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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1994 Commission File No. N/A
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FM 1993A CORP.
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(Exact name of registrant as specified in its charter)
DELAWARE 33-0598332
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(State of Incorporation) (I.R.S. Employer
Identification No.)
9330 BALBOA AVENUE, SAN DIEGO, CA 92123
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (619) 571-2470
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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 No X
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Number of shares of common stock, $.01 par value, outstanding
as of the close of business June 30, 1994 - 100
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FM 1993A CORP.
UNAUDITED BALANCE SHEETS
ASSETS
June 30, December 31,
1994 1993
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Cash . . . . . . . . . . . . . . . . . . . . $ 100 $ 100
Long-term notes receivable . . . . . . . . . 66,612,888 --
Deferred finance charges . . . . . . . . . . 2,352,688 --
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TOTAL. . . . . . . . . . . . . . . . . . . . $68,965,676 $ 100
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LIABILITIES AND STOCKHOLDER'S EQUITY
Long-term notes payable. . . . . . . . . . . $68,965,576 $ --
Stockholder's equity:
Common stock, no par value,
1,000 shares authorized,
100 shares issued and outstanding. . . . 100 100
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TOTAL. . . . . . . . . . . . . . . . . . . . $68,965,676 $ 100
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See accompanying notes to financial statements.
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FM 1993A CORP.
UNAUDITED STATEMENTS OF OPERATIONS
Three months Six months
ended ended
June 30, 1994 June 30, 1993
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Revenues:
Interest income. . . . . . . . . . . . $ 1,779,933 $ 3,540,907
Administrative fee income. . . . . . . 12,500 25,000
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1,792,433 3,565,907
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Expenses:
Interest expense . . . . . . . . . . . 1,779,933 3,540,907
Administrative fee expense . . . . . . 12,500 25,000
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1,792,433 3,565,907
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Net earnings . . . . . . . . . . . . . . $ -- $ --
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See accompanying notes to financial statements.
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FM 1993A CORP.
UNAUDITED STATEMENTS OF CASH FLOWS
Six months
ended
June 30, 1994
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Cash flows from operations:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ --
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Cash flows provided by operations. . . . . . . . . . . . --
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Cash flows from investing activities:
Long-term notes receivable purchased . . . . . . . . . . . (66,427,605)
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Cash flows used in investing activities. . . . . . . . . (66,427,605)
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Cash flows from financing activities:
Proceeds from issuance of long-term
notes payable. . . . . . . . . . . . . . . . . . . . . . 68,908,000
Finance charges incurred in
issuance of long-term notes payable. . . . . . . . . . . (2,480,395)
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Cash flows provided by
financing activities. . . . . . . . . . . . . . . . . 66,427,605
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Net increase in cash . . . . . . . . . . . . . . . . . . . . --
Cash at beginning of period. . . . . . . . . . . . . . . . . 100
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Cash at end of period. . . . . . . . . . . . . . . . . . . . $ 100
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See accompanying notes to financial statements.
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FM 1993A CORP.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments, consisting only of normal recurring
adjustments, considered necessary for a fair presentation have been
included. These financial statements should be read in conjunction with the
audited financial statements for and as of March 31, 1994. The Company had
no operations in the prior year.
2. ORGANIZATION
FM 1993A Corp. (the "Company") was incorporated in the State of Delaware on
December 22, 1993 for the purpose of: (i) issuing and selling debt
obligations ("Notes"), as principal and as agent for CRC-I Limited
Partnership ("CRC-I") and CRC-II Limited Partnership ("CRC-II),
Massachusetts limited partnerships, and (ii) acquiring, owning and holding
obligations of CRC-I and CRC-II as well as accounts, investments and other
property to be pledged as collateral for the Notes. The Company may not
engage in any other activities other than those required to accomplish the
foregoing.
CRC-I and CRC-II (collectively, "CRC") are special purpose limited
partnerships organized to (i) acquire, own, hold and sell or transfer
estates for years in various existing and to-be-constructed Foodmaker, Inc.
restaurant properties, (ii) sell mortgage notes to the Company accompanied
by a pledge of the foregoing estates for years, and (iii) lease the
restaurant properties to Foodmaker. CRC-I and CRC-II may not engage in any
other activities other than those required to accomplish the foregoing.
3. SIGNIFICANT TRANSACTIONS
On January 5, 1994, in a private placement transaction, FM 1993A Corp.
issued and sold $70 million aggregate principal amount of Notes (the
"Notes") for $68.9 million, less offering expenses of $2.5 million, which
proceeds were used to purchase for $66.4 million, notes receivable from
CRC-I and CRC-II with an aggregate principal amount of $70 million
(collectively, the "CRC Notes"). The Notes are due November 1, 2003,
payable interest only at the rate of 9.75% per annum semi-annually on July
1 and January 1 each year, with a mandatory prepayment of 50% of the
original principal on the first business day of January 2003. The CRC
Notes' payment and interest terms are equivalent to and structured to
coincide with the Notes such that funds will be available to make payments
on the Notes. In addition, the CRC Notes require semi-annual sinking fund
payments to a trustee of $747 thousand, which will be utilized to partially
fund the 50% prepayment in January 2003. CRC-I and CRC-II used the
proceeds of the CRC Notes (of which approximately 43% relates to CRC-I and
57% to CRC-II) to purchase estates for years in various Foodmaker
restaurant properties and, in a transaction accounted for as a financing,
will lease back such properties to Foodmaker on terms which will provide
the funds necessary to make the CRC Notes' payments. The Notes are secured
by, among other things, the CRC Notes, the CRC leases to Foodmaker, first
priority liens on the underlying properties and any sinking fund or other
amounts held in trust.
