<PAGE> 1
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 EXCHANGE
ACT OF 1934
For the quarterly period ended July 12, 1998
-------------
[x] 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 Registrant as specified in its charter)
TENNESSEE 62-1602074
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
P.O. BOX 291047, NASHVILLE, TN 37229
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(Address of principal executive offices)
(615) 885-9056
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former
fiscal year, if changed since last report)
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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Class Outstanding August 18, 1998
----- ---------------------------
Common stock, $.01 par value 7,190,401 shares
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
LOGAN'S ROADHOUSE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
July 12, 1998 Dec. 28, 1997
Assets (Unaudited) (Audited)
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 515,813 6,466,775
Investments, at amortized cost 8,000,000 17,900,052
Receivables: trade and other 896,222 812,623
Inventories 670,354 471,150
Preopening costs (note 5) 2,099,314 923,225
Prepaid expenses and other current assets 1,003,987 762,185
----------- ----------
Total current assets 13,185,690 27,336,010
Property, plant and equipment, net 71,606,858 51,075,003
Other assets 194,018 112,198
----------- ----------
Total assets $84,986,566 78,523,211
=========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 4,036,796 2,402,763
Accrued payroll and related expenses 972,180 1,466,149
Deferred revenue 157,188 492,804
Income taxes payable 643,004 280,458
Accrued state and local taxes 1,274,977 732,338
Deferred income taxes 332,178 332,178
----------- ----------
Total current liabilities 7,416,323 5,706,690
Deferred income taxes 1,191,299 1,191,299
----------- ----------
Total liabilities 8,607,622 6,897,989
Shareholders' equity (note 2):
Common stock, $0.01 par value;
Authorized 15,000,000 shares; issued
7,178,828 and 7,142,418 shares, respectively 71,788 71,424
Additional paid-in capital 60,393,588 60,048,611
Retained earnings 15,913,568 11,505,187
----------- ----------
Total shareholders' equity 76,378,944 71,625,222
----------- ----------
Total liabilities and shareholders' equity $84,986,566 78,523,211
=========== ==========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 3
LOGAN'S ROADHOUSE, INC.
STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED: TWENTY-EIGHT WEEKS ENDED:
------------------------------ ------------------------------
July 12, 1998 July 13, 1997 July 12, 1998 July 13, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net restaurant sales $22,530,694 15,965,741 49,175,957 33,862,109
Costs and expenses:
Food and beverage 7,335,995 5,237,167 16,065,002 11,097,344
Labor and benefits 6,468,562 4,374,737 14,139,155 9,334,729
Occupancy and other 3,298,493 2,299,113 7,279,692 4,906,228
Depreciation and amortization 1,100,431 850,386 2,419,052 1,800,610
General and administrative 1,226,360 817,771 2,927,736 1,893,528
----------- ---------- ---------- ----------
19,429,841 13,579,174 42,830,637 29,032,439
----------- ---------- ---------- ----------
Income from operations 3,100,853 2,386,567 6,345,320 4,829,670
Other income
Interest, net 81,776 55,804 305,579 115,998
Franchise fee and royalties 88,554 33,813 152,158 79,508
----------- ---------- ---------- ----------
170,330 89,617 457,737 195,506
----------- ---------- ---------- ----------
Earnings before income taxes 3,271,183 2,476,184 6,803,057 5,025,176
Income tax expense (note 3) 1,151,457 903,807 2,394,677 1,834,189
----------- ---------- ---------- ----------
Net earnings $ 2,119,726 1,572,377 4,408,380 3,190,987
=========== ========== ========== ==========
Earnings per share (note 4):
Basic 0.30 0.26 0.62 0.53
=========== ========== ========== ==========
Diluted 0.29 0.25 0.60 0.51
=========== ========== ========== ==========
Weighted average shares outstanding:
Basic 7,164,310 6,018,128 7,153,681 6,016,394
=========== ========== ========== ==========
Diluted 7,409,044 6,247,743 7,381,214 6,256,861
=========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
LOGAN'S ROADHOUSE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Twenty-eight Weeks Ended
July 12,1998 July 13, 1997
------------ -------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 4,408,380 3,190,987
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 2,419,052 1,800,610
Net effect of changes in current assets and
current liabilities (989,269) (1,739,001)
------------ ----------
Net cash provided by operating activities 5,838,163 3,252,596
