<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TWELVE WEEKS ENDED JULY 3, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-8445
CONSOLIDATED PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
INDIANA 37-0684070
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
500 CENTURY BUILDING, 36 S. PENNSYLVANIA STREET
INDIANAPOLIS, INDIANA 46204
(317) 633-4100
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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 outstanding at July 31, 1996: 13,980,403
The Index to Exhibits is located at Page 12. Total Pages 14
<PAGE>
CONSOLIDATED PRODUCTS, INC.
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Financial Position -
July 3, 1996 (Unaudited) and September 27, 1995 3
Consolidated Statements of Earnings (Unaudited)
Twelve and Forty Weeks Ended July 3, 1996
and July 5, 1995 4
Consolidated Statements of Cash Flows (Unaudited)
Forty Weeks Ended July 3, 1996 and
July 5, 1995 5
Notes to Consolidated Financial Statements (Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 8
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
JULY 3 SEPTEMBER 27
1996 1995
------------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash, including cash equiva-
lents of $1,395,000 in 1996
and $615,000 in 1995 $1,914,938 $1,350,139
Receivables 3,040,373 1,973,102
Sale and leaseback properties
under contract -- 3,150,000
Inventories 4,194,013 3,619,687
Deferred income taxes 747,000 747,000
Other current assets 4,199,764 3,611,261
------------- ------------
Total current assets 14,096,088 14,451,189
------------- ------------
PROPERTY AND EQUIPMENT
Land 29,064,012 21,425,346
Buildings 27,336,338 18,138,352
Leasehold improvements 36,077,991 31,062,184
Equipment 60,442,027 51,194,014
Construction in progress 7,508,318 7,957,312
------------- ------------
160,428,686 129,777,208
Less accumulated depreciation
and amortization (55,440,725) (51,664,749)
------------- ------------
Net property and equipment 104,987,961 78,112,459
------------- ------------
LEASED PROPERTY
Leased property under capital
leases, less accumulated amorti-
zation of $9,501,421 in 1996
and $9,079,286 in 1995 3,379,634 3,802,939
Net investment in direct
financing leases 1,876,434 2,167,297
------------- ------------
Net leased property 5,256,068 5,970,236
------------- ------------
DEFERRED INCOME TAXES 558,000 558,000
OTHER ASSETS 608,281 741,913
------------- ------------
$ 125,506,398 $ 99,833,797
------------- ------------
------------- ------------
JULY 3 SEPTEMBER 27
1996 1995
------------- ------------
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $12,407,527 $9,242,512
Accrued expenses
Salaries and wages 4,744,495 4,402,889
Insurance 2,992,721 2,938,352
Property taxes 2,056,942 1,940,653
Other 7,445,040 5,010,300
Current portion of obligations
under capital leases 1,275,512 1,170,946
Current portion of senior note 5,000,000 4,250,000
------------- ------------
Total current liabilities 35,922,237 28,955,652
------------- ------------
OBLIGATIONS UNDER
CAPITAL LEASES 7,267,747 8,262,690
REVOLVING LINE OF CREDIT 9,000,000 --
SENIOR NOTE 20,000,000 20,000,000
SHAREHOLDERS' EQUITY
Common stock -- $.50 stated value,
25,000,000 shares authorized --
shares issued: 13,954,886 in 1996;
12,471,879 in 1995 6,977,443 6,235,940
Additional paid-in capital 50,237,476 31,952,996
Retained earnings (deficit) (2,461,234) 6,405,050
Less treasury stock -- at cost:
75,943 shares in 1996;
139,564 shares in 1995 (1,437,271) (1,978,531)
------------- ------------
Total shareholders' equity 53,316,414 42,615,455
------------- ------------
$ 125,506,398 $ 99,833,797
------------- ------------
------------- ------------
SEE ACCOMPANYING NOTES.
