<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 8, 1998
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 May 6, 1998: 20,898,828
The Index to Exhibits is located at Page 14. Total Pages 24
<PAGE>
CONSOLIDATED PRODUCTS, INC.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Financial Position -
April 8, 1998 (Unaudited) and September 24, 1997 3
Consolidated Statements of Earnings (Unaudited)
Sixteen and Twenty-Eight Weeks Ended April 8, 1998
and April 9, 1997 4
Consolidated Statements of Cash Flows (Unaudited)
Twenty-Eight Weeks Ended April 8, 1998 and
April 9, 1997 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 12
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
APRIL 8, SEPTEMBER 24,
1998 1997
------------- -------------
<S> <C> <C>
(Unaudited)
ASSETS
CURRENT ASSETS
Cash, including cash equiva-
lents of $1,205,000 in 1998
and $2,300,000 in 1997 $ 2,310,078 $ 2,668,232
Receivables 2,982,166 4,021,798
Sale and leaseback properties
under contract 3,596,575 885,000
Inventories 4,278,792 4,592,570
Deferred income taxes 1,971,000 1,971,000
Other current assets 7,096,024 5,853,527
------------- -------------
Total current assets 22,234,635 19,992,127
------------- -------------
PROPERTY AND EQUIPMENT
Land 45,182,089 41,085,184
Buildings 41,064,803 38,814,164
Leasehold improvements 45,136,826 42,988,402
Equipment 73,999,489 66,313,931
Construction in progress 6,423,737 9,998,783
------------- -------------
211,806,944 199,200,464
Less accumulated depreciation
and amortization (60,640,261) (56,360,238)
------------- -------------
Net property and equipment 151,166,683 142,840,226
------------- -------------
LEASED PROPERTY
Leased property under capital
leases, less accumulated amorti-
zation of $9,479,022 in 1998
and $9,722,025 in 1997 2,423,519 2,710,269
Net investment in direct
financing leases 997,300 1,208,032
------------- -------------
Net leased property 3,420,819 3,918,301
------------- -------------
OTHER ASSETS 487,049 515,760
------------- -------------
$ 177,309,186 $ 167,266,414
------------- -------------
------------- -------------
<CAPTION>
APRIL 8, SEPTEMBER 24,
1998 1997
------------- -------------
<S> <C> <C>
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 12,320,158 $ 14,253,267
Accrued expenses 21,209,238 22,101,998
Current portion of senior note 738,889 738,889
Current portion of obligations
under capital leases 1,349,528 1,380,249
------------- -------------
Total current liabilities 35,617,813 38,474,403
------------- -------------
DEFERRED INCOME TAXES 1,205,000 1,205,000
OBLIGATIONS UNDER
CAPITAL LEASES 4,668,457 5,375,754
REVOLVING LINE OF CREDIT 4,000,000 --
SENIOR NOTE 28,522,222 29,261,111
SHAREHOLDERS' EQUITY
Common stock -- $.50 stated value
50,000,000 shares authorized --
shares issued: 21,009,143 in 1998;
20,867,475 in 1997 10,504,572 10,433,738
Additional paid-in capital 92,369,516 91,143,921
Retained earnings (deficit) 3,380,492 (5,396,965)
Less: Unamortized value of
restricted shares (1,340,957) (1,839,982)
Treasury stock -- at cost
128,092 shares in 1998:
114,574 shares in 1997 (1,617,929) (1,390,566)
------------- -------------
Total shareholders' equity 103,295,694 92,950,146
------------- -------------
$ 177,309,186 $ 167,266,414
------------- -------------
------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
CONSOLIDATED PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
SIXTEEN TWENTY-EIGHT
WEEKS ENDED WEEKS ENDED
----------- -----------
APRIL 8, APRIL 9, APRIL 8, APRIL 9,
1998 1997 1998 1997
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES
Net sales $ 89,695,835 $ 77,085,369 $ 153,111,574 $ 131,429,827
Franchise fees 906,249 856,475 1,715,917 1,510,706
Other - net 537,964 293,864 1,191,531 894,478
------------- ------------- -------------- --------------
91,140,048 78,235,708 156,019,022 133,835,011
------------- ------------- -------------- --------------
COSTS AND EXPENSES
Cost of sales 22,788,429 20,247,950 39,234,300 34,749,641
Restaurant operating costs 41,658,671 34,679,456 70,884,030 58,967,529
General and administrative 7,550,247 6,737,437 12,383,997 11,077,257
Depreciation and amortization 3,772,832 3,204,835 6,501,527 5,448,827
Rent 3,004,731 2,499,334 4,967,954 4,301,347
Marketing 2,810,291 2,363,132 4,811,825 4,027,100
Amortization of pre-opening costs 1,028,020 1,068,080 1,889,443 1,860,251
Interest 847,266 1,192,229 1,487,469 1,990,599
------------- ------------- -------------- --------------
83,460,487 71,992,453 142,160,545 122,422,551
------------- ------------- -------------- --------------
