<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB - QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 6, 1996,
----------------
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
---------- ----------
Commission file number 0-26400
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LOGAN'S ROADHOUSE, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
TENNESSEE 62-1602074
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
P.O. BOX 291047, NASHVILLE, TN 37229
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(615) 885-9056
- --------------------------------------------------------------------------------
(Issuer's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
Class Outstanding November 15, 1996
----- -----------------------------
Common stock, $.01 par value 6,013,597 shares
Transitional Small Business Disclosure Format (check one):
Yes No x
--- ---
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
LOGAN'S ROADHOUSE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
October 6, 1996
Assets (Unaudited) Dec. 31, 1995
--------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 12,273,600 2,260,776
Receivables: trade and other 302,859 184,875
Inventories 264,079 157,938
Preopening costs 823,632 376,014
Prepaid expenses and other current assets 257,927 232,788
------------ ------------
Total current assets 13,922,097 3,212,391
Property, plan and equipment, net 28,335,319 16,600,294
Other assets 71,316 56,017
------------ ------------
Total assets $ 42,328,732 19,868,702
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,659,056 730,176
Accrued payroll and related expenses 487,939 443,348
Deferred revenue 155,010 239,959
Income taxes payable 531,851 49,700
Accrued state and local taxes 430,447 450,475
Current portion of long-term
debt obligations (note 4) - 639,439
Deferred income taxes 139,300 139,300
------------ ------------
Total current liabilities 3,403,603 2,692,397
Long-term obligations, less current portion
(note 4) - 1,939,812
Deferred income taxes 181,900 181,900
------------ ------------
Total liabilities 3,585,503 4,814,109
Shareholders' equity (note 2):
Common stock, $0.01 par value;
Authorized 15,000,000 share; issued
6,011,229 and 4,717,500 shares, respectively 60,112 31,450
Additional paid-in capital 35,032,315 14,302,035
Retained earnings 3,650,802 721,108
------------ ------------
Total shareholders' equity 38,743,229 15,054,593
------------ ------------
Total liabilities and shareholders' equity $ 42,328,732 19,868,702
============ ============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 3
LOGAN'S ROADHOUSE, INC.
STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Twelve Weeks Ended: Forty Weeks Ended:
--------------------------------- -------------------------------
Oct. 6, 1996 Oct. 1, 1995 Oct. 6, 1996 Oct. 1, 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net restaurant sales $10,139,129 6,891,259 30,121,482 20,148,102
Costs and expenses:
Food and beverage 3,422,300 2,511,589 10,057,474 7,270,042
Labor and benefits 2,768,998 1,833,325 8,241,402 5,456,097
Occupancy and other 1,450,431 1,061,280 4,454,500 3,399,138
Depreciation and amortization 450,935 272,014 1,311,219 678,566
General and administrative 569,829 369,127 1,863,337 1,174,949
----------- ------------ ------------ ------------
8,662,493 6,047,335 25,927,932 17,978,792
----------- ------------ ------------ ------------
Income from operations 1,476,636 843,924 4,193,550 2,169,310
----------- ------------ ------------ ------------
Other income and (expense): 126,917 (23,355) 221,500 (155,738)
Interest net 24,167 0 57,458 0
----------- ------------ ------------ ------------
Franchise fee and royalties 151,084 (23,355) 278,958 (155,738)
----------- ------------ ------------ ------------
Earnings before income taxes 1,627,720 820,569 4,472,508 2,013,572
Income tax expense (note 3) 537,147 290,810 1,542,814 713,610
----------- ------------ ------------ ------------
Net earnings (note 3) $ 1,090,573 529,759 2,929,694 1,299,962
=========== ============ ============ ============
Earnings per share (note 3) $ 0.18 0.12 0.51 0.37
=========== ============ ============ ============
Weighted average shares outstanding (note 3) 6,193,952 4,448,733 5,707,611 3,528,899
=========== ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 4
Logan's Roadhouse, Inc.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Forty Weeks Ended
---------------------------------------
Oct. 6, 1996 Oct. 1, 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,929,694 1,507,870
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 1,311,219 678,566
Deferred taxes - 260,000
Net effect of changes in current assets and
current liabilities 98,133 (437,415)
------------ ------------
Net cash provided by operating activities 4,339,046 2,009,021
------------ ------------
Cash flows from investing activities:
Additions to property, plant and equipment (12,490,613) (11,436,090)
Increase in other assets (15,300) (62,762)
