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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(D)
OF THE SECURITIES AND EXCHANGE ACT
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-14311
FAMILY STEAK HOUSES OF FLORIDA, INC.
(exact name of registrant as specified in its charter)
Florida No. 59-2597349
(State of Incorporation) (I.R.S. Employer Identification)
2113 Florida Boulevard
Neptune Beach, Florida 32266
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (904) 249-4197
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value
(Title of Class)
______________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
[ ]
Indicate by check mark whether registrant is an accelerated filer (as
defined by Rule 126-2 of the Act.
YES [ ] NO [ X ]
As of February 25, 2004, 3,706,200 shares of Common Stock of the registrant
were outstanding. The aggregate market value of such voting Common Stock (based
upon the closing sale price of the registrant's Common Stock on the Over the
Counter Bulletin Board on February 25, 2004, as reported in The Wall Street
Journal) held by non-affiliates of the registrant was approximately $1,118,500.
Documents Incorporated by Reference
Portions of the registrant's 2003 Annual Report to Shareholders are
incorporated by reference into Part II. Portions of the Proxy Statement for the
registrant's 2004 Annual Meeting of Shareholders are incorporated by reference
into Part III.
PART I
ITEM 1. BUSINESS
General
Family Steak Houses of Florida, Inc. (the "Company")is the
operator of eighteen restaurants in the state of Florida. The
Company's first restaurant was opened in Jacksonville, Florida
in May 1982. The Company's stock trades on the Over the Counter
Bulletin Board under the symbol RYFL.
The Company is the sole franchisee for Ryan's Family Steak
House, Inc. in the state of Florida operating under a franchise
agreement with Ryan's Properties, Inc. (the "Franchisor").
Ryan's restaurants are family-oriented buffet restaurants
serving high-quality, reasonably priced food in a casual
atmosphere with server-assisted service. Ryan's restaurants
feature self-service scatter bars with a variety of over 100
fruit, vegetable and meat entree items, bakery and dessert bar,
drink refills and table service. Several restaurants feature a
display cooking area, where guests can have grilled-to-order
steaks, chicken, pork chops and other items, all of which is
included in the price of the all-you-can-eat buffet.
In December 2003, the Company amended the franchise
agreement which, among other things, requires each Ryan's
restaurant to be converted to a different name and logo by June
2005. The Ryan's restaurants will be converted to one of two
names, based on a variety of factors, either "Whistle Junction"
or "Florida Buffet" (the "Whistle Junction Restaurant" and/or
the "Florida Buffet Restaurant"). The operations of the Whistle
Junction Restaurants and the Florida Buffet Restaurants will
maintain the current buffet format and will include enhancements
to the buildings, service and menus.
Company History
The Company was formed effective September 1985 by the
combination of six limited partnerships, each of which owned and
operated a Ryan's restaurant franchise. In April 1986, the
Company issued 853,200 shares of its common stock in exchange
for the assets and liabilities of the predecessor partnerships
and 1,134,000 shares of its common stock to Eddie L. Ervin, Jr.,
in consideration for Mr. Ervin assigning to the Company all of
his rights under the Franchise Agreement, as defined below. The
Company completed its initial public offering of 900,000 shares
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of its common stock in 1986 resulting in net proceeds to the
Company of approximately $4,145,000.
Franchise Agreement
The Company operates its Ryan's restaurants under a
franchise agreement between the Company and the Franchisor dated
September 16, 1987, which amended and consolidated all previous
franchise agreements (as amended, the "Franchise Agreement"). In
December 2003, the Company entered into an amendment(the
"Amendment") to the Franchise Agreement to terminate the
Franchise Agreement by June 2005. The Amendment requires the
Company to convert a specific number of its Ryan's restaurants
each quarter to a new name and logo, beginning the first quarter
of 2004, and requires all of the Ryan's restaurants to be
converted by June 2005. As soon as each Ryan's restaurant is
converted, franchise fees are no longer payable to the
Franchisor for that converted restaurant. (See Note 4 to the
Financial Statements for further details in the Company's 2003
Annual Report to Shareholders.)
The Amendment requires the Company to pay a monthly
franchise fee of 4.0% of the gross receipts of each restaurant
operating under the name of Ryan's. Total franchise fee expenses
were $1,494,400, $1,681,600 and $1,260,300 for fiscal years
2003, 2002 and 2001, respectively.
