --------------
Total shareholders' equity . . . . . . . . . . . . . . . . 10,454,776 9,993,616
-------------- --------------
Total liabilities and shareholders' equity . . . . . . . . . . . $ 14,583,543 $ 13,697,442
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to the financial statements
1
<PAGE>
TIMBER LODGE STEAKHOUSE, INC.
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED TWENTY-FOUR WEEKS ENDED
JUNE 18, JUNE 19, JUNE 18, JUNE 19,
1997 1996 1997 1996
---------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . $ 5,921,684 $ 4,736,133 $ 11,135,992 $ 9,016,848
Costs and expenses:
Food and beverage costs . . . . . . . . . . . . 2,243,330 1,794,835 4,170,498 3,415,890
Labor and benefits costs. . . . . . . . . . . . 1,719,379 1,357,366 3,192,967 2,577,634
Restaurant operating expenses . . . . . . . . . 578,297 444,118 1,116,727 875,434
Occupancy costs . . . . . . . . . . . . . . . . 590,332 525,908 1,160,635 939,707
---------------- --------------- -------------- --------------
Restaurant costs and expenses. . . . . . . . 5,131,338 4,122,227 9,640,827 7,808,665
---------------- --------------- -------------- --------------
Restaurant operating income. . . . . . . . . . . . 790,346 613,906 1,495,165 1,208,183
General and administrative . . . . . . . . . . . . 375,754 272,666 715,290 536,542
Amortization of pre-opening costs. . . . . . . . . 58,274 59,019 134,900 117,260
---------------- --------------- -------------- --------------
Operating income. . . . . . . . . . . . . . . . 356,318 282,221 644,975 554,381
Interest expense . . . . . . . . . . . . . . . . . 28,909 3,025 48,250 4,538
Interest and other (income) expense. . . . . . . . (17,205) (21,667) (36,773) (45,188)
---------------- --------------- -------------- --------------
Income before income taxes . . . . . . . . . . . . 344,614 300,863 633,498 595,031
Income taxes. . . . . . . . . . . . . . . . . . 103,300 65,050 190,000 123,950
---------------- --------------- -------------- --------------
Net income . . . . . . . . . . . . . . . . . . . . $ 241,314 $ 235,813 $ 443,498 $ 471,081
---------------- --------------- -------------- --------------
---------------- --------------- -------------- --------------
Net income per share . . . . . . . . . . . . . . . $0.07 $0.07 $0.12 $0.13
---------------- --------------- -------------- --------------
---------------- --------------- -------------- --------------
Weighted average number of common and
common equivalent shares outstanding. . . . . . 3,668,229 3,572,500 3,661,122 3,573,712
---------------- --------------- -------------- --------------
---------------- --------------- -------------- --------------
</TABLE>
See accompanying notes to the financial statements
2
<PAGE>
TIMBER LODGE STEAKHOUSE, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
TWENTY-FOUR WEEKS ENDED
JUNE 18, JUNE 19,
1997 1996
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 443,498 $ 471,081
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . 481,867 368,184
Amortization . . . . . . . . . . . . . . . . . . . . . . . 134,900 139,031
Deferred rent. . . . . . . . . . . . . . . . . . . . . . . (47,941) 367,227
Changes in operating assets and liabilities:
Receivables . . . . . . . . . . . . . . . . . . . . . . (91,633) (158,532)
Inventories . . . . . . . . . . . . . . . . . . . . . . (26,105) (526)
Pre-opening costs . . . . . . . . . . . . . . . . . . . (295,723) (97,031)
Prepaid expenses and other current assets . . . . . . . (244,388) (21,877)
Accounts payable. . . . . . . . . . . . . . . . . . . . 69,475 60,611
Accrued salaries and wages. . . . . . . . . . . . . . . 78,750 51,866
Sales tax payable . . . . . . . . . . . . . . . . . . . (45,733) (13,646)
Gift certificates payable . . . . . . . . . . . . . . . (313,555) (163,229)
Income taxes payable. . . . . . . . . . . . . . . . . . (214,182) 56,350
Other accrued expenses. . . . . . . . . . . . . . . . . (70,298) 9,593
-------------- --------------
Net cash provided by (used in) operating activities. . . . . . . (141,068) 1,069,102
INVESTING ACTIVITIES
Purchases of property and equipment. . . . . . . . . . . . . . . (1,469,091) (1,432,652)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . (5,087) 12,648