------------ ------------
Net cash used by investing activities (12,505,913) (11,498,852)
Cash flows from financing activities:
Net proceeds from public offerings 20,758,942 13,329,348
Proceeds from issuance of long-term debt - 2,293,171
Payments on long-term obligations (2,579,251) (2,016,277)
Partner distributions and costs relating to the
formation of the new corporate structure - (1,108,987)
------------ ------------
Net cash provided by financing activities 18,179,691 12,497,255
------------ ------------
Net increase in cash 10,012,824 3,007,424
Cash and cash equivalents, beginning of period 2,260,776 400,123
------------ ------------
Cash and cash equivalents, end of period $ 12,273,600 3,407,547
============ ============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
LOGIN'S ROADHOUSE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FORTY WEEKS ENDED OCTOBER 6, 1996 AND OCTOBER 1, 1995
(1) BASIS OF PRESENTATION
The accompanying financial statements have been prepared by the Company
without audit, with the exception of the December 31, 1995 balance sheet which
was derived from the audited financial statements included in the Company's
December 31, 1995 Annual Report. The financial statements include balance
sheets, statements of earnings and statements of cash flows and have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting and in accordance with Item 310(b) of Regulation S-B.
These financial statments, note disclosures and other information should be
read in conjunction with the "Selected Financial Data" and financial statements
and the notes thereto included in the Company's December 31, 1995 Annual Report.
In the opinion of management, the unaudited interim financial statements
contained in this report reflect all adjustments, consisting of only normal
recurring accruals, which are necessary for a fair presentation of the
financial position and the results of operations for the interim periods
presented. The results of operations for any interim period are not
necessarily indicative of results for the full year.
From inception through July 25, 1995, the Company was a partnership and,
accordingly, incurred no federal or state income tax liability. The discussion
of financial condition and results of operations included in the paragraphs
that follow reflect a pro forma adjustment for federal and state taxes that
would have been recorded during the third quarter and nine-month period of 1995
if the Company had been subject to corporate income taxes for such period.
For accounting purposes, the Company has adopted a 52/53 week fiscal year
ending on the last Sunday in December. For financial reporting purposes, the
first quarter consists of 16 weeks with the second, third and fourth quarters
each consisting of 12 weeks (13 weeks in the fourth quarter of a 53 week year).
(2) REGISTERED PUBLIC OFFERINGS
On July 26, 1995, the Company completed its initial public offering
whereby 1.1 million shares of Common Stock were sold in a registered offering.
Proceeds to the Company (after underwriting discounts and expenses) amounted to
approximately $13.3 million. The net proceeds were used to repay approximately
$1.7 million under its existing line of credit and to purchase for approximately
$6.1 million land, buildings and leasehold improvements for five restaurants
which had previously been leased. The remaining $5.5 million of net proceeds
have been used, together with cash from operations and borrowings, to fund the
development of additional restaurants and for the maintenance and improvement of
existing restaurants.
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<PAGE> 6
Pursuant to a registered public offering on April 10, 1996, the Company
sold 862,500 shares of Common Stock at $26 per share. After deducting
underwriting discounts and expenses of the offering, proceeds to the Company
amounted to approximately $20.8 million. From the net proceeds, the Company
has repaid approximately $2.4 million of outstanding indebtedness and plans to
use the remaining net proceeds, together with cash on hand, cash flow from
operations, and lease financing to open eight or nine additional restaurants
during the remainder of 1996 and 1997, depending on the availability of quality
sites, the hiring and training of sufficiently skilled management and other
personnel and other factors.
On May 9, 1996, the Company's Board of Directors authorized a
three-for-two stock split in the form of a 50% stock dividend which was payable
on June 5, 1996, to shareholders of record on May 20, 1996. Prior to the stock
split, the Company had 4,077,500 common shares outstanding. A total of
2,003,729 shares of Common Stock were issued in connection with the split
bringing the new common shares outstanding to 6,011,229 at October 6, 1996. All
references in the accompanying financial statements to weighted-average shares
outstanding and per share amounts have been restated to reflect the split.
