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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark One)
(x ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended January 1, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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.
YES__ NO (X)
As of March 7, 1997, 10,954,960 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 NASDAQ National
Market System on March 7, 1997, as reported in The Wall Street Journal) held by
non-affiliates of the registrant was approximately $10,758,319.
Documents Incorporated by Reference
Portions of the registrant's 1996 Annual Report to Shareholders
are incorporated by reference into Part II. Portions of the Proxy Statement for
the registrant's 1997 Annual Meeting of Shareholders are incorporated by
reference into Part III.
PART I
ITEM 1. BUSINESS
General
Family Steak Houses of Florida, Inc. ("Family" or the "Company"), is the
sole franchisee of Ryan's Family Steak House restaurants ("Ryan's restaurants")
in the State of Florida.
The Company's first Ryan's restaurant was opened in Jacksonville, Florida,
in May 1982. As of January 1, 1997, the Company operated 25 Ryan's restaurants
in Florida, including nine in north Florida and sixteen in central and west
Florida.
A Ryan's restaurant is a family-oriented restaurant serving high-quality,
reasonably-priced food in a casual atmosphere with server-assisted service.
Ryan's restaurants serve lunch and dinner seven days a week and offer a variety
of charbroiled entrees, including various cuts of beef, chicken, and seafood.
Most of the restaurants serve a brunch on weekends only. Each restaurant
features a diverse selection of items from either a series of "scatter bars" or
a 65-foot, self-service, all-you-can-eat Mega Bartm, and a separate fresh bakery
and dessert bar. In addition to traditional salad bar items, the scatter bars or
Mega Barstm offer hot meats, pre-made salads, soups, baked potatoes with
toppings, cheeses and a variety of vegetables.
The Company believes that its operating strategy of selling top-quality
meals at reasonable prices, at food costs to the Company which are higher than
the industry average, creates a perception of value to its customers.
The Company operates its Ryan's restaurants under a Franchise Agreement
with Ryan's Family Steak Houses, Inc., ("Ryan's", or the "Franchisor") which
grants the Company the right to operate Ryan's Family Steak House restaurants
throughout North and Central Florida.
Company History
The Company was formed by the combination, effective February 1986, of six
limited partnerships, each of which owned and operated a Ryan's restaurant
franchise. In April 1986, the Company issued 4,266,000 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 4,500,000 shares of its common stock in 1986 resulting in net
proceeds to the Company of approximately $4,145,000.
2
Franchise Agreement
The Company operates its Ryan's restaurants under a Franchise Agreement
between the Company and the Franchisor dated as of September 16, 1987, which
Franchise Agreement amended and consolidated all previous franchise agreements
(as amended, the "Franchise Agreement"). The Franchise Agreement extends through
December 31, 2010 and provides for two additional ten-year renewal options. The
renewal options are subject to certain conditions, including the condition that
the Company has fully and faithfully performed its obligations under the
Franchise Agreement during its original term. Under the terms of the Franchise
Agreement, the Company has the right to use the registered mark "Ryan's Family
Steak House" and the right to use the Franchisor's techniques in the operation
of Ryan's Family Steak House restaurants.
In 1996, the Company and the Franchisor amended the Franchise Agreement.
The amended agreement requires the Company to pay a royalty fee of 3.0% through
December 2001 and 4.0% thereafter on the gross receipts of each Ryan's Family
Steak House restaurant. Total royalty fee expenses were $1,138,600, $1,263,200,
and $1,561,100 for the years ended January 1, 1997, January 3, 1996 and December
28, 1994, respectively.
The Franchise Agreement requires the Company to operate a minimum number of
Ryan's restaurants on December 31 of each year. Failure to operate the minimum
number could result in the loss of exclusivity rights to the Ryan's concept in
the Company's Florida territory. The following schedule outlines the number of
Ryan's restaurants required to be operated by the Company on December 31 of each
year under the Franchise Agreement:
Number of
Restaurants Required to
End of Fiscal Year be in Operation
- ------------------ ---------------
1997 25
1998 26
1999 27
2000 28
2001 and subsequent years Increases by one each year
3
Prior to July 1994, the Company held exclusive franchise rights to build
Ryan's restaurants in the State of Florida, with the exception of Panama City,
Florida and Escambia County, Florida, where the Franchisor has the right to
operate Ryan's restaurants. In July 1994 the Company relinquished the franchise
rights to most counties in northwest Florida and south Florida in exchange for
forgiveness of $500,000 in past due royalty fees. The Company has the right to
repurchase the exclusive franchise rights to these counties for $500,000 at any
time prior to June 30, 1998. In addition, the Franchisor agreed not to develop
any Ryan's restaurants in the south Florida territory prior to June 30, 1996.
