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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 September 30, 1994 Commission File No.033-53455
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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 X No
--- ---
Number of shares of common stock, $.01 par value, outstanding
as of the close of business September 30, 1994 - 100
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FM 1993A CORP.
UNAUDITED BALANCE SHEETS
ASSETS
September 30, December 31,
1994 1993
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Cash . . . . . . . . . . . . . . . . . . . . $ 100 $ 100
Accrued interest receivable. . . . . . . . . 1,706,250 --
Long-term notes receivable . . . . . . . . . 66,705,529 --
Deferred finance charges . . . . . . . . . . 2,288,836 --
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TOTAL. . . . . . . . . . . . . . . . . . . . $70,700,715 $ 100
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued interest payable . . . . . . . . . . $ 1,706,250 $ --
Long-term notes payable. . . . . . . . . . . 68,994,365 --
Stockholder's equity:
Common stock, no par value,
1,000 shares authorized,
100 shares issued and outstanding. . . . 100 100
----------- -----------
TOTAL. . . . . . . . . . . . . . . . . . . . $70,700,715 $ 100
=========== ===========
See accompanying notes to financial statements.
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FM 1993A CORP.
UNAUDITED STATEMENTS OF OPERATIONS
Three months Nine months
ended ended
September 30, 1994 September 30, 1993
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Revenues:
Interest income. . . . . . . . . . . . $ 1,798,891 $ 5,339,800
Administrative fee income. . . . . . . 12,500 37,500
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1,811,391 5,377,300
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Expenses:
Interest expense . . . . . . . . . . . 1,798,891 5,339,800
Administrative fee expense . . . . . . 12,500 37,500
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1,811,391 5,377,300
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Net earnings . . . . . . . . . . . . . . $ -- $ --
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See accompanying notes to financial statements.
3
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FM 1993A CORP.
UNAUDITED STATEMENTS OF CASH FLOWS
Nine months
ended
September 30, 1994
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Cash flows from operations:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ --
Increase in accrued interest receivable. . . . . . . . . . (1,706,250)
Increase in accrued interest payable . . . . . . . . . . . 1,706,250
-----------
Cash flows provided by operations. . . . . . . . . . . . --
-----------
Cash flows from investing activities:
Long-term notes receivable purchased . . . . . . . . . . . (66,427,605)
-----------
Cash flows used in investing activities. . . . . . . . . (66,427,605)
-----------
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)
-----------
Cash flows provided by
financing activities. . . . . . . . . . . . . . . . . 66,427,605
-----------
Net increase in cash . . . . . . . . . . . . . . . . . . . . --
Cash at beginning of period. . . . . . . . . . . . . . . . . 100
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Cash at end of period. . . . . . . . . . . . . . . . . . . . $ 100
===========
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 "Private
Placement 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"). In September 1994, the Private Placement
Notes were exchanged for substantially identical registered notes (the
"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.
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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 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 Private Placement 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. In
September 1994, the Private Placement Notes were exchanged for substantially
identical registered notes. 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 nine months ended September 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
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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,
except as follows:
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Number Description
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27 Financial Data Schedule (included only with electronic
filing)
(b) Reports on Form 8-K - None.
8
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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: November 14, 1994
9
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 1706250
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1706350
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 70700715
<CURRENT-LIABILITIES> 1706250
<BONDS> 68994365
<COMMON> 100
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 70700715
<SALES> 0
<TOTAL-REVENUES> 5377300
<CGS> 0
<TOTAL-COSTS> 37500
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 5339800
<INCOME-PRETAX> 0
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