The Company plans to convert most of the Ryan's restaurants
to a new family-buffet dining concept by creating a new brand
that will be known as the "Whistle Junction". The new concept
entails a substantial redesigning of the restaurant's exterior
to look like an old train station. The interior of the
restaurants will also feature the train theme, including
operating model railroads running throughout the dining room and
various train memorabilia. The operation of the Whistle
Junction Restaurants will continue to be a buffet format, but
with an upgraded menu and improved service levels. The first
Whistle Junction Restaurant is scheduled to open in March 2004,
and a newly built Whistle Junction Restaurant is scheduled to
open in April 2004.
Certain of the Ryan's restaurants will be converted to an
alternate brand that will be known as the "Florida Buffet" based
on various factors including the restaurant's location. Through
February 2004, three Ryan's restaurants have been converted to
Florida Buffet Restaurants. The Florida Buffet conversions
3
include interior and exterior changes to the building design to
incorporate a "Florida look" theme, although the changes are not
as significant as those for the Whistle Junction Restaurant.
Menu and service enhancements are also added to the Florida
Buffet Restaurants which are designed to attract and maintain
increased customer volumes.
The following schedule outlines the number of Ryan's restaurants
required to be converted to another name by the Company at each
quarter-end under the Amendment. Failure to convert the
cumulative required number of restaurants at any quarter-end
date results in a higher franchise fee on the restaurants still
using the Ryan's name. Failure to convert all of the
restaurants by June 30, 2005 is a default under the Franchise
Agreement in the event of which the franchisor has the right to
require the Company to cease using the Ryan's name immediately.
Cumulated Number of
Restaurants Required to
End of Fiscal Quarter be Converted
March 31, 2004 3
June 30, 2004 5
September 30, 2004 8
December 31, 2004 11
March 31, 2005 14
June 30, 2005 18
The Company is ahead of this schedule for the first quarter
of 2004, having converted three restaurants by February 11,
2004. However, the Company's ability to convert the remaining
restaurants depends on factors that may be beyond management's
control, such as its ability to raise capital for the Whistle
Junction remodels, obtaining building permits, the operating
results of the converted restaurants, and the resulting impact
on the Company's cash flow and other variable factors.
Operations of Restaurants
Format. As of February 25, 2004, 17 of the Company's
restaurants are located in free-standing buildings which vary in
size from 7,500 to 12,000 square feet. One of the Company's
restaurants is located in a shopping mall. Each restaurant is
constructed of brick or stucco walls, interior and exterior,
with exposed woodwork. The interior of each restaurant contains
a dining room, a customer ordering area, and a kitchen. The
dining rooms seat between 270 and 500 persons and highlight
4
centrally located, illuminated scatter bars and a fresh bakery
and dessert bar. Six restaurants include a display cooking area
with a charcoal grill and a flat grill for grilled-to-order
steaks, pork chops and chicken items, a rotisserie chicken
broiler, a pizza oven and a wok for preparation of Chinese food
items. Each restaurant has parking for approximately 100 to 175
cars on lots of overall size of approximately 50,000 to 70,000
square feet.
The restaurants operate seven days a week. Typical hours
of operation are from 11:00 a.m. to 9:00 p.m., Sunday through
Thursday, and from 11:00 a.m. to 10:00 p.m., Friday and
Saturday. Restaurants that serve breakfast open at 8:00 a.m.
Saturday and Sunday. In each restaurant, the customer enters the
restaurant, orders from the menu, and then enters the dining
room. Beverages are brought to the table by servers. Entrees are
cooked to order at most locations. The customer ordering the
buffet is given unlimited access to the scatter bars and the
bakery and dessert bar. Customers receive table service of the
entree and beverage refills except at stores with display
cooking, which offer buffet only. For the fiscal year ended
December 31, 2003, the average weekly customer count per
restaurant was approximately 5,220 and the average meal price
(including beverage) was approximately $7.00.
Restaurant Management and Supervision. The Company manages
its restaurants pursuant to a standardized operating and control
system together with comprehensive recruiting and training of
personnel to maintain food and service quality. In each
restaurant, the management group consists of a general manager,
a manager and one to three assistant managers, depending on
sales volume. The Company requires at least two members of the
management group on duty during all peak serving periods.
Management-level personnel usually begin employment at the
manager trainee or assistant manager level, depending on prior
restaurant management experience. All new management-level
personnel must complete the Company's five-week training program
prior to being placed in a management position.
Each restaurant management group reports to a supervisor.
Presently, the supervisors each oversee the operations of five
to seven restaurants. The supervisors report directly to the
Director of Operations. Communication and support from all
departments in the Company are designed to assist the
supervisors in responding promptly to local problems and
opportunities.
5
All restaurant managers and supervisors participate in
incentive programs based upon the profitability of their
restaurants and upon the achievement of certain pre-set goals.