Ryan's has not developed any restaurants in Florida as of March 13, 1997.
In July 1994, the Company executed and delivered a note to the Franchisor
for payment of $800,000 in past due royalty fees. (See Note 5 to the
Consolidated Financial Statements in the Company's 1996 Annual Report to
Shareholders).
The Franchise Agreement contains provisions relating to the operation of
the Company's Ryan's restaurants. Upon the Company's failure to comply with such
provisions, the Franchisor may terminate the Franchise Agreement if such default
is not cured within 30 days of notice from the Franchisor. Termination of the
Franchise Agreement would result in the loss of the Company's right to use the
"Ryan's Family Steak House" name and concept and could result in the sale of the
physical assets of the Company to the Franchisor pursuant to a right of first
refusal. Termination of the Company's rights under the Franchise Agreement may
result in the disruption, and possibly the discontinuance, of the Company's
operations. The Company believes that it has operated and maintained each of its
Ryan's Family Steak House restaurants in accordance with the operational
procedures and standards set forth in the Franchise Agreement, as amended.
Operations of Ryan's Restaurants
Format. As of March 5, 1997, 24 of the Company's Ryan'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 Ryan's restaurants is located in a mall. Each
restaurant is constructed of brick or stucco walls, interior and exterior, with
exposed woodwork. The interior of each Ryan's restaurant contains a dining room,
a customer ordering area, and a kitchen. The dining rooms seat a total of
between 270 and 500 persons and highlight centrally located, illuminated scatter
bars or Mega Bars[tm] and a fresh bakery bar. Each Ryan's restaurant has parking
for approximately 100 to 175 cars on lots of overall size of approximately
50,000 to 70,000 square feet.
The Ryan's 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 open for brunch
open at 8:00 a.m. Saturday and Sunday. In a Ryan's 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. The
customer ordering the salad bar is given unlimited access to the scatter bars or
Mega Barstm and the bakery dessert bar. Customers receive table service of the
entree and beverage refills. For the year ended January 1, 1997, the average
weekly customer count per restaurant was approximately 5,200 and the average
cost of a meal, with beverage, was approximately $5.90.
4
Restaurant Management and Supervision. The Company manages the Ryan's
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 Ryan's 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 six-week training period prior to being placed in a
management position.
Each restaurant management group reports to a supervisor. Presently, the
supervisors each oversee the operations of six to seven restaurants. The
supervisors report directly to the Vice President 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.
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.
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 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, except for fresh produce, which is delivered
three to five times per week. The Company believes that satisfactory sources of
supply are available for all the items it regularly uses.
5
The Franchise Agreement requires that all suppliers to Ryan's restaurants
are subject to approval by the Franchisor. Through its relationship with the
Franchisor, the Company has obtained favorable pricing on the purchase of food
products from several suppliers. In June 1995, the Company renewed its agreement
with Kraft Foodservice, Inc. to serve as its primary supplier. Kraft was
subsequently purchased by Alliant Foodservice, Inc. The Alliant agreement has a
five-year term and is cancellable at any time with 60 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.
Development
General. The Company operated 25 Ryan's restaurants as of March 5, 1997.
Site Location and Construction. The Company considers the specific location
of a restaurant to be important to its long-term success. The site selection
process focuses on a variety of factors, including trade area demographics (such
as population density and household income level), an evaluation of site
characteristics (such as visibility, accessibility, and traffic volume), and an
analysis of the potential competition. In addition, site selection is influenced
by the general proximity of a site to other Ryan's restaurants in order 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 transient business.
6
The Company constructs its Ryan's restaurants using its contracting
subsidiary. Management believes that by performing site selection and restaurant
construction internally, the Company can maintain better control of site
selection, real estate cost and construction performance. While the Company has
not required performance and payment bonds, it undertakes to closely supervise
and monitor all construction and confirm payment of subcontractors and
suppliers. New Ryan's restaurants generally are completed within three months of
the date on which construction is commenced.
