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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 JANUARY 3, 2001
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.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA NO. 59-2597349
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(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION)
2113 FLORIDA BOULEVARD
NEPTUNE BEACH, FLORIDA 32266
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (904) 249-4197
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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)
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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.
[ ]
As of February 16, 2001, 2,416,200 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
NASDAQ SmallCap Market System on February 16, 2001, as reported in THE WALL
STREET JOURNAL) held by non-affiliates of the registrant was approximately
$1,246,800.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 2000 Annual Report to Shareholders are
incorporated by reference into Part II. Portions of the Proxy Statement for the
registrant's 2001 Annual Meeting of Shareholders are incorporated by reference
into Part III.
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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. The Company presently operates 23 Ryan's restaurants in
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 "scatter bars" and a
separate fresh bakery and dessert bar. In addition to traditional salad bar
items, the scatter bars 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 Properties, Inc., ("Ryan's", or the "Franchisor") which grants the
Company the exclusive right to operate Ryan's Family Steak House restaurants
throughout North and Central Florida.
COMPANY HISTORY
The Company was formed by the combination, effective September 1985, 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
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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.
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
$1,197,600, $1,165,300, and $1,150,900 for the fiscal years ended January 3,
2001, December 29, 1999 and December 30, 1998, 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 of restaurants could result in the loss of exclusive franchise
rights to the Ryan's concept in North and Central Florida. In 1999, the Company
and Ryan's amended the number of restaurants required to be in operation as
detailed below. The Company operated 23 restaurants as of fiscal year end 2000
and was therefore in compliance with the Franchise Agreement. The Company plans
to open three restaurants in 2001, and expects to be in compliance with the
requirement. However, there can be no assurance that the Company can open three
restaurants, which could result in the loss of exclusivity in North and Central
Florida.
The following schedule outlines the number of Ryan's restaurants
required to be operated by the Company as of December 31 of each year under the
amended Franchise Agreement:
NUMBER OF
RESTAURANTS REQUIRED TO
END OF FISCAL YEAR BE IN OPERATION
- ------------------ ------------------------
2001 23
2002 25
2003 and subsequent years Increases by two each year
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The amendment to the Franchise Agreement adopted in 1999 also clarified
that the Franchisor's consent is needed for certain kinds of transactions.
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.
OPERATIONS OF RYAN'S RESTAURANTS
FORMAT. As of February 23, 2001, 20 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. Three of the Company's Ryan's restaurants are located in shopping
malls. 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
between 270 and 500 persons and highlight centrally located, illuminated scatter
bars and a fresh bakery and dessert 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 serve breakfast
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
and the bakery and dessert bar. Customers receive table service of the entree
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and beverage refills. For the fiscal year ended January 3, 2001, the average
weekly customer count per restaurant was approximately 5,270 and the average
meal price (including beverage) was approximately $6.60.
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 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 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. In 1999, the Company implemented 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 95% 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
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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 do so in the future.
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 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.
DEVELOPMENT
GENERAL. The Company operated 23 Ryan's restaurants as of February 23,
2001.
SITE LOCATION AND CONSTRUCTION. The Company considers the specific
location of a restaurant to be important to its long-term success. The Company's
Franchisor assists the Company in selection of new restaurant sites. 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.
The Company constructs its Ryan's restaurants using a general
contractor selected from several solicited bids. For certain new restaurants,
the Company may use its construction subsidiary to serve as the general
contractor in order to expedite the process of obtaining building permits.
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Management believes that by performing site selection through the Franchisor,
the Company can select superior sites with high average sales volumes and
control real estate costs. New Ryan's restaurants are usually completed within
four 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 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 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.
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. 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.
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.
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 their
restaurants so that they are similar to the scatter bar format used by the
Company. Management has developed a plan to attempt to reduce the negative
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impact on sales from new competition, but there can be no assurance that sales
trends will improve. The strategies implemented include the installation of an
exhibition grill cooking area in two restaurants, which have to date produced
positive sales results. Management intends to add the grill cooking area to
several more restaurants in 2001. In addition, the Franchisor has the right to
operate restaurants in several west Florida and south Florida counties, and does
operate two restaurants in west Florida.
EMPLOYEES
As of January 3, 2001, the Company employed approximately 1,300
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 3, 2001:
Edward B. Alexander, age 42, has been Executive Vice President since
September 1999, and has been Chief Financial Officer of the Company since 1990.
In addition, Mr. Alexander served on the Company's Board of Directors from May
1996 to July 1999.
Kevin R. Pickett, age 41, has been Vice President of the Company since
September 1999, and Director of Operations of the Company since August 1996. Mr.
Pickett served as regional supervisor for the Company from July 1993 to August
1996, and was a manager of various Company restaurants from October 1988 to June
1993.
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. 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
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inflation will not increase and impact the Company in the future. A significant
portion of the Company's employees are paid by the federally established
statutory minimum wage. Although no minimum wage increases have been signed into
law, various proposals are presently being considered in the United States
Congress. News reports suggest that the Federal minimum wage may increase by
$1.00 per hour to $6.15 with a two to three year phase-in period, beginning
sometime in 2001. 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. Such changes in the federal minimum wage would impact the Company's
payroll and benefits costs. 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. 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
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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.
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.
LONG TERM DEBT
In December 1996, the Company entered into two loan agreements with
FFCA Mortgage Corporation ("FFCA"). Pursuant to the first Loan Agreement (the
"1996 Loan Agreement"), the Company borrowed $15.36 million, which loans are
evidenced by fourteen Promissory Notes payable to FFCA. Each Note is secured by
a mortgage on a Company restaurant property. 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 1996 Loan Agreement provides for various
covenants, including the maintenance of prescribed debt service coverages.
