<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 SIXTEEN WEEKS ENDED APRIL 9, 1997
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 organization) Identification No.)
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 May 7, 1997: 15,522,106
The Index to Exhibits is located at Page 12. Total Pages 17
<PAGE>
CONSOLIDATED PRODUCTS, INC.
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Financial
Position - April 9, 1997 (Unaudited) and
September 25, 1996 3
Consolidated Statements of Earnings
(Unaudited) Sixteen and Twenty-Eight
Weeks Ended April 9, 1997 and April 10,
1996 4
Consolidated Statements of Cash Flows
(Unaudited) Twenty-Eight Weeks Ended
April 9, 1997 and April 10, 1996 5
Notes to Consolidated Financial Statements
(Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 11
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 12
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
<TABLE>
<CAPTION>
APRIL 9, SEPTEMBER 25, APRIL 9, SEPTEMBER 25,
1997 1996 1997 1996
------------ ------------ ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT ASSETS CURRENT LIABILITIES
Cash, including cash equiva- Accounts payable $13,038,592 $ 13,529,119
lents of $410,000 in 1997 Accrued expenses 17,353,676 17,473,046
and $190,000 in 1996 $ 789,641 $ 630,362 Current portion of senior note 5,738,889 5,000,000
Receivables 3,183,913 3,301,499 Current portion of obligations
Sale and leaseback properties under capital leases 1,336,496 1,302,523
under contract 1,965,678 2,231,000 ----------- ------------
Inventories 4,276,952 3,940,075 Total current liabilities 37,467,653 37,304,688
Deferred income taxes 1,248,000 1,248,000 ----------- ------------
Other current assets 4,428,766 3,792,620 DEFERRED INCOME TAXES 325,000 325,000
----------- -----------
Total current assets 15,892,950 15,143,556
----------- -----------
PROPERTY AND EQUIPMENT OBLIGATIONS UNDER
Land 37,277,839 30,579,097 CAPITAL LEASES 6,021,270 6,956,882
Buildings 34,422,305 29,417,926
Leasehold improvements 40,305,327 37,235,370
Equipment 60,372,192 52,920,755 REVOLVING LINE OF CREDIT 16,000,000 4,000,000
Construction in progress 8,748,772 7,496,456
----------- -----------
181,126,435 157,649,604
Less accumulated depreciation SENIOR NOTE 24,261,111 25,000,000
and amortization (51,709,145) (46,987,316)
----------- -----------
Net property and equipment 129,417,290 110,662,288 SHAREHOLDERS' EQUITY
----------- ----------- Common stock -- $.50 stated value
LEASED PROPERTY 25,000,000 shares authorized --
Leased property under capital shares issued: 15,596,542 in 1997;
leases, less accumulated amorti- 14,045,486 in 1996 7,798,271 7,022,743
zation of $9,698,942 in 1997 Additional paid-in capital 75,006,361 51,766,742
and $9,628,062 in 1996 2,958,385 3,252,642 Retained earnings (deficit) (14,513,336) 1,262,066
Net investment in direct Less: Unamortized value of
financing leases 1,378,784 1,782,993 restricted shares (1,046,987) (1,416,851)
----------- ----------- Treasury stock -- at cost
Net leased property 4,337,169 5,035,635 99,146 shares in 1997:
----------- ----------- 78,288 shares in 1996 (1,139,558) (805,768)
----------- ------------
OTHER ASSETS 532,376 574,023 Total shareholders' equity 66,104,751 57,828,932
------------ ----------- ----------- ------------
$ 150,179,785 $131,415,502 $150,179,785 $131,415,502
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
CONSOLIDATED PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
SIXTEEN TWENTY-EIGHT
WEEKS ENDED WEEKS ENDED
------------------------------ -----------------------------
APRIL 9, APRIL 10, APRIL 9, APRIL 10,
1997 1996 1997 1996
------------ --------------- ------------- --------------
<S> <C> <C> <C> <C>
REVENUES
Net sales $ 77,085,369 $ 65,017,847 $131,429,827 $112,025,399
Franchise fees 856,475 817,423 1,510,706 1,382,480
Other, net 293,864 720,832 894,478 1,259,688
------------ --------------- ------------- -------------
78,235,708 66,556,102 133,835,011 114,667,567
------------ --------------- ------------- -------------
COSTS AND EXPENSES
Cost of sales 20,247,950 17,421,914 34,749,641 29,761,061
Restaurant operating costs 34,679,456 29,783,276 58,967,529 51,048,581
General and administrative 6,737,437 5,929,019 11,077,257 9,746,887
Depreciation and amortization 3,204,835 2,551,947 5,448,827 4,378,067
Marketing 2,363,132 2,135,263 4,027,100 3,605,412
Rent 2,499,334 2,194,758 4,301,347 3,834,980
Amortization of pre-opening costs 1,068,080 955,540 1,860,251 1,612,734
Interest 1,192,229 968,769 1,990,599 1,640,298
------------ --------------- ------------- --------------
71,992,453 61,940,486 122,422,551 105,628,020
------------ --------------- ------------- --------------
EARNINGS BEFORE INCOME TAXES 6,243,255 4,615,616 11,412,460 9,039,547
INCOME TAXES 2,440,000 1,790,000 4,380,000 3,460,000
------------ --------------- ------------- --------------
NET EARNINGS $3,803,255 $2,825,616 $ 7,032,460 $ 5,579,547
------------ --------------- ------------- --------------
------------ --------------- ------------- --------------
NET EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE $ .24 $ .18 $ .45 $ .36
WEIGHTED AVERAGE SHARES
AND EQUIVALENTS 15,733,981 15,492,742 15,701,380 15,462,653
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
CONSOLIDATED PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
TWENTY-EIGHT WEEKS ENDED
----------------------------
APRIL 9, APRIL 10,
1997 1996
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 7,032,460 $ 5,579,547
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 5,448,827 4,378,067
Amortization of pre-opening costs 1,860,251 1,612,734
Changes in receivables and inventories (232,166) (294,245)
Changes in other assets (2,359,657) (1,806,717)
Changes in income taxes payable 362,455 556,513
Changes in accounts payable
and accrued expenses (966,457) 979,383
(Gain) loss on disposal of property (17,541) 70,066
----------- ------------
Net cash provided by operating activities 11,128,172 11,075,348
----------- ------------
INVESTING ACTIVITIES
Additions of property and equipment (30,475,123) (26,165,718)
Net proceeds from disposal of
property and equipment 7,085,952 3,645,432
----------- ------------
Net cash used in investing activities (23,389,171) (22,520,286)
----------- ------------
FINANCING ACTIVITIES
Principal payments on debt
and capital lease obligations (5,500,575) (4,698,581)
Proceeds from issuance of senior note 5,000,000 5,000,000
Net proceeds from revolving line of credit 12,000,000 10,000,000
Proceeds from equipment and property leases 398,686 429,608
Lease payments on subleased properties (379,465) (376,441)
Cash dividends paid in lieu of fractional shares (20,519) (13,062)
Proceeds from exercise of stock options 175,855 360,192
Proceeds from employee stock purchase plan 746,296 538,668
----------- ------------
Net cash provided by financing activities 12,420,278 11,240,384
----------- ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 159,279 (204,554)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 630,362 1,350,139
----------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 789,641 $ 1,145,585
----------- ------------
----------- ------------
</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 April 9, 1997, the consolidated
statements of earnings for the sixteen and twenty-eight weeks ended April 9,
1997 and April 10, 1996 and the consolidated statements of cash flows for the
twenty-eight weeks ended April 9, 1997 and April 10, 1996 have been included.