Management of New Restaurants. When a new Ryan's restaurant is opened, the
principal restaurant management positions are staffed with 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 undergo one week of intensive training conducted
by a training team. Such training includes preopening 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.
Joint Venture
In December 1994, the Company formed a new subsidiary, Family Steak JV,
Inc. which acquired a 50% ownership in a Florida limited liability company,
Cross Creek Barbeque, L.C. ("Cross Creek"), for the purpose of opening a new
restaurant. The Company contributed certain furnishings, fixtures, and equipment
owned by its Wrangler's Roadhouse, Inc. subsidiary ("Wrangler's") to Cross Creek
and the other 50% owner of Cross Creek contributed the cash necessary to remodel
and open the new Cross Creek restaurant. As a result of unsatisfactory
operational performance, the Company sold its interest in the Cross Creek
restaurant in July 1995. Wrangler's leased the land and building to Cross Creek
until May 1996, when it sold them at a gain of approximately $5,000.
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, and the
name "Mega Bar", are the primary trademarks and service marks of the Franchisor.
Such marks are registered in the United States. All of these registrations and
the goodwill associated with the Franchisor's trademarks are of material
importance to the Company's business and are licensed to the Company under the
Franchise Agreement.
7
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
also is in competition with specialty food outlets and other vendors of food.
The amount of new competition near Company restaurants increased
significantly in 1996, and is expected to continue to increase in 1997. The
increased competition had a significant negative impact on sales in 1996.
Management has developed a plan to attempt to reduce the negative impact on
sales from new competition in 1997, but there can be no assurance that sales
trends will improve. In addition, the Franchisor has the right to operate
restaurants in several other west Florida and south Florida counties.
Employees
As of January 1, 1997, the Company employed approximately 1,400 persons, of
whom approximately 50% 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.
Executive Officers
The following persons were executive officers of the Company effective
January 1, 1997:
Lewis E. Christman, Jr., age 77, has been President and Chief Executive
Officer of the Company since April 1994. Mr. Christman was hired as a consultant
to oversee and direct the Company's purchasing program in January 1994 and has
been a Director of the Company since May 1993. In addition, Mr. Christman serves
as President of each of the Company's subsidiaries. Mr. Christman has been a
partner in East Coast Marketing since 1990. From 1979 to 1989, Mr. Christman
served as Chairman of the Board of Neptune Marketing, Inc., a food brokerage
company.
8
Edward B. Alexander, age 38, has been Vice President of Finance since
December 1996, and was Secretary and Treasurer of the Company from November 1990
to December 1996. In addition, Mr. Alexander was appointed to the Board of
Directors in May 1996, and serves as Secretary of each of the Company's
subsidiaries. Mr. Alexander served as controller of the Company from January
1989 to April 1990. From April 1985 until December 1988, Mr. Alexander was
employed as controller for Mac Papers, Inc., a wholesale paper products
distributor. Prior to April 1985, Mr. Alexander served as a senior accountant
for the accounting firm of Touche Ross & Co.
Michael J. Walters, age 34, has been Secretary of the Company since
December 1996. Mr. Walters has served as Controller of the Company since
September 1990. From May 1987 to September 1990, Mr. Walters was employed as an
accountant for the accounting firm of Deloitte & Touche.
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 minimum wage level and, accordingly, any change in such minimum wage
will affect the Company's labor costs. The Company is also subject to the Equal
Employment Opportunity Act and a variety of federal and state statutes and
regulations. 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.
The Company believes that it is in substantial compliance with all
applicable federal, state and local statutues, regulations and ordinances 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. 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. A substantial portion of the beef used
by the Company is obtained from one supplier, although the Company believes
comparable beef meeting its specifications is available in adequate quantities
from other suppliers. 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 insure that meat received by the
Company is properly aged, the Company maintains a two to six week supply of
beef.
9
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 and inventories. Therefore,
with the exception of debt service, working capital requirements for continuing
operations are not significant.
In December 1996, the Company entered into a Loan Agreement with FFCA
Mortgage Corporation ("FFCA"). The Loan Agreement governs eighteen Promissory
Notes payable to FFCA. Each note is secured by a mortgage on a Company
restaurant property with a total outstanding principal balance of $15,360,000 as
of January 1, 1997. The Promissory Notes provide for a term of twenty years and
an interest rate equal to the thirty-day LIBOR rate plus 3.75%, adjusted
monthly. The Loan Agreement provides for various covenants, including the
maintenance of prescribed debt service coverages.
