<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-Q
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
ACT OF 1934
For quarter period ended March 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 0-25886
GARDEN FRESH RESTAURANT CORP.
(Exact name of registrant as specified in its charter)
Delaware 33-0028786
(State or other jurisdiction of incorporation (I.R.S. Employee
or organization) Identification No.)
17180 Bernardo Center Drive, San Diego, CA 92128
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (619) 675-1600
Former name, former address and former fiscal year.
If changed since last report.
Indicate by a 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
The number of shares of Common Stock, $.01 par value, outstanding as of March
31, 1997 was 4,169,188. There are no other classes of common stock.
<PAGE>
GARDEN FRESH RESTAURANT CORP.
QUARTERLY REPORT ON FORM 10-Q
MARCH 31, 1997
TABLE OF CONTENTS
Page
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
Condensed Balance Sheet as of March 31, 1997 and
September 30, 1996 3
Condensed Statement of Income for the three months and
six months ended March 31, 1997 and March 31, 1996 4
Condensed Statement of Cash Flows for the six months
ended March 31, 1997 and March 31, 1996 5
Notes to Unaudited Condensed Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II: OTHER INFORMATION
Item 1: Legal Proceedings 13
Item 2: Changes in Securities 13
Item 3: Defaults Upon Senior Securities 13
Item 4: Submission of Matters to a Vote of Security Holders 13
Item 5: Other Information 13
Item 6: Exhibits and Reports on Form 8-K 13
<PAGE>
GARDEN FRESH RESTAURANT CORP.
CONDENSED BALANCE SHEET
(Dollars in thousands)
<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENT
<CAPTION>
September 30, 1996 March 31, 1997
(Unaudited)
<S> <C> <C>
ASSETS
Cash $ 615 $ 2,194
Inventories 2,297 2,592
Other current assets 530 1,639
Deferred income taxes 734 588
---------- ----------
Total current assets 4,176 7,013
Property and equipment, net 41,552 46,816
Intangible and other assets 1,572 1,514
Deferred income taxes 762 719
---------- -----------
Total assets $ 48,062 $ 56,062
---------- -----------
---------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 3,028 $ 2,768
Current portion of long-term debt 3,490 4,150
Accrued liabilities 4,335 5,018
---------- -----------
Total current liabilities 10,853 11,936
Accrued rent 1,508 1,469
Long term debt, net of current portion 6,444 11,679
Shareholders' equity:
Common stock, $.01 par value; 12,000,000
shares authorized at September 30, 1996 and
March 31, 1997; 4,117,227 and 4,169,188
issued and outstanding at September 30, 1996
and March 31, 1997, respectively. 41 42
Paid in capital 37,772 38,100
Accumulated deficit (8,556) (7,164)
---------- -----------
Total shareholders' equity 29,257 30,978
---------- -----------
Total liabilities and shareholders' equity $ 48,062 $ 56,062
---------- -----------
---------- -----------
<FN>
See notes to unaudited condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
GARDEN FRESH RESTAURANT CORP.
CONDENSED STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
-------------------- --------------------
March 31 March 31 March 31 March 31
1996 1997 1996 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $ 17,597 $ 23,459 $ 32,532 $ 42,736
COST AND EXPENSES:
Cost of sales 4,788 6,062 8,889 11,183
Restaurant operating expenses:
Labor 4,905 6,787 9,164 12,523
Occupancy and other 4,200 5,434 8,053 10,146
General and administrative expenses 1,307 1,490 2,496 2,804
Depreciation and amortization 1,013 1,617 2,031 3,061
-------- -------- -------- --------
Total costs and expenses 16,213 21,390 30,633 39,717
-------- -------- -------- --------
OPERATING INCOME 1,384 2,069 1,899 3,019
Interest income (expense) (71) (381) (169) (685)
Other income (expense) (21) (7) (33) (23)
-------- -------- -------- --------
INCOME BEFORE INCOME
TAXES 1,292 1,681 1,697 2,311
Provision for income taxes (521) (664) (681) (919)
-------- -------- -------- --------
NET INCOME $ 771 $ 1,017 $ 1,016 $ 1,392
-------- -------- -------- --------
-------- -------- -------- --------
Net income per share $ .19 $ .23 $ .25 $ .32
-------- -------- -------- --------
-------- -------- -------- --------
Shares used in computing
net income per share 4,135 4,404 4,126 4,345
-------- -------- -------- --------
-------- -------- -------- --------
<FN>
See notes to unaudited condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
GARDEN FRESH RESTAURANT CORP.