The Company believes these incentive programs enable it to
operate more efficiently and to attract qualified managers. The
Company has an operating partner program for certain managers to
provide them with an additional career path and give them
increased incentive to maximize the profitability of their
restaurants. The Company currently has two operating partners
participating in this program.
Purchasing, Quality and Cost Control. The Company has a
centralized purchase control program which is designed to ensure
uniform product quality in all restaurants. The program also
helps to maintain reduced food, beverage, and supply costs. The
Company purchases approximately 90% of the products used by the
Company's restaurants through the centralized purchase control
program. USDA choice or select grain-fed beef, the Company's
primary commodity, is closely monitored by the Company for
advantageous purchasing and quality control. The Company
purchases beef through various producers and brokers both on a
contract basis and on a spot basis. Beef and other products are
generally delivered directly to the restaurants three times
weekly. The Company has in the past obtained satisfactory
sources of supply for all the items it regularly uses and
believes it will be able to continue to do so in the future.
The Franchise Agreement requires all suppliers of Ryan's
restaurants be approved by the Franchisor. Through its
relationship with the Franchisor, the Company has obtained
favorable pricing on the purchase of food products from several
suppliers. After the termination of the Franchise Agreement,
there can be no assurance that these favorable pricing terms
will be maintained on all products. The Company changed its
primary distributor to Performance Food Group ("PFG") in 2004.
The PFG agreement is cancelable at any time with 90 days notice.
The Company maintains centralized financial and accounting
controls for its restaurants. On a daily basis, restaurant
managers forward customer counts, sales information and supplier
invoices to Company headquarters. On a weekly basis, restaurant
managers forward summarized sales reports and payroll data.
Physical inventories of all food and supply items are taken
weekly, and meat is inventoried daily.
6
Development
General. The Company operated 15 Ryan's restaurants and
three Florida Buffet Restaurants as of February 25, 2004. A new
Whistle Junction Restaurant, one of the Company's new restaurant
concepts, is under construction and is expected to open in April
2004.
Site Location and Construction. The Company considers the
specific location of a restaurant to be important to its long-
term success. The Company's site selection process for its
restaurants focuses on a variety of factors including trade area
demographics (such as population density and household income
level), site characteristics (such as visibility, accessibility,
and traffic volume), proximity to large retailers and potential
competition. In addition, site selection is influenced by the
general proximity of a site to other Company restaurants to
improve the efficiency of the Company's field supervisors and
potential marketing programs. The Company generally locates its
restaurants near or adjacent to residential areas in an effort
to capitalize on repeat business from such areas as opposed to
relying solely upon transient business.
The Company used a general contractor selected from several
solicited bids, for most of the Company's restaurants built in
recent years. For the Company's newest restaurant, opened in
December 2001, the Company used its construction subsidiary as
the general contractor to expedite the process of obtaining
building permits. New restaurants are usually completed within
five months of the date on which construction is commenced.
Management of New Restaurants. When a new restaurant is
opened, the principal restaurant management positions are
staffed primarily with management personnel who have prior
experience in a management position at another of the Company's
restaurants and who have undergone special training. Prior to
opening, all staff personnel at the new location complete one
week of intensive training conducted by a training team. Such
training includes pre-opening drills in which test meals are
served to the invited public. Both the staff at the new
location and personnel experienced in store openings at other
locations participate in the training and drills.
7
Proprietary Trade Marks
The name "Ryan's Family Steak House" along with all
ancillary signs, building design and other symbols used in
conjunction with the name, are the primary trademarks and
service marks of the Franchisor. Such marks are registered in
the United States. The Company has applied for a trademark for
its new Whistle Junction concept.
Competition
The food service business in Florida is highly competitive
and is often affected by changes in the taste and eating habits
of the public, economic conditions affecting spending habits,
local demographics, traffic patterns and local and national
economic conditions. The principal bases of competition in the
industry are the quality and price of the food products offered.
Location, speed of service and attractiveness of the facilities
are also important factors. The Company's restaurants are in
competition with restaurants operated or franchised by national,
regional and local restaurant companies offering a similar menu,
many of which have greater resources than the Company. The
Company is also in competition with specialty food outlets and
other vendors of food. With the termination of the Company's
Franchise Agreement, the Company could experience competition
from its former Franchisor.
The amount of new competition near Company restaurants has
increased significantly in the past few years. In some cases,
competitors have opened new restaurants with superior facilities
close to the Company's restaurants. In addition, in the past
several years, many restaurants have remodeled to incorporate a
scatter bar format similar to that used by the Company.
Management has developed strategies to attempt to reduce the
negative impact on sales from new competition, but there can be
no assurance that sales trends will improve.