EARNINGS BEFORE INCOME TAXES 7,679,561 6,243,255 13,858,477 11,412,460
INCOME TAXES 2,805,000 2,440,000 5,060,000 4,380,000
------------- ------------- -------------- --------------
NET EARNINGS $ 4,874,561 $ 3,803,255 $ 8,798,477 $ 7,032,460
------------- ------------- -------------- --------------
------------- ------------- -------------- --------------
NET EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
Basic $ .23 $ .20 $ .42 $ .36
Diluted $ .23 $ .19 $ .42 $ .36
WEIGHTED AVERAGE SHARES
AND EQUIVALENTS:
Basic 20,848,680 19,310,600 20,808,107 19,267,789
Diluted 21,239,253 19,667,476 21,191,487 19,626,725
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
CONSOLIDATED PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
TWENTY-EIGHT WEEKS ENDED
---------------------------
APRIL 8, APRIL 9,
1998 1997
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 8,798,477 $ 7,032,460
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 6,517,279 5,448,827
Amortization of pre-opening costs 1,889,442 1,860,251
Changes in receivables and inventories 1,364,350 (232,166)
Changes in other assets (2,634,121) (2,359,657)
Changes in income taxes payable (376,153) 362,455
Changes in accounts payable
and accrued expenses (2,428,810) (966,457)
Gain on disposal of property (243,870) (17,541)
------------ ------------
Net cash provided by operating activities 12,886,594 11,128,172
------------ ------------
INVESTING ACTIVITIES
Additions of property and equipment (21,200,909) (30,475,123)
Net proceeds from disposal of
property and equipment 4,139,563 7,085,952
------------ ------------
Net cash used in investing activities (17,061,346) (23,389,171)
------------ ------------
FINANCING ACTIVITIES
Principal payments on debt
and capital lease obligations (6,281,227) (5,500,575)
Proceeds from long-term debt 5,000,000 5,000,000
Net proceeds from revolving line of credit 4,000,000 12,000,000
Proceeds from equipment and property leases 393,529 398,686
Lease payments on subleased properties (343,752) (379,465)
Cash paid in lieu of fractional shares (21,020) (20,519)
Proceeds from exercise of stock options 53,547 175,855
Proceeds from employee stock purchase plan 1,015,521 746,296
------------ ------------
Net cash provided by financing activities 3,816,598 12,420,278
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (358,154) 159,279
------------ ------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,668,232 630,362
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,310,078 $ 789,641
------------ ------------
------------ ------------
</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 8, 1998, the consolidated statements of
earnings for the sixteen and twenty-eight weeks ended April 8, 1998 and April
9, 1997 and the consolidated statements of cash flows for the twenty-eight
weeks ended April 8, 1998 and April 9, 1997 have been included.
The consolidated statements of earnings for the sixteen and twenty-eight
weeks ended April 8, 1998 and April 9, 1997 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 24, 1997.
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 8, 1998
and April 9, 1997 amounted to $946,000 and $1,646,000, respectively. Cash
payments for income taxes during the sixteen weeks ended April 8, 1998 and
April 9, 1997 amounted to $4,660,000 and $4,018,000, respectively.
SHAREHOLDERS' EQUITY
The number of shares issued as of April 8, 1998 on the consolidated
statement of financial position includes 4,150,088 shares which were
distributed on December 26, 1997 pursuant to a five for four stock split
declared on December 3, 1997 to shareholders of record on December 15, 1997.
NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 128, "Earnings Per Share".
Statement 128 replaced the previously reported primary and fully diluted
earnings per share with basic and diluted earnings per share. Under the new
requirements for computing basic earnings per share, the dilutive effect of
stock options is excluded. Diluted earnings per share is very similar to the
previously reported primary earnings per share. All earnings per share
amounts have been presented, and where necessary, have been restated to
conform to the requirements of Statement 128.
Diluted earnings per common and common equivalent share is computed by
dividing net earnings by the weighted average number of outstanding 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 9,
1997 have been restated to give effect to the five for four stock split
declared on December 3, 1997 and distributed on December 26, 1997 to
shareholders of record on December 15, 1997.
