<PAGE>
United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-23278
Brazil Fast Food Corp.
(Exact name of registrant as specified in its charter)
Delaware 13-3688737
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Praia do Flamengo, 200-22o. Andar, CEP 22210-030, Rio de Janeiro, Brazil
(Address of principal executive offices)
011-55-21-285-2424
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
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. [X] Yes [ ] No
Applicable Only to Issuers Involved in Bankruptcy
Proceeding During the Preceding Five Years:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [ ] Yes [ ] No
Applicable Only to Corporate Issuers:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
10,404,484 shares of Common Stock at November 18, 1996
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
The condensed financial statements included herein have been prepared
by Brazil Fast Food Corp., formerly Trinity Americas Inc., (the "Company"),
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. While certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, the Company believes that the disclosures made herein are
adequate to make the information presented not misleading.
<PAGE>
BRAZIL FAST FOOD CORP.
BALANCE SHEETS
<TABLE>
<CAPTION>
==============================================================================
ASSETS
-------------------
September 30, 1996 August 31, 1995
------------------ ---------------
<S> <C> <C>
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents R$ 2,401,000 R$ 228,000
Restricted cash and investments - 9,041,000
Accounts receivable, net 501,000 -
Inventories 491,000 -
Other 1,630,000 22,000
------------ -----------
TOTAL CURRENT ASSETS 5,023,000 9,291,000
PROPERTY AND EQUIPMENT, NET 12,086,000 -
DEFERRED CHARGES 1,489,000 -
PURCHASE PRICE IN EXCESS OF NET ASSETS
ACQUIRED, NET 26,755,000 -
------------ -----------
TOTAL ASSETS R$45,353,000 R$9,291,000
============ ===========
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
CURRENT LIABILITIES:
<S> <C> <C>
Notes payable R$ 927,000 R$ -
Accounts payable and accrued liabilities 2,137,000 125,000
Payroll and related accruals 2,580,000 -
Taxes, other than income taxes 322,000 -
Deferred income 625,000 -
Other 1,947,000 -
---------- ----------
TOTAL CURRENT LIABILITIES 8,538,000 125,000
---------- -----------
NOTES PAYABLE, less current portion 2,553,000 -
DEFERRED INCOME 3,008,000 -
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000
shares authorized; no shares issued - -
Common stock, $.0001 par value, 20,000,000
shares authorized; 10,404,484 and
2,965,000 shares issued and outstanding
at September 30, 1996 and August 31,
1995, respectively 1,000 -
Additional paid-in capital 36,130,000 9,082,000
Retained earnings (deficit) (3,988,000) 84,000
Cumulative transaction adjustment (889,000) -
---------- -----------
TOTAL SHAREHOLDERS' EQUITY 31,254,000 9,166,000
---------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY R$45,353,000 R$9,291,000
============ ===========
</TABLE>
See Selected Notes to Financial Statements.
<PAGE>
BRAZIL FAST FOOD CORP.
STATEMENTS OF OPERATIONS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
For The Three Months Ended
-------------------------------------
September 30, 1996 August 31, 1995
------------------- ----------------
<S> <C> <C>
NET OPERATING REVENUES:
Restaurant sales 16,396,000 R$ -
Franchise income 189,000 -
Other income 301,000 -
------------ ---------------
TOTAL NET OPERATING REVENUES 16,886,000 -
------------ ---------------
COSTS AND EXPENSES:
Cost of restaurant sales 5,829,000 -
Restaurant payroll and other employee
benefits 3,660,000 -
Restaurant occupancy and other expenses 1,364,000 -
Depreciation and amortization 1,097,000 -
Other operating expenses 2,282,000 -
Selling expenses 1,063,000 -
General and administrative expenses 3,345,000 95,000
------------ ---------------
TOTAL COSTS AND EXPENSES 18,640,000 95,000
------------ ---------------
LOSS FROM OPERATIONS (1,754,000) (95,000)
------------ ---------------
INTEREST INCOME 21,000 109,000
INTEREST EXPENSE (254,000) -
FOREIGN EXCHANGE GAIN (LOSS) - -
------------ ---------------
INCOME (LOSS) BEFORE PROVISION FOR
(BENEFIT FROM) INCOME TAXES (1,987,000) 14,000
PROVISION FOR (BENEFIT FROM) INCOME TAXES (63,000) -
------------ ---------------
NET INCOME (LOSS) R$(1,924,000) R$ 14,000
============ ===============
NET INCOME (LOSS) PER COMMON SHARE R$ (.21) R$ -
============ ===============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 9,170,817 2,965,000
============ ===============
</TABLE>
See Selected Notes to Financial Statements.