3
<PAGE>
CONSOLIDATED PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
TWELVE FORTY
WEEKS ENDED WEEKS ENDED
----------- -----------
JULY 3 JULY 5 JULY 3 JULY 5
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES
Net sales $ 55,202,677 $ 45,391,171 $167,228,075 $139,732,927
Franchise fees 687,423 402,302 2,069,903 1,331,207
Other, net 547,208 330,710 1,806,896 1,093,997
------------ ------------ ------------ ------------
56,437,308 46,124,183 171,104,874 142,158,131
------------ ------------ ------------ ------------
COSTS AND EXPENSES
Cost of sales 14,634,607 11,719,510 44,395,668 36,793,610
Restaurant operating costs 24,508,604 20,306,476 75,557,185 64,309,191
Selling, general and administrative 5,979,870 5,137,951 19,332,169 15,760,358
Depreciation and amortization 2,034,250 1,615,820 6,412,317 5,129,283
Amortization of pre-opening costs 760,982 489,920 2,373,716 1,465,164
Rent 1,701,539 1,453,778 5,536,519 4,485,909
Interest 786,175 792,304 2,426,473 3,070,181
------------ ------------ ------------ ------------
50,406,027 41,515,759 156,034,047 131,013,696
------------ ------------ ------------ ------------
EARNINGS BEFORE INCOME TAXES 6,031,281 4,608,424 15,070,827 11,144,435
INCOME TAXES 2,325,000 1,760,000 5,785,000 4,260,000
------------ ------------ ------------ ------------
NET EARNINGS $ 3,706,281 $ 2,848,424 $ 9,285,827 $ 6,884,435
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
NET EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
Primary $ .26 $ .21 $ .66 $ .63
Fully diluted $ .26 $ .21 $ .66 $ .52
WEIGHTED AVERAGE SHARES
AND EQUIVALENTS:
Primary 14,165,227 13,886,840 14,089,438 10,963,138
Fully diluted 14,165,286 13,887,378 14,101,089 13,897,905
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
CONSOLIDATED PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FORTY WEEKS ENDED
-------------------
JULY 3 JULY 5
1996 1995
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 9,285,827 $ 6,884,435
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 6,412,317 5,129,283
Amortization of pre-opening costs 2,373,716 1,465,164
Changes in receivables and inventories (1,594,040) (587,617)
Changes in other assets (2,709,617) (2,078,358)
Changes in income taxes payable 1,925,602 1,655,848
Changes in accounts payable
and accrued expenses 4,013,569 1,126,003
Loss on disposal of property 217,362 10,587
----------- -----------
Net cash provided by operating activities 19,924,736 13,605,345
----------- -----------
INVESTING ACTIVITIES
Additions of property and equipment (35,098,437) (29,539,801)
Net proceeds from disposal of
property and equipment 5,562,468 3,441,405
----------- -----------
Net cash used in investing activities (29,535,969) (26,098,396)
----------- -----------
FINANCING ACTIVITIES
Principal payments on debt
and capital lease obligations (4,899,911) (4,144,102)
Proceeds from debt 5,000,000 - -
Proceeds from revolving line of credit 9,000,000 7,500,000
Proceeds from equipment and property leases 595,930 579,859
Lease payments on subleased properties (553,963) (531,685)
Cash dividends paid in lieu of fractional shares (13,062) (8,748)
Cash paid in lieu of fractional shares -- (4,260)
Proceeds from exercise of stock options and warrants 508,370 69,010
Proceeds from employee stock purchase plan 538,668 393,850
----------- -----------
Net cash provided by financing activities 10,176,032 3,853,924
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 564,799 (8,639,127)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,350,139 10,326,159
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,914,938 $ 1,687,032
----------- -----------
----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
CONSOLIDATED PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements.
In the opinion of the Company, all adjustments (consisting of only normal
recurring accruals) considered necessary to present fairly the consolidated
financial position as of July 3, 1996, the consolidated statements of earnings
for the twelve and forty weeks ended July 3, 1996 and July 5, 1995 and the
consolidated statements of cash flows for the forty weeks ended July 3, 1996 and
July 5, 1995 have been included. Certain 1995 items have been reclassified to
conform to the 1996 presentation.
The consolidated statements of earnings for the twelve and forty weeks
ended July 3, 1996 and July 5, 1995 are not necessarily indicative of the
consolidated statements of earnings for the entire year. For further
information, refer to the consolidated financial statements and notes thereto
included in the Company's annual report on Form 10-K for the year ended
September 27, 1995.
SEASONALITY
Historically, the influence of the seasonality factor on sales has not been
significant. However, profitability may be influenced by fluctuations in sales
volume because of the nature of the Company's fixed costs.