------------ ----------
Cash flows from investing activities:
Additions to property, plant and equipment (21,952,698) (8,781,616)
Proceeds from maturities of investments 9,900,052 4,895,338
Increase in other assets (81,820) (27,525)
------------ ----------
Net cash used by investing activities (12,134,466) (3,913,803)
------------ ----------
Cash flows from financing activities-
Proceeds from exercise of stock options 345,341 51,705
------------ ----------
Net decrease in cash (5,950,962) (609,502)
Cash and cash equivalents, beginning of period 6,466,775 780,307
------------ ----------
Cash and cash equivalents, end of period $ 515,813 170,805
============ ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
LOGAN'S ROADHOUSE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
TWENTY-EIGHT WEEKS ENDED JULY 12, 1998 AND JULY 13, 1997
(1) BASIS OF PRESENTATION
The accompanying financial statements have been prepared by the Company
without audit, with the exception of the December 28, 1997 balance sheet which
was derived from the audited financial statements included in the Company's
December 28, 1997 Annual Report. The financial statements include balance
sheets, statements of earnings and statements of cash flows which have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting and in accordance with Rule 10-01 of Regulation S-X. These
financial statements, 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 28, 1997 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.
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) SHAREHOLDERS' EQUITY
On July 23, 1997, the Company completed a public offering whereby
1,100,000 shares of Common Stock were sold at $24 per share. Proceeds to the
Company (after underwriting discounts and expenses) amounted to approximately
$24.6 million. The Company had 7,178,828 shares of Common Stock outstanding at
July 12, 1998.
(3) INCOME TAXES
The provision for income taxes for the six months (28 weeks) ended July
12, 1998 and the comparable period of 1997 consists of both federal and state
taxes. The Company's effective tax rates for the above periods were 35.2% for
1998 and 36.5% for 1997. The current year decline is attributable to an increase
in tax exempt interest income during the first and second quarters of 1998.
5
<PAGE> 6
(4) EARNING PER SHARE
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 128 Earnings Per Share, during the fourth quarter of 1997. Accordingly, all
prior period earnings per share data has been restated in accordance with SFAS
No. 128. Basic earnings per share data has been computed on the basis of the
weighted average number of shares outstanding, and diluted earnings per share
data has been computed on the basis of the weighted average number of shares
outstanding, including stock equivalents, which consist of stock options.
The following table is a reconciliation of basic and diluted earnings per share
for the periods presented:
<TABLE>
<CAPTION>
Twelve Weeks Ended July 12, 1998 Twelve Weeks Ended July 13, 1997
--------------------------------------- --------------------------------------------
Income Common Income Common
Available Shares Per Share Available Shares Per Share
(Numerator) (Demonator) Amount (Numerator) (Denomiator) Amount
---------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $2,119,726 7,164,310 $ 0.30 $1,572,377 6,018,128 $ 0.26
========== ==========
Effect of dilutive securities
Stock options -- 244,734 -- 229,615
Diluted EPS
---------- --------- ---------- ---------- --------- ----------
$2,119,726 7,409,044 $ 0.29 $1,572,377 6,247,743 $ 0.25
========== ========= ========== ========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Twenty-eight Weeks Ended July 12, 1998 Twenty-eight Weeks Ended July 13, 1997
--------------------------------------- --------------------------------------------
Income Common Income Common
Available Shares Per Share Available Shares Per Share
(Numerator) (Demonator) Amount (Numerator) (Denomiator) Amount
---------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $4,408,380 7,153,681 $ 0.62 $3,190,987 6,016,394 $ 0.53
========== ==========
Effect of dilutive securities
Stock options -- 227,533 -- 240,467
Diltued EPS
---------- --------- ---------- ---------- --------- ----------
$4,408,380 7,381,214 $ 0.60 $3,190,987 6,256,861 $ 0.51
========== ========= ========== ========== ========= ==========
</TABLE>
For the twelve weeks ended July 12, 1998, options to purchase 66,000 shares of
the Company's common stock were excluded from the computation of diluted
earnings per share as these securities were anti-dilutive for such period.