Employees
As of December 31, 2003, the Company employed approximately
1,050 persons, of whom approximately 40% are considered by
management as part-time employees. No labor unions currently
represent any of the Company's employees. The Company has not
experienced any work stoppages attributable to labor disputes
and considers employee relations to be good.
8
Government Regulation
The Company is subject to the Fair Labor Standards Act
which governs such matters as minimum wage requirements,
overtime and other working conditions. A large number of the
Company's restaurant personnel are paid at or slightly above the
federal statutory minimum wage level and, accordingly, any
change in such minimum wage will affect the Company's labor
costs. Costs of food, beverage, and labor are the expenses most
affected by inflation in the Company's business. Although
inflation in recent years has been low and accordingly has not
had a significant impact on the Company, there can be no
assurance that inflation will not increase and impact the
Company in the future.
Although no minimum wage increases have been signed into
law, various proposals are presently being considered in the
United States Congress. Such changes in the federal minimum
wage would impact the Company's payroll and benefits costs. The
Company is typically able to increase its menu prices to cover
most of the payroll rate increases; however, there can be no
assurance that menu price increases will be able to offset labor
cost increases in the future. Annual sales price increases have
consistently ranged from 1.0% to 3.0%.
The Company is also subject to the Equal Employment
Opportunity Act and a variety of federal and state statutes and
regulations. Any new legislation or regulation that may require
the Company to pay more in health insurance premiums may
adversely affect the Company's labor costs.
The Company's restaurants are constructed to meet local and
state building requirements and are operated in accordance with
state and local regulations relating to the preparation and
service of food. More stringent and varied requirements of local
governments with respect to land use, zoning and environmental
factors may in some cases delay the Company's construction of
new restaurants or remodels of existing ones.
The Company believes that it is in substantial compliance
with all applicable federal, state and local statutes,
regulations and ordinances including those related to protection
of the environment and that compliance has had no material
effect on the Company's capital expenditures, earnings or
competitive position, and such compliance is not expected to
have a material adverse effect upon the Company's operations.
9
The Company, however, cannot predict the impact of possible
future legislation or regulation on its operations.
Sources and Availability of Raw Materials
The Company procures its food and other products from a
variety of suppliers, and follows a policy of obtaining its food
and products from several major suppliers under competitive
terms. To ensure against interruption in the flow of food
supplies due to unforeseen or catastrophic events, to take
advantage of favorable purchasing opportunities, and to ensure
that meat received by the Company is properly aged, the Company
maintains a two to six-week supply of beef.
Working Capital Requirements
Substantially all of the Company's revenues are derived
from cash sales. Inventories are purchased on credit and are
converted rapidly to cash. The Company does not maintain
significant receivables or inventories. Therefore, with the
exception of debt service, working capital requirements for
continuing operations are not significant.
Long-Term Debt
In December 1996, the Company entered into a series of loan
agreements with FFCA Mortgage Corporation, (now know as GE
Capital Franchise Finance Corporation ("GE Capital"). As of
December 31, 2003, the outstanding balance due under the
Company's various loans with GE Capital was $18,189,200. The
weighted average interest rate for the GE Capital loans is 7.37%
at December 31, 2003. The Company used the proceeds of the GE
Capital loans primarily to refinance its debt and to fund
construction of one new restaurant.
Seasonality
The Company's operations are subject to seasonal
fluctuations. Revenues per restaurant generally increase from
January through April and decline from September through
December.
Research
The Company has relied primarily on the Franchisor to
maintain ongoing research programs relating to the development
10
of new products. Since the Company has reached an agreement to
terminate the Franchise Agreement, beginning in 2004, it will
have to conduct its own research and development. Management
believes this can be accomplished by working with its various
product manufacturers, who actively research and test products
and make presentations to the Company on a regular basis. The
Company entered into an agreement in 2003 with the Brown Group,
an organization experienced with design and development of
restaurant concepts, for a total fee of $100,000 for the purpose
of developing its new Whistle Junction concept.
Customers
No material part of the Company's business is dependent
upon a single customer or a few customers.
Information as to Classes of Similar Products or Services
The Company operates in only one industry segment. All
significant revenues and pre-tax earnings relate to retail sales
of food to the general public through restaurants owned and
operated by the Company. The Company has no operations outside
the continental United States.
As of February 25, 2004, the Company operated 15 Ryan's
restaurants and three Florida Buffet Restaurants.