CONDENSED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<CAPTION>
Six Months Ended
-------------------------------------------
Mar 31, 1996 Mar 31, 1997
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,016 $ 1,392
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,031 3,061
Loss on disposal of property 33 31
Deferred income taxes 24 189
Changes in operating assets and liabilities
Inventories 50 (295)
Prepaid expenses and other current assets (1,065) (1,109)
Accounts payable (806) (260)
Accrued liabilities 1,716 683
Accrued rent 6 (39)
------------- -------------
Net cash provided by operating activities 3,005 3,653
------------- -------------
INVESTING ACTIVITIES:
Acquisition of property and equipment
New restaurants (5,697) (6,597)
Existing restaurant additions (782) (1,050)
Increase in intangible and other assets (372) (651)
------------- -------------
Net cash used in investing activities (6,851) (8,298)
------------- -------------
------------- -------------
FINANCING ACTIVITIES:
Proceeds from long term debt 2,931 8,203
Change in certificates of deposit
restricted to secure debt 62 0
Repayment of long term debt (928) (2,308)
Net proceeds from issuance of common stock 329
Proceeds from stock note 324 0
------------- -------------
Net cash provided by financing activities 2,389 6,224
------------- -------------
Net (decrease) increase in cash (1,457) 1,579
Cash at beginning of period 3,762 615
------------- -------------
Cash at end of period $ 2,305 $ 2,194
------------- -------------
------------- -------------
<FN>
See notes to unaudited condensed financial statements.
</TABLE>
<PAGE>
GARDEN FRESH RESTAURANT CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. CONDENSED FINANCIAL STATEMENTS
The accompanying condensed financial statements have been prepared by the
Company without audit and reflect all adjustments which are, in the opinion of
management, necessary for a fair statement of financial position and the
results of operations for the interim periods. The statements have been
prepared in accordance with the regulations of the Securities and Exchange
Commission and do not necessarily include certain information and footnote
disclosures necessary to present the statements in accordance with generally
accepted accounting principles. For further information, refer to the
financial statements and notes thereto for the fiscal year ended September 30,
1996 included in the Company's Form 10-K.
2. NET INCOME PER SHARE
Net income per share is computed based on the weighted average number of
common shares and common stock equivalents, using the treasury stock method,
outstanding during the period ending March 31, 1997.
3. PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
<PAGE>
GARDEN FRESH RESTAURANT CORP.
STATEMENT OF OPERATING DATA
<TABLE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
The following table sets forth the percentage of net sales of certain items
included in the Company's statement of operating data for the periods
indicated.
<CAPTION>
3 Months Ended 6 Months Ended
------------------- -------------------
March 31 March 31 March 31 March 31
1996 1997 1996 1997
<S> <C> <C> <C> <C>
NET SALES 100.0% 100.0% 100.0% 100.0%
COST AND EXPENSES:
Cost of sales 27.1% 25.8% 27.3% 26.2%
Restaurant operating expenses:
Labor 27.9% 28.9% 28.2% 29.3%
Occupancy and other 23.9% 23.2% 24.8% 23.7%
General and administrative expenses 7.4% 6.4% 7.7% 6.6%
Depreciation and amortization 5.8% 6.9% 6.2% 7.1%
------------------- -------------------
Total operating expenses 92.1% 91.2% 94.2% 92.9%
------------------- -------------------
OPERATING INCOME 7.9% 8.8% 5.8% 7.1%
Interest expense (.4)% (1.6)% (.5)% (1.6)%
Other income (expense) (.1)% (.1)% (.1)%
INCOME BEFORE INCOME
TAXES 7.4% 7.2% 5.2% 5.4%
Provision for income taxes (3.0)% (2.8)% (2.1)% (2.1)%
NET INCOME 4.4% 4.4% 3.1% 3.3%
</TABLE>
<PAGE>
RESULTS OF OPERATIONS
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996
Net Sales. Net sales for the three months ended March 31, 1997 increased
33.5% to $23.5 million from $17.6 million for the comparable 1996 period. This
increase was primarily due to the opening of eleven new restaurants since the
comparable 1996 period. Additionally, the company experienced a .5% increase
in comparable sales.
Cost of Sales. Cost of sales for the three months ended March 31, 1997 as
a percent of sales decreased 1.3% from the comparable 1996 period, but was up
27.1% to $6.1 million due to the higher sales volume.