6
<PAGE>
The following table presents information necessary to calculate basic and
diluted earnings per common and common equivalent share:
<TABLE>
<CAPTION>
SIXTEEN TWENTY-EIGHT
WEEKS ENDED WEEKS ENDED
--------------------------- ---------------------------
APRIL 8, APRIL 9, APRIL 8, APRIL 9,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average shares outstanding-Basic 20,848,680 19,310,600 20,808,107 19,267,789
Share equivalents 390,573 356,876 383,380 358,936
------------ ------------ ------------ ------------
Weighted average shares and equivalents-Diluted 21,239,253 19,667,476 21,191,487 19,626,725
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net earnings for basic and diluted
earnings per share computation $ 4,874,561 $ 3,803,255 $ 8,798,477 $ 7,032,460
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</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 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
--------------------- ---------------------
4/8/98 4/9/97 4/8/98 4/9/97
------ ------ ------ ------
<S> <C> <C> <C> <C>
REVENUES
Net sales 98.4% 98.5% 98.1% 98.2%
Franchise fees 1.0 1.1 1.1 1.1
Other, net 0.6 0.4 0.8 0.7
----- ----- ----- -----
100.0 100.0 100.0 100.0
----- ----- ----- -----
COSTS AND EXPENSES
Cost of sales 25.4(1) 26.3(1) 25.6(1) 26.4(1)
Restaurant operating costs 46.4(1) 45.0(1) 46.3(1) 44.8(1)
General and administrative 8.3 8.6 7.9 8.3
Depreciation and amortization 4.1 4.1 4.2 4.1
Rent 3.3 3.2 3.2 3.2
Marketing 3.1 3.0 3.1 3.0
Amortization of pre-opening costs 1.1 1.4 1.2 1.4
Interest 1.0 1.5 0.9 1.5
----- ----- ----- -----
91.6 92.0 91.2 91.5
----- ----- ----- -----
EARNINGS BEFORE INCOME TAXES 8.4 8.0 8.8 8.5
INCOME TAXES 3.1 3.1 3.2 3.3
----- ----- ----- -----
NET EARNINGS 5.3% 4.9% 5.6% 5.2%
----- ----- ----- -----
</TABLE>
------------------
(1) Cost of sales and restaurant operating costs are expressed as a
percentage of net sales.
COMPARISON OF SIXTEEN WEEKS ENDED APRIL 8, 1998 TO SIXTEEN WEEKS ENDED APRIL
9, 1997
REVENUES
Net sales increased $12,610,000 to $89,696,000, or 16.4%, due to an
increase in Steak n Shake's net sales. The $12,671,000 increase, or 17.7%, in
net sales of Steak n Shake was due to the opening of 34 new units within the
last year pursuant to the Company's expansion plan (non-same stores) and a
1.0% increase in same store sales. The increase in same store sales was
attributable to a 3.1% increase in check average partially offset by a 2.1%
decrease in customer counts. Steak n Shake instituted price increases of
1.0%, 1.1%, and 1.0% in March 1997, October 1997, and March 1998,
respectively.
Franchise fees increased $50,000 to $906,000, due to higher franchised
unit sales volumes. Nine Steak n Shake franchised units were opened since
the end of the second quarter of fiscal 1997 and one franchised unit was
closed during the second quarter of fiscal 1998. On December 22, 1997, the
Company completed the purchase of eight franchised Steak n Shake restaurants
in southern Georgia and northwest Florida.
Other revenues increased $244,000 to $538,000 primarily due to the
inclusion of lease termination costs of approximately $487,000 in the prior
year associated with the disposition of two leased properties.
8
<PAGE>
COSTS AND EXPENSES
Cost of sales increased $2,540,000, or 12.5%, as a result of sales
increases. As a percentage of net sales, cost of sales decreased to 25.4%
from 26.3%, primarily as a result of the higher level of Company-operated
restaurant sales in relation to product sales to franchisees, which have a
much higher cost of sales than restaurant sales, and menu price increases.
These factors more than offset increases in food costs.
Restaurant operating costs increased $6,979,000, or 20.1%, due to
increased labor costs and other operating costs resulting primarily from the
increased sales volume. Restaurant operating costs, as a percentage of net
sales, increased to 46.4% from 45.0%. The higher labor costs were the result
of an increase in the average hourly employee rate per hour, due in part to
increases in the minimum wage on September 1, 1997, and higher costs
associated with recruiting and training unit level restaurant management
arising from new restaurant development and management turnover. The higher
other operating costs were the result of an increase in repair and
maintenance costs and supply costs.