11
ITEM 2. PROPERTIES
Restaurant Restaurant Concept
Locations Date Opened as of March 1, 2003
-------- ----------- ------------
(2)Ocala September 1986 Ryan's
(2)Lakeland February 1987 Ryan's
(2)Lakeland March 1987 Ryan's
(2)Winter Haven August 1987 Ryan's
(2)Gainesville December 1987 Florida Buffet
(2)Tampa June 1988 Florida Buffet
(2)Tallahassee August 1988 Ryan's
(2)Daytona Beach September 1988 Ryan's
(1)Tampa November 1988 Ryan's
(2)Orlando February 1989 Ryan's
(2)Melbourne October 1989 Ryan's
(2)Lake City March 1991 Ryan's
(1)Brooksville January 1997 Ryan's
(2)Deland April 1999 Ryan's
(1)Tampa September 1999 Florida Buffet
(2)St. Cloud December 2000 Ryan's
(2)Titusville May 2001 Ryan's
(2)Jacksonville December 2001 Ryan's
(1) Leased property
(2) Property subject to mortgage securing GE Capital Notes
As of December 31, 2003, the Company owned the real
property on which 15 of its restaurants were located. All of
these properties are subject to mortgages securing the GE
Capital notes.
The Company also leases two buildings in Jacksonville,
Florida for its executive offices.
ITEM 3. LEGAL PROCEEDINGS
The Company, in the normal course of business, is subject
to occasional legal proceedings. However, there are no material
pending legal proceedings to which the Company, or any of its
subsidiaries, is a party or to which any of their properties
are subject; nor are there material proceedings known to be
contemplated by any governmental authority; nor are there
material proceedings known to the Company, pending or
contemplated, in which any director, officer, affiliate
or any principal security holder of the Company or any associate
of the foregoing is a party or has an interest adverse to the
Company.
12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information contained under the caption "Common Stock
Data" in the Company's 2003 Annual Report to Shareholders is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information contained under the caption "Five Year
Financial Summary" in the Company's 2003 Annual Report to
Shareholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information contained under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's 2003 Annual Report to Shareholders
is incorporated herein by reference.
ITEM 7.A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT RISK
The information contained under the caption "Quantitative
and Qualitative Disclosure About Risk" in the Company's 2003
Annual Report to Shareholders is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements
The Consolidated Financial Statements of the Company and
Independent Auditors' Report as contained in the Company's 2003
Annual Report to Shareholders are incorporated herein by
reference.
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Supplementary Data
The information contained under the caption "Quarterly
Consolidated Financial Data" in the Company's 2003 Annual Report
to Shareholders is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9.A. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. As
required by Rule 13a-15(e) under the Securities Exchange Act of
1934 (the "Exchange Act"), as of the end of the period covered
by this report, the Company carried out an evaluation of the
effectiveness of the design and operation of the Company's
disclosure controls and procedures. This evaluation was carried
out under the supervision and with the participation of the
Company's management, including the President and the Director
of Finance. Based upon that evaluation, the Company's President
and Director of Finance have concluded that the Company's
disclosure controls and procedures are effective in alerting them
to material information regarding the Company's financial statements
and disclosure obligation in order to allow the Company to meet
its reporting requirements under the Exchange Act in a timely
manner.
(b) Changes in internal control. There have been no changes
in internal controls or in other factors that could
significantly affect these controls subsequent to the date of
their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information regarding directors contained under the
caption "Election of Directors" in the Company's Proxy Statement
for the 2004 Annual Meeting of Shareholders, which will be filed
with the Securities and Exchange Commission by April 29, 2004,
is incorporated herein by reference.
14
Executive Officers
The following persons were executive officers of the
Company effective December 31, 2003:
Edward B. Alexander, age 45, has been President of the
Company since April 2003. He was Executive Vice President from
September 1999 to April 2003, and was Chief Financial Officer of
the Company from 1990 to April 2003. In addition, Mr. Alexander
served on the Company's Board of Directors from May 1996 to July
1999.
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the caption "Executive Pay"
in the Company's Proxy Statement for the 2004 Annual Meeting of
Shareholders, which will be filed with the Securities and
Exchange Commission by April 29, 2004, is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information contained under the captions "Security
Ownership of Certain Beneficial Owners and Management" in the
Company's Proxy Statement for the 2004 Annual Meeting of
Shareholders, which will be filed with the Securities and
Exchange Commission by April 29, 2004, is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the captions "Election of
Directors - Certain Relationships and Related Transactions" and
"Compensation Committee Interlocks and Insider Participation" in
the Company's Proxy Statement for the 2004 Annual Meeting of
Shareholders, which will be filed with the Securities and
Exchange Commission by April 29, 2004, is incorporated herein by
reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information contained under the caption "Principal
Accounting Fees and Services" in the Company's Proxy Statement
for the 2004 Annual Meeting of Shareholders, which will be filed
15
with the Securities and Exchange Commission by April 29, 2004,
is incorporated herein by reference.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)1. The financial statements listed below are filed with
this report on Form 10-K or are incorporated herein by
reference from the Company's 2003 Annual Report to
Shareholders. With the exception of the pages listed
below, the 2003 Annual Report to Shareholders is not
deemed "filed" as a part of this report on Form 10-K.