The Company used the proceeds of the Promissory Notes to retire its notes
with Cerberus Partners, L.P. and its loan with the Daiwa Bank Limited and
SouthTrust Bank of Alabama, N.A. The Company realized a discount on the
retirement of the Cerberus notes, which was partially offset by unamortized debt
issuance costs. The resulting gain of $348,500 net of income taxes, has been
accounted for as an extraordinary item. In addition, the Company retired
Warrants for 1,050,000 shares of the Company's common stock previously held by
Cerberus. Cerberus continues to hold Warrants to purchase 700,000 shares of the
Company's common stock at an exercise price of $.40 per share.
Also in December 1996, the Company entered into a separate loan agreement
with FFCA under which it may borrow up to an additional $4,640,000 in 1997. This
additional financing would be evidenced by four additional Promissory Notes
secured by mortgage on four Company restaurant properties. The terms and
interest rate of this loan agreement are identical to the loan agreement
described above.
10
Seasonality
The Company's operations are subject to some seasonal fluctuations.
Revenues per restaurant generally increase from January through April and
decline from September through December.
Research
The Company relies primarily on the Franchisor to maintain ongoing research
programs relating to the development of new products and evaluation of marketing
activities. Although research and development activities are important to the
Company, no expenditures for research and development have been incurred by the
Company.
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.
ITEM 2. PROPERTIES
Location Date Opened
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Jacksonville May 1982
Jacksonville May 1983
Jacksonville November 1983
Orange Park May 1984
Jacksonville May 1985
Jacksonville July 1985
Ocala September 1986
Neptune Beach November 1986
Lakeland February 1987
Lakeland March 1987
Winter Haven August 1987
Apopka September 1987
Gainesville December 1987
Hudson February 1988
New Port Richey May 1988
Tampa June 1988
Tallahassee August 1988
Daytona Beach September 1988
Tampa November 1988
Orlando January 1989
Orlando February 1989
Clearwater August 1989
Melbourne November 1989
Lake City March 1991
Brooksville January 1997
11
As of March 5, 1997, the Company operated 25 Ryan's restaurants. The
specific rate at which the Company is able to open new restaurants will be
determined by its ability to locate suitable sites on satisfactory terms, raise
the necessary capital, secure appropriate governmental permits and approvals and
recruit and train management personnel.
As of January 1, 1997, the Company owned the real property on which 22 of
its restaurants were located. Eighteen of these properties were subject to
mortgages securing the FFCA Notes.
The Company leases the real property on which three of its restaurants are
located. Those restaurants are located in Jacksonville, Florida, Clearwater,
Florida and Brooksville, Florida.
The executive offices of the Company, consisting of approximately 3,500
square feet, are leased at a monthly rental rate of $2,680, plus sales tax, from
Barbara Smith, the wife of the late William Stanley Smith, Jr., a former officer
and director of the Company. The Company paid $34,254 in rental payments to Mr.
and Mrs. Smith in fiscal year 1996.
The Company currently leases 2,800 square feet of mixed warehouse and
office space from Eddie L. Ervin, Jr., a former officer and director of the
Company. The aggregate monthly payment due is approximately $1,495, plus sales
tax. The Company paid $20,065 in rental payments to Mr. Ervin in fiscal year
1996.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to various pending legal proceedings arising in
the normal course of business. In the opinion of management, based on the advice
of legal counsel, the ultimate disposition of these claims and litigation will
not have material adverse effect on the financial position or results of
operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
12
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 1996 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 1996 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 1996
Annual Report to Shareholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of the Company and the Report of
Independent Certified Public Accountants as contained in the Company's 1996
Annual Report to Shareholders are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
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 1997 Annual Meeting of
Shareholders, which will be filed with the Securities and Exchange Commission
prior to May 1, 1997, is incorporated herein by reference.
Securities and Exchange Commission Rules under Section 16(a) of the
Securities Exchange Act of 1934 require the Company's officers and directors,
and persons who own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the National Association of Securities
Dealers and to furnish the Company with copies of all Section 16(a) forms they
file.
13
Based solely on its review of the copies of such forms received by it or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the 1996 fiscal
year, all filing requirements applicable to its officers, directors, and
greater-than-10% beneficial owners were complied with on a timely basis, except
as set forth under the caption "Compliance with Section 16(a) of the Securities
Exchange Act of 1934" in the Company's Proxy Statement for the 1996 Annual
Meeting of Shareholders, which will be filed with the Securities and Exchange
Commission prior to May 1, 1997, which is incorporated herein by reference.