Certain 1996 items have been reclassified to conform to the 1997
presentation.
The consolidated statements of earnings for the sixteen and
twenty-eight weeks ended April 9, 1997 and April 10, 1996 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 25, 1996.
SEASONAL ASPECTS
The Company has substantial fixed costs which do not decline as a
result of a decline in sales. The Company's second fiscal quarter, which
falls during the winter months, usually reflects lower average weekly unit
volumes, and sales can be adversely affected by severe winter weather.
INTEREST AND INCOME TAXES PAID
Cash payments for interest during the sixteen weeks ended April 9, 1997
and April 10, 1996 amounted to $1,646,000 and $1,301,000, respectively. Cash
payments for income taxes during the sixteen weeks ended April 9, 1997 and
April 10, 1996 amounted to $4,018,000 and $2,764,000, respectively.
DEBT
On April 28, 1997, the Company amended its Senior Note Agreement and
Private Shelf Facility increasing the borrowing capacity to $50,000,000.
During the second quarter of 1997, the Company amended its $30,000,000
Revolving Credit Facility to extend the maturity date to December 1998.
SHAREHOLDERS' EQUITY
The number of shares issued as of April 9, 1997 as reported in the
consolidated statement of financial position includes 1,402,298 shares which
were distributed on January 20, 1997 to shareholders of record on January 6,
1997 pursuant to a 10% stock dividend declared on December 18, 1996.
6
<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 total
revenues, unless otherwise indicated, of items included in the Company's
consolidated statements of earnings for the periods indicated:
<TABLE>
<CAPTION>
SIXTEEN TWENTY-EIGHT
WEEKS ENDED WEEKS ENDED
----------------- -----------------
4/9/97 4/10/96 4/9/97 4/10/96
------ ------- ------ -------
<S> <C> <C> <C> <C>
REVENUES
Net sales 98.5% 97.7% 98.2% 97.7%
Franchise fees 1.1 1.2 1.1 1.2
Other, net 0.4 1.1 0.7 1.1
------ ------ ------ ------
100.0 100.0 100.0 100.0
------ ------ ------ ------
COSTS AND EXPENSES
Cost of sales 26.3(1) 26.8(1) 26.4(1) 26.6(1)
Restaurant operating costs 45.0(1) 45.8(1) 44.9(1) 45.6(1)
General and administrative 8.6 8.9 8.3 8.5
Depreciation and amortization 4.1 3.8 4.1 3.8
Marketing 3.0 3.2 3.0 3.2
Rent 3.2 3.3 3.2 3.3
Amortization of pre-opening costs 1.4 1.4 1.4 1.4
Interest 1.5 1.5 1.5 1.4
------ ------ ------- ------
92.0 93.1 91.5 92.1
------ ------ ------- ------
EARNINGS BEFORE INCOME TAXES 8.0 6.9 8.5 7.9
INCOME TAXES 3.1 2.7 3.3 3.0
------ ------ ------ -----
NET EARNINGS 4.9% 4.2% 5.2% 4.9%
------ ------ ------ -----
------ ------ ------ -----
</TABLE>
- - -------------
(1) Cost of sales and restaurant operating costs are expressed as a
percentage of net sales.
COMPARISON OF SIXTEEN WEEKS ENDED APRIL 9, 1997 TO SIXTEEN WEEKS ENDED
APRIL 10, 1996
REVENUES
Net sales increased $12,068,000 to $77,085,000, or 18.6%, due primarily to
an increase in Steak n Shake's net sales of $12,293,000. The increase in net
sales of Steak n Shake of 20.7% was due to the opening of new units pursuant
to the Company's expansion plan (non-same stores) partially offset by a 0.1%
decrease in same store sales and the closure of two low-volume units. The
decrease in same store sales was attributable to a decrease of 1.5% in
customer counts partially offset by a 1.4% increase in check average. Steak n
Shake instituted price increases of 1.4%, 1.3%, and 1.0% in January 1996,
October 1996, and March 1997, respectively. After excluding units in close
proximity (generally three miles) to the new units opened during the periods,
Steak n Shake same store sales increased 3.6%.
Franchise fees increased $39,000 to $856,000, as a result of an increase
in franchise royalties of $129,000 due to the opening of 11 Steak n Shake
franchised units since the beginning of the second quarter of fiscal 1996
partially offset by a decrease in initial franchise fees of $90,000.
Other revenues decreased $427,000 primarily due to lease buyout costs of
approximately $487,000 associated with the disposition of two leased
properties.