Page
Reference
Form 2003
10-K Annual Report
Consent of Independent Certified
Public Accountants 25
Independent Auditors' Report 37
Consolidated Statements of Operations 15
Consolidated Balance Sheets 16
Consolidated Statements of Share-
holders' Equity 17
Consolidated Statements of Cash Flows 18
Notes to Consolidated Financial
Statements 19
Common Stock Data 40
Five-Year Financial Summary 4
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 5
Quantitative and Qualitative
Disclosures About Risk 14
(a)2. No financial statement schedules have been included
since the required information is not applicable or the
information required is included in the financial
statements, the notes thereto, or Item 8 of this
report.
16
(a)3. The following exhibits are filed as part of this report
on Form 10-K, and this list comprises the Exhibit
Index.
No. Exhibit
3.01 Articles of Incorporation of Family Steak Houses of
Florida, Inc. (Exhibit 3.01 to the Company's
Registration Statement on Form S-1, Registration No.
33-1887, is incorporated herein by reference.)
3.02 Bylaws of Family Steak Houses of Florida, Inc.
(Exhibit 3.02 to the Company's Registration Statement
on Form S-1, Registration No. 33-1887, is
incorporated herein by reference.)
3.03 Articles of Amendment to the Articles of
Incorporation of Family Steak Houses of Florida, Inc.
(Exhibit 3.03 to the Company's Registration Statement
on Form S-1, Registration No. 33-1887, is
incorporated herein by reference.)
3.04 Articles of Amendment to the Articles of
Incorporation of Family Steak Houses of Florida, Inc.
(Exhibit 3.04 to the Company's Registration Statement
on Form S-1, Registration No. 33-1887, is
incorporated herein by reference.)
3.05 Amended and Restated Bylaws of Family Steak Houses of
Florida, Inc. (Exhibit 4 to the Company's Form 8-A,
filed with the Commission on March 19, 1997, is
incorporated herein by reference.)
3.06 Articles of Amendment to the Articles of
Incorporation of Family Steak Houses of Florida, Inc.
(Exhibit 3 to the Company's Form 8-A filed with the
Commission on March 19, 1997, is incorporated herein
by reference.)
3.07 Articles of Amendment to the Articles of
Incorporation of Family Steak Houses of Florida, Inc.
(Exhibit 3.08 to the Company's Annual Report on Form
10-K filed with the Commission on March 31, 1998, is
incorporated herein by reference.)
17
3.08 Amendment to Bylaws of Family Steak Houses of
Florida, Inc. (Exhibit 3.08 to the Company's Annual
Report on Form 10-K filed with the Commission on
March 15, 2000, is incorporated herein by reference.)
3.09 Articles of Amendment to the Articles of
Incorporation of Family Steak Houses of Florida, Inc.
10.01 Amended Franchise Agreement between Family Steak
Houses of Florida, Inc. and Ryan's Family Steak
Houses, Inc., dated September 16, 1987. (Exhibit
10.01 to the Company's Registration Statement on Form
S-1, filed with the Commission on October 2, 1987,
Registration No. 33-17620, is incorporated herein by
reference.)
10.02 Lease regarding the restaurant located at 3549
Blanding Boulevard, Jacksonville, Florida (Exhibit
10.03 to the Company's Registration Statement on Form
S-1, Registration No. 33-1887, is incorporated herein
by reference.)
10.03 Amendment of Franchise Agreement between Ryan's
Family Steak Houses, Inc. and the Company dated July
11, 1994. (Exhibit 10.17 to the Company's Annual
Report on Form 10-K, filed with the Commission on
March 28, 1995, is incorporated herein by reference.)
10.04 Agreement between the Company and Kraft Foodservice,
Inc. (now U.S. Foods), as the Company's primary food
product distribution. (Exhibit 10.06 to the Company's
Quarterly Report on Form 10-Q, filed with the
Commission on August 9, 1995, is incorporated herein
by reference.)
10.05 Lease Agreement between the Company and CNL American
Properties Fund, Inc., dated as of September 18,
1996. (Exhibit 10.02 to the Company's Quarterly
Report on Form 10-Q, filed with the Commission on
November 18, 1996 is hereby incorporated by
reference.)