The information regarding executive officers is set forth in Item 1 of this
report under the caption "Executive Officers."
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the caption "Executive Pay" in the
Company's Proxy Statement for the 1997 Annual Meeting of Shareholders, which
will be filed with the Securities and Exchange Commission prior to May 1, 1997,
is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the Company's Proxy Statement for the 1996
Annual Meeting of Shareholders, which will be filed with the Securities and
Exchange Commission prior to May 1, 1997, is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the caption "Election of Directors -
Certain Relationships and Related Transactions" in the Company's Proxy Statement
for the 1996 Annual Meeting of Shareholders, which will be filed with the
Securities and Exchange Commission prior to May 1, 1997, is incorporated herein
by reference.
14
PART IV
ITEM 14. 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
1996 Annual Report to Shareholders. With the exception of the pages
listed below, the 1996 Annual Report to Shareholders is not deemed
"filed" as a part of this report on Form 10-K.
Page
Reference
---------
Form 1996
10-K Annual Report
---- -------------
Consent of Independent Certified
Public Accountants F-1
Independent Auditors' Report 24
Consolidated Statements of Operations 10
Consolidated Balance Sheets 11
Consolidated Statements of Share-
holders' Equity 12
Consolidated Statements of Cash Flows 13
Notes to Consolidated Financial
Statements 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 or the notes thereto.
(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.)
15
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 Shareholder Rights Agreement, dated March 19, 1997, by and between
Family Steak Houses of Florida, Inc. and Chase Mellon Shareholder
Services, LLC (Exhibit 1 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 to the Company's Form 8-A, is
incorporated herein by reference.)
4.01 Specimen Stock Certificate for shares of the Company's Common Stock
(Exhibit 4.01 to the Company's Registration Statement on Form S-1,
Registration No. 33-1887, is incorporated herein by reference.)
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 Lease, dated May 18, 1989, between the Company and Stoneybrook
Associates, Ltd., for a restaurant located in Clearwater, Florida.
(Exhibit 10.25 to the Company's Registration Statement on Form S-1,
filed with the Commission on September 29, 1989, Registration No.
33-17620, is incorporated herein by reference.)
16
10.04 Amended and Restated Warrant to Purchase Shares of Common Stock, void
after October 1, 2003, which represents warrants issued to The Phoenix
Insurance Company, The Travelers Indemnity Company, and The Travelers
Insurance Company, (subsequently transferred to Cerberus Partners,
L.P.) (Exhibit 10.07 to the Company's Annual Report on Form 10-K,
filed with the Commission on March 28, 1995, is incorporated herein by
reference).
10.05 Warrant to Purchase Shares of Common Stock, void after October 1,
2003, which represents warrants issued to The Phoenix Insurance
Company, The Travelers Indemnity Company, and The Travelers Insurance
Company. (subsequently transferred to Cerberus Partners, L.P.)
(Exhibit 10.08 to the Company's Annual Report on Form 10-K, filed with
the Commission on March 28, 1995, is incorporated herein by
reference).
10.06 Lease dated March 1, 1994 between the Company and Eddie L. Ervin, Jr.,
for corporate office and warehouse space in Neptune Beach, Florida.
(Exhibit 10.15 to the Company's Annual Report on Form 10-K, filed with
the Commission on March 28, 1995, is incorporated herein by
reference).
10.07 Lease dated March 1, 1994 between the Company and William Stanley
Smith, Jr., for executive offices in Neptune Beach, Florida. (Exhibit
10.16 to the Company's Annual Report on Form 10-K, filed with the
Commission on March 28, 1995, is incorporated herein by reference).
10.08 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).
10.09 Agreement between the Company and Kraft Foodservice, Inc., as the
Company's primary food product distribution. (Exhibit 10.06 to the
Company's Annual Report on Form 10-Q, filed with the Commission on
August 9, 1995, is incorporated herein by reference).
10.10 Employment agreement between the Company and Edward B. Alexander,
dated as of October 1, 1996. (Exhibit 10.01 to the Company's Quarterly
Report on Form 10-Q, filed with the Commission on November 18, 1996,
is incorporated herein by reference).