7
<PAGE>
COSTS AND EXPENSES
Cost of sales increased $2,826,000, or 16.2%, as a result of sales
increases. As a percentage of net sales, cost of sales decreased to 26.3%
from 26.8%, primarily as a result of menu price increases, tight management
controls over food costs and the higher mix of Company-operated restaurant
sales as compared to product sales to franchisees partially offset by
inflationary pressures on food cost, in particular, beef costs.
Restaurant operating costs increased $4,896,000, or 16.4%, due to
increased labor costs and other operating costs resulting from the higher
sales volume and the effect of the minimum wage increase. Restaurant
operating costs, as a percentage of net sales, decreased to 45.0% from 45.8%,
primarily as a result of improved labor utilization and a decrease in fringe
benefit costs.
The Company's operating margins improved despite the effect of the minimum
wage increase and inflationary pressures on food cost due primarily to tight
management control over food and labor costs.
General and administrative expenses increased $808,000 or 13.6%. The
increase in expenses was attributable to personnel related costs, which
included costs for additional staffing in connection with the development of
new restaurants. As a percentage of revenues, general and administrative
expenses decreased to 8.6% from 8.9%.
The $653,000 increase in depreciation and amortization expense was
attributable to the net depreciable capital additions since the beginning of
fiscal 1996.
Marketing expense increased $228,000, or 10.7%. As a percentage of
revenues, marketing expense decreased to 3.0% from 3.2% due to the Company's
market intensification strategy.
Rent expense increased $305,000, or 13.9%, as a result of sale and
leaseback transactions since the second quarter of fiscal 1996 involving nine
company-owned properties and a net increase in the number of other leased
properties.
The $113,000 increase in the amortization of pre-opening costs was
attributable to the increase in the number of new company-operated units opened
since the end of the first quarter of 1996.
Interest expense increased $223,000 as a result of the increased
borrowings under the Company's revolving line of credit and senior note
agreements, offset by lower average costs of borrowing and the reduction in
capital lease obligations.
INCOME TAXES
The Company's effective income tax rate increased to 39.1%
from 38.8% for the quarter ended April 10, 1996 and from 37.8% for the year
ended September 25, 1996. While the anticipated amount of federal tax
credits increased over the quarter ended April 10, 1996, federal tax credits
as a percentage of earnings before income taxes declined resulting in the
increase in the effective income tax rate. A valuation allowance against
gross deferred tax assets has not been provided based upon the expectation of
future taxable income.
NET EARNINGS
Net earnings increased $978,000, or 34.6%, primarily
as a result of the increase in Steak n Shake's operating earnings. Fully
diluted earnings per share increased from $.18 to $.24.
8
<PAGE>
COMPARISON OF TWENTY-EIGHT WEEKS ENDED APRIL 9, 1997 TO TWENTY-EIGHT WEEKS
ENDED APRIL 10, 1996
REVENUES
Net sales increased $19,404,000 to $131,430,000, or 17.3%, due primarily
to an increase in Steak n Shake's net sales of $19,742,000. The increase in
net sales of Steak n Shake of 19.3% was due to the opening of new units
pursuant to the Company's expansion plan (non-same stores), partially offset
by a 0.2% decrease in same store sales and the closure of three low-volume
units. The decrease in same store sales was attributable to a decrease of
1.5% in customer counts partially offset by a 1.3% increase in check average.
Steak n Shake instituted price increases of 1.4%, 1.3%, and 1.0% in January
1996, October 1996, and March 1997, respectively. After excluding units in
close proximity (generally three miles) to the new units opened during the
periods, Steak n Shake same store sales increased 3.0%.
Franchise fees increased $128,000 to $1,511,000, as a result of an
increase in franchise royalties of $288,000 due to the opening of 15 Steak n
Shake franchised units since the beginning of fiscal 1996 partially offset by
a decrease in initial franchise fees of $160,000.
Other revenues decreased $365,000 due to lease buyout costs of
approximately $487,000 associated with the disposition of two leased
properties, partially offset by revenue generated by an increase in the
number of properties leased to franchisees by the Company's franchise
financing subsidiary.
COSTS AND EXPENSES
Cost of sales increased $4,989,000, or 16.8%, as a result of sales
increases. As a percentage of net sales, cost of sales decreased to 26.4%
from 26.6%.
Restaurant operating costs increased $7,919,000, or 15.5%, due to
increased labor costs and other operating costs resulting from the higher
sales volume and the effect of the minimum wage increase. Restaurant
operating costs, as a percentage of net sales, decreased to 44.9% from 45.6%,
primarily as a result of improved labor utilization and a decrease in fringe
benefit costs.
General and administrative expenses increased $1,330,000 or 13.6%. The
increase in expenses was attributable to personnel related costs, which
included costs for additional staffing in connection with the development of
new restaurants. As a percentage of revenues, general and administrative
expenses decreased to 8.3% from 8.5%.
The $1,071,000 increase in depreciation and amortization expense was
attributable to the net depreciable capital additions since the beginning of
fiscal 1996.
Marketing expense increased $422,000, or 11.7%. As a percentage of
revenues, marketing expense decreased to 3.0% from 3.2% due to the Company's
market intensification strategy.
Rent expense increased $466,000, or 12.2%, as a result of sale and leaseback
transactions since the beginning of fiscal 1996 involving twelve Company-owned
properties and a net increase in the number of other leased properties.
The $248,000 increase in the amortization of pre-opening costs was
attributable to the increase in the number of new Company-operated units opened
since the beginning of fiscal 1996.
Interest expense increased $350,000 as a result of the increased borrowings
under the Company's revolving line of credit and senior note agreements, offset
by lower average costs of borrowing and the reduction in capital lease
obligations.
9
<PAGE>
INCOME TAXES
The Company's effective income tax rate increased to 38.4% from 38.3% for
the twenty-eight weeks ended April 10, 1996 and from 37.8% for the year ended
September 25, 1996. A valuation allowance against gross deferred tax assets
has not been provided based upon the expectation of future taxable income.