<PAGE>
BRAZIL FAST FOOD CORP.
STATEMENTS OF OPERATIONS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
For The Nine Months Ended
------------------------------------
September 30, 1996 August 31, 1995
------------------- ---------------
<S> <C> <C>
NET OPERATING REVENUES:
Restaurant sales R$31,937,000 R$ -
Franchise income 340,000 -
Other income 622,000 -
------------ --------------
TOTAL NET OPERATING REVENUES 32,899,000 -
------------ --------------
COSTS AND EXPENSES:
Cost of restaurant sales 11,885,000 -
Restaurant payroll and other employee
benefits 7,320,000 -
Restaurant occupancy and other expenses 2,643,000 -
Depreciation and amortization 2,159,000 -
Other operating expenses 5,302,000 -
Selling expenses 1,793,000 -
General and administrative expenses 5,990,000 242,000
------------ --------------
TOTAL COSTS AND EXPENSES 37,092,000 242,000
------------ --------------
LOSS FROM OPERATIONS (4,193,000) (242,000)
------------ --------------
INTEREST INCOME 390,000 398,000
INTEREST EXPENSE (396,000) -
FOREIGN EXCHANGE GAIN (LOSS) (31,000) -
------------ ---------------
INCOME (LOSS) BEFORE PROVISION FOR
(BENEFIT FROM) INCOME TAXES (4,230,000) 156,000
PROVISION FOR (BENEFIT FROM) INCOME TAXES (51,000) 46,000
------------ ---------------
NET INCOME (LOSS) R$(4,179,000) R 110,000
============ ===============
NET INCOME (LOSS) PER COMMON SHARE R$ (.62) R$ .04
============ ===============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,793,312 2,965,000
============ ===============
</TABLE>
See Selected Notes to Financial Statements.
<PAGE>
BRAZIL FAST FOOD CORP.
STATEMENTS OF OPERATIONS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
For The Nine Months Ended
-------------------------------------
September 30, 1996 August 31, 1995
------------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) R$ (4,179,000) R$ 110,000
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 2,159,000 -
Changes in operating assets and
liabilities, net of effects from
acquisition of businesses:
(Increase) Decrease in:
Accounts receivable 303,000 -
Inventories 35,000 -
Other current assets (596,000) -
Deferred charges (295,000) -
Increase (Decrease) in:
Accounts payable and accrued
liabilities 171,000 -
Payroll and related accruals 621,000 (23,000)
Taxes, other than income taxes (124,000) -
Deferred income 3,633,000 -
Other current liabilities (324,000) 57,000
------------ ---------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 1,404,000 144,000
------------ ---------
CASH FLOWS INVESTING ACTIVITIES:
Capital expenditures (3,767,000) -
Increase in restricted cash and
investments (102,000) (360,000)
Release of restricted cash and
investments 9,573,000 -
Acquisitions of businesses (22,634,000) -
------------ ---------
NET CASH (USED IN) INVESTING
ACTIVITIES (16,930,000) (360,000)
------------ ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from private placement 15,107,000 -
Net increase in notes payable 3,205,000 -
------------ ---------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 18,312,000 -
------------ ---------
EFFECT OF FOREIGN EXCHANGE RATES (411,000) (13,000)
------------ ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 2,375,000 (229,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 26,000 457,000
------------ ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD R$ 2,401,000 R$ 228,000
============ =========
</TABLE>
See Selected Notes to Financial Statements.
<PAGE>
BRAZIL FAST FOOD CORP.
SELECTED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
===============================================================================
NOTE 1 - FINANCIAL STATEMENT PRESENTATION
- -----------------------------------------
The accompanying financial statements have been prepared by Brazil Fast Food
Corp. (previously known as Trinity Americas Inc.) (the "Company"), without
audit. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at September 30, 1996 and for all periods
presented have been made. The results of operations for the period ended
September 30, 1996 are not necessarily indicative of the operating results for a
full year.