(5) NEW ACCOUNTING PRONOUNCEMENT
On April 13, 1998 the AICPA Accounting Standards Executive Committee
(AcSEC) issued Statement of Position 98-5, Reporting on the Costs of Start-Up
Activity. SOP 98-5 is effective for financial statements issued for fiscal years
beginning after December 15, 1998. The SOP requires that costs incurred during a
start-up activity (including organization costs) be expensed as incurred. The
Company will recognize no later than the first quarter of 1999, as a cumulative
effect of a change in accounting principle, a charge equal to the after tax
effect of the unamortized pre-opening costs at the date of adoption.
6
<PAGE> 7
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 second quarter
(12 weeks) and six months (28 weeks) ended July 12, 1998. This section should be
read in connection with the "Selected Financial Data" and financial statements
and related notes included in the Company's December 28, 1997 Annual Report.
At the time of the Company's initial public offering in July 1995, the
Company had eight restaurants in operation located primarily in middle
Tennessee. The Company completed its second public offering of Common Stock in
April 1996 at which time it operated ten restaurants. The Company has continued
its expansion strategy and currently operates 34 restaurants located in Alabama,
Georgia, Florida, Indiana, Kentucky, Louisiana, Tennessee, Virginia and West
Virginia. In addition, the Company franchises a total of four restaurants in
Oklahoma, North Carolina and South Carolina.
In July 1997, the Company completed its third public offering raising
net proceeds of approximately $24.6 million. The Company plans to use the
remaining proceeds, together with cash on hand, cash flow from operations and
lease financing to open six new restaurants during the remainder of 1998. 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 which 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 new restaurants will be operated profitably.
7
<PAGE> 8
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
---------------------------------------------------------------------
Second Quarter Six Months
(12 Weeks Ended) (28 Weeks Ended)
-------------------------------- --------------------------------
July 12, 1998 July 13, 1997 July 12, 1998 July 13, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net restaurant sales ................. 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Food and beverage .................. 32.6 32.8 32.7 32.8
Labor and benefits ................. 28.7 27.4 28.8 27.6
Occupancy and other ................ 14.6 14.4 14.8 14.4
Depreciation and amortization ...... 4.9 5.3 4.9 5.3
General and administrative ......... 5.4 5.1 5.9 5.6
----- ----- ----- -----
Total operating costs and expenses 86.2 85.0 87.1 85.7
----- ----- ----- -----
Income from operations .......... 13.8 15.0 12.9 14.3
Other income (expense), net .......... .7 .5 .9 .5
----- ----- ----- -----
Earnings before income taxes .... 14.5 15.5 13.8 14.8
Income tax expense ................... 5.1 5.7 4.8 5.4
----- ----- ----- -----
Net earnings..................... 9.4% 9.8% 9.0% 9.4%
===== ===== ===== =====
</TABLE>
NET RESTAURANT SALES
Net restaurant sales increased $6,564,953 or 41.1% during the second
quarter of 1998 (12 weeks), and increased $15,313,848 or 45.2% during the
six-month period (28 weeks) ended July 12, 1998, compared to the corresponding
periods of last year. The Company had 33 restaurants in operation at July 12,
1998 compared to 22 at July 13, 1997. The Company opened nine new restaurants
during the six-month period ended July 12, 1998; five during the first quarter
and four during the second quarter. The substantial growth in sales for both the
second quarter and six-month period of 1998 is primarily attributable to the
opening of 11 new restaurants since the second quarter of 1997. In addition, a
2.5% menu price increase was implemented in January, 1998.
For the second quarter and first six months of 1998, same store sales
declined 1.5% and increased .4%, respectively, when compared to the
corresponding periods of last year. The 1.5% decline for the second quarter is
primarily attributable to one restaurant located in a smaller market which
experienced an operating problem.
Alcoholic beverage sales, consisting of liquor and beer, accounted for
10.6% and 11.3% of net restaurant sales for the six-month period ended July 12,
1998 and July 13, 1997, 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.
8
<PAGE> 9
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 customers, are reflected in this category.