General and administrative expenses increased $813,000 or 12.1%. As a
percentage of revenues, general and administrative expenses decreased to 8.3%
from 8.6%. The increase in expenses was largely attributable to personnel
costs related to additional staffing in connection with the development of
new restaurants.
The $568,000 increase in depreciation and amortization expense was
attributable to the net depreciable capital additions since the beginning of
fiscal 1997.
Rent expense increased $505,000, or 20.2%, as a result of sale and
leaseback transactions since the second quarter of fiscal 1997 involving
eleven Company-owned properties and a net increase in the number of other
leased properties, including the eight franchised Steak n Shake restaurants
purchased in fiscal 1998.
Marketing expense increased $447,000, or 18.9%. As a percentage of
revenues, marketing expense increased to 3.1% from 3.0%.
The $40,000 decrease in the amortization of pre-opening costs was
attributable to the timing of the number of new Company-operated units opened
during fiscal 1998 as compared to fiscal 1997.
Interest expense decreased $345,000 due to decreased borrowings under the
Company's revolving line of credit as a result of the paydown of this credit
facility with the proceeds from an equity offering in the fourth quarter of
fiscal 1997, partially offset by a reduction in capitalized interest.
INCOME TAXES
The Company's effective income tax rate decreased to 36.5% from 39.1% for
the quarter ended April 9, 1997 and from 36.9% for the year ended September
24, 1997. The decrease from the prior year and from fiscal 1997 resulted from
lower state income taxes. 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 $1,071,000, or 28.2%, primarily as a result of the
increase in Steak n Shake's operating earnings and lower interest expense and
income taxes. Diluted earnings per share increased from $.19 to $.23.
9
<PAGE>
COMPARISON OF TWENTY-EIGHT WEEKS ENDED APRIL 8, 1998 TO TWENTY-EIGHT WEEKS ENDED
APRIL 9, 1997
REVENUES
Net sales increased $21,682,000 to $153,112,000, or 16.5%, due to an
increase in Steak n Shake's net sales. The increase of $21,746,000, or 17.8%
in net sales of Steak n Shake was due to the opening of 34 new units pursuant
to the Company's expansion plan (non-same stores), partially offset by a 0.2%
decrease in same store sales. The decrease in same store sales was
attributable to a decrease of 3.2% in customer counts partially offset by a
3.0% increase in check average. Steak n Shake instituted price increases of
1.0%, 1.1%, and 1.0% in March 1997, October 1997, and March 1998,
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 0.9% versus the prior year. At April 8, 1998, 263 Steak n
Shake restaurants, including 49 franchised units, were being operated.
Franchise fees increased $205,000 to $1,716,000, as a result of higher
franchised unit sales volumes and an increase in initial and renewal
franchise fees of $15,000. Nine Steak n Shake franchised units were opened
since the end of the second quarter of fiscal 1997, including three in the
first half of 1998, and one franchised unit was closed during the second
quarter of fiscal 1998. On December 22, 1997, the Company completed the
purchase of eight franchised Steak n Shake restaurants.
Other revenues increased $297,000 primarily as a result of a $228,000 gain
on the disposal of property in the first quarter of 1998 and the inclusion of
lease termination costs of approximately $487,000 in the prior year
associated with the disposition of two leased properties.
COSTS AND EXPENSES
Cost of sales increased $4,485,000, or 12.9%, as a result of sales
increases. As a percentage of net sales, cost of sales decreased to 25.6%
from 26.4% primarily as a result of the higher level of Company-operated
restaurant sales in relation to the cost of product sales to franchisees and
menu price increases.
Restaurant operating costs increased $11,916,000, or 20.2%, due to
increased labor costs and other operating costs resulting primarily from the
higher sales volume. Restaurant operating costs, as a percentage of net
sales, increased to 46.3% from 44.8%. The higher labor costs were the result
of an increase in the average hourly employee rate per hour, due in part to
increases in the minimum wage on September 1, 1997, and higher costs
associated with recruiting and training unit level restaurant management
arising from new restaurant development and management turnover. The higher
other operating costs were the result of an increase in repair and
maintenance costs and supply costs.
General and administrative expenses increased $1,307,000, or 11.8%. As a
percentage of revenues, general and administrative expenses decreased to 7.9%
from 8.3%. The increase in expenses was largely attributable to personnel
costs related to additional staffing in connection with the development of
new restaurants.
The $1,053,000 increase in depreciation and amortization expense was
attributable to the net depreciable capital additions since the beginning of
fiscal 1997.