Certain information and footnote disclosures prepared in accordance with general
accepted accounting principles and normally included in the financial statements
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the financial statements and notes included in the
Company's Annual Report on Form 10-K for the year ended August 31, 1995, as well
as the Company's proxy statement dated February 12, 1996, for further discussion
and background of the acquisition of Venbo Comercio Alimentos Ltda. ("Venbo")
discussed below.
The accompanying financial statements have been presented in Brazilian reais, in
accordance with generally accepted accounting principles used in the United
States. In the accompanying financial statements, U.S. dollar amounts have been
translated into reais using the conversion rates as of September 30, 1996 and
August 31, 1995 for the respective balance sheets. For the statements of
operations presented, the U.S. dollar activities of the Company (primarily the
interest income and general and administrative expenses of Trinity Americas Inc.
prior to the Venbo acquisition) were converted into reais on a monthly basis,
based on the average conversion rate for each month, and then adjusted to
consider the effect of inflation experienced in Brazil for the period presented.
This methodology has been employed to reflect the fact that Venbo will be
operating exclusively in Brazil for the near term. Management believes that
this presentation will provide readers a better understanding of performance.
In addition, all future reporting will continue to be in reais if and until such
time as another currency is deemed more appropriate.
Prior to the acquisition of Venbo discussed in Note 2, the Company reported on
an August 31, fiscal year. Subsequent to the acquisition of Venbo, the Company
changed its fiscal year to December 31, and filed a transition report on Form
10-Q for the period from September 1, 1995 through December 31, 1995. The
Company's 1996 Form 10-Q filings will be made in comparison to the nearest
comparable quarter for the prior period. Management believes this presentation
to be adequate due to the inherent lack of comparability of quarterly
information due to the Company's acquisition of an operating entity in 1996,
while the Company existed as a "blind pool" for all prior periods. Accordingly,
the accompanying balance sheet as of September 30, 1996 is compared to the
latest audited balance sheet of August 31, 1995 and the statements of operations
for the three and nine month periods ended September 30, 1996 are compared to
the previously filed three and nine month periods ended August 31, 1995 and the
statements of cash flows are for the nine month periods ended September 30, 1996
and August 31, 1995.
<PAGE>
BRAZIL FAST FOOD CORP.
SELECTED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
===============================================================================
NOTE 2 - ORGANIZATION AND OPERATIONS
- -------------------------------------
The Company was incorporated in the State of Delaware on September 16, 1992 to
serve as a vehicle to effect a merger, exchange of capital stock, assets
acquisition or other similar business combination (a "Business Combination").
All activity of the Company through March 19, 1996 related to its formation,
fund-raising and search to effect a Business Combination.
On March 19, 1996 (the "Closing"), the Company acquired all of the outstanding
quotas (shares of capital stock) of Venbo from Bob's Industria e Comercio Ltda.
("BIEC") and Arnaldo Bisoni ("Bisoni" and with BIEC, collectively, the
"Sellers") for $19,200,000 (the "Purchase Price"), of which $16,700,000 was paid
in cash at the Closing (inclusive of $100,000 which had been previously paid in
October 1995 upon the parties' execution of the Heads of Agreement), with the
balance of $2,500,000 payable with interest at the rate of 1- 1/2% per annum
over LIBOR due 720 days from the Closing. In addition, the Company acquired all
of the trademarks relating to Venbo's business from Vendex International N.V.,
an affiliate of the Sellers, for $1,800,000, payable to BIEC with interest at
the rate of 6-7/8% per annum in monthly installments equal to 4% of Venbo's net
sales for each immediately preceding month. The Company's acquisition of the
quotes and trademarks is hereinafter referred to as the "Acquisition".
At the date of Acquisition, Venbo, a Brazilian limited liability company which
conducts business under the trademark "Bob's", owned and, directly and through
franchisees, operated the second largest chain of hamburger fast food
restaurants in Brazil, including 46 units in the State of Rio de Janeiro, 22
units in the State of Sao Paulo and 10 units in the capital cities of the States
of Brazil.