-------------- --------------
Net cash used in investing activities. . . . . . . . . . . . . . (1,474,178) (1,420,004)
FINANCING ACTIVITIES
Proceeds from short-term borrowings. . . . . . . . . . . . . . . 968,425 100,000
Exercise of stock options. . . . . . . . . . . . . . . . . . . . 24,975 --
Principal collected on long-term note. . . . . . . . . . . . . . 50,000 --
Common stock repurchased . . . . . . . . . . . . . . . . . . . . (7,313) (10,100)
-------------- --------------
Net cash provided by financing activities. . . . . . . . . . . . 1,036,087 89,900
Net decrease in cash and cash equivalents. . . . . . . . . . . . (579,159) (261,002)
Cash and cash equivalents at beginning of year . . . . . . . . . 1,178,373 2,020,096
-------------- --------------
Cash and cash equivalents at end of period . . . . . . . . . . . $ 599,214 $ 1,759,094
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to the financial statements
3
<PAGE>
TIMBER LODGE STEAKHOUSE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 18, 1997
(unaudited)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying condensed Financial
Statements contain all normal recurring adjustments necessary for a fair
presentation. The results of operations for the twenty-four week period
ended June 18, 1997 are not necessarily indicative of the results to be
expected for the full year.
The significant accounting policies followed by the Company are set
forth in the Notes to Financial Statements in the Company's 1996 Annual
Report and Form 10-KSB filed with the Securities and Exchange Commission.
These condensed Financial Statements should be read in conjunction with the
Financial Statements in the 1996 Annual Report and Form 10-KSB.
2. NET INCOME PER SHARE
The net income per share is computed using the weighted average number
of shares of common stock equivalents, outstanding during the periods
presented.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, EARNINGS PER SHARE, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per
share, the dilutive effect of stock options will be excluded. The impact of
Statement 128 on the calculation of primary and fully diluted earnings per
share for these quarters is not expected to be material.
3. RECLASSIFICATION
Certain prior year items have been reclassified to conform with the
current year presentation.
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following table sets forth the percentage relationship to net sales
of certain items included in the Company's statements of operations.
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED TWENTY-FOUR WEEKS ENDED
------------------------------- -----------------------------
JUNE 18, JUNE 19, JUNE 18, JUNE 19,
1997 1996 1997 1996
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Food and beverage costs . . . . . . . . . . . 37.9 37.9 37.5 37.9
Labor and benefits costs. . . . . . . . . . . 29.0 28.7 28.7 28.6
Restaurant operating expenses . . . . . . . . 9.8 9.4 10.0 9.7
Occupancy costs . . . . . . . . . . . . . . . 10.0 11.0 10.4 10.4
---------- ----------- ----------- -----------
Restaurant costs and expenses. . . . . . 86.7 87.0 86.6 86.6
---------- ----------- ----------- -----------
Restaurant operating income. . . . . . . . . . . . 13.3 13.0 13.4 13.4
General and administrative . . . . . . . . . . . . 6.3 5.8 6.4 6.0
Amortization of pre-opening costs. . . . . . . . . 1.0 1.2 1.2 1.3
---------- ----------- ----------- -----------
Operating income . . . . . . . . . . . . . . . 6.0 6.0 5.8 6.1
Interest expense . . . . . . . . . . . . . . . . . 0.5 0.1 0.4 0.0
Interest and other (income)/expense. . . . . . . . (0.3) (0.5) (0.3) (0.5)
---------- ----------- ----------- -----------
Income before income taxes . . . . . . . . . . . . 5.8 6.4 5.7 6.6
Income taxes. . . . . . . . . . . . . . . . . 1.7 1.4 1.7 1.4
---------- ----------- ----------- -----------
Net income . . . . . . . . . . . . . . . . . . . . 4.1% 5.0% 4.0% 5.2%
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Number of restaurants
open at end of period. . . . . . . . . . . . . . . 14 11
</TABLE>
TWELVE WEEKS ENDED JUNE 18, 1997, COMPARED TO TWELVE WEEKS ENDED JUNE 19, 1996.