Rent expense increased $667,000, or 15.5%, as a result of sale and
leaseback transactions since the beginning of fiscal 1997 involving thirteen
Company-owned properties and a net increase in the number of other leased
properties, including the eight franchised Steak n Shake units purchased
during fiscal 1998.
Marketing expense increased $785,000, or 19.5%. As a percentage of
revenues, marketing expense increased slightly to 3.1% from 3.0%.
The $29,000 increase in the amortization of pre-opening costs was
attributable to the timing of the number of new Company-operated units opened
during fiscal 1998 as compared to fiscal 1997.
10
<PAGE>
Interest expense decreased $503,000 due to decreased borrowings under the
Company's revolving line of credit as a result of the paydown of this credit
facility with the proceeds from an equity offering in the fourth quarter of
fiscal 1997, partially offset by a reduction in capitalized interest.
INCOME TAXES
The Company's effective income tax rate decreased to 36.5% from 38.4% for
the twenty-eight weeks ended April 9, 1997 and from 36.9% for the year ended
September 24, 1997. The decrease from the prior year and from fiscal 1997
resulted from lower state income taxes. 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 $1,766,000, or 25.1%, primarily as a result of the
increase in Steak n Shake's operating earnings and lower interest expense and
income taxes. Diluted earnings per share increased from $.36 to $.42.
LIQUIDITY AND CAPITAL RESOURCES
Twelve Company-operated Steak n Shake restaurants and three franchised
Steak n Shake restaurants were opened during the twenty-eight weeks ended
April 8, 1998. In addition, the Company completed the purchase of eight
franchised Steak n Shake restaurants in southern Georgia and northwest
Florida on December 22, 1997. Subsequent to the end of the second quarter,
two franchised Steak n Shake restaurants were opened. Ten Company-operated
units are currently under construction. For the twenty-eight weeks ended
April 8, 1998, capital expenditures totaled $21,201,000 as compared to
$30,475,000 for the comparable prior year period.
The Company's five year growth program for 1998 through 2002 calls for an
annual increase of 20% in the number of Company-operated Steak n Shake
restaurants. In addition to the 290 Company-operated units contemplated by
this program, the Company will also expand its franchise system. The result
would be nearly 600 systemwide Steak n Shake restaurants by the end of fiscal
2002, of which approximately 500 would be Company-operated. 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.
During the twenty-eight weeks ended April 8, 1998, cash provided by
operations totaled $12,887,000, while cash generated by sale and leaseback
transactions and other disposals of property totaled $4,140,000. During the
twenty-eight weeks ended April 9, 1997, cash provided by operations totaled
$11,128,000, while cash generated by sale and leaseback transactions and
other disposals of property totaled $7,086,000.
Net cash provided by financing activities for the twenty-eight weeks ended
April 8, 1998, totaled $3,817,000. Net borrowings under the Company's
$30,000,000 Revolving Credit Agreement (the "Revolving Credit Agreement")
totaled $4,000,000 during the twenty-eight weeks ended April 8, 1998. The
proceeds from these borrowings were used, together with cash provided by
operations, to fund the Company's current expansion plan. During the
twenty-eight weeks ended April 8, 1998, the Company borrowed $5,000,000 under
its $50,000,000 ten-year Senior Note Agreement and Private Shelf Facility
(the "Senior Note Agreement"), the proceeds of which were utilized to
refinance a like amount under the prior senior note agreement.
Net cash provided by financing activities for the twenty-eight weeks ended
April 9, 1997 totaled $12,420,000. Net borrowings under the Revolving Credit
Agreement totaled $12,000,000 during the twenty-eight weeks ended April 9,
1997. The proceeds from these borrowings were used together with cash
provided by operations, to fund the Company's expansion program. During the
twenty-eight weeks ended April 9, 1997, the Company borrowed $5,000,000 under
the Senior Note Agreement, the proceeds of which were utilized to refinance a
like amount under the prior senior note agreement.
As of April 8, 1998 the Company had outstanding $29,261,000 under the
Senior Note Agreement. As of April 8, 1998 outstanding borrowings under the
Senior Note Agreement bear interest at an average fixed
11
<PAGE>
rate of 7.6%. The Revolving Credit Agreement bears interest based on LIBOR
plus 75 basis points or the prime rate, at the election of the Company.