(3) FORMATION OF LOGAN'S ROADHOUSE, INC. AND PRO FORMA ADJUSTMENTS
Prior to the effective date of the initial public offering (July
26, 1995), the Company operated as a partnership. On July 25, 1995, the
partners of Logan's Partnership exchanged their respective partnership
interests for an aggregate of 3,067,500 shares (giving effect to a
three-for-two stock split) of Common Stock of the Company pursuant to a
reorganization. Logan's Partnership's historical carrying value for assets
and liabilities carried over to the Company upon consummation of the
reorganization. Income taxes on earnings of the Company through July 25, 1995
were the responsibility of the partners. Included in the third quarter and
nine-month periods ended October 1, 1995, is a pro forma adjustment that
provides for statutory federal and state tax rates then in effect as though
the Company had been subject to corporate income taxes for the period
indicated. Net earnings per share for the period(s) ended October 1, 1995, is
based on the number of shares which would have been outstanding assuming the
partners had been shareholders and is based on the number of shares the
partners received when the reorganization was consummated.
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<PAGE> 7
(4) LONG-TERM OBLIGATIONS
The following is a summary of long-term obligations at October 6, 1996
and December 31, 1995, respectively.
<TABLE>
<CAPTION>
October 6, 1996 December 31, 1995
--------------- -----------------
<S> <C> <C>
Installation notes payable bearing interest at prime
rate (8.5% at Dec. 31, 1995). The notes were
secured by certain furniture, fixtures and
equipment and were paid prior to maturity............ $ - 1,659,988
Capital lease obligations with interest rates ranging
from 10.08% to 12.8%................................. - 648,910
Unsecured installment notes payable to a
financing company bearing interest 8.4%.
The notes were paid prior to maturity................ - 270,353
------------ ------------
Total long-term obligations................ - 2,579,251
Less current installments, including capital lease
obligations.......................................... - (639,439)
------------ ------------
Long-term obligations, less current portion $ - 1,939,812
============ ============
</TABLE>
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
The following discussion includes comments and data relating to the
Company's financial condition and results of operations for the third quarter
(12 weeks) and nine months (40 weeks) ended October 6, 1996. This section
should be read in connection with the "Selected Financial Data" and financial
statements and related notes included in the Company's December 31, 1995 Annual
Report.
On April 10, 1996, the Company completed a secondary offering whereby
it sold 1,293,750 shares (giving effect to a three-for-two stock split) of
common Stock in a registered offering. Proceeds to the Company (after
underwriting discounts and expenses) amounted to approximately $20.8 million.
The Company currently has 6,011,229 shares of common stock outstanding after a
three-for-two stock split which was payable on June 5, 1996.
Results of Operations
The following table sets forth, for the periods indicated, the
percentages which items in the statements of earnings bear to net sales.
<TABLE>
<CAPTION>
Percentage of Net Restaurant Sales
----------------------------------
Third Quarter Nine Months
(12 Weeks Ended) (40 Weeks Ended)
-------------- --------------
Oct. 6, 1996 Oct. 1, 1995 Oct. 6, 1996 Oct. 1, 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net restaurant sales..................... 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Food and beverage....................... 33.8 36.4 33.4 36.1
Labor and benefits...................... 27.3 26.6 27.4 27.1
Occupancy and other..................... 14.3 15.4 14.8 16.9
Depreciation and amortization........... 4.4 3.9 4.3 3.4
General and administrative.............. 5.6 5.4 6.2 5.7
----- ----- ----- -----
Total operating costs and expenses..... 85.4 87.7 86.1 89.2
----- ----- ----- -----
Income from operations................. 14.6 12.3 13.9 10.8
Other income (expense), net.............. 1.5 (.4) .9 (.8)
----- ----- ----- -----
Earnings before income taxes........... 16.1 11.9 14.8 10.0
Income tax expense....................... 5.3 4.2 5.1 3.5
----- ----- ----- -----
Net earnings........................... 10.8% 7.7% 9.7% 6.5%
===== ===== ===== =====
</TABLE>
8
<PAGE> 9
Net restaurant sales
Sales during the third quarter (12 weeks) and nine-month period (40 weeks)
ended October 6, 1996, increased 47.1% and 49.5%, respectively, when compared
to the comparable periods of last year. The following table indicates sales
increases by components for both periods as compared to the comparable periods
last year.