NET EARNINGS
Net earnings increased $1,453,000, or 26.0%, primarily as a result of
the increase in Steak n Shake's operating earnings. Fully diluted earnings per
share increased from $.36 to $.45.
LIQUIDITY AND CAPITAL RESOURCES
Eight Company-operated Steak n Shake restaurants were opened during the
sixteen weeks ended April 9, 1997. A total of nineteen Company-operated
Steak n Shake restaurants and two franchised Steak n Shake restaurants were
opened during the twenty-eight weeks ended April 9, 1997. Subsequent to the
end of the second quarter, two Company-operated and three franchised Steak n
Shake restaurants were opened. Twelve additional units, including one
franchised unit, are currently under construction. For the twenty-eight weeks
ended April 9, 1997, capital expenditures totaled $30,475,000 as compared to
$26,166,000 for the comparable prior year period.
As of April 9, 1997, the Company had borrowed $25,000,000 under its
ten-year Senior Note Agreement and Private Shelf Facility. Borrowings under
this facility bear interest at an average fixed rate of 7.7%. On April 28,
1997, the Company amended the Senior Note Agreement and Private Shelf
Facility increasing borrowing capacity to $50,000,000. The Company's
$30,000,000 Revolving Credit Agreement bears interest based on LIBOR plus
87.5 basis points or the prime rate, at the election of the Company. During
the second quarter of 1997, the Company amended the Revolving Credit
Agreement to extend the maturity date to December 1998. The amount
outstanding under the Revolving Credit Agreement was $16,000,000 as of
April 9, 1997. 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 242 new Company-operated
restaurants to be opened during the five-year period from fiscal 1997 to
fiscal 2001. The Company intends to fund capital expenditures and meet
working capital needs using existing resources and anticipated cash flows
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.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard ("SFAS") No. 128, "Earnings Per
Share." For its fiscal year beginning September 25, 1997, 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
basic earnings per share, the dilutive effect of stock options will be
excluded. The change is expected to result in an increase in primary (basic)
earnings per share for both the sixteen weeks ended April 9, 1997 and
April 10, 1996 of $.01 per share, and for both the twenty-eight weeks ended
April 9, 1997 and April 10, 1996 of $.01 per share. The adoption of SFAS
No. 128 will have no effect on diluted earnings per share for the same periods.
10
<PAGE>
RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS
This Report contains certain statements that are "forward-looking
statements" within the meaning of Section 27A of the Securities Act and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Those statements include, but may not be limited to, the discussions
of the Company's expansion strategy, expectations concerning its future
profitability, capital sources and needs and franchising program. Investors
in the Common Stock are cautioned that reliance on any forward-looking
statement involves risks and uncertainties, and that although the Company
believes that the assumptions on which the forward-looking statements
contained herein are reasonable, any of those assumptions could prove to be
inaccurate, and as a result, the forward-looking statements based on those
assumptions also could be incorrect. The uncertainties in this regard
include, but are not limited to, those identified above. In light of these
and other uncertainties, the inclusion of a forward-looking statement herein
should not be regarded as a representation by the Company that the Company's
plans and objectives will be achieved.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable until the Company's fiscal year beginning
October 1, 1998.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of shareholders of Consolidated Products,
Inc. (the "Company") held February 12, 1997, the following actions
were taken:
1. Nine directors were elected to serve until the next annual meeting
and until their successors are duly elected and qualified, as
follows:
Name Votes For Votes Withheld Abstentions
---- --------- -------------- -----------
S. Sue Aramian 10,611,634 817 1,101,884
Alva T. Bonda 10,642,581 1,136 1,070,618
Neal Gilliatt 10,640,298 1,446 1,072,591
Alan B. Gilman 10,648,562 425 1,065,348
E. W. Kelley 10,640,838 1,446 1,072,051
Charles E. Lanham 10,651,180 507 1,062,648
J. Fred Risk 10,597,076 2,071 1,115,188
John W. Ryan 10,647,093 507 1,066,735
James Williamson, Jr. 10,649,056 912 1,064,367
2. A proposal to approve the adoption by the Board of Directors of
the Company's 1997 Employee Stock Option Plan was adopted by the
vote of 8,926,846 shares FOR, 141,573 shares AGAINST and
2,645,916 shares ABSTAIN.
3. A proposal to approve the adoption by the Board of Directors of
the Company's 1997 Capital Appreciation Plan was adopted by the
vote of 8,759,373 shares FOR, 301,350 shares AGAINST and 2,653,612
shares ABSTAIN.
4. A proposal to approve the adoption by the Board of Directors of the
Amendment to the Company's 1992 Employee Stock Purchase Plan was
adopted by the vote of 8,974,267 shares FOR, 84,996 shares AGAINST
and 2,655,072 shares ABSTAIN.
5. A proposal to approve the adoption by the Board of Directors of
the Company's 1997 Nonemployee Director Stock Option Plan was
adopted by the vote of 8,828,810 shares FOR, 247,344 shares
AGAINST and 2,638,181 shares ABSTAIN.
6. A proposal to approve the selection by the Board of Directors of
Ernst & Young LLP as the Company's independent auditors for the
fiscal year ending September 24, 1997 was approved by the vote of
10,634,663 shares FOR, 11,300 shares AGAINST and 1,068,372 shares
ABSTAIN.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
(2) Not Applicable
(3) 3.01 Articles of Incorporation of Consolidated Products, Inc.
(formerly Steak n Shake, Inc.), as amended through
November 1, 1981. (Incorporated by reference to the
Exhibits to Registration Statement No. 2-75094).
3.02 Attachment to Joint Agreement of Merger dated October 31,
1983, between Franklin Corporation and Steak n Shake, Inc.
(Incorporated by reference to the Exhibits to Registrant's
Form 10-K for the year ended September 28, 1983).
12
<PAGE>
3.03 Bylaws of Consolidated Products, Inc. (formerly Steak n
Shake, Inc.) in effect at December 26, 1990. (Incorporated
by reference to the Exhibits to Registration Statement of
Form S-2 filed with the Commission on August 6, 1992, file
no. 33-50568).