During the second quarter of fiscal 1998, the Company amended the Revolving
Credit Agreement to extend the maturity date to December 1999. The amount
outstanding under the Revolving Credit Agreement was $4,000,000 as of April
8, 1998. 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.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-up
Activities." SOP 98-5 broadly defines start-up activities as those one-time
activities that relate to, among other activities, the opening of a new
facility. The Company's current policy is to capitalize pre-opening costs,
which represent costs incurred before a new restaurant opens, and then
amortize those costs from the opening date over a one-year period. At April
8, 1998, unamortized pre-opening costs were $1,491,000. Under the new
requirements for reporting costs of start-up activities, companies will be
required to expense start-up costs as incurred. The provisions of SOP 98-5
are effective for fiscal years beginning after December 15, 1998. Upon
adoption, the Company will be required to write-off the unamortized
pre-opening cost balance as a cumulative change in accounting principle.
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.
12
<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 11, 1998, 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:
<TABLE>
<CAPTION>
Name Votes For Abstentions
---- --------- -----------
<S> <C> <C>
S. Sue Aramian 14,490,641 215,397
Alva T. Bonda 14,460,217 245,821
Neal Gilliatt 14,469,469 236,569
Alan B. Gilman 14,481,401 224,637
E. W. Kelley 14,476,053 229,985
Charles E. Lanham 14,488,132 217,906
J. Fred Risk 14,433,453 272,585
John W. Ryan 14,489,823 216,215
James Williamson, Jr. 14,487,600 218,438
</TABLE>
2. A proposal to approve the adoption of the Board of Directors of
the Amendment to the Company's 1992 Employee Stock Purchase Plan
was adopted by the vote of 14,370,244 shares FOR, 204,366 shares
AGAINST and 131,428 shares ABSTAIN.
3. A proposal to approve the adoption by the Board of Directors of
the Company's 1998 Nonemployee Director Stock Option Plan was
adopted by the vote of 14,244,138 shares FOR, 294,355 shares
AGAINST and 167,545 shares ABSTAIN.
4. A proposal to approve the adoption by the Board of Directors of
the Amendment to the Company's Articles of Incorporation
increasing the number of shares of Common Stock authorized to
50,000,000 shares was adopted by the vote of 13,995,558 shares
FOR, 606,899 shares AGAINST and 103,581 shares ABSTAIN.
5. 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 30, 1998 was approved by the vote
of 14,625,499 shares FOR, 8,344 shares AGAINST and 72,195 shares
ABSTAIN.
13
<PAGE>
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).
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).
3.05 Articles of Amendment to the Articles of
Incorporation of Consolidated Products, Inc. dated
May 8, 1998.
(4) 4.01 Specimen certificate representing Common Stock of
Consolidated Products, Inc. (Incorporated by
reference to the Exhibits to the Registrant's
Quarterly Report on Form 10-Q for the quarterly
period ended April 9, 1997).
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).
14
<PAGE>
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. (Incorporated by reference to the
Exhibits to the Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended April 9,
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.
(Incorporated by reference to the Exhibits to the
Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended April 9, 1997).
4.07 Third Amendment to Amended and Restated Credit
Agreement by and between Consolidated Products,
Inc. and Bank One, Indianapolis, N.A. dated
September 18, 1997. (Incorporated by reference to
the Exhibits to the Registrant's Annual Report on
Form 10-K for the fiscal year ended September 24,
1997).
4.08 Fourth Amendment to Amended and Restated Credit
Agreement by and between Consolidated Products,
Inc. and Bank One, Indianapolis, N.A. dated
February 9, 1998.
(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).
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).
15
<PAGE>
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).
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
16
<PAGE>
definitive Proxy Statement dated December 24, 1996
related to the 1997 Annual Meeting of Shareholders).
10.19 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 22, 1997
related to the 1998 Annual Meeting of Shareholders).
10.20 Consolidated Products, Inc. 1998 Nonemployee
Director Stock Option Plan. (Incorporated by
reference to the Appendix to the Registrant's
definitive Proxy Statement dated December 22, 1997
related to the 1998 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 8, 1998.
17
<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 21, 1998.
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
18
<PAGE>
EXHIBIT 3.05
ARTICLES OF AMENDMENT OF THE SUE ANNE GILROY
ARTICLES OF INCORPORATION SECRETARY OF STATE
State Form 39333 )R7 / 4-95) CORPORATIONS DIVISION
Approved by State Board of Accounts 1995 302 W. Washington St., Rm. E018
Indianapolis, IN 46204
Telephone: (317) 232-6576
Indiana Code 23-1-38-1 et. seq.
FILING FEE: $30.00
INSTRUCTIONS: Use 8 1/2" x 11" white paper for inserts.
Present original and one copy to address in upper right hand
corner of this form.
Please TYPE or PRINT.