NET SALES. Total sales for the twelve weeks ending June 18, 1997
increased 25.0% to $5,921,684 compared to $4,736,133 for the same period last
year. The increase is attributable to the four new restaurants opened since
the beginning of the second quarter of fiscal 1996. Same store sales, for
stores open at least 18 months, were up 4.8%. This increase is due primarily
to radio advertising in most markets.
5
<PAGE>
COSTS AND EXPENSES. Cost of restaurant sales, consisting of food and
beverage costs, were even with last year at 37.9% as a percent of net sales.
Some cost reduction menu changes have been integrated that in aggregate
offset an increase in commodity prices of beef and seafood.
Labor and related benefit costs increased .3% to 29.0% compared to 28.7%
for the same period last year. Hourly labor productivity gains were achieved
during the quarter but were offset by an increase in health insurance costs
as more employees entered the Company's program and by an increase in payroll
related taxes.
Restaurant operating expenses include all other unit-level costs, the
major components of which are rents, real estate taxes, utilities, store
supplies, repairs and maintenance and other related occupancy costs.
Restaurant operating expenses and occupancy costs combined decreased .6% to
19.8% of net sales compared to 20.4% for the same period last year. The
decrease is attributable primarily to lower rent expense as the Company's two
newest restaurants have no building and no land and building rent associated
with them respectively.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased .5% to 6.3% of net sales compared to 5.8% for the same
period last year. This increase is attributable to an increase in radio
advertising expenditures in the Company's markets during the quarter.
AMORTIZATION OF PRE-OPENING COSTS. Amortization of pre-opening costs
decreased to 1.0% of net sales compared to 1.2% for the same period last
year. The decrease is attributable to amortizing the pre-opening costs for
the two new restaurants compared to three new restaurants for the same
quarter last year. The Company amortizes pre-opening costs for new
restaurants over a twelve month period commencing with the first full period
after the restaurant's opening.
INTEREST AND OTHER INCOME. Interest was paid on short term borrowings
via a line of credit and construction loan the Company has with a local bank.
The increase in short term borrowings was used to meet the Company's working
capital needs and funding construction of the Company's new St. Cloud,
Minnesota restaurant.
Interest income was earned on marketable securities and a promissory
note related to the Q. Cumbers sale. Interest expense for the quarter was
$28,909 compared to $3,025 for the same period last year. Interest and other
income in aggregate was $17,205 for the quarter compared to $21,667 for the
same period last year.
PROVISION FOR INCOME TAXES. The Company's effective tax rate is
estimated at 30% compared to 20% for the same period last year. The increase
in the effective tax rate is a result of the Company receiving refunds of
taxes previously provided for in 1996. The company's tax rate is impacted by
tax credits for FICA tax paid on tips received by restaurant employees.
NET INCOME. The Company's net income was $241,314 or $.07 per share
compared to $235,813 or $.07 per share for the same period last year.
6
<PAGE>
TWENTY-FOUR WEEKS ENDED JUNE 18, 1997, COMPARED TO TWENTY-FOUR WEEKS ENDED
JUNE 19, 1996.
NET SALES. Total sales for twenty-four weeks ending June 18, 1997
increased 23.5% to $11,135,992 compared to $9,016,848 for the same period
last year. The increase is attributable to opening five new restaurants
since the beginning of 1996. Same store sales for stores open at least 18
months were up 4.4% year-to-date 1997.
COSTS AND EXPENSES. Cost of restaurant sales consisting of food and
beverage decreased .4% to 37.5% compared to 37.9% for the same period last
year. The Company experienced lower produce costs in 1997 vs. last year that
offset an increase in beef prices in 1997.
Labor and related benefit costs were 28.7% as a percentage of sales
compared to 28.6% for the same period last year. Labor productivity
improvements were achieved year-to-date commensurate with the same store
sales increase but were offset by an increase in payroll related taxes and
benefit costs.
Restaurant operating expenses and occupancy costs combined were 20.4%
year-to-date compared to 20.1% for the same period last year. The increase
is attributable to an increase in costs of store maintenance year-to-date.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased .4% to 6.4% of net sales compared to 6.0% for the same
period last year. This increase is due to the higher level costs of
television and radio advertising year-to-date compared to the same period
last year.