INTEREST AND INCOME TAXES PAID
Cash payments for interest during the forty weeks ended July 3, 1996 and
July 5, 1995 amounted to $2,981,000 and $3,332,000, respectively. Cash payments
for income taxes during the forty weeks ended July 3, 1996 and July 5, 1995
amounted to $3,804,000 and $2,606,000, respectively.
SHAREHOLDERS' EQUITY
The number of shares issued as of July 3, 1996 on the consolidated
statement of financial position includes 1,246,670 shares which were distributed
on January 15, 1996 pursuant to a 10% stock dividend declared on December 12,
1995 to shareholders of record on December 22, 1995.
STOCK OPTIONS
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." The Company is required to adopt the provisions of this
Statement for its fiscal year beginning September 26, 1996. The Company will
continue to measure compensation cost in accordance with Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" and provide the
necessary footnote disclosure in accordance with Statement of Financial
Accounting Standards No. 123.
6
<PAGE>
NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Primary earnings per common and common equivalent share are computed by
dividing net earnings by the weighted average number of common shares and common
equivalent shares outstanding. Common equivalent shares include shares subject
to purchase under stock options and stock warrants. Primary earnings per share
in the forty weeks ended July 3, 1996 and July 5, 1995 are not comparable
because of the increase in the number of shares outstanding arising from the
conversion of the Company's 10% Subordinated Convertible Debentures ("the
Debentures") into the Company's Common Stock effective April 3, 1995.
Fully diluted earnings per common and common equivalent share assumes, in
addition to the above, that the Debentures were converted at the date of
issuance, and that net earnings are increased by the actual amount of interest
expense, net of income taxes, related to the Debentures.
Net earnings per common and common equivalent share and weighted average
shares and equivalents for the twelve and forty weeks ended July 5, 1995 have
been restated to give effect to the 10% stock dividend declared on December 12,
1995.
The following table presents information necessary to calculate net
earnings per common and common equivalent share:
<TABLE>
<CAPTION>
TWELVE FORTY
WEEKS ENDED WEEKS ENDED
------------------------- -------------------------
JULY 3 JULY 5 JULY 3 JULY 5
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PRIMARY:
Weighted average shares outstanding 13,854,317 13,487,224 13,765,858 10,618,693
Share equivalents 310,910 399,616 323,580 344,445
---------- ---------- ---------- ----------
Weighted average shares and equivalents 14,165,227 13,886,840 14,089,438 10,963,138
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
FULLY DILUTED:
Weighted average shares outstanding 13,854,317 13,487,224 13,765,858 10,618,693
Share equivalents 310,969 400,154 335,231 411,522
Conversion of Debentures -- -- -- 2,867,690
---------- ---------- ---------- ----------
Weighted average shares and equivalents 14,165,286 13,887,378 14,101,089 13,897,905
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
NET EARNINGS:
Net earnings for primary earnings
per share computation $3,706,281 $2,848,424 $9,285,827 $6,884,435
Add - interest expense, net of income
taxes , applicable to Debentures -- -- -- 333,003
---------- ---------- ---------- ----------
Net earnings, as adjusted for fully
diluted earnings per share computation $3,706,281 $2,848,424 $9,285,827 $7,217,438
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
In the following discussion, the term "same store sales" refers to the
sales of only those units open for at least six months prior to the beginning of
the fiscal periods being compared and which remained open through the end of the
fiscal period.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship to revenues of
items included in the Company's consolidated statements of earnings for the
periods indicated:
<TABLE>
<CAPTION>
TWELVE FORTY
WEEKS ENDED WEEKS ENDED
--------------------- ---------------------
7/3/96 7/5/95 7/3/96 7/5/95
------ ------ ------ ------
<S> <C> <C> <C> <C>
REVENUES
Net sales 97.8% 98.4% 97.7% 98.3%
Franchise fees 1.2 .9 1.2 .9
Other, net 1.0 .7 1.1 .8
----- ----- ----- -----
100.0 100.0 100.0 100.0