- - --------------------------------------------------------------------------------
ARTICLES OF AMENDMENT OF THE
ARTICLES OF INCORPORATION OF:
- - --------------------------------------------------------------------------------
Name of Corporation:
Consolidated Products, Inc.
- - --------------------------------------------------------------------------------
The undersigned officers of:
Consolidated Products, Inc.
- - --------------------------------------------------------------------------------
(hereinafter referred to as the Corporation) existing pursuant to the
provisions of: (indicate appropriate act)
/ / Indiana Business Corporation Law / / Indiana Professional Corporation Act
of 1983
as amended (hereinafter referred to as the Act), desiring to give notice of
corporate action effectuating amendment of certain provisions of its Articles
of Incorporation, certify the following facts:
- - --------------------------------------------------------------------------------
ARTICLE I AMENDMENT(S)
- - --------------------------------------------------------------------------------
SECTION 1 The date of incorporation of the Corporation is:
December 15, 1976
- - --------------------------------------------------------------------------------
SECTION 2 The name of the Corporation following this amendment to the
Articles of Incorporation is:
Consolidated Products, Inc.
- - --------------------------------------------------------------------------------
SECTION 3
The exact text of Article(s) V, SECTION 1 of the Articles of Incorporation is
now as follows:
SECTION 1. NUMBER.
A. The total number of shares which the Corporation has authority
to issue is 50,000,000.
B. The number of shares which the Corporation designates as
having par value -- none.
C. The number of shares which the Corporation designates as
without par value is 50,000,000.
- - --------------------------------------------------------------------------------
SECTION 4 Date of each amendmenet's adoption:
October 29, 1997
- - --------------------------------------------------------------------------------
19
<PAGE>
- - --------------------------------------------------------------------------------
ARTICLE II Manner of Adoption and Vote
- - --------------------------------------------------------------------------------
Strike inapplicable section:
- - --------------------------------------------------------------------------------
/ / SECTION 1. This amendment was adopted by the Board of Directors or
incorporators and shareholder action was not required.
- - --------------------------------------------------------------------------------
/ / SECTION 2. The shareholders of the Corporation entitled to vote in respect
to the amendment adopted the proposed amendment. The amendment was adopted
by:
A. Vote of such shareholders during a meeting called by the Board of
Directors.
The results of such vote is as follows:
16,604,556 - Shares entitled to vote.
14,706,038 - Number of shares represented at the meeting
13,995,558 - Shares voted in favor.
606,899 - Shares voted against.
B. Written consent executed on ______________ , 19__ and signed by
all such shareholders.
- - --------------------------------------------------------------------------------
ARTICLED III COMPLIANCE WITH LEGAL REQUIREMENTS
- - --------------------------------------------------------------------------------
The manner of the adoption of the Articles of Amendment and the vote by which
they were adopted constitute full legal compliance with the provisions of the
Act, the Articles of Incorporation, and the By-Laws of the Corporation.
- - --------------------------------------------------------------------------------
I hereby verify, subject to the penalties of perjury, that the statements
contained herein are true, this 6th day of May, 1998.
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Signature of current officer Printed name of officer
/s/ Mary H. Mueller Mary Hall Mueller
- - --------------------------------------------------------------------------------
Officer's title
Vice President, General Counsel and Associate Secretary
- - --------------------------------------------------------------------------------
20
<PAGE>
EXHIBIT 4.08
FOURTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
CONSOLIDATED PRODUCTS, INC., an Indiana corporation (the "Company") and
BANK ONE, INDIANA, NATIONAL ASSOCIATION, a national banking association (the
"Bank") agree as follows:
1. CONTEXT. This agreement is made in the context of the following
agreed statement of facts:
a. The Company and the Bank are parties to an Amended and Restated
Credit Agreement dated December 30, 1994, as amended by a First
Amendment to Amended and Restated Credit Agreement dated September
26, 1995, as further amended by a Second Amendment to Amended and
Restated Credit Agreement dated effective as of January 31, 1997, as
further amended by a Third Amendment to Amended and Restated Credit
Agreement dated September 18, 1997, (collectively, the "Agreement").
b. The Company has requested that the Bank extend the Revolving Loan
Maturity Date to December 31, 1999, and the Bank has agreed to such
request subject to certain terms and conditions.
c. The parties have executed this document (this "Fourth Amendment") to
give effect to their agreement.
2. DEFINITIONS. Terms used in this Fourth 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 DEFINITION. 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 Fourth Amendment, December 31, 1999, 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:
- "FOURTH AMENDMENT" means the written amendment to this
Agreement entitled "Fourth Amendment to Amended and
Restated Credit Agreement" and dated effective as of
February 9, 1998.