AMORTIZATION OF PRE-OPENING COSTS. Amortization of pre-opening costs
decreased to 1.2% of sales compared to 1.3% for the same period last year.
INTEREST EXPENSE AND OTHER INCOME. Interest was paid on short term
borrowings via a line of credit and construction loan the Company has with a
local bank. Short term borrowings were used to meet working capital needs
while interest was paid on equipment financing agreements and a construction
loan to build a new restaurant.
Interest income was earned on marketable securities and a promissory
note related to the Q. Cumbers sale. Interest expense year-to-date was
$48,250 compared to $4,538 for the same period last year. Interest and other
income in aggregate was $36,773 year-to-date compared to $43,188 for the same
period last year. Interest income decreased from 1996 as income earned on
marketable securities was lower due to a reduction in invested cash used to
fund new restaurant development.
PROVISION FOR INCOME TAXES. The Company's effective tax rate is
estimated at 30% compared to a 20% rate for same period last year.
NET INCOME. The Company's net income year-to-date was $443,498 or $.12
per share compared to $471,081 or $.13 for the same period last year.
7
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has leased its restaurant sites under
non-cancelable leases for periods of six to twenty years, with renewal
options of between three and ten years. The Company plans to continue
leasing sites for expansion in the foreseeable future.
Cash used in operating activities was $141,068 compared to cash provided
of $1,069,102 for the same period last year. The Company had net working
capital deficit of ($865,204) at June 18, 1997 compared to a deficit of
($337,912) at January 1, 1997. The decrease in working capital is a result
of utilizing existing cash to fund new restaurant development. The Company
has a $500,000 bank line of credit which it has used to fund short-term cash
needs. The Company also has a $1,375,000 construction loan to fund the
construction of a new restaurant. At the end of first quarter 1997 these
lines had an outstanding balance of $968,425. This balance is planned to be
paid down in subsequent quarters. Most of the Company's sales are paid by
cash or credit card and the Company generally receives 30 days credit from
trade suppliers.
The Company currently intends to focus its expansion on steakhouse
restaurants and estimates that the average costs of developing a new
steakhouse restaurant to be approximately $1,200,000. The actual cost will
vary depending on the size of the restaurant, the amount of landlord
contributions, if any, and whether extensive renovation or remodeling is
required. Pre-opening costs, primarily labor, advertising, travel and other
costs related to the three new steakhouses opened in 1996 were $119,000 per
restaurant. Expenses for new restaurants opening in the future are expected
to be lower as training and general start-up efficiencies are achieved from
the Company opening additional restaurants in markets away from Minnesota.
The Company believes that cash generated from operations and funds
available under its line of credit will be sufficient to fund operations for
at least the next twelve months.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit No. Exhibit
----------- -------
11.1 Statement Regarding Computation of Per
Share Earnings.(1)
(b) No reports on Form 8-K have been filed during the quarter for which
this report was filed.
- ---------------
(1) See Financial Statements -- Statements of Income.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TIMBER LODGE STEAKHOUSE, INC.
Date: August 12, 1997 By: /s/ Dermot F. Rowland
----------------------------------
Dermot F. Rowland
Its: Chief Executive Officer
Date: August 12, 1997 By: /s/ Peter S. Bedzyk
----------------------------------
Peter S. Bedzyk
Its: President
S-1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-02-1997
<PERIOD-END> JUN-18-1997
<CASH> 599,214
<SECURITIES> 0
<RECEIVABLES> 228,209
<ALLOWANCES> 0
<INVENTORY> 229,373
<CURRENT-ASSETS> 2,063,280
<PP&E> 11,957,594
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,583,543
<CURRENT-LIABILITIES> 2,928,484
<BONDS> 0
0
0
<COMMON> 35,986
<OTHER-SE> 10,418,790
<TOTAL-LIABILITY-AND-EQUITY> 14,583,543
<SALES> 11,135,992
<TOTAL-REVENUES> 11,135,992
<CGS> 4,170,498
<TOTAL-COSTS> 9,640,827
<OTHER-EXPENSES> 813,417
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,250
<INCOME-PRETAX> 633,498
<INCOME-TAX> 190,000
<INCOME-CONTINUING> 443,498
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 443,498
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