----- ----- ----- -----
COSTS AND EXPENSES
Cost of sales 25.9 25.4 26.0 25.9
Restaurant operating costs 43.5 44.0 44.2 45.2
Selling, general and administrative 10.6 11.1 11.3 11.1
Depreciation and amortization 3.6 3.5 3.7 3.6
Amortization of pre-opening costs 1.3 1.1 1.4 1.0
Rent 3.0 3.1 3.2 3.2
Interest 1.4 1.8 1.4 2.2
----- ----- ----- -----
89.3 90.0 91.2 92.2
----- ----- ----- -----
EARNINGS BEFORE INCOME TAXES 10.7 10.0 8.8 7.8
INCOME TAXES 4.1 3.8 3.4 3.0
----- ----- ----- -----
NET EARNINGS 6.6% 6.2% 5.4% 4.8%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
COMPARISON OF TWELVE WEEKS ENDED JULY 3, 1996 TO TWELVE WEEKS ENDED JULY 5, 1995
REVENUES
Revenues increased $10,313,000 to $56,437,000, or 22.4%, due primarily to
an increase in Steak n Shake's net sales of $9,749,000. The increase in net
sales of Steak n Shake was due to the opening of 43 new, company-operated
restaurants since the beginning of fiscal 1995 partially offset by the closure
of five low-volume units. Same store sales were flat as a 1.7% increase in
check average was offset by a decrease of 1.5% in customer counts. Steak n
Shake instituted a price increase of 1.4% in January 1996. After excluding
existing units in close proximity (generally three miles) to the new units
opened during the periods, Steak n Shake's same store sales increased 2.1%.
Franchise fees, which includes both initial franchise fees and royalties on
franchise sales, increased $285,000 to $687,000 due primarily to the opening of
16 Steak n Shake franchised units since the second quarter of fiscal 1995.
Other revenues increased $216,000 to $547,000 due primarily to the increase
in the number of properties leased to franchisees by the Company's franchise
financing subsidiary.
8
<PAGE>
COSTS AND EXPENSES
Cost of sales increased $2,915,000, or 24.9%, as a result of sales
increases. As a percentage of revenues, cost of sales increased to 25.9% from
25.4%, primarily as a result of the mix of Company-operated cost of sales and
the cost of sales on product sales to franchisees.
Restaurant operating costs increased $4,202,000, or 20.7%, due to higher
sales volume. Restaurant operating costs, as a percentage of revenues,
decreased to 43.5% from 44.0%, primarily as a result of the increase in sales
and improved labor utilization.
Selling, general and administrative expenses increased $842,000 or 16.4%.
As a percentage of revenues, selling, general and administrative expenses
decreased to 10.6% from 11.1%. Marketing expense, as a percentage of revenues,
remained unchanged at 3.0% and accounted for $315,000 of the increase, primarily
as a result of increased television advertising. Additionally, the increase in
expenses was attributable to personnel related costs, which included costs for
additional staffing in connection with the development of new restaurants.
The $418,000 increase in depreciation and amortization expense was
attributable to the net depreciable capital additions since the first quarter of
fiscal 1995.
The $271,000 increase in the amortization of pre-opening costs was
attributable to the increase in the number of new company-operated units opened.
Rent expense increased $248,000, or 17.0%, as a result of sale and
leaseback transactions since the second quarter of fiscal 1995 involving eight
Company-operated properties and a net increase in the number of other leased
properties.
Interest expense decreased $6,000 as a result of the Company's adoption of
the Statement of Financial Accounting Standards No. 34, "Capitalization of
Interest" during fiscal 1995 partially offset by interest expense related to the
additional borrowings under the Company's revolving line of credit and senior
note agreements.
INCOME TAXES
The Company's effective income tax rate increased to 38.5% from 38.2% for
the quarter ended July 5, 1995 and from 37.8% for the year ended September 27,
1995. The increase from the prior year and from the fiscal year ended September
27, 1995 resulted from a decrease in federal tax credits as a percentage of
earnings before income taxes. A valuation allowance against gross deferred tax
assets has not been provided based upon expectation of future taxable income.
NET EARNINGS
Net earnings increased $858,000 to $3,706,000, or 30.1%,
primarily as a result of the increase in Steak n Shake's operating earnings.
Fully diluted earnings per share increased from $.21 to $.26.