21
<PAGE>
3. THE REVOLVING LOAN. The Bank hereby agrees to extend the Revolving
Loan Maturity Date from December 31, 1998 to December 31, 1999, 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 a Revolving Note in the
form of EXHIBIT "A" attached to this Fourth Amendment.
4. CONDITIONS PRECEDENT. As conditions precedent to the effectiveness
of this Fourth Amendment, the Bank shall have received, each duly executed and
in form and substance satisfactory to the Bank, this Fourth 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 Fourth
Amendment, the Revolving Note and any other document required under
this Fourth Amendment.
c. A certificate signed by the Secretary of the Company certifying the
name of the officer or officers authorized to sign this Fourth
Amendment, the Revolving Note and any other document required under
this Fourth 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.
5. REPRESENTATION AND WARRANTIES. To induce the Bank to enter into this
Fourth Amendment, the Company represents and warrants, as of the date of this
Fourth 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.
6. REAFFIRMATION OF THE AGREEMENT. Except as amended by this Fourth
Amendment, all terms and conditions of the Agreement shall continue unchanged
and in full force and effect.
22
<PAGE>
IN WITNESS WHEREOF, the Company and the Bank, by their duly authorized
officers, have executed this Fourth Amendment to Amended and Restated Credit
Agreement effective on February 9, 1998.
CONSOLIDATED PRODUCTS, INC.
By: /s/ James W. Bear
-------------------------------
Senior Vice President & Treasurer
---------------------------------
(Printed Name and Title)
BANK ONE, INDIANA,
NATIONAL ASSOCIATION
By: Brian D. Smith, Vice President
and Senior Relationship Manager
-------------------------------
23
<PAGE>
EXHIBIT 11.01
CONSOLIDATED PRODUCTS, INC.
COMPUTATION OF EARNINGS PER SHARE
NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 128, "Earnings Per Share".
Statement 128 replaced the previously reported primary and fully diluted
earnings per share with basic and diluted earnings per share. Under the new
requirements for computing basic earnings per share, the dilutive effect of
stock options is excluded. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts have been presented, and where necessary, have been restated to
conform to the requirements of Statement 128.
Diluted earnings per common and common equivalent share is computed by
dividing net earnings by the weighted average number of outstanding 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 9,
1997 have been restated to give effect to the five for four stock split
declared on December 3, 1997, distributed on December 26, 1997 to
shareholders of record on December 15, 1997.
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 8, APRIL 9, APRIL 8, APRIL 9,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average shares outstanding-Basic 20,848,680 19,310,600 20,808,107 19,267,789
Share equivalents 390,573 356,876 383,380 358,936
------------ ------------ ------------ ------------
Weighted average shares and equivalents-Diluted 21,239,253 19,667,476 21,191,487 19,626,725
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net earnings:
Net earnings for basic and diluted
earnings per share computation $ 4,874,561 $ 3,803,255 $ 8,798,477 $ 7,032,460
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
24
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF APRIL 8, 1998 AND THE
CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIXTEEN AND TWENTY-EIGHT WEEKS
ENDED APRIL 8, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> SEP-25-1997
<PERIOD-END> APR-08-1998
<CASH> 2,310,078<F1>
<SECURITIES> 0
<RECEIVABLES> 6,578,741
<ALLOWANCES> 0
<INVENTORY> 4,278,792
<CURRENT-ASSETS> 22,234,635
<PP&E> 211,806,944
<DEPRECIATION> 60,640,261
<TOTAL-ASSETS> 177,309,186
<CURRENT-LIABILITIES> 35,617,813
<BONDS> 0
0
0
<COMMON> 10,504,572
<OTHER-SE> 92,791,122
<TOTAL-LIABILITY-AND-EQUITY> 177,309,186
<SALES> 153,111,574
<TOTAL-REVENUES> 156,019,022
<CGS> 39,234,300
<TOTAL-COSTS> 110,118,330<F2>
<OTHER-EXPENSES> 11,469,481<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,487,469
<INCOME-PRETAX> 13,858,477
<INCOME-TAX> 5,060,000
<INCOME-CONTINUING> 8,798,477
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,798,477
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
<FN>
<F1>Cash includes cash equivalents of $1,205,000.
<F2>Includes restaurant operating costs of $70,884,030.
<F3>Includes depreciation and amortization and rent of $6,501,527 and
$4,967,954, respectively.
</FN>
</TABLE>