In order to raise sufficient cash to complete the Acquisition and to fund the
Company's subsequent expansion strategy, the Company sold 3,115,701 shares of
its common stock to new investors in a private transaction (the "Private
Placement") at $3.20 per share, resulting in net proceeds to the Company of
approximately $10,000,000.
Funding of the cash portion of the Purchase Price was derived from the following
sources; (i) approximately $9,900,000 from the Company's own funds; (ii)
$4,000,000 from a Brazilian subsidiary of Coca-Cola, which was paid to the
Company concurrently with the consummation of the Acquisition, in consideration
for Coca-Cola products being designated the exclusive soft drink products for
all of the Company's restaurants for a ten-year term and for the Company's
agreement to participate at its own expense in joint promotions and marketing
programs with Coca-Cola during such term; and (iii) the balance of $2,800,000
from the proceeds of the Private Placement.
At the Closing, the Company issued 1,046,422 shares of its commons stock to
Shampi Investments A.E.C. ("Shampi") in exchange for the assignment by Shampi to
the Company of Shampi's right to acquire the outstanding quotas of Venbo.
<PAGE>
BRAZIL FAST FOOD CORP.
SELECTED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
===============================================================================
NOTE 2 - ORGANIZATION AND OPERATIONS (CONT'D)
- ----------------------------------------------
As a result of the Acquisition and the Private Placement: (i) Venbo became a
wholly-owned subsidiary of the Company, (ii) Shampi and the investors in the
Private Placement, collectively, acquired approximately 58.4% of the outstanding
common stock of the Company, (iii) designees of Shampi, being respectively,
Peter VanVoorst Vader, Omar Carneiro da Cunha and Arnaldo Bisoni, became three
of the five members of the Company's Board of Directors, and (iv) the Company's
name was changed to "Brazil Fast Food Corp.". Reference is made to the
Company's proxy statement dated February 12, 1996, for a discussion of Venbo's
business and the background of the Acquisition.
NOTE 3 - RESTRICTED CASH AND INVESTMENTS
- -----------------------------------------
The Company, pursuant to the terms of its initial public offering ("the
Offering"), held approximately $9.6 million as of March 19, 1996, which included
interest income, in a trust account which was primarily invested in a short term
U.S. Government Security. These funds were released, in connection with the
terms of the Offering, upon the consummation of the Acquisition described above.
NOTE 4 - ACCOUNTING FOR ACQUISITION OF VENBO
- ---------------------------------------------
On March 19, 1996, the Company acquired all of the outstanding quotas (shares of
capital stock) of Venbo, as described in Note 2. The Acquisition has been
accounted for as a purchase by the Company. The results of operations of Venbo
are included in the accompanying financial statements for the period from the
acquisition date, March 19, 1996, through September 30, 1996. In connection with
the Acquisition the Company has recorded approximately R$20.4 million of excess
purchase price over net assets acquired. This reflects a preliminary allocation
of purchase price and is subject to final determination. Goodwill resulting from
the Acquisition will be amortized over a 20 year period.
The following represents selected pro forma results of operations for the Venbo
acquisition as though the companies had been combined at the beginning of the
nine month periods ended September 30, 1996 and 1995. The pro-forma results
include an adjustment for the amortization of goodwill. These pro-forma results
are not indicative of either future financial performance or actual results
which would have occurred had the Acquisition taken place at the beginning of
the period.
September 30,
----------------------------
1996 1995
------------ ------------
Revenues R$45,444,000 R$45,773,000
========== ==========
Net loss R$(6,921,000) R$(7,582,000)
========== ==========
Net loss per share R$ (1.02) R$ (1.12)
========== ==========
<PAGE>
BRAZIL FAST FOOD CORP.
SELECTED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
===============================================================================
NOTE 5 - OTHER ACQUISITIONS
- ----------------------------
a) On June 10, 1996, the Company acquired all of the outstanding quotas
(capital shares) of, respectively, BigBurger Sao Paulo Lanchonetes Ltda. and
BigBurger Goiania Lanchonetes Ltda., each a Brazilian corporation (collectively,
the "Acquired Companies"), from Rucker Holding Corporation, a non-affiliated
British Virgin Islands corporation ("Rucker"), for (i) $250,000 (paid in
Brazilian reais) and (ii) 510,000 shares of the Company's common stock. The
Acquired Companies owned and operated 7 "Mr. Theo" hamburger fast food
restaurants in Sao Paulo and Goiania, Brazil. All of these restaurants have
been rebranded and are now operating under the Company's "Bob's" tradename. In
connection with this acquisition, the Company has recorded approximately R$2.1
million of excess purchase price over net assets acquired. This reflects a
preliminary allocation of purchase price and is subject to final determination.