9
<PAGE>
COMPARISON OF FORTY WEEKS ENDED JULY 3, 1996 TO FORTY WEEKS ENDED JULY 5, 1995
REVENUES
Revenues increased $28,947,000 to $171,105,000, or 20.4%, due primarily to
an increase in Steak n Shake's net sales of $27,677,000. The increase in net
sales of Steak n Shake was due to the opening of 49 new units since the
beginning of the third quarter of fiscal 1994 partially offset by a decrease in
same store sales of 1.0% and the closure of six low-volume units. The decrease
in same store sales was attributable to a decrease of 3.4% in customer counts
partially offset by a 2.5% increase in check average. Steak n Shake instituted
price increases of 1.7% and 1.4% in February 1995 and January 1996,
respectively. After excluding existing units in close proximity (generally three
miles) to the new units opened during the periods, Steak n Shake's same store
sales increased 1.2%. Management believes that the soft retail environment and
inclement weather late in the quarter ended December 20, 1995 had a negative
impact on Steak n Shake's sales.
Franchise fees, which includes both initial franchise fees and royalties on
franchisee sales, increased $739,000 to $2,070,000 due primarily to the opening
of 22 Steak n Shake franchised units since the beginning of fiscal 1995.
Other revenues increased $713,000 to $1,807,000 due to the increase in the
number of properties leased to franchisees by the Company's franchise financing
subsidiary.
COSTS AND EXPENSES
Cost of sales increased $7,602,000, or 20.7%, as a result of net sales
increases. As a percentage of revenues, cost of sales increased slightly to
26.0% from 25.9%.
Restaurant operating costs increased $11,248,000, or 17.5%, due to higher
sales volume. Restaurant operating costs, as a percentage of revenues,
decreased to 44.2% from 45.2%, primarily as a result of the increase in Steak n
Shake sales and improved labor utilization.
Selling, general and administrative expenses increased $3,572,000, or
22.7%. As a percentage of revenues, selling, general and administrative
expenses increased to 11.3% from 11.1%. Marketing expense, as a percentage of
revenues, increased to 3.1% from 2.8% and accounted for $1,302,000 of the
increase, primarily as a result of increased television advertising.
Additionally, the increase in expenses was attributable to personnel related
costs, which included costs for additional staffing in connection with the
development of new restaurants.
The $1,283,000 increase in depreciation and amortization expense was
attributable to the net depreciable capital additions since the beginning of
fiscal 1995.
The $909,000 increase in the amortization of pre-opening costs was
attributable to the increase in the number of new company-operated units opened.
Rent expense increased $1,051,000, or 23.4%, as a result of sale and
leaseback transactions since the beginning of fiscal 1995 involving ten
Company-operated properties and a net increase in the number of other leased
properties.
Interest expense decreased $644,000 as a result of the conversion of the
Debentures into Common Stock on April 3, 1995 and the Company's adoption of the
Statement of Financial Accounting Standards No. 34, "Capitalization of
Interest", during fiscal 1995, partially offset by borrowings under the
Company's revolving line of credit and senior note agreements.
INCOME TAXES
The Company's effective income tax rate increased slightly to 38.4% from
38.2% for the forty weeks ended July 5, 1995 and from 37.8% for fiscal 1995.
The increase from the prior period and from fiscal year 1995 resulted from a
decrease in federal tax credits as a percentage of earnings before income taxes.
A valuation allowance against gross deferred tax assets has not been provided
based upon the expectation of future taxable income.
10
<PAGE>
NET EARNINGS
Net earnings increased $2,401,000 to $9,286,000, or 34.9%,
primarily as a result of the increase in Steak n Shake's operating earnings.
Fully diluted earnings per share increased from $.52 to $.66. Primary earnings
per share are not comparable because of the increase in the number of shares
outstanding arising from the conversion of the Debentures into Common Stock on
April 3, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company primarily needs capital for the development of new Steak n
Shake restaurants. During fiscal 1994 and 1995, the Company opened 11 and 21
new Company-operated Steak n Shake units, respectively, and incurred capital
expenditures of $20,567,000 and $42,899,000, respectively. During the 40 weeks
ended July 3, 1996, 22 additional Company-operated units were opened, and
capital expenditures totaled $35,098,000 as compared to $29,540,000 for the
comparable period in the prior fiscal year. The primary sources of funds for
the Company's expansion program have been cash flow from operations, borrowings
and capital generated by sale and leaseback transactions.