Food and beverage costs remained approximately the same, declining 0.2%
as a percentage of net sales from 32.8% in the second quarter of 1997 to 32.6%
in the second quarter of 1998 and declining 0.1% from 32.8% for the six-month
period ended July 13, 1997 to 32.7% for the six-month period ended July 12,
1998. During both the first and second quarters of 1998, the Company experienced
higher produce, seafood, cheese and dairy costs which were substantially offset
by lower beef costs. In addition, cost increases were partially offset by a 2.5%
menu price increase in January 1998. The prices of the Company's commodities
(beef, pork, chicken, seafood and produce) are subject to seasonal fluctuations.
Accordingly, food cost results for the second quarter ended July 12, 1998 may
not 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 1.3% from
27.4% in the second quarter of 1997 to 28.7% in the second quarter of 1998 and
increased 1.2% from 27.6% for the six-month period ended July 13, 1997 to 28.8%
for the six-month period ended July 12, 1998. The increase in both the second
quarter and six-month period is primarily attributable to: (i) operating on
lower average unit volumes, compared to the corresponding periods of last year
and (ii) increased employee training focusing on strengthening customer service,
product quality, speed and efficiency.
OCCUPANCY AND OTHER
Occupancy and other costs and expenses are primarily fixed in nature
and, with the exception of 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 increased 0.2%
from 14.4% in the second quarter of 1997 to 14.6% in the second quarter of 1998
and increased 0.4% from 14.4% for the six-month period ended July 13, 1997 to
14.8% for the six-month period ended July 12, 1998.
As a result of operating with a larger restaurant base during 1998,
occupancy and other costs and expenses have increased in total absolute dollars.
The percentage increases of 0.2% and 0.4% for the second quarter and six-month
period ended July 12, 1998, respectively, are primarily attributable to
operating on a lower average unit volumes.
9
<PAGE> 10
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 July 12, 1998, the amount of preopening costs, net
of amortization, on the Company's balance sheet was $2,099,314. (See Note 5 of
"Notes to Unaudited Financial Statements").
For the second quarter of 1998, depreciation and amortization amounted
to $1,100,431, an increase of $250,045 or 29.4% over the comparable period in
1997. For the six-month period ended July 12, 1998, these expenses amounted to
$2,419,052, an increase of $618,442 or 34.3% over the comparable period in 1997.
As a percentage of net restaurant sales, these expenses declined 0.4% from 5.3%
for the second quarter and six-month period ended July 13, 1997 to 4.9% for the
second quarter and the six-month period ended July 12, 1998. The increase in
absolute dollars is primarily the result of increased depreciation and
amortization resulting from the opening of 18 new restaurants since the
beginning of 1997. The 0.4% percentage decline in the second quarter and
six-month period ended July 12, 1998 is primarily attributable to the
amortization of preoperational costs being amortized over an expanding sales
base.
GENERAL AND ADMINISTRATIVE
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 costs
associated with being a public company are the major items of expense in this
category.
For the second quarter of 1998, general and administrative expenses
amounted to $1,226,360, an increase of $408,589 or 50.0% over the comparable
period in 1997. For the six-month period ended July 12, 1998, these expenses
amounted to $2,927,736, an increase of $1,034,208 or 54.6% over the comparable
period in 1997. As a percentage of net sales, these expenses increased 0.3% from
5.1% for the second quarter of 1997 to 5.4% for the second quarter of 1998 and
increased 0.3% from 5.6% for the six months ended July 13, 1997 to 5.9% for the
six months ended July 12, 1998.
The dollar increase is primarily attributable to the Company
significantly expanding its management and staff personnel in the areas of
operations, training, real estate, construction and accounting. Most of the
staff additions were made during the fourth quarter of 1997 in preparation for
the Company's expected growth in 1998. 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 during 1998 in absolute dollars, but to
decline slightly as a percentage of net sales from the 5.9% rate for the six
months ended July 12, 1998. For a discussion of factors affecting the Company's
plans to open additional restaurants see "Liquidity and Capital Resources."