Goodwill resulting from this acquisition will be amortized over a 20 year
period.
b) On July 24, 1996, the Company acquired all of the operating assets of each of
BigBurger Ltda. ("BigBurger") and five of its affiliates, all Brazilian
corporations (collectively, the "BigBurger Companies"), for 1,520,000 shares of
the Company's common stock (the "Shares") pursuant to the terms and conditions
of an Exchange Agreement dated July 24, 1996. The BigBurger Companies own and
operate 27 hamburger fast food restaurants, inclusive of outlets operated by
franchisees (collectively, the "BigBurger Stores"), in 9 Brazilian states. In
connection with this acquisition, the Company has recorded approximately R$4.8
million of excess purchase price over net assets acquired. This reflects a
preliminary allocation of purchase price and is subject to final determination.
Goodwill resulting from this acquisition will be amortized over a 20 year
period.
Note 6 - Private Placement
- --------------------------
In September 1996, the Company closed a private placement of 621,250 units
(the "Units"). Each Unit consists of two shares of the Company's common stock
and one warrant to purchase one share of common stock at an exercise price of
$5.50 through September 30, 2001. The Compnay received net proceeds, exclusive
of related expenses, of approximately $4,854,000.
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
--------------------------------------------------------------------
Brazil Fast Food Corp. (previously know as Trinity Americas Inc.) (the
"Company") was incorporated in September 1992 to serve as a vehicle to effect a
Business Combination with an operating business. On February 9, 1994, the
Company's Registration Statement covering 1,700,000 Units was declared effective
by the Securities and Exchange Commission, generating net proceeds of
approximately U.S. $9.6 million.
On March 19, 1996 (the "Closing"), the Company acquired all of the outstanding
quotas (shares of capital stock) of Venbo from Bob's Industria a Comercio Ltda.
("BIEC") and Arnaldo Bisoni ("Bisoni" and with BIEC, collectively, the
"Sellers") for $19,200,000 (the "Purchase Price"), of which $16,700,000 was paid
in cash at the closing (inclusive of $100,000 which had been previously paid in
October 1995 upon the parties' execution of the Heads of Agreement), with the
balance of $2,500,000 payable with interest at the rate of 1 1/2% per annum over
LIBOR due 720 days from the Closing. In addition, the Company acquired all of
the trademarks relating to Venbo's business from Vendex International N.V., an
affiliate of the Sellers, for $1,800,000, payable to BIEC with interest at the
rate of 6-7/8% per annum in monthly installments equal to 4% of Venbo's net
sales for each immediately preceding month. The Company's acquisition of the
quotas and trademarks in hereinafter referred to as the "Acquisition".
At the date of Acquisition, Venbo, a Brazilian limited liability company which
conducts business under the trademark "Bob's", owned and, directly and through
franchisees, operated the second largest chain of hamburger fast food
restaurants in Brazil, including 46 units in the State of Rio de Janeiro, 22
units in the State of Sao Paulo and 10 units in the capital cities of other
States of Brazil.
In order to raise sufficient cash to complete the Acquisition and to fund the
Company's subsequent expansion strategy, the Company sold 3,115,701 shares of
its common stock to new investors in a private transaction (the "Private
Placement") at $3.20 per share, resulting in net proceeds to the Company
approximately $10,000,000.
Funding of the cash portion of the Purchase Price was derived from the following
sources: (i) approximately $9,900,000 from the Company's own funds; (ii)
$4,000,000 from a Brazilian subsidiary of Coca-Cola, which was paid to the
Company concurrently with the consummation of the Acquisition, in consideration
for Coca-Cola products being designated the exclusive soft drink products for
all of the Company's restaurants for a ten-year term and for the Company's
agreement to participate at its own expense in joint promotions and marketing
programs with Coca-Cola during such term; and (iii) the balance of $2,800,000
from the proceeds of the Private Placement.