Labor Expense. Labor expense for the three months ended March 31, 1997
increased 38.8% to $6.8 million from $4.9 million for the comparable 1996
period. This increase was due to the new restaurants opened since the
comparable 1996 period. As a percentage of sales the labor expense for the
three months ended March 31, 1997 increased to 28.9% from 27.9% in the
comparable 1996 period. This was due to the increase in Federal and California
minimum wage and higher labor hours in new stores than planned during the first
six months.
Occupancy and Other Operating Costs. Occupancy and other operating costs
for the three months ended March 31, 1997 increased 28.6% to $5.4 million from
$4.2 million for the comparable 1996 period. This was due to the addition of
eleven restaurants since the comparable 1996 period. As a percent of net
sales, occupancy and other operating costs for the three months ended March 31,
1997 decreased to 23.2% from 23.9% in the comparable 1996 period. This
percentage decrease was due to less occupancy cost associated with the purchase
of five of the eleven new restaurants as opposed to leases and higher sales
volume per restaurant leveraging fixed occupancy costs.
General and Administrative Expenses. General and administrative expenses
for the three months ended March 31, 1997 increased 15.4% to $1.5 million from
$1.3 million for the comparable 1996 period. This increase was due to the
personnel and relocation cost associated with supporting stores in new regions.
As a percent of net sales, general and administrative expenses for the three
months ended March 31, 1997 decreased to 6.4% from 7.4% for the comparable 1996
period.
Depreciation and Amortization Expense. Depreciation and amortization
expenses for the three months ended March 31, 1997 increased 60% to $1.6
million from $1.0 million for the comparable 1996 period. This increase was
due to depreciation and amortization for the new restaurants opened since the
comparable 1996 period. Depreciation and amortization as a percent of net sales
was 6.9% up from 5.8% for the comparable 1996 period.
Interest Expense. Total interest expense for the three months ended March
31, 1997 increased 300% to $.4 million from $.1 million for the comparable 1996
period. Interest expense was higher due to the increased debt incurred by the
Company to support continued expansion for fiscal 1997 and 1998.
Six Months Ended March 31, 1997 Compared to Six Months Ended March 31, 1996
Net Sales. Net sales for the six months ended March 31, 1997 increased
31.4% to $42.7 million from $32.5 million for the comparable 1996 period. This
was due to the opening of eleven restaurants since the comparable 1996 period
and the increase in comparable restaurant sales of 1.9%.
Cost of Sales. Cost of sales for the six months ended March 31, 1997 as a
percent of sales decreased 1.1% from the comparable 1996 period, but was higher
in total dollars by 25.8% at $11.2 million due to higher sales volume.
Labor Expense. Labor expense for the six months ended March 31, 1997
increased 35.9% to $12.5 million from $9.2 million for the comparable 1996
period. This increase was due to the new restaurants opened since the
comparable 1996 period. As a percentage of sales the labor expense for the six
months ended March 31, 1997 increased to 29.3% from 28.2% in the comparable
1996 period due to the increase in minimum wage and the addition of eleven new
restaurants which utilized higher labor hours than planned during the first six
months.
<PAGE>
Occupancy and Other Operating Costs. Occupancy and other operating costs
for the six months ended March 31, 1997 increased 24.7% to $10.1 million from
$8.1 million for the comparable 1996 period. This was due mainly to the
addition of eleven new restaurants, additional advertising to support the
increase in same store sales in existing markets, and increases in professional
services due to the change in minimum wages. Occupancy and other operating
costs as a percent of sales decreased to 23.7% for the six months ended March
31, 1997 from 24.8% for the comparable 1996 period. This was due primarily to
additional sales volume.
General and Administrative Expenses. General and administrative expenses
for the six months ended March 31, 1997 increased 12.0% to $2.8 million from
$2.5 million for the comparable 1996 period. This was due primarily to the
increased personnel and relocation costs associated with opening stores in new
regions. As a percent of net sales, general and administrative expenses for
the six months ended March 31, 1997 decreased to 6.6% from 7.7% for the
comparable 1996 period.
Depreciation and Amortization Expense. Depreciation and amortization
expenses for the six months ended March 31, 1997 increased 55.0% to $3.1
million from 2.0 million for the comparable 1996 period. This increase was due
to depreciation and amortization for the new restaurants opened since the
comparable 1996 period. Depreciation and amortization as a percent of net sales
was 7.1% up from 6.2% for the comparable 1996 period due to higher preopening
costs for eleven new restaurants.