The Company has borrowings of $10,000,000 available under its $25,000,000
Senior Note Agreement and Private Shelf Facility (the "Senior Note Agreement")
over the period ending September 27, 1998, at interest rates based upon market
rates at the time of borrowing. As of August 1, 1996, outstanding borrowings
under the Senior Note Agreement had an average interest rate of 7.6%. The
Company's $30,000,000 Revolving Credit Agreement matures in December 1997 and
bears interest at a rate based on LIBOR plus 0.875% or the prime rate, at the
election of the Company. The amount outstanding under the Revolving Credit
Agreement was $10,000,000 as of August 1, 1996. The Company expects to be able
to secure a new revolving credit facility upon expiration of the current
agreement. The Company's debt agreements contain restrictions which, among
other things, require the Company to maintain certain financial ratios.
The Company's current expansion plan calls for 240 new Company-operated
restaurants to be opened during the five-year period from fiscal 1997 to fiscal
2001. The average cost of a new restaurant including land, site improvements,
building and equipment for fiscal 1996 is expected to be approximately
$1,425,000. The Company expects to fund the expansion plan and meet working
capital needs using existing resources and anticipated cash flow from
operations, together with additional capital generated by sale and leaseback
transactions involving newly acquired properties, bank borrowings, and the
issuance of equity and/or debt securities.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(2) Not Applicable
(4) 4.01 Specimen certificate representing Common Stock of Consolidated
Products, Inc. (formerly Steak n Shake, Inc.). (Incorporated by
reference to the Exhibits to Registration Statement No. 2-80542
on Form S-8 filed with the Commission on April 7, 1989).
4.02 Amended and Restated Credit Agreement by and Between Consolidated
Products, Inc. and Bank One, Indianapolis, N.A. dated December
30, 1994 (amending that earlier credit agreement between parties
dated as of March 10, 1994 and effective as of February 23, 1994,
relating to a $5,000,000 revolving line of credit which was not
filed pursuant to Rule 601 of the Securities and Exchange
Commission), relating to a $30,000,000 revolving line of credit.
(Incorporated by reference to the Exhibits to the Registrant's
Report on Form 10-Q for the fiscal quarter ended December 21,
1994).
4.03 Note Purchase Agreement by and Between Consolidated Products,
Inc. and The Prudential Insurance Company of America dated as of
September 27, 1995 related to $39,250,000 senior note agreement
and private shelf facility. (Incorporated by reference to the
Exhibits to the Registrant's Report on Form 8-K dated September
26, 1995).
4.04 First Amendment to Amended and Restated Credit Agreement by and
between Consolidated Products, Inc. and Bank One, Indianapolis,
N.A. dated September 26, 1995. (Incorporated by reference to the
Exhibits to the Registrant's Report on Form 8-K dated September
26, 1995).
(10) 10.01 Consolidated Products, Inc. 1991 Stock Option Plan for
Nonemployee Directors. (Incorporated by reference to the
Appendix to the Registrant's definitive Proxy Statement dated
January 10, 1992 related to its 1992 Annual Meeting of
Shareholders).
10.02 Consolidated Products, Inc. Executive Incentive Bonus Plan.
(Incorporated by reference to the Exhibits to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended July
1, 1992).
10.03 Steak n Shake, Inc. Executive Incentive Bonus Plan. (Incorporated
by reference to the Registrant's Quarterly Report on Form 10-Q
for the fiscal quarter ended July 1, 1992).
10.04 Consultant Agreement by and between James Williamson, Jr. and the
Registrant dated November 20, 1990. (Incorporated by reference to
the Exhibits to the Registrant's Quarterly Report on Form 10-Q
for the fiscal quarter ended July 1, 1992).
10.05 Memorandum agreement between Neal Gilliatt and the Registrant
dated July 30, 1991. (Incorporated by reference to the Exhibits
to the Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 1, 1992).
12
<PAGE>
10.06 Area Development Agreement by and between Steak n Shake, Inc. and
Consolidated Restaurants Southeast, Inc. (currently Kelley
Restaurants, Inc.) dated June 12, 1991 for Charlotte, North
Carolina area. (Incorporated by reference to the Exhibits to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended July 1, 1992).
10.07 Area Development Agreement by and between Steak n Shake, Inc. and
Consolidated Restaurants Southeast, Inc. (currently Kelley
Restaurants, Inc.) dated June 12, 1991 for Atlanta, Georgia area.