3.04 Articles of Amendment to Articles of Incorporation of
Steak n Shake, Inc. dated May 15, 1984. (Incorporated by
reference to the Exhibits to the Registrant's Form 10-K
Annual Report for the year ended September 26, 1984).
(4) 4.01 Specimen certificate representing Common Stock of
Consolidated Products, Inc.
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 and Private Shelf 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).
4.05 Second Amendment to Amended and Restated Credit Agreement by
and between Consolidated Products, Inc. and Bank One,
Indianapolis, N.A. effective January 31, 1997.
4.06 Amendment No. 1 to Note Purchase and Private Shelf Agreement
by and between Consolidated Products, Inc. and The Prudential
Insurance Company of America dated as of April 28, 1997
related to senior note agreement and private shelf facility.
(10) 10.01 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).
10.02 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).
10.03 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).
13
<PAGE>
10.04 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).
10.05 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).
10.06 Area Development Agreement by and between Steak n Shake, Inc.
and Consolidated Restaurants Southeast, Inc. (currently
Kelley Restaurants, Inc.) dated June 12, 1991 for 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).
10.07 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).
10.08 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).
10.09 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).
10.10 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).
10.11 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).
10.12 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).
10.13 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).
10.14 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).
14
<PAGE>
10.15 Consolidated Products, Inc. 1997 Employee Stock Option Plan.
(Incorporated by reference to the Appendix to the
Registrant's definitive Proxy Statement dated December 24,
1996 related to the 1997 Annual Meeting of Shareholders).
10.16 Consolidated Products, Inc. 1997 Capital Appreciation Plan.
(Incorporated by reference to the Appendix to the
Registrant's definitive Proxy Statement dated December 24,
1996 related to the 1997 Annual Meeting of Shareholders).
10.17 Amendment to Consolidated Products, Inc. 1992 Employee Stock
Purchase Plan. (Incorporated by reference to the Appendix
to the Registrant's definitive Proxy Statement dated
December 24, 1996 related to the 1997 Annual Meeting of
Shareholders).
10.18 Consolidated Products, Inc. 1997 Nonemployee Director Stock
Option Plan. (Incorporated by reference to the Appendix to
the Registrant's definitive Proxy Statement dated
December 24, 1996 related to the 1997 Annual Meeting
of Shareholders).
(11) 11.01 Computation of Earnings Per Share.
(15) Not applicable.
(18) Not applicable.
(19) Not applicable.
(22) Not applicable.
(23) Not applicable.
(24) Not applicable.
(27) 27.01 Financial data schedule. (Electronic filing only).
(99) Not applicable.
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed during the sixteen weeks
ended April 9, 1997.
15
<PAGE>
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 May 15, 1997.
CONSOLIDATED PRODUCTS, INC.
(Registrant)
/s/ Gregory G. Fehr
--------------------------------------
By Gregory G. Fehr
Vice President and Controller
On Behalf of the Registrant and as
Principal Accounting Officer
16
<PAGE>
COMMON STOCK COMMON STOCK
NUMBER SHARES
COP
CONSOLIDATED PRODUCTS, INC.
INCORPORATED UNDER THE LAWS SEE REVERSE FOR
OF THE STATE OF INDIANA CERTAIN DEFINITIONS
CUSIP 209798 10 7
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
Consolidated Products, Inc. transferable on the books of the Corporation by
the holder hereof in person or by duly authorized attorney upon surrender of
this certificate properly endorsed. The holder hereof, by accepting this
certificate, expressly assents to and is bound by all provisions of the
Articles of Incorporation, and by the By-Laws of the Corporation, and all
amendments thereto, respectively from time to time, to all of which reference
is hereby made with the same force and effect as if the same were herein set
forth in full. This certificate is not valid until countersigned by the
Transfer Agent and registered by the Registrar.
Witness the seal of the Corporation and the signatures of its duly
authorized officers.
Dated
[SEAL]
/s/ S. Sue Aramian E.W. Kelley
- - ------------------ --------------------
SECRETARY CHAIRMAN
THIS CERTIFICATE IS TRANSFERABLE EITHER
IN CHICAGO, IL. OR IN NEW YORK, N.Y.
Countersigned and Registered:
HARRIS TRUST AND SAVINGS BANK
Transfer Agent
and Registrar
By
Authorized Signature
<PAGE>
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship
and not as tenants in common
TOD -- transfer on death direction in event of
of owner's death, to person named on face
subject to STA TOD rules
UNIF GIFT MIN ACT -- __________ Custodian __________
(Cust) (Minor)
under Uniform Gifts to Minors
Act ________
(State)
UNIF TRAN MIN ACT -- __________ Custodian __________
(Cust) (Minor)
under Uniform Transfers to Minors
Act ________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, ___________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________
_____________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
____________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated ________________________
___________________________________________
Signature
___________________________________________
Signature
In presence of: ___________________________
__________________________________________________________________
NOTE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME OF THE STOCKHOLDER(S) AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANK, STOCKBROKER, SAVINGS AND LOAN ASSOCIATION OR CREDIT
UNION WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17 Ad-15.
<PAGE>
SECOND AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
CONSOLIDATED PRODUCTS, INC., an Indiana corporation, (the "Company") and
BANK ONE, INDIANAPOLIS, National Association, a national banking association,
(the "Bank") agree as follows:
1. CONTEXT. This agreement is made in the context of the following
agreed state of facts:
a. The Company and the Bank are parties to an Amended ad Restated
Credit Agreement dated December 30, 1994, as amended by the First
Amendment to Amended and Restated Credit Agreement dated September 26,
1995 (collectively, the "Agreement").
b. The Company has requested that the Bank extend the Revolving Loan
Maturity Date to December 31, 1998, and the Bank has agreed to such
requests to certain terms and conditions.
c. The parties have executed this document (this "Second Amendment") to
give effect to their agreement.