10.06 Rent Addendum to Lease Agreement between the Company
and CNL American Properties Fund, Inc., dated as of
September 18, 1996. (Exhibit 10.04 to the Company's
Quarterly Report on Form 10-Q, filed with the
18
Commission on November 18, 1996 is hereby
incorporated by reference.)
10.07 Amendment of Franchise Agreement between the Company
and Ryan's Family Steak Houses, Inc. dated October 3,
1996. (Exhibit 10.15 to the Company's Annual Report
on Form 10-K, filed with the Commission on April 1,
1997 is hereby incorporated by reference.)
10.08 $15.36m Loan Agreement, between the Company and FFCA
Mortgage Corporation, dated December 18, 1996.
(Exhibit 10.18 to the Company's Annual Report on Form
10-K, filed with the Commission on April 1, 1997 is
hereby incorporated by reference.)
10.09 $4.64m Loan Agreement, between the Company and FFCA
Mortgage Corporation, dated December 18, 1996.
(Exhibit 10.19 to the Company's Annual Report on Form
10-K, filed with the Commission on April 1, 1997 is
hereby incorporated by reference.)
10.10 Form of Promissory Note between the Company and FFCA
Mortgage Corporation, dated December 18, 1996.
(Exhibit 10.20 to the Company's Annual Report on Form
10-K, filed with the Commission on April 1, 1997 is
hereby incorporated by reference.)
10.11 Form of Mortgage between the Company and FFCA
Mortgage Corporation, dated December 18, 1996
(Exhibit 5 to the Company's Schedule 14D-9, filed
with the Commission on March 19, 1997 is hereby
incorporated by reference.)
10.12 Form of Mortgage between the Company and FFCA
Mortgage Corporation, dated March 18, 1996. (Exhibit
10.22 to the Company's Annual Report on Form 10-K,
filed with the Commission on April 1, 1997 is hereby
incorporated by reference.)
10.13 Lease agreement dated January 29, 1998 between the
Company and Excel Realty Trust, Inc. (Exhibit 10.19
to the Company's Annual Report on Form 10-K, filed
with the Commission on March 31, 1998 is hereby
incorporated by reference.)
19
10.14 Lease between the Company and Stuart S. Golding
Company dated February 3, 1999. (Exhibit 10.23 to the
Company's Annual Report on Form 10-K, filed with the
Commission on March 24, 1999 is hereby incorporated
by reference).
10.15 Amendment of Franchise Agreement between the Company
and Ryan's Family Steak Houses, Inc. dated August 31,
1999. (Exhibit 10.19 to the Company's Annual Report
on Form 10-K filed with the Commission on March 15,
2000 is incorporated herein by reference.)
10.16 Stock option agreement between the Company and
director Jay Conzen, dated November 3, 1999. (Exhibit
10.20 to the Company's Annual Report on Form 10-K
filed with the Commission on March 15, 2000 is
incorporated herein by reference.)
10.17 Amendment to Franchise Agreement between the Company
and Ryan's Properties, Inc. dated January 30, 2002.
(Exhibit 10.19 to the Company's Annual Report on Form
10-K filed with the Commission on March 29, 2002 is
incorporated herein by reference.)
10.18 Contract for sale and leaseback of restaurant
property between the Company and After Ours, LLC,
dated June 10, 2002. (Exhibit 10.01 to the Company's
Quarterly Report on Form 10-Q filed with the
Commission on August 16, 2002 is incorporated herein
by reference.)
10.19 Lease agreement for restaurant property between the
Company and After Ours, LLC, dated July 12, 2002.
(Exhibit 10.02 to the Company's Quarterly Report on
Form 10-Q filed with the Commission on August 16,
2002 is incorporated herein by reference.)
10.20 Lease Agreement between the Company and E.D.I.
Investments, Inc. for a restaurant property, dated
August 5, 2002. (Exhibit 10.03 to the Company's
Quarterly Report on Form 10-Q filed with the
Commission on August 16, 2002 is incorporated herein
by reference.)
20
10.21 Form of Amended and Restated Mortgage Agreement
between the Company and GE Capital Franchise Finance
Corporation dated October 21, 2002. (Exhibit 10.01
to the Company's Quarterly Report on Form 10-Q filed
with the Commission on November 15, 2002 is
incorporated herein by reference.)
10.22 Form of Promissory Note between the Company and GE
Capital Franchise Finance Corporation dated October
21, 2002. (Exhibit 10.02 to the Company's Quarterly
Report on Form 10-Q filed with the Commission on
November 15, 2002 is incorporated herein by
reference.)