At the Closing, the Company issued 1,046,422 shares of its common stock to
Shampi Investments A.E.C. ("Shampi") in exchange for the assignment by Shampi
to the Company of Shampi's right to acquire the outstanding quotas of Venbo.
As a result of the Acquisition and the Private Placement; (i) Venbo became a
wholly-owned subsidiary of the Company, (ii) Shampi and the investors in the
Private Placement, collectively, acquired approximately 58.4% of the outstanding
common stock of the Company, (iii) designees of Shampi, being respectively,
Peter van Voorst Vader, Omar Carneiro de Cunha and Bisoni, became three of the
five members of the Company's Board of Directors, and (iv) the Company's name
was changed to "Brazil Fast Food Corp.". Reference is made to the Company's
proxy statement dated February 12, 1996, for a discussion of Venbo's business
and the background of the Acquisition.
<PAGE>
Results of Operations
- ---------------------
At September 30, 1996, there were 103 Bob's outlets in operation in Brazil.
Of these stores 23 were operated by franchisees, 5 were permanent kiosks and 4
were Company trailers, as well as 1 franchisee trailer, which are used at
different locations for special events.
For the three and nine months ended September 30, 1996 the Company had net
losses of (R$1,924,000) and (R$4,179,000), respectively, as compared to net
income of R$14,000 and R$110,000 for the three and nine months ended August 31,
1995, respectively. Prior to the acquisitions, the Company operated as a "blind
pool" and, accordingly, results of operations for periods prior to the
acquisition relate to interest and dividend income, offset by general and
administrative expenses and income taxes.
Same store sales in existence for one year or more were approximately even for
the quarter ended September 30, 1996 as contrasted with the comparable period of
the 1995 fiscal year. The increase in same store sales compares favorably to the
quarter ended June 30, 1996 when same store sale were down 6.8% as contrasted
with the comparable period of the 1995 fiscal year. This increase in same store
sales result from new marketing campaigns, improvement in the Brazilian economy,
and seasonal fluctuations.
Cost of restaurant sales as a percentage of sales has decreased by 3% in the
quarter ended September 30, 1996 as compared with the quarter ended June 30,
1996. This improvement in operations is attributable to new managements'
efforts to improve procurement of supplies, and other programs.
Depreciation and amortization expense of R$ 1,097,000 and R$ 2,159,000 for the
three months and nine months ended September 30, 1996, respectively is
primarily a result of the excess of cost over net assets acquired recognized
on the acquisitions.
General and administrative expenses includes R$542,000 relating to pre-operating
costs incurred in the period ended September 30, 1996 (R$ 504,000 in the quarter
ended September 30, 1996 and R$ 38,000 in the quarter ended June 30, 1996). Pre-
operating costs consists of costs of hiring and training new personnel, rent and
occupancy during the pre-opening period, and other identifiable costs associated
with the opening of new restaurants. The Company expenses pre-opening costs as
incurred.
Liquidity and Capital Resources
- -------------------------------
At September 30, 1996, the Company had cash and cash equivalents of R$2,401,000
and a working capital deficit of R$3,515,000. The cash available at September
30, 1996 was the result of the Acquisition described above, along with cash
generated from operations, the private placements and the agreement with Coca-
Cola described above. The Company, consistent with its growth plan, expended a
substantial portion of its cash reserves primarily for the refurbishment and
rebranding of units acquired in the Mr. Theo and BigBurger acquisitions
(discussed in Note 5 to the unaudited condensed financial statements). The
Company believes that its available liquid assets on hand, existing borrowing
facilities, and future cash flows from operations should be sufficient for its
presently contemplated operations and growth.
<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) Items 2 and 7; August 7, 1996
<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.
Brazil Fast Food Corp.
(registrant)
Dated: November 19, 1996
By:/s/Peter van Voorst Vader
Peter van Voorst Vader
Chief Executive Officer
By:/s/Marcos Bastos Rocha
Marcos Bastos Rocha
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,401
<SECURITIES> 0
<RECEIVABLES> 501
<ALLOWANCES> 0
<INVENTORY> 491
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0
0
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</TABLE>