2. DEFINITIONS. Terms used in this Second Amendment with their initial
letters capitalized are used as defined in the Agreement, unless otherwise
defined herein. Section 1 of the Agreement is amended as follows:
a. AMENDED DEFINITIONS. The definition of "Revolving Loan Maturity
Date" is amended and restated in its entirety as follows:
- "REVOLVING LOAN MATURITY DATE" means, as of the date of the
Second Amendment, December 31, 1998, and thereafter any
subsequent date to which the Commitment may be extended by
the Bank pursuant to the terms of Section 2.a(iv).
b. NEW DEFINITIONS. A new definition is added to Section 1 of the
Agreement to read as follows:
- "Second Amendment" means the written amendment to this
Agreement entitled "Second Amendment to Amended and Restated
Credit Agreement" and dated with effects as of January 31,
1997.
3. THE REVOLVING LOAN. The Bank agrees to extend the Revolving Loan
Maturity Date from December 31, 1997, to December 31, 1998, under the
provisions of Section 2.a(iv) of the Agreement. The extension is subject to
execution and delivery by the Company to the Bank of
<PAGE>
a Revolving Note in the form of EXHIBIT "A" attached to this Second Amendment.
4. THE TERM NOTE. The second two sentences of Section 2.b(ii) of the
Agreement are amended and restated in their entireties to read hereafter as
follows:
(ii) THE TERM NOTE. The obligation of the Company to repay the
Term Loan shall be evidenced by a promissory note
(the "Term Note")in the form of EXHIBIT "B" attached to the
Second Amendment. The principal of the Term Loan shall be
repayable in equal quarterly installments, each of which
shall be equal to one-fortieth (1/40) of the initial
principal amount of the Term Loan, which quarterly payments
shall be due on the last Banking Day of each March, June,
September and December commencing on the last Banking Day of
March, 1999, and continuing until that date which is
sixty (60) months from the date of the Term Note, on which
date the entire principal balance of the Term Loan shall be
due and payable together with all accrued and unpaid
interest.
5. CONDITIONS PRECEDENT. As conditions precedent to the effectiveness
of this Second Amendment, the Bank shall have received, each duly executed
and in form and substance satisfactory to the Bank, this Second Amendment and
the following:
a. The Revolving Note.
b. A certified copy of resolutions of the Board of Directors of the
Company authorizing the execution and delivery of this Second
Amendment, the Revolving Note and any other document required under
this Second Amendment.
c. A certificate signed by the Secretary of the Company certifying the
name of the officer or officers authorized to sign this Second
Amendment, the Revolving Note and any other document required under
this Second Amendment, together with a sample of the true signature
of each such officer.
d. Such other documents as may be reasonably required by the Bank.
6. REPRESENTATIONS AND WARRANTIES. To induce the Bank to enter into
this Second Amendment, the Company represents and warrants, as of the date of
this Second Amendment, that no Event of Default or Unmatured Event of Default
has occurred and is continuing and that the representations and warranties
contained in Section 3 of the Agreement are true and correct, except that the
representations contained in Section 3.d refer to the latest financial
statements furnished to the Bank by the Company pursuant to the requirements
of the Agreement.
7. REAFFIRMATION OF THE AGREEMENT. Except as amended by this Second
Amendment, all terms and conditions of the Agreement shall continue unchanged
and in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the Company and the Bank, by their duly authorized
officers, have executed this Second Amendment to Amended and Restated Credit
Agreement on February ____, 1997, but with effect as of January 31, 1997.
CONSOLIDATED PRODUCTS, INC.
By: /s/ James W. Bear
--------------------------------
James W. Bear
Senior Vice President
BANK ONE, INDIANAPOLIS,
NATIONAL ASSOCIATION
BY: /s/ Brian D. Smith
--------------------------------
Brian D. Smith, Vice President
and Senior Portfolio Manager
3
<PAGE>
PROMISSORY NOTE
(Revolving Loan)
Indianapolis, Indiana
$30,000,000.00 Dated as of January 31, 1997
Final Maturity: December 31, 1998
On or before December 31, 1998 ("Final Maturity"), CONSOLIDATED
PRODUCTS, INC. (the "Maker") promises to pay to the order of BANK ONE,
INDIANAPOLIS, National Association (the "Bank") at the principal office of
the Bank at Indianapolis, Indiana, the principal sum of Thirty Million and
00/100 Dollars ($30,000,000.00) or so much of the principal amount of the
Loan represented by this Note as may be disbursed by the Bank under the terms
of the Credit Agreement described below, and to pay interest on the unpaid
principal balance outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Loan") incurred or to be incurred
by the Maker under a revolving line of credit extended to the Maker by the
Bank under an Amended and Restated Credit Agreement dated December 30, 1994,
as amended (the "Credit Agreement"). All references in this Note to the
Credit Agreement shall be construed as referenced to that Agreement as it
further may be amended from time to time. The Loan is referred to in the
Credit Agreement as the "Revolving Loan." Subject to the terms and
conditions of the Credit Agreement, the proceeds of the Loan may be advanced
and repaid and re-advanced until Final Maturity. The principal amount of the
Loan outstanding from time to time shall be determined by reference to the
books and records of the Bank on which all Advances under the Loan and all
payments by the Maker on account of the Loan shall be recorded. Such books
and records shall be deemed PRIMA FACIE to be correct as to such matters.
The terms "Advance" and "Banking Day" are used in this Note as defined
in the Credit Agreement.
Interest on the unpaid principal balance of the Loan outstanding from
time to time prior to and after maturity will accrue at the rate or rates
provided in the Credit Agreement. Prior to maturity, accrued interest shall
be due and payable on the last Banking Day of each March, June, September and
December commencing on the last Banking Day of March 1997. After maturity,
interest shall be due and payable as accrued and without demand. Interest
will be calculated on the basis that an entire year's interest is earned in
360 days.
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, at Final Maturity. Principal may be
prepaid, but only as provided in the Credit Agreement.