<TABLE>
<CAPTION>
Third Quarter Nine Months
(12 weeks) (40 weeks)
Ended Oct. 6, 1996 Ended Oct. 6, 1996
------------------ -------------------
Restaurants % of % of
No. Change No. Change
--- ------ --- ------
<S> <C> <C> <C> <C>
In operation, for comparable quarters 6 (2.3%) 5 1.1%
Newly opened (non-comparable) 8 49.4 9 48.4
--- ---- -- ----
14 47.1% 14 49.5%
=== ==== == ====
</TABLE>
The Company opened four new restaurants in 1995 and has opened five new
restaurants thus far in 1996; one during the first quarter and two each during
the second and third quarters. The Company had 14 restaurants in operation at
October 6, 1996. Management attributes the 2.3% decline in same store sales for
the third quarter of 1996 to one unit in a smaller market which accounted for
the majority of the decline. Although this unit continues to achieve annualized
sales levels in excess of $3 million, its volume was lower relative to
prior-year periods because of increased competition in the market. In
addition, management believes same store sales results were adversely affected
by the heavy television viewership of the Olympics in the early part of the
quarter. For the nine-month period, same store sales increased 1.1%. This
increase is primarily a result of a 3% menu price increase which was implemented
in late November 1995, Alcoholic beverage sales, consisting of liquor and beer,
accounted for 11.9% and 12.9% of net restaurant sales for the nine-month periods
ended October 6, 1996 and October 1, 1995, respectively. Management
attributes the decrease to an overall increase in the Company's lunch sales and
a relative decrease in liquor sales as a percentage of alcoholic beverage sales.
Food and beverage costs
This category primarily consists of the cost of all food and beverages,
including alcoholic and non-alcoholic beverages. In addition, the cost of
peanuts, which are complimentary to all customers, are reflected in this
category.
Food and beverage costs decreased 2.6% as a percentage of net sales from
36.4% in the third quarter of 1995 to 33.8% in the third quarter of 1996 and
decreased 2.7% from 36.1% for the nine-month period ended October 1, 1995 to
33.4% for the nine-month period ended October 1, 1996. Management attributes
the overall decreases in both periods to lower beef and produce prices and the
switch to a new food distributor during the fourth quarter of 1995. In
addition, cost increases as a percentage of net sales were partially offset by
a 3% menu price increase in late November 1995. The prices of the Company's
commodities (beef, pork, chicken, seafood
9
<PAGE> 10
and produce) are subject to seasonal fluctuations. Accordingly, food cost
results for the third quarter and nine-month period ended October 6, 1996 may
not necessarily be indicative of results to be expected for the year.
The company has historically experienced higher food costs during the spring
(second quarter) and summer (third quarter) time periods.
Labor and benefits
Labor and benefits include restaurant management salaries, bonuses,
hourly wages for unit level employees, payroll taxes and various employee
benefit programs.
As a percentage of net sales, labor and benefits increased .7% from 26.6%
in the third quarter of 1995 to 27.3% in the third quarter 1996 and increased
.3% from 27.1% for the nine months ended October 1, 1995 to 27.4% for the nine
months ended October 6, 1996,
During the current nine-month period, five new restaurants have been
opened, two of which were opened during the third quarter. The third quarter
increase of .7% is primarily attributable to the two new restaurants opened and
the associated high labor costs normally incurred. There were no new
restaurants opened during the third quarter last year. Generally, when a new
restaurant opens, management budgets and incurs labor costs approximately 15%
higher than normal to accommodate the initial increased business and to ensure
a high level of food quality and service to its customers. As the new staff
gains experience over a 30-60 day post-opening period, hourly labor schedules
are gradually adjusted to provide maximum efficiency with existing sales volume.
Occupancy and other
Occupancy and other costs and expenses are primarily fixed in nature and,
with the exception of rent and advertising, generally do not vary with unit
sales volume. Rent, insurance, property taxes, utilities, maintenance and
advertising account for the major expenditures in this category.