Interest Expense. Total interest expense for the six months ended March
31, 1997 increased 250.0% to $.7 million from $.2 million for the comparable
1996 period. Interest expense was up due to the increase in debt incurred by
the Company to support the continued expansion in fiscal 1997 and 1998.
LIQUIDITY AND CAPITAL RESOURCES
To date, the Company has financed its cash requirements principally from
operating activities, the private placement of preferred stock, external debt
and capital leases and a public stock offering. The Company does not have
significant receivables or inventory, and receives trade credit based upon
negotiated terms when purchasing food and supplies. For the six months ended
March 31, 1997 the Company generated $3.7 million in cash flow from operating
activities up from $3.0 in the comparable 1996 period. During this period the
Company acquired property and equipment totalling $7.6 million, and paid down
existing debt of $2.3 million, added additional debt of $8.2 million and
received $.3 million from the issuance of common stock, which resulted in a
positive $1.6 million in total cash flow.
The Company's principal capital requirement has been for funding the
development of new restaurants. Historically the Company has primarily leased
the land and buildings for its restaurant operations. The Company does
purchase land and/or buildings when favorable conditions are available. The
Company currently owns the land and buildings for eleven restaurants, including
the land for two sites the Company expects to open in fiscal 1997. During the
first six months of fiscal 1997, the Company opened four full service
restaurants. As of March 31, 1997 the Company operated 47 restaurants.
Capital expenditures totalled $7.6 million during the first six months of
fiscal 1997 and $6.5 million for the comparable period in fiscal 1996.
The cash investment to open the four full service restaurants as of March
31, 1997 was $8.0 million excluding pre- opening costs. The pre-opening costs
for the four full service restaurants opened in fiscal 1997 were $.6 million.
The Company has signed two leases, and closed two escrows for additional new
sites expected to open in fiscal 1997. The Company has signed one lease and
opened two escrows expected to open in fiscal 1998. The cash investment to
open a new restaurant typically includes the purchase or installation of
furniture, fixtures, equipment and leasehold improvements, and in the case of
an owned site, the purchase of land and a building. In addition to budgeted
capital expenditures for fiscal 1997 of $14.8 million for new restaurant
openings, the Company has budgeted $1.8 million in expenditures for fiscal 1997
for capital improvements at existing sites.
<PAGE>
The Company will need to rely on funds generated from revenues to finance
a portion of the expansion currently planned for fiscal 1997, as well as any
expansion taking place after fiscal 1997. Should the Company's results of
operations or its rate of growth fail to be adequate to finance expansion or
should costs or capital expenditures rise, the Company may not have the ability
to open new restaurants at its desired pace or at all, and could be required to
seek additional financing in the future. There can be no assurance that the
Company will be able to raise such capital when needed on satisfactory terms or
at all.
IMPACT OF INFLATION
The primary inflationary factors affecting the Company's operations
include food and beverage and labor costs. The Company does not believe that
inflation has materially affected earnings during the past three years.
Substantial increases in costs and expenses, particularly food, supplies, labor
and operating expenses, could have a significant impact on the Company's
operating results to the extent that such increases cannot be passed along to
guests.
BUSINESS RISKS
The Company's business is subject to a number of risks. This Form 10Q
contains forward-looking statements, including statements about openings of new
restaurants, within the meaning of Section 27A of the Securities Act of 1933,
as amended. Discussion containing such forward-looking statements may be found
in the material set forth under "Business Risks" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations," as well as
within this Form 10Q generally. Actual results could differ materially from
those projected in the forward-looking statements as a result of the risk
factors set forth below and the matters set forth in this Form 10Q generally.
The Company's business is subject to a number of risks, several of which are
described below. The reader is urged to consider the more comprehensive
summary of such risks found in the Company's Form 10Q for the fiscal year
ending September 30, 1996.
Certain Operating Results and Consideration
In fiscal 1995 and 1996, respectively, the Company experienced an increase
of 2.0% and an increase of 2.5% in comparable restaurant sales. In the first
six months of fiscal 1996 and 1997, respectively, the Company's comparable
restaurant sales increased by approximately 6.7% and 1.9%, respectively. The
Company's newer restaurants have not historically experienced significant
increases in guest volume following their initial opening period. In addition,
the Company does not believe it has significant latitude to achieve comparable
restaurant sales growth through price increases. The Company believes that it
may from time to time in the future experience declines in comparable
restaurant sales, and that any future increases in comparable restaurant sales
would be modest.