If any installment of interest due under the terms of this Note is not
paid when due, then the Bank or any subsequent holder of this Note may,
subject to the terms of the Credit Agreement, at
Page 1 of 2 pages
<PAGE>
its option and without notice, declare the entire principal amount of the
Note and all accrued interest immediately due and payable. Reference is made
to the Credit Agreement which provides for acceleration of the maturity of
this Note upon the happening of other "Events of Default" as defined therein.
If any installment of interest due under the terms of this Note prior to
maturity is not paid in full when due, then the Bank at its option and
without prior notice to the Maker, may assess a late payment fee in an amount
equal to the greater of $50.00 or five percent (5%) of the amount past due.
Each late payment fee assessed shall be due and payable on the earlier of the
next regularly scheduled interest payment date or the maturity of this Note.
Waiver by the Bank of any late payment fee assessed, or the failure of the
Bank in any instance to assess a late payment fee shall not be construed as a
waiver by the Bank of its right to assess late payment fees thereafter.
All payments on account of this Note shall be applied first to expenses
of collection, next to any late payment fees which are due and payable, next
to interest which is due and payable, and only after satisfaction of all such
expenses, fees and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for
payment and notice of nonpayment of this Note, and each of them consents to
any renewals or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note is given in renewal and replacement of that certain Promissory
Note (Revolving Loan) of the Maker dated as of September 27, 1995, in the
principal amount of $30,000,000.00 and bearing a maturity date of December
31, 1997.
This Note is made under and will be governed in all cases by the
substantive laws of the State of Indiana, notwithstanding the fact that
Indiana conflicts of law rules might otherwise require the substantive rules
of law of another jurisdiction to apply.
CONSOLIDATED PRODUCTS, INC.
By: __________________________________
__________________________________
(printed name and title)
<PAGE>
PROMISSORY NOTE
(Term Loan)
$_____________________ Indianapolis, Indiana
Dated: December 31, ____
Final Maturity: December 31, ____
CONSOLIDATED PRODUCTS, INC., an Indiana corporation (the "Maker")
promises to pay to the order of BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION
(the "Bank") at the principal banking office of the Bank at Indianapolis,
Indiana, the principal sum of ____________________ Dollars ($____________)
and to pay interest on the unpaid principal balance outstanding from time to
time as herein provided.
This Note evidences a loan (the "Loan") extended to the Maker by the
Bank under a Credit Agreement dated December 30, 1994, as amended
(collectively, the "Credit Agreement"). The Loan is referred to in the
Credit Agreement as the "Term Loan." All references in this Note to the
Credit Agreement shall be construed as references to that Agreement as it may
be amended from time to time.
The principal of the Loan shall be repaid in installments in the amount
of $____________ each, which shall be due and payable on the last Banking Day
of each March, June, September and December during the term of this Note,
commencing on the last Banking Day of March, ____, and continuing until
December 31, ____, on which date the entire principal balance of this Note
shall be due and payable. The term "Banking Day" is used in this Note as
defined in the Credit Agreement. Principal may be prepaid, but only as
provided in the Credit Agreement, and provided further that all partial
prepayments shall be applied to the latest maturing installments of principal
payment under this Note in inverse order of maturity.
Interest on the unpaid principal balance of the Loan outstanding from
time to time prior to and after maturity will accrue at the rate or rates
provided in the Credit Agreement. Prior to maturity, accrued interest shall
be due and payable on the last Banking Day of each month commencing on the
last Banking Day of the month in which this Note is executed in addition to
the installments of principal due on those dates. After maturity, interest
shall be due and payable as accrued and without demand. Interest will be
calculated on the basis that an entire year's interest is earned in 360 days.
If any installment of principal or interest due under the terms of this
Note is not paid when due, then the Bank or any subsequent holder of this
Note may, at its option and without notice, declare the entire principal
amount of this Note and all accrued interest immediately due and payable.
Reference is made to the Credit Agreement for other conditions under which
the maturity of this Note may be accelerated.
Exhibit "B"
Page 1 of 2 pages
<PAGE>
If any installment of principal or interest due under the terms of this
Note prior to maturity is not paid in full when due, then the Bank at its
option and without prior notice to the Maker, may assess a late payment fee
in an amount equal to the greater of $50.00 or five percent (5%) of the past
due amount. Each late payment fee assessed shall be due and payable on the
earlier of the due date of the next regularly scheduled payment of principal
or interest, or the maturity of this Note. Waiver by the Bank of any late
payment fee assessed, or the failure of the Bank in any instance to assess a
late payment fee shall not be construed as a waiver by the Bank of its right
to assess late payment fees thereafter.
All payments on account of this Note shall be applied first to expenses
of collection, next to any late payment fees which are due and payable, next
to interest which is due and payable, and only after satisfaction of all such
expenses, fees and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for
payment and notice of nonpayment of this Note, and each of them consents to
any renewals or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note is made under and will be governed in all cases by the
substantive laws of the State of Indiana, notwithstanding the fact that
Indiana conflicts of law rules might otherwise require the substantive rules
of law of another jurisdiction to apply.
CONSOLIDATED PRODUCTS, INC.
By: __________________________________
__________________________________
(Printed Name and Title)
Exhibit "B"
Page 2 of 2 pages
<PAGE>
April 28, 1997
Consolidated Products, Inc.
500 Century Building
36 South Pennsylvania Street
Indianapolis, Indiana 46204
Attention: Chief Financial Officer
Re: AMENDMENT NO. 1 TO NOTE PURCHASE AND PRIVATE SHELF AGREEMENT
Ladies and Gentlemen:
Reference is made to that certain Note Purchase and Private Shelf
Agreement dated as of September 27, 1995 (as amended from time to time, the
"NOTE AGREEMENT") between Consolidated Products, Inc., an Indiana corporation
(the "COMPANY"), and The Prudential Insurance Company of America
("PRUDENTIAL"), pursuant to which the Company issued and sold and Prudential
purchased the Company's:
(i) 12.44% $14,250,000 Series A Senior Notes due October 31, 1997,
(ii) 7.70% $10,000,000 Series B Senior Notes due September 27, 2005,
(iii) 7.40% $5,000,000 Series C Senior Notes due September 25, 2005,
(iv) 7.72% $5,000,000 Series D Senior Notes due August 23, 2006, and
(v) 7.83% $5,000,000 Series E Senior Notes due August 23, 2006.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Note Agreement.