Occupancy and other costs as a percentage of net sales decreased 1.1%
from 15.4% in the third quarter of 1995 to 14.3% in the third quarter of 1996
and decreased 2.1% from 16.9% for the nine-month period ended October 1, 1995
to 14.8% for the nine months ended October 6, 1996.
As a result of operating with a larger restaurant base during 1996,
occupancy and other costs and expenses have increased in total absolute
dollars. The percentage declines in both periods is primarily attributable to
the elimination of a substantial amount of rent expense. In connection with
the Company's initial public offering in July, 1995, five leased facilities
consisting of land, buildings and leasehold improvements were purchased for
$6.1 million. Accordingly, rent expense in the category has significantly
declined since July 1995.
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<PAGE> 11
Depreciation and amortization
The Company records depreciation on its property and equipment on a
straight-line basis over an estimated useful life. In addition, this category
also includes amortization of a new restaurant's preopening costs, which
include costs of hiring and training the initial staff and certain other costs.
The preopening costs are amortized over a one-year period commencing with a
restaurant's opening. As of October 6, 1996, the amount of preopening costs,
net of amortization, on the Company's balance sheet was $823,632.
For the third quarter of 1996, depreciation and amortization amounted to
$450,935, an increase of $178,921 or 65.8% over the comparable period in 1995.
For the nine-month period ended October 6, 1996, these expenses amounted to
$1,311,219 an increase of $632,653 or 93.2% over the comparable period in 1995.
As a percentage of net restaurant sales, these expenses increased .5% from
3.9% for the third quarter of 1995 to 4.4% for the third quarter of 1996 and
increased .9% from 3.4% for the nine months ended October 1, 1995 to 4.3% for
the nine months ended October 6, 1996. These increases are primarily the
result of the aforementioned purchase of five leased facilities and increased
depreciation and amortization resulting from the opening of six new restaurants
since October 1, 1995. Although the Company prefers to own rather than lease
its restaurant facilities and plans to pursue this policy, where possible, in
subsequent quarters, the Company will continue to lease properties in certain
locations.
General adminstrative
General and administrative expenses include all corporate and
administrative functions that serve to support the existing restaurant base and
provide the infrastructure for future growth. Management, supervisory and
staff salaries, employee benefits, data processing, training, rent and office
supplies are the major items of expense in this category.
For the third quarter of 1996, general and administrative expenses
amounted to $569,829, an increase of $200,702 or 54.4% over the comparable
period in 1995. For the nine-month period ended October 6, 1996, these
expenses amounted to $1,863,337, an increase of $688,388 or 58.6% over the
comparable period in 1995. As a percentage of net sales these expenses
increased .2% from 5.4% for the third quarter of 1995 to 5.6% for the third
quarter of 1996; and increased .5% from 5.7% for the nine months ended October
1, 1995 to 6.2% for the nine months ended October 6, 1996.
The increase is primarily attributable to the Company significantly
expanding its management and staff personnel in the areas of finance,
accounting, human resources, operations, training and real estate reflecting
the increased level of organizational support necessary to support the
Company's growing restaurant base. Since July 1995, the Company has also
incurred certain additional costs associated with operating as a public
company. Because of the Company's expansion plans and the expected increase in
net sales as a result thereof, management expects these expenses to continue to
increase in absolute dollars, but to decline slightly as a percentage of net
sales. For a discussion of factors affecting the Company's plans to open
additional restaurants, see "Liquidity and Capital Resources."
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<PAGE> 12
Other Income and Expense
Net interest income (interest income minus interest expense) from cash and
cash equivalents amounted to $126,917 during the third quarter of 1996 as
compared to $23,355 of net interest expense last year. For the nine-month
period ended October 6, 1996, net interest income amounted to $221,500 versus
$155,738 of net interest expense in the comparable period last year. On April
10, 1996, the Company completed a secondary offering of shares of Common Stock
with net proceeds amounting to approximately $20.8 million. From the net
proceeds, the Company repaid all of the then outstanding debt. Accordingly,
during the second and third quarters of 1996, the Company has incurred no
interest expense and generated interest income from its various taxable and
non-taxable investments.