Expansion Risks: Future Restaurant Financing Capital Needs
The Company opened seven restaurants and one quick service restaurant in
fiscal 1996 and has opened four full service restaurants in the first six
months of fiscal 1997 and currently intends to open four additional restaurants
in the remainder of fiscal 1997. The Company's ability to achieve its
expansion plans will depend on a variety of factors, many of which may be
beyond the Company's control, including the Company's ability to locate
suitable restaurant sites, negotiate acceptable lease or purchase terms, obtain
required governmental approvals and construct new restaurants in a timely
manner, attract, train and retain qualified and experienced personnel and
management, operate its restaurants profitably and obtain additional capital,
as well as general economic conditions and the degree of competition in the
particular region of expansion. The Company has experienced, and expects to
continue to experience, delays in restaurant openings from time to time. The
Company incurs substantial costs in opening a new restaurant and, in the
Company's experience, new restaurants experience fluctuating operational levels
for some time after opening. There can be no assurance that the Company will
successfully expand or that the Company's existing or new restaurant will be
profitable. The Company has encountered intense competition for restaurant
sites, and in many cases has had difficulty buying or leasing desirable sites
on terms that are acceptable to the Company. In many cases, the Company's
competitors are willing and able to pay more than the Company for sites. The
Company expects these difficulties in obtaining desirable sites to continue for
the foreseeable future.
<PAGE>
Cost Sensitivity
The Company's profitability is highly sensitive to increases in food,
labor and other operating costs. The Company's dependence on frequent
deliveries of fresh produce and groceries subjects it to the risk that
shortages or interruptions in supply caused by adverse weather or other
conditions could materially adversely affect the availability, quality and cost
of ingredients. In addition, unfavorable trends or developments concerning
factors such as inflation, food, labor and employee benefit costs (including
increases in hourly wage and minimum unemployment tax rates), rent increases
resulting from the rent escalation provisions in the Company's leases, and the
availability of experienced management and hourly employees may also adversely
affect the Company. The Company believes recent relatively favorable inflation
rates and part-time labor supplies in its principal market area have
contributed to relatively stable food and labor costs in recent years.
However, there can be no assurance that these conditions will continue or that
the Company will have the ability to control costs in the future.
Minimum Wage
The Company has recently experienced an increase in the hourly wage rate
due to an increase in the federal minimum wage rate October 1, 1996 and in
California March 1, 1997. The Company also expects to experience increases in
the future due to increases in the California minimum wage rate (March 1, 1998)
and the federal minimum wage rate (October 1, 1997) over the next year and a
half. While the Company has managed to absorb the increases as of October 1,
1996 without reduction in profitability there can be no assurance that the
Company will be able to do so in the future.
Importance of Key Employees
The Company is heavily dependent upon the services of its officers and key
management personnel involved in restaurant operations, purchasing, expansion
and administration. In particular, the Company is dependent upon the
management and leadership of its three executive officers, Michael P. Mack,
David W. Qualls and R. Gregory Keller. The loss of any of these three
individuals could have a material adverse effect on the Company's business and
its financial results of operations. The success of the Company and its
individual restaurants depends upon the Company's ability to attract and retain
highly motivated, well-qualified restaurant operations and other management
personnel. The Company faces significant competition in the recruitment of
qualified employees.
Seasonality and Quarterly Fluctuations
The Company's business experiences seasonal fluctuations, as a
disproportionate amount of the Company's net income is generally realized in
the second, third and fourth fiscal quarters due to higher average sales and
lower average costs. Quarterly results have been and are expected to continue
to fluctuate as a result of a number of factors, including the timing of new
restaurant openings. As a result of these factors, net sales and net income on
a quarterly basis may fluctuate and are not necessarily indicative of the
results that may be achieved for a full fiscal year.
Geographic Concentration in California; Restaurant Base
Twenty-nine of the Company's 47 existing restaurants are located in
California. Accordingly, the Company is susceptible to fluctuations in its
business caused by adverse economic or other conditions in this region,
including natural disasters or other acts of God. As a result of the Company's
continued concentration in California, adverse economic or other conditions in
California could have a material adverse effect on the Company's business. The
Company's significant investment in, and long-term commitment to, each of its
restaurant sites limits its ability to respond quickly or effectively to
changes in local competitive conditions or other changes that could affect the
Company's operations. In addition, the Company has a small number of
restaurants relative to some of its competitors. Consequently, a decline in
the profitability of an existing restaurant or the introduction of an
unsuccessful new restaurant could have a more significant effect on the
Company's result of operations than would be the case in a company with a
larger number of restaurants.