10
<PAGE> 11
OTHER INCOME (EXPENSE)
Net interest income (interest income minus interest expense) from cash,
cash equivalents and investments amounted to $81,776 during the second quarter
of 1998, compared to $55,804 during the comparable period last year. For the
six-month period ended July 12, 1998, net interest income amounted to $305,579,
compared to $115,998 in the comparable period last year. During the third
quarter of last year the Company completed a public offering of its Common Stock
with net proceeds to the Company amounting to approximately $24.6 million.
Accordingly, during the first and second quarters of 1998, with higher levels of
invested cash, the Company generated increased interest income from its various
taxable and non-taxable investments.
During the six-month period ended July 12, 1998, the Company had four
franchised restaurants in operation compared to two for the corresponding period
of 1997. The Company's newest franchised restaurant opened in Fayetteville,
North Carolina in June 1998. In connection with the opening, the Company
recognized as income the initial non-refundable $30,000 franchise fee collected.
During the first six months of 1998, royalty fees of $122,158 were received from
the four franchised restaurants.
INCOME TAXES
The effective tax rates for both the second quarter and six-month
period ended July 12, 1998 and July 13, 1997 were 35.2% and 36.5%, respectively.
The decline in the 1998 tax rate to 35.2% is attributable to an increase in
tax-exempt interest income during 1998.
NET EARNINGS
As a result of the factors discussed above, net earnings in the second
quarter of 1998 increased $547,349 or 34.8% to $2,119,726, or 9.4% of net sales
from $1,572,377, or 9.8% of net sales, in the second quarter of 1997. Diluted
earnings per share increased $0.04 or 16.0% in the second quarter of 1998 to
$0.29 from $0.25 in the second quarter of 1997 with an 18.6% increase in diluted
shares of Common Stock outstanding.
Net earnings increased $1,217,393 or 38.2% to $4,408,380 or 9.0% of net
sales for the six-month period ended July 12, 1998 from $3,190,987, or 9.4% of
net sales for the six months ended July 13, 1997. Diluted earnings per share
increased $.09 or 17.6% for the six months ended July 12, 1998 to $0.60 from
$0.51 for the six months ended July 13, 1997 with a 18.0% increase in shares of
Common Stock outstanding.
11
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
In July 1997, the Company completed a public offering whereby 1,100,000
shares of Common Stock were sold. Proceeds to the Company (after underwriting
discounts and expenses) amounted to approximately $24.6 million. The Company
plans to use the remainder of the proceeds, together with cash on hand, cash
flow from operations and lease financing, to open six new restaurants during the
remainder of 1998. For additional liquidity, the Company has available a $2.5
million revolving credit facility with a local bank. As of August 18, 1998,
there were no borrowings outstanding.
As reflected in the table below, 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
principal sources of capital to fund such expenditures have been (i) cash
provided by operations, (ii) net proceeds from equity offerings and (iii) lease
financing. The following table provides certain information regarding the
Company's sources and uses of capital for the periods presented.
<TABLE>
<CAPTION>
Six Months
(28 weeks ended) Fiscal Year Ended
July 12, 1998 Dec. 28, 1997 Dec. 29, 1996
------------- ------------- -------------
(in thousands)
<S> <C> <C> <C>
Cash flows from operations ....... $ 5,838 $ 8,915 $ 7,302
Capital expenditures ............. (21,953) (19,296) (18,146)
Net proceeds from public offerings -- 24,556 20,733
Net repayments .................. -- -- (2,579)
</TABLE>
Cash flows provided by operations and proceeds from public equity
offerings represent the Company's primary sources of liquidity and capital. The
substantial growth of the Company over the period has not required significant
additional working capital. Sales are predominantly cash, and the business does
not require significant additional working capital, 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 rather than lease its restaurant facilities
when possible. The cost of developing the Company's prototype Logan's Roadhouse
restaurant is estimated to range from $2.0 to $2.6 million, including $900,000
for building costs, $400,000 for equipment costs and $175,000 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 development of a new restaurant will not include land acquisition
costs if the property is leased rather than purchased.
Capital expenditures and preopening costs for the remainder of 1998 are
estimated to amount to approximately $14.5 million for the development of 11 new
restaurants of which six are expected to open during 1998 depending on the
availability of quality sites, the hiring and training of sufficiently skilled
management and other personnel and other factors. In addition,
12
<PAGE> 13
the Company plans to spend approximately $300,000 during the remainder of 1998
to renovate and replace equipment in existing restaurants.