In May 1996, the Company's first franchised restaurant was opened in
Edmond, Oklahoma. In connection with the opening, the Company recognized as
income the initial nonrefundable $30,000 franchise fee collected. In addition,
royalty fees of $3,291 and $24,167 were received during the second and third
quarters, respectively from the one franchised restaurant.
Income taxes
The effective tax rates for the third quarters of 1996 and 1995 were 33.0%
and 35.4%, respectively. For the nine-month period, the effective tax rates
for 1996 and 1995 were 34.5% and 35.4%, respectively. The reduction in the
third quarter tax rate to 33.0% is attributable to the impact of tax-free
interest income being generated from certain non-taxable investments.
From inception through July 25, 1995, the Company was a partnership and
accordingly incurred no federal or state income tax liability. Reflected in
the third quarter and nine-month period ended October 1, 1995, is a pro forma
adjustment that provides for statutory federal and state tax rates then in
effect as though the Company had been subject to corporate income taxes for the
period indicated.
Net earnings
As a result of the factors discussed above, net earnings in the third
quarter of 1996 increased 105.9% to $1,090,573 or 10.8% of net sales from
$529,759 or 7.7% of net sales in the third quarter of 1995. Earnings per share
increased $0.06 or 50.0% in the third quarter of 1996 to $.18 from $.12 in
the third quarter of 1995 with a 39.2% increase in shares of Common Stock
outstanding.
Net earnings increased 125.4% to $2,929,694 or 9.7% of net sales for the
nine months ended October 6, 1996, from $1,299,962 or 6.5% of net sales for the
nine months ended October 1, 1995. Earnings per share increased $.14 or 37.8%
for the nine months ended October 6, 1996 to $.51 from $.37 for the nine months
ended October 1, 1995 with a 61.7% increase in shares of Common Stock
outstanding.
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<PAGE> 13
Liquidity and Capital Resources
On April 10, 1996, the Company completed a secondary offering whereby
1,293,750 shares (giving effect to a three-for-two stock split) of Common Stock
were sold in a registered offering. Proceeds to the Company (after
underwriting discounts and expenses) amounted to approximately $20.8 million.
From the net proceeds, the Company repaid approximately $2.4 million of
outstanding indebtedness and plans to use the remaining proceeds, together
with cash on hand, cash flow from operations and lease financing, to open eight
or nine additional restaurants during the remainder of 1996 and 1997 (one in
1996 and seven or eight in 1997). The Company's ability to expand the number
of its restaurants will depend on a number of factors, including the selection
and availability of quality restaurant sites, the negotiation of acceptable
lease or purchase terms, the securing of required governmental permits and
approvals, the adequate supervision of construction, the hiring, training and
retaining of skilled management and other personnel, the availability of
adequate financing and other factors, many of which are beyond the control of
the Company. The hiring and retention of management and other personnel may be
difficult given the low unemployment rates in the areas in which the Company
intends to operate. There can be no assurance that the Company will be
successful in opening the number of restaurants anticipated in a timely manner.
Furthermore, there can be no assurance that the Company's new restaurants will
generate sales revenue or profit margins consistent with those of the Company's
existing restaurants, or that these new restaurants will be operated
profitably.
The Company's principal capital needs arise from the development of new
restaurant facilities and, to a lesser extent, maintenance and improvement of
its existing facilities. Prior to the Company's initial public offering in late
July 1995, the principal sources of capital to fund the aforementioned
expenditures were operating cash flow, bank borrowings and lease financing. The
following table provides certain information regarding the Company's sources
and uses of capital for the periods presented.
<TABLE>
<CAPTION>
Nine Months
(40 Weeks) Fiscal Year Ended
Ended -------------------
October 6, 1996 Dec. 31, 1995 Dec. 25, 1994
--------------- ------------- --------------
(in thousands)
<S> <C> <C> <C>
Cash flows from operations......................... $ 4,339 $ 3,022 $ 2,195
Net proceeds from public offering.................. 20,759 13,048 -
Capital expenditures............................... (12,491) (13,886) (2,047)
Net borrowings (repayments)........................ (2,579) 529 806
</TABLE>
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<PAGE> 14
Since inception, the Company's single largest use of funds has been for
capital expenditures consisting of land, building, equipment and preopening
costs associated with its restaurant expansion program. The substantial growth
of the Company over the period has not required significant additional working
capital. Sales are predominately cash and the business does not require
significant receivables or inventories. In addition, it is common to receive
trade credit for the purchase of food, beverage and supplies, thereby reducing
the need for incremental working capital to support sales increases.