(Incorporated by reference to the Exhibits to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended July
1, 1992).
10.08 Letter from the Registrant to Alan B. Gilman dated June 27, 1992.
(Incorporated by reference to the Exhibits to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended July
1, 1992).
10.09 Consolidated Products, Inc. 1992 Employee Stock Purchase Plan.
(Incorporated by reference to the Appendix to the Registrant's
definitive Proxy Statement dated January 12, 1993 related to the
1993 Annual Meeting of Shareholders).
10.10 Consolidated Products, Inc. 1992 Employee Stock Option Plan.
(Incorporated by reference to the Appendix to the Registrant's
definitive Proxy Statement dated January 12, 1993 related to the
1993 Annual Meeting of Shareholders).
10.11 Consolidated Products, Inc. 1994 Capital Appreciation Plan.
(Incorporated by reference to the Appendix to the Registrant's
definitive Proxy Statement dated January 13, 1994 related to the
1994 Annual Meeting of Shareholders).
10.12 Consolidated Products, Inc. 1994 Nonemployee Director Stock
Option Plan. (Incorporated by reference to the Appendix to the
Registrant's definitive Proxy Statement dated January 13, 1994
related to the 1994 Annual Meeting of Shareholders).
10.13 Consolidated Products, Inc. 1995 Employee Stock Option Plan.
(Incorporated by reference to the Appendix to the Registrant's
definitive Proxy Statement dated January 12, 1995 related to the
1995 Annual Meeting of Shareholders).
10.14 Consolidated Products, Inc. 1995 Nonemployee Director Stock
Option Plan. (Incorporated by reference to the Appendix to the
Registrant's definitive Proxy Statement dated January 12, 1995
related to the 1995 Annual Meeting of Shareholders).
10.15 Consolidated Products, Inc. 1996 Nonemployee Director Stock
Option Plan. (Incorporated by reference to the Appendix to the
Registrant's definitive Proxy Statement dated January 15, 1996
related to the 1996 Annual Meeting of Shareholders).
(11) 11.01 Computation of Earnings Per Share. (Incorporated by reference to
the Notes to the Consolidated Financial Statements included as a
part of this report).
(27) 27.01 Financial data schedule. (Electronic filing only).
13
<PAGE>
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the twelve weeks ended July
3, 1996.
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, on August 14, 1996.
CONSOLIDATED PRODUCTS, INC.
(Registrant)
/s/ Kevin F. Beauchamp
---------------------------------------
By Kevin F. Beauchamp
Vice President and Controller
On Behalf of the Registrant and as
Principal Accounting Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF JULY 3, 1996 AND THE
CONSOLIDATED STATEMENT OF EARNINGS FOR THE TWELVE AND FORTY WEEKS ENDED JULY 3,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-25-1996
<PERIOD-START> SEP-28-1995
<PERIOD-END> JUL-03-1996
<CASH> 1,914,938<F1>
<SECURITIES> 0
<RECEIVABLES> 3,040,373
<ALLOWANCES> 0
<INVENTORY> 4,194,013
<CURRENT-ASSETS> 14,096,088
<PP&E> 160,428,686
<DEPRECIATION> (55,440,725)
<TOTAL-ASSETS> 125,506,398
<CURRENT-LIABILITIES> 35,922,237
<BONDS> 0
0
0
<COMMON> 6,977,443
<OTHER-SE> 46,338,971
<TOTAL-LIABILITY-AND-EQUITY> 125,506,398
<SALES> 167,228,075
<TOTAL-REVENUES> 171,104,874
<CGS> 44,395,668
<TOTAL-COSTS> 119,952,853<F2>
<OTHER-EXPENSES> 33,654,721<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,426,473
<INCOME-PRETAX> 15,070,827
<INCOME-TAX> 5,785,000
<INCOME-CONTINUING> 9,285,827
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,285,827
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
<FN>
<F1>CASH INCLUDES CASH EQUIVALENTS OF $1,395,000.
<F2>INCLUDES RESTAURANT OPERATING COST OF $75,557,185.
<F3>INCLUDES DEPRECIATION AND AMORTIZATION AND RENT OF $8,786,033 AND $5,536,519,
RESPECTIVELY.
</FN>
</TABLE>