Management believes that available cash, investments, cash provided
from operations, lease financing and an unused $2.5 million bank line of credit
will be sufficient to fund the Company's expansion plans through 1998. 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.
As the year 2000 approaches, a critical business issue has emerged
regarding how existing application software programs and operating systems can
accommodate this date value. Many existing application software products in the
marketplace were designed to accommodate only two-digit date entries. Beginning
in the year 2000, these systems and products will need to be able to accept
four-digit entries to distinguish years beginning with 2000 from prior years. As
a result, computer systems and software used by many companies may need to be
upgraded to comply with such "Year 2000" requirements. While the Company has
developed a plan to ensure that its software applications and programs are Year
2000 compliant, there can be no assurance that such plan will be implemented in
a timely and effective manner or that coding errors or other defects will not be
discovered after its implementation. Also, the Company has initiated discussions
with its principal food product supplier to determine the extent to which the
Company is vulnerable to those third parties' failure to remediate their own
Year 2000 issues. Management does not expect to incur costs in excess of $10,000
in connection with remediating its Year 2000 issues. Currently, the Company does
not have a contingency plan. If the Company's principal food product supplier
fails to remediate its Year 2000 issues such that it cannot supply the Company's
food product, the Company will contract with another supplier. Although
management does not believe the Year 2000 issues will have a material adverse
effect on the Company's business or financial condition, any Year 2000
compliance problem of the Company or its principal food product supplier could
result in such a material adverse effect.
FORWARD-LOOKING STATEMENTS
This Form 10-Q and other information that is provided by the Company
contains forward-looking statements, including those regarding the opening of
additional restaurants, planned capital expenditures, the adequacy of the
Company's capital resources and other statements regarding trends relating to
various revenue and expense items including Year 2000 related issues. These
statements are subject to a number of risks and uncertainties beyond the
Company's control that could cause the Company's actual results to differ
materially from those projected in such forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
No disclosure required.
13
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As disclosed in the Company's Quarterly Report on Form 10-Q for the
quarter ended April 19, 1998, the Company entered into a settlement agreement
with each of Joseph H. Cook, Charles Keith Olivier and Gerald A. Jacobs, in
connection with lawsuits against the Company. The United States District Court
for the Middle District of Tennessee dismissed with prejudice on May 12, 1998
and May 11, 1998, respectively, the actions brought by Mr. Cook and by Messrs.
Olivier and Jacobs.
As disclosed in the Company's Quarterly Report on Form 10-Q for the
quarter ended April 19, 1998, Kenneth F. Payne filed a lawsuit against the
Company in the United States District Court for the Middle District of
Tennessee, Nashville Division. Mr. Payne claims that the Company terminated his
employment because he refused to participate in, or remain silent about, and
reported certain improper or inappropriate activities allegedly engaged in by
the Company in violation of the Fair Labor Standards Act and the Tennessee
Whistle Blower Statute. A trial date for the lawsuit with Mr. Payne has been set
for September 29, 1998. The Company denies his allegations and believes it has
meritorious defenses against such claims. At this time, the Company believes
that the lawsuit will not exceed the limits of available insurance coverage or
have a material adverse effect on the Company's financial position or results of
operations.
The Company's forward looking statements relating to the pending
lawsuit with Mr. Payne reflect management's best judgment based on the status of
the litigation to date and facts currently known to the Company and, as a
result, involve a number of risks and uncertainties, including the possible
disclosure of new facts and information adverse to the Company in the discovery
process and the inherent uncertainties associated with litigation.
Except as set forth above, the Company is not currently involved in any
litigation nor, to management's knowledge, is any litigation threatened against
the Company, except for routine litigation arising in the ordinary course of
business. In the judgment of management of the Company, no material adverse
effect on the Company's financial position or results of operations would result
if any such litigation were not resolved in the Company's favor.