The Company's only source of liquidity is collection of scheduled payments
on the CRC Notes, which, in turn, are dependent upon Foodmaker's payments
on the CRC leases. If Foodmaker were to fail to make payments to CRC-I and
CRC-II on the financing leases, CRC-I and CRC-II would be unable to make
payments on the CRC Notes. The Company would then be required to initiate
proceedings to gain possession of, liquidate or obtain tenants for the
restaurant properties. Although the Company believed at the time of the
transaction that the value of the restaurant properties and other
collateral would be adequate to secure the Notes, there can be no assurance
that such collateral will continue to maintain its value or that, if
necessary, it can be liquidated in sufficient amounts or at times required
to satisfy all scheduled principal and interest payments.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The Company is a special purpose corporation, incorporated in the State
of Delaware in December 1993 for the benefit of Foodmaker in connection with
the financing of certain of its restaurant properties through CRC-I and
CRC-II limited partnerships, which were organized in December 1993 under the
laws of the Commonwealth of Massachusetts. Operations commenced on January
5, 1994 with the issuance and sale, in a private placement transaction, of
$70 million aggregate principal amount of Notes. The net sales proceeds from
the sale of the Notes were approximately $68.9 million, which proceeds were
used to purchase the CRC-I Note, issued in the principal amount of
approximately $30.2 million, and the CRC-II Note, issued in the principal
amount of approximately $39.8 million, for approximately $66.4 million . The
closing costs paid by the Company were approximately $2.5 million. The Notes
are due November 1, 2003, payable interest only at the rate of 9.75% per
annum semi-annually on the first business day of each January and July and
continuing through the first business day of July 2003. A mandatory
prepayment of 50% of the original balance of the Notes is due on the first
business day of January 2002. The CRC Notes' payment and interest terms are
equivalent to and structured to coincide with the Notes such that funds will
be available to make payments on the Notes. In addition, the CRC Notes
require semi-annual sinking fund payments to a trustee of approximately $.7
million, which will be utilized to partially fund the 50% prepayment due in
January 2002. The proceeds of the CRC Notes (of which approximately 43%
relates to CRC-I and 57% to CRC-II) have been and will be used by CRC-I and
CRC-II to purchase estates for years in various Foodmaker restaurant
properties and, in a transaction accounted for as a financing, CRC-I and
CRC-II will lease back such properties to Foodmaker on terms which will
provide the funds required to make the necessary payments on CRC Notes. The
Notes are secured by, among other things, the CRC Notes, the CRC leases to
Foodmaker, first priority liens on the leased properties and any sinking fund
or other amounts held in trust.
Since the Company has equivalent notes receivable (the CRC Notes) and
notes payable (the Notes), including face amounts, net proceeds and stated
interest rates, interest income and expense should equate to approximately
$6.8 million annually, plus amortization of approximately $.4 million of
original issue discount and, as applicable, deferred finance charges on the
respective notes. For the three and six months ended June 30, 1994, slightly
less than one-fourth and one-half, respectively, of the annual amounts are
reflected as interest income and expense, since the Notes were issued a few
days after the beginning of the periods. The Company has elected to be taxed
as a Sub-chapter S Corporation under the Code and, as a result, has no
federal income tax liability.
Liquidity and Capital Resources
The Company's only source of liquidity is collection of scheduled
payments on the CRC Notes, which, in turn, are dependent upon Foodmaker's
payment on the CRC leases. The basic amounts payable on the CRC Notes are
equal to, and timed to coincide with, the payments required to be made on the
Notes. The CRC Notes also require sinking fund payments to the Trustee,
which, in addition to the value of the leased properties, should provide an
increasing amount of security through year nine of the Notes. If Foodmaker
were to fail to make payments to CRC-I and CRC-II on the financing leases,
CRC-I and CRC-II would be unable to make payments on the CRC Notes. The
Company would then be required to initiate proceedings to gain possession of,
liquidate or obtain tenants for the leased properties. Although the Company
believed at the time of the transaction that the value of the leased
properties and other collateral would be adequate to secure the Notes, there
can be no assurance that such collateral will continue to maintain its value
or that, if necessary, it can be liquidated in sufficient amounts or at the
times required to satisfy all scheduled principal and interest payments.
PART II - OTHER INFORMATION
There is no information required to be reported for any items under Part II.
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SIGNATURE
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 and in the capacities indicated.
FM 1993A CORP.
By: CHARLES W. DUDDLES
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Charles W. Duddles,
President, Treasurer and Secretary
(Duly Authorized Signatory)
Date: August 3, 1994
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