17
10.11 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).
10.12 Construction Addendum between the Company and CNL American Properties
Fund, Inc., dated as of September 18, 1996. (Exhibit 10.03 to the
Company's Quarterly Report on Form 10-Q, filed with the Commission on
November 18, 1996 is hereby incorporated by reference).
10.13 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
Commission on November 18, 1996 is hereby incorporated by reference).
10.14 Amendment of Franchise Agreement between the Company and Ryan's
Family Steak Houses, Inc. dated October 3, 1996.
10.15 Employment agreement between the Company and Lewis E. Christman, Jr.,
dated as of December 30, 1996. (Exhibit 2 to the Company's Schedule
14D-9, filed with the Commission on March 19, 1997 is hereby
incorporated by reference.)
10.16 Consulting agreement between the Company and Robert J. Martin, dated
as of January 8, 1997. (Exhibit 4 to the Company's Schedule 14D-9,
filed with the Commission on March 19, 1997 is hereby incorporated by
reference.)
10.17 $15.36m Loan Agreement, between the Company and FFCA Mortgage
Corporation, dated December 18, 1996.
10.18 $4.64m Loan Agreement, between the Company and FFCA Mortgage
Corporation, dated December 18, 1996.
10.19 Form of Promissory Note between the Company and FFCA Mortgage
Corporation, dated December 18, 1996.
18
10.20 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.)
10.21 Form of Environmental Agreement between the Company and FFCA Mortgage
Corporation, dated March 18, 1996.
13.01 1996 Annual Report to Shareholders.
21.01 Family Rustic Investments, Inc., a Florida corporation, Steak House
Construction Corporation, a Florida corporation, Wrangler's Roadhouse,
Inc., a Florida corporation and Steak House Realty Corporation, a
Florida corporation, are wholly owned subsidiaries of the Company.
23.0l Consent of Independent Certified Public Accountants - Deloitte &
Touche LLP.
27.00 Financial data schedules (electronic filing only).
(b) None.
(c) See (a)3. above for a list of all exhibits filed herewith and the Exhibit
Index.
(d) None.
19
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' CONSENT
We consent to the incorporation by reference in this Annual Report of Family
Steak Houses of Florida, Inc. on Form 10-K of our report dated February 27,
1997, appearing in the 1996 Annual Report to Shareholders of Family Steak Houses
of Florida, Inc.
We additionally consent to the incorporation by reference in Registration
Statement No. 33-11684 pertaining to the 1986 Employee Incentive Stock Option
Plan of Family Steak Houses of Florida, Inc. on Form S-8 of our report dated
February 27, 1997 appearing in and incorporated by reference in this Annual
Report on Form 10-K of Family Steak Houses of Florida, Inc. for the year ended
January 1, 1997.
We further consent to the incorporation by reference in Registration Statement
No. 33-12556 pertaining to the 1986 Stock Option Plan for Non-Employee Directors
of Family Steak Houses of Florida, Inc. on Form S-8 of our report dated February
27, 1997 appearing in and incorporated by reference in this Annual Report on
Form 10-K of Family Steak Houses of Florida, Inc. for the year ended January 1,
1997.
We further consent to the incorporation by reference in Registration Statement
No. 33-62101 pertaining to the 1996 Long Term Incentive Plan of Family Steak
Houses of Florida, Inc. on Form S-8 of our report dated February 27, 1997
appearing in and incorporated by reference in this Annual Report on Form 10-K of
Family Steak Houses of Florida, Inc. for the year ended January 1, 1997.
Deloitte & Touche LLP
Jacksonville, Florida
March 25, 1997
F-1
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 26, 1997 BY: /s/ Lewis E. Christman, Jr.
---------------------------
Lewis E. Christman, Jr., President
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/ Lewis E. Christman, Jr. President (Principal March 26, 1997
Lewis E. Christman, Jr. Executive Officer
and Director)
/s/ Edward B. Alexander Vice President and Director March 26, 1997
Edward B. Alexander (Principal Financial and
Accounting Officer)
/s/ Robert J. Martin Director March 26, 1997
Robert J. Martin
/s/ Michael J. Walters Controller March 26, 1997
Michael J. Walters
/s/ Joseph M. Glickstein, Jr. Director March 26, 1997
Joseph M. Glickstein, Jr.
/s/ Richard M. Gray Director March 26, 1997
Richard M. Gray