14
<PAGE> 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Shareholders on May 7, 1998 for
the purpose of (1) electing one nominee as a Class II Director and two nominees
as Class III Directors; (2) approving the proposed amendments to the Company's
1995 Incentive Stock Plan; and (3) approving the appointment of KPMG Peat
Marwick LLP as the Company's independent auditors for the fiscal year ended
December 27, 1998. The vote was as follows:
<TABLE>
<CAPTION>
For Against Abstain Total
--------- ------- ------- ---------
<S> <C> <C> <C> <C>
(1) Election of Directors:
B. Tom Collins 5,217,510 287,116 -0- 5,504,626
========= ======= ====== =========
Edwin W. Moats, Jr. 5,224,110 280,516 -0- 5,504,626
========= ======= ====== =========
Ted H. Welch 5,217,510 287,516 -0- 5,504,626
========= ======= ====== =========
(2) Proposed Amendments to
1995 Incentive Stock Plan 4,559,191 924,652 20,783 5,504,626
========= ======= ====== =========
(3) Approval of KPMG Peat
Marwick as Auditors 5,486,811 11,875 5,940 5,504,626
========= ======= ====== =========
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
*3.1 Amended and Restated Charter of the Registrant
*3.2 Bylaws of the Registrant
*4.1 Section 8 of the Amended and Restated Charter of the
Registrant (included in Exhibit 3.1)
*4.2 Specimen of Common Stock Certificate
**10.1 Amendment No. 2 to the Registrant's 1995 Incentive Stock Plan
27.1 Financial Data Schedule for quarter ended July 13, 1997 (for
SEC use only)
27.2 Financial Data Schedule for quarter ended July 12, 1998 (for
SEC use only)
* Incorporated by reference to the Registrant's Registration
Statement on Form SB-2 (Registration No. 33-92976-A)
** Incorporated by reference to the Registrant's Registration
Statement on Form S-8 (Registration No. 333-48015)
(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
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.
LOGAN'S ROADHOUSE, INC.
By: /s/ David J. McDaniel
-----------------------------------
David J. McDaniel,
Sr. Vice President, Treasurer and
Secretary (Chief Financial Officer)
Date: August 21, 1998
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LOGAN'S ROADHOUSE, INC. FOR THE SIX MONTHS ENDED JULY
13, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> JUL-13-1997
<CASH> 170,805
<SECURITIES> 4,165,395
<RECEIVABLES> 502,802
<ALLOWANCES> 0
<INVENTORY> 427,659
<CURRENT-ASSETS> 6,671,807
<PP&E> 44,335,018
<DEPRECIATION> 2,787,657
<TOTAL-ASSETS> 48,318,566
<CURRENT-LIABILITIES> 4,426,014
<BONDS> 0
0
0
<COMMON> 60,195
<OTHER-SE> 43,184,329
<TOTAL-LIABILITY-AND-EQUITY> 48,318,566
<SALES> 33,862,109
<TOTAL-REVENUES> 33,862,109
<CGS> 11,097,344
<TOTAL-COSTS> 27,138,911
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,025,176
<INCOME-TAX> 1,834,189
<INCOME-CONTINUING> 3,190,987
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,190,987
<EPS-PRIMARY> .53
<EPS-DILUTED> .51
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LOGAN'S ROADHOUSE, INC. FOR THE SIX MONTHS ENDED JULY
12, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-START> DEC-29-1997
<PERIOD-END> JUL-12-1998
<CASH> 515,813
<SECURITIES> 8,000,000
<RECEIVABLES> 896,222
<ALLOWANCES> 0
<INVENTORY> 670,354
<CURRENT-ASSETS> 13,185,690
<PP&E> 76,801,917
<DEPRECIATION> 5,195,059
<TOTAL-ASSETS> 84,986,566
<CURRENT-LIABILITIES> 7,416,323
<BONDS> 0
0
0
<COMMON> 71,788
<OTHER-SE> 76,307,156
<TOTAL-LIABILITY-AND-EQUITY> 84,986,566
<SALES> 49,175,957
<TOTAL-REVENUES> 49,175,957
<CGS> 16,065,002
<TOTAL-COSTS> 39,902,901
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,803,057
<INCOME-TAX> 2,394,677
<INCOME-CONTINUING> 4,408,380
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,408,380
<EPS-PRIMARY> .62
<EPS-DILUTED> .60
</TABLE>