Pursuant to the request of the Company and in accordance with the
provisions of paragraph 11C of the Note Agreement, the parties hereto agree
as follows:
SECTION 1. AMENDMENT. From and after the date this letter becomes
effective in accordance with its terms, the Note Agreement is amended as
follows:
1.1 Paragraph 1D of the Note Agreement is amended to delete in its
entirety the amount "$10,000,000" appearing therein and to substitute
therefor the amount "$35,000,000".
<PAGE>
1.2 Paragraph 2B(2) of the Note Agreement is amended to delete in its
entirety clause (i) thereof and to substitute therefor the following: "(i)
April 28, 2000, and".
1.3 The Company and Prudential expressly agree and acknowledge that as
of the date hereof the Available Facility Amount is $25,000,000.
NOTWITHSTANDING THE FOREGOING, THIS AMENDMENT AND THE NOTE AGREEMENT HAVE
BEEN ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PRUDENTIAL NOR
ANY PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO
PURCHASE SHELF NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT
TO SPECIFIC PURCHASES OF SHELF NOTES, AND THE FACILITY SHALL IN NO WAY BE
CONSTRUED AS A SOMMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.
SECTION 2. REPRESENTATION AND WARRANTY. The Company hereby represents
and warrants that no Default or Event of Default exists under the Note
Agreement as of the date hereof.
SECTION 3. CONDITIONS PRECEDENT. This letter shall become effective as
of the date first above written upon (i) the return by the Company to
Prudential of a counterpart hereof duly executed by the Company and
Prudential and (ii) the payment of a $50,000 structuring fee to The
Prudential Insurance Company of America. The letter should be returned to:
Prudential Capital Group, Two Prudential Plaza, Suite 5600, Chicago, Illinois
60601, Attention: Wiley S. Adams.
SECTION 4. REFERENCE TO AND EFFECT ON NOTE AGREEMENT. Upon the
effectiveness of this letter, each reference to the Note Agreement in any
other document, instrument or agreement shall mean and be a reference to the
Note Agreement as modified by this letter. Except as specifically set forth
in Section 1 hereof, the Note Agreement shall remain in full force and effect
and is hereby ratified and confirmed in all respects.
SECTION 5. GOVERNING LAW. THIS LETTER SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD
TO PRINCIPLES OF CONFLICT OF LAWS OF SUCH STATE.
<PAGE>
SECTION 6. COUNTERPARTS; SECTION TITLES. This letter may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and
the same instrument. The section titles contained in this letter are and
shall be without substance, meaning or content of any kind whatsoever and are
not a part of the agreement between the parties hereto.
Very truly yours,
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Mark A. Hoffmeister
----------------------------------
Vice President
AGREED AND ACCEPTED:
CONSOLIDATED PRODUCTS, INC.
By: /s/ James W. Bear
--------------------------------------------
James W. Bear
Senior Vice President, Finance and Treasurer
<PAGE>
EXHIBIT 11.01
CONSOLIDATED PRODUCTS, INC.
COMPUTATION OF EARNINGS PER SHARE
NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Primary and fully diluted 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. Common equivalent shares include
shares subject to purchase under stock options.
Net earnings per common and common equivalent share and weighted
average shares and equivalents for the sixteen and twenty-eight weeks ended
April 10, 1996 have been restated to give effect to the 10% stock dividend
declared on December 18, 1996.
The following table presents information necessary to calculate net earnings
per common and common equivalent share:
<TABLE>
<CAPTION>
SIXTEEN TWENTY-EIGHT
WEEKS ENDED WEEKS ENDED
-------------------------- -------------------------
APRIL 9 APRIL 10 APRIL 9 APRIL 10
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Primary:
Weighted average shares outstanding 15,448,480 15,152,346 15,414,231 15,100,742
Share equivalents 285,501 340,396 287,149 361,911
----------- ----------- ----------- -----------
Weighted average shares and equivalents 15,733,981 15,492,742 15,701,380 15,462,653
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Fully Diluted:
Weighted average shares outstanding 15,448,480 15,152,346 15,414,231 15,100,742
Share equivalents 285,501 380,461 308,457 402,866
----------- ----------- ----------- -----------
Weighted average shares and equivalents 15,733,981 15,532,807 15,722,688 15,503,608
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net earnings:
Net earnings for primary and fully diluted
earnings per share computation $ 3,803,255 $ 2,825,616 $ 7,032,460 $ 5,579,547
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF APRIL 9, 1997 AND THE
CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIXTEEN AND TWENTY-EIGHT WEEKS ENDED
APRIL 9, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-24-1997
<PERIOD-START> SEP-26-1996
<PERIOD-END> APR-09-1997
<CASH> 789,641<F1>
<SECURITIES> 0
<RECEIVABLES> 5,149,591
<ALLOWANCES> 0
<INVENTORY> 4,276,952
<CURRENT-ASSETS> 15,892,950
<PP&E> 181,126,435
<DEPRECIATION> 51,709,145
<TOTAL-ASSETS> 150,179,785
<CURRENT-LIABILITIES> 37,467,653
<BONDS> 0
0
0
<COMMON> 7,798,271
<OTHER-SE> 58,306,480
<TOTAL-LIABILITY-AND-EQUITY> 150,179,785
<SALES> 131,429,827
<TOTAL-REVENUES> 133,835,011
<CGS> 34,749,641
<TOTAL-COSTS> 93,717,170<F2>
<OTHER-EXPENSES> 11,610,425<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,990,599
<INCOME-PRETAX> 11,412,460
<INCOME-TAX> 4,380,000
<INCOME-CONTINUING> 7,032,460
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,032,460
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
<FN>
<F1>Cash includes cash equivalents of $410,000.
<F2>Includes restaurant operating costs of $58,967,529.
<F3>Includes depreciation and amortization and rent of $7,309,078 and
$4,301,347, respectively.
</FN>
</TABLE>