<PAGE>
Additionally, the Company will be opening new restaurants in markets in
which it currently has no operating experience. Consequently a poor decision
about the selection of a new region could materially affect the Company's
results.
Legal Matters
The Company closed a leased restaurant in September, 1994 and filed a
lawsuit against the landlord for breach of contract. The landlord has
countersued the Company for damages. An unfavorable decision against the
Company could adversely affect the Company.
Volatility of Stock Price
The market price of the Company's common stock has fluctuated since the
initial public offering of the common stock in May 1995. Quarterly operating
results of the Company and other restaurant companies, changes in general
conditions in the economy, the financial markets or the restaurant industry,
natural disasters or other developments affecting the Company or its
competitors could cause the market price of the common stock to fluctuate
substantially. In addition, in recent years the stock market has experienced
extreme price and volume fluctuations. This volatility has had a significant
effect on the market price of securities issued by many companies for reasons
unrelated to the operating performance of these companies.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings Not Applicable
Item 2. Changes in Securities Not Applicable
Item 3. Default upon Senior Securities Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders Not Applicable
a. The company's Annual Stockholder Meeting was held on
February 26, 1997. The election of one (1) director and the
ratification of independent accountants were presented for
shareholder approval. The results are listed below:
Election of Class A Director:
Director
Michael P. Mack Total Votes For 3,837,229
Total Votes Withheld 2,200
Ratification of Independent Accountants:
Price Waterhouse LLP Total Votes For 3,829,821
Total Votes Against 3,300
Total Votes Abstain 6,308
Item 5. Other Information Not Applicable
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
The Exhibits required by Item 6(a) of this report are listed in
the Exhibit Index on page 14 herewith.
b. Report on Form 8-K:
No reports on Form 8-K have been filed by the Company during the
fiscal quarter ended March 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GARDEN FRESH RESTAURANT CORP.
(Registrant)
Dated: May 13 , 1997 /s/ Michael P. Mack
Michael P. Mack
President and Chief Executive Officer
(Principal Executive Officer)
Dated: May 13 , 1997 /s/ David W. Qualls
David W. Qualls
Chief Financial Officer, Executive Vice President -
Finance and Real Estate and Secretary
(Principal Accounting and Financial Officer)
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
3.1* Restated Certificate of Incorporation of Garden Fresh Restaurant
Corp.
3.2** Bylaws of Garden Fresh Restaurant Corp., as amended.
10.1** Form of Indemnity Agreement for executive officers and directors.
10.2** The Company's Restaurant Management Stock Option Plan, as
amended.
10.3** The Company's Key Employee Stock Option Plan, as amended.
10.4** The Company's 1995 Outside Director Stock Option Plan.
10.5** The Company's 1995 Key Employee Stock Option Plan, as amended.
27.1 Financial Data Schedule
* Incorporated by reference from Exhibit 4.1 filed with the Company's
Registration Statement on Form S-8 (No. 33-93568) filed June 16, 1995.
** Incorporated by reference from the Exhibits with corresponding numbers
filed with the Company's Registration Statement on Form S-1 (No.
33-90404), as amended by Amendment No. 1 to Form S-1 filed on April 19,
1995, Amendment No. 2 to Form S-1 filed May 8, 1995, Amendment No. 3 to
Form S-1 filed May 15, 1995, except that Exhibit 3.4 is incorporated from
Exhibits 3.4 and 3.4A, Exhibit 10.2 is incorporated by reference from
Exhibits 10.2 and 10.2A, Exhibit 10.3 is incorporated by reference from
Exhibits 10.3 and 10.3A, Exhibit 10.5 is incorporated by reference from
Exhibit 10.5 and 10.5A.
<PAGE>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CONSOLIDATED
BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS PART OF THE
ANNUAL REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH ANNUAL REPORT ON FORM 10-Q
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 2,194
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 2,592
<CURRENT-ASSETS> 7,013
<PP&E> 69,501
<DEPRECIATION> 22,685
<TOTAL-ASSETS> 56,062
<CURRENT-LIABILITIES> 11,936
<BONDS> 0
0
0
<COMMON> 42
<OTHER-SE> 38,100
<TOTAL-LIABILITY-AND-EQUITY> 56,062
<SALES> 42,736
<TOTAL-REVENUES> 42,736
<CGS> 11,183
<TOTAL-COSTS> 39,717
<OTHER-EXPENSES> 23
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 685
<INCOME-PRETAX> 2,311
<INCOME-TAX> 919
<INCOME-CONTINUING> 1,392
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,392
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.32
</TABLE>