The Company prefers to own its restaurant facilities when possible rather
than lease. The cost of developing the Company's prototype Logan's Roadhouse
restaurant is estimated to range from $1.9 to $2.5 million, including $825,000
for building costs, $400,000 for equipment costs and $150,000 for preopening
costs. Land acquisition costs, including site preparation, are the most
variable development costs and are estimated to range between $500,000 and $1.1
million. The cost of the development for a new restaurant will not include land
acquisition costs if the property is leased rather than purchased. The Company
plans to open eight or nine restaurants during the remainder of 1996 and in
1997, depending on the availability of quality sites, the hiring and training
of sufficiently skilled management and other personnel and other factors.
Capital expenditures and preopening costs for the fourth quarter should
be approximately $6.1 million. Of this amount, $6.0 million will be used for
the development of seven new restaurants, one of which is scheduled to open in
early December 1996 and $100,000 will be used for various renovations and
replacements of equipment in existing restaurants. In 1997, capital
expenditures and preopening costs are estimated to range from approximately
$11.0 million to $13.2 million for the development of ten or eleven new
restaurants of which seven or eight are expected to be opened in 1997. In
addition, the Company plans to spend $200,000 in 1997 to renovate and replace
equipment in existing restaurants.
Management believes that the net proceeds of the secondary offering,
together with available cash reserves and cash provided from operations, will
be sufficient to fund the Company's expansion plans through 1997. Should the
Company's actual results of operations fall short of, or its rate of expansion
significantly exceed its plans, or should its costs or capital expenditures
exceed expectations, the Company may need to seek additional financing in the
future. In negotiating such financing, there can be no assurance that the
Company will be able to raise additional capital on terms satisfactory to the
Company.
In order to provide any additional funds necessary to pursue the Company's
growth strategy, the Company may incur, from time to time, additional short and
long-term bank indebtedness and may issue, in public or private transactions,
its equity and debt securities, the availability and terms of which will depend
upon market and other conditions. There can be no assurance that such
additional financing will be available on terms acceptable to the Company.
This report contains certain forward-looking statements, including those
relating to the opening of additional restaurants and planned capital
expenditures, each of which is affected by the specific, cautionary language
appearing in the first paragraph of "Liquidity and Capital Resources."
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
The Company was not required to file a report on Form 8-K during the
quarter for which this report is filed.
15
<PAGE> 16
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
LOGAN'S ROADHOUSE, INC.
By: /s/ David J. McDaniel
----------------------------
David J. McDaniel,
Vice President, Treasurer and Secretary
(Chief Financial Officer)
Date: November 15, 1996
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM LOGAN'S
ROADHOUSE, INC. UNAUDITED FINANCIAL STATEMENTS AS OF AND FOR THE FORTY-WEEK
PERIOD ENDED OCTOBER 6, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> OCT-06-1996
<EXCHANGE-RATE> 1
<CASH> 12,273,600
<SECURITIES> 0
<RECEIVABLES> 302,859
<ALLOWANCES> 0
<INVENTORY> 264,079
<CURRENT-ASSETS> 13,922,097
<PP&E> 29,898,504
<DEPRECIATION> 1,563,185
<TOTAL-ASSETS> 42,328,732
<CURRENT-LIABILITIES> 3,403,603
<BONDS> 0
0
0
<COMMON> 60,112
<OTHER-SE> 38,683,117
<TOTAL-LIABILITY-AND-EQUITY> 42,328,732
<SALES> 30,121,482
<TOTAL-REVENUES> 30,400,440
<CGS> 10,057,474
<TOTAL-COSTS> 25,927,932
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,472,508
<INCOME-TAX> 1,542,814
<INCOME-CONTINUING> 2,929,694
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,929,694
<EPS-PRIMARY> 0.51
<EPS-DILUTED> 0.51
</TABLE>