10.23 Form of Loan Agreement between the Company and GE
Capital Franchise Finance Corporation dated October
21, 2002. (Exhibit 10.03 to the Company's Quarterly
Report on Form 10-Q filed with the Commission on
November 15, 2002 is incorporated herein by
reference.)
10.24 Lease Agreement between the Company and Barnhill's
Buffet, Inc. for a restaurant property in Orange
Park, Florida. (Exhibit 10.04 to the Company's
Quarterly Report on Form 10-Q filed with the
Commission on November 15, 2002 is incorporated
herein by reference.)
10.25 Amendment to Franchise Agreement between the Company
and Ryan's Properties, Inc. dated December 17, 2003.
10.26 Distribution agreement between the Company and
Performance Food Group, Inc. dated July 30, 2003.
13.01 2003 Annual Report to Shareholders.
21. Subsidiaries of the Company.
23. Independent Auditors' Consent
31.01 Chief Executive Officer Certification pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31.02 Chief Financial Officer Certification pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
21
32.01 Chief Executive Officer Certification pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.02 Chief Financial Officer Certification pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
None.
22
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
FAMILY STEAK HOUSES OF FLORIDA, INC.
Date: March 29, 2004 By: /s/ Edward B. Alexander
Edward B. Alexander
President
Chief Operating Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of the Registrant in the capacities and on the date
indicated.
Signature Title Date
/s/ Edward B. Alexander President 3/29/04
Edward B. Alexander Chief Operating Officer
/s/ Stephen C. Travis Director of Finance 3/29/04
Stephen C. Travis (Principal Financial and
Accounting Officer)
/s/ Glen F. Ceiley Chairman of the Board 3/29/04
Glen F. Ceiley
/s/ Steve Catanzaro Director 3/29/04
Steve Catanzaro
/s/ Jay Conzen Director 3/29/04
Jay Conzen
/s/ William Means Director 3/29/04
William Means
23
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
Steak House Construction Corporation, Inc.
24
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Annual
Report of Family Steak Houses of Florida, Inc. on Form 10-K and
in Registration Statement Nos. 33-11684, 33-12556, 33-12556 and
333-98327 of Family Steak Houses of Florida, Inc. on Forms S-8
of our report dated March 19, 2004, appearing in the 2003 Annual
Report to Shareholders of Family Steak Houses of Florida, Inc.
Deloitte & Touche LLP
Certified Public Accountants
Jacksonville, Florida
March 29, 2004
25
EXHIBIT 31.01
CERTIFICATIONS
I, Edward B. Alexander, certify that:
1. I have reviewed this annual report on Form 10-K of
Family Steak Houses of Florida, Inc.
2. Based on my knowledge, this annual report does not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements
made, in light of the circumstances under which such
statements were made, not misleading with respect to the
period covered by this annual report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
annual report;
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the
Evaluation Date;
26
5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have
indicated in this annual report whether or not there
were significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation,
including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: March 29, 2004
/s/ Edward B. Alexander
Edward B. Alexander
President and
Chief Operating Officer
27
EXHIBIT 31.02
I, Stephen C. Travis, certify that:
1. I have reviewed this annual report on Form 10-K of
Family Steak Houses of Florida, Inc.
2. Based on my knowledge, this annual report does not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements
made, in light of the circumstances under which such
statements were made, not misleading with respect to the
period covered by this annual report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
annual report;
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of
28
registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have
indicated in this annual report whether or not there
were significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation,
including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: March 29, 2004
/s/ Stephen C. Travis
Stephen C. Travis
Director of Finance
29
EXHIBIT 32.01
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Family Steak Houses of Florida, Inc.'s
(the "Company") Annual Report on Form 10-K for the period ending
December 31, 2003, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Edward B.
Alexander, Chief Operating Officer/President of the Company,
certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that,:
(1). The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended; and
(2). The information contained in the Report fairly
presents, in all material respects, the financial
condition and results of operations of the Company.
Date: March 29, 2004 By: /s/ Edward B. Alexander
Edward B. Alexander
President and
Chief Operating Officer
30
EXHIBIT 32.02
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Family Steak Houses of Florida, Inc.'s
(the "Company") Annual Report on Form 10-K for the period ending
December 31, 2003, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Stephen C.
Travis, Director of Finance/ Chief Financial Officer of the
Company, certify pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that,:
(1). The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended; and
(2). The information contained in the Report fairly
presents, in all material respects, the financial
condition and results of operations of the Company.
Date: March 29, 2004 By: /s/ Stephen C. Travis
Stephen C. Travis
Director of Finance
31