The Company used the proceeds of the 1996 Loan Agreement to retire its
Notes with Cerberus Partners, L.P. ("Cerberus") and its loans with the Daiwa
Bank Limited and SouthTrust Bank of Alabama, N.A. In addition, the Company
retired warrants for 210,000 shares of the Company's common stock previously
held by Cerberus. Cerberus continues to hold warrants to purchase 140,000 shares
of the Company's common stock at an exercise price of $2.00 per share.
Pursuant to its second loan agreement with FFCA (the "1998 Loan
Agreement"), the Company borrowed an additional $2,590,000 in 1998. The proceeds
of the 1998 loan were used to fund the construction of a new restaurant in
Leesburg, Florida, and the land and a portion of the cost of construction of a
new restaurant in Deland, Florida. This additional financing is evidenced by
three additional Promissory Notes secured by mortgages on three Company
restaurant properties. The terms and conditions of the 1998 Loan Agreement are
substantially identical to those of the 1996 Loan Agreement.
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In October 1998, the Company received two commitments for new financing
from FFCA. The Company borrowed a total of $2.6 million in 1999 under the first
commitment (the "1999 Loan"). The proceeds of the 1999 Loan were used to fund
construction of new restaurants in Deland and Tampa, Florida. The 1999 Loan is
secured by mortgages on two Company restaurant properties. The second commitment
(the "2000 Loan") was for construction financing for two new restaurants to be
built in 2000 and 2001. Terms of the 2000 Loan include funding of a maximum of
$1,600,000 per restaurant. Other terms and conditions of the 1999 and 2000 Loans
are substantially identical to those of the 1996 Loan Agreement.
The Company plans to open three new restaurants in 2001. In July 2000,
the Company received a new commitment from FFCA to fund $1,600,000 each for two
additional restaurants to be constructed in 2001.
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 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.
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ITEM 2. PROPERTIES
LOCATION DATE OPENED
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Jacksonville May 1982
Orange Park May 1984
Ocala September 1986
Neptune Beach November 1986
Lakeland February 1987
Lakeland March 1987
Winter Haven August 1987
Apopka September 1987
Gainesville December 1987
New Port Richey May 1988
Tampa June 1988
Tallahassee August 1988
Daytona Beach September 1988
Tampa November 1988
Orlando February 1989
Clearwater July 1989
Melbourne October 1989
Lake City March 1991
Brooksville January 1997
Leesburg June 1998
Deland April 1999
Tampa September 1999
St. Cloud December 2000
As of February 23, 2001, the Company operated 23 Ryan's restaurants.
The specific rate at which the Company is able to open new restaurants will be
determined, among other factors, 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 3, 2001, the Company owned the real property on which 18
of its restaurants were located. All of these properties are subject to
mortgages securing the FFCA notes.
The Company leases the real property on which five of its restaurants
are located. Those restaurants are located in Jacksonville, Clearwater,
Brooksville, Leesburg, and Tampa, Florida. The Company also leases two buildings
in Jacksonville, Florida for its executive offices.
In November 2000, the Company closed on the purchase of real property
for a new restaurant location in Titusville, Florida. A restaurant is under
construction on that property and is scheduled to open in May 2001. The Company
is seeking to identify two new restaurant locations for construction in 2001.
The Company received notice in December 2000 from its landlord of the
Clearwater, Florida restaurant that the lease for the restaurant would be
terminated effective March 20, 2001. The Company had expected to renew the lease
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for at least an additional year. Due to the lease termination, the Company
recognized an asset valuation charge of $189,700 in 2000.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject from time to time 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
currently pending 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.
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 2000 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 2000 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
2000 Annual Report to Shareholders is incorporated herein by reference.
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ITEM 7.A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT RISK
The Company is exposed to market risk from changes in interest rates.
For its cash and cash equivalents, investments and mortgages receivable, a
change in interest rates affects the amount of interest income than can be
earned. For its debt instruments, a change in interest rates affects the amount
of interest expense incurred.
The following table provides information about the Company's financial
instruments that are sensitive to changes in interest rates.
2001 2002 2003 2004 2005 THEREAFTER TOTAL
---- ---- ---- ---- ---- ---------- -----
Assets
Overnight repurchase
account at variable
interest rate $ 597,000 $ 597,000
Weighted average
interest rate 5.8%
Certificates of deposit
at fixed interest rates $ 10,000 $ 10,000
Weighted average
interest rate 4.8%
Mortgages receivable at
fixed interest rate $ 172,000 13,400 342,000 $ 527,400
Weighted average
interest rate 9.1% 10.0% 10.0%
Liabilities
Notes payable at
variable
interest rate $ 565,900 607,200 669,400 733,200 813,200 15,046,400 $18,435,300
Weighted average
interest rate 10.4% 10.4% 10.4% 10.4% 10.4% 10.4%
Long-term capital lease
at fixed interest rate $ 3,700 18,800 20,900 23,200 25,800 956,900 $ 1,049,300
Weighted average
interest rate 10.7% 10.7% 10.7% 10.7% 10.7% 10.7%
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company and the Report of
Independent Certified Public Accountants as contained in the Company's 2000
Annual Report to Shareholders are incorporated herein by reference.
SUPPLEMENTARY DATA
Following is a summary of the quarterly results of operations for the years
ended January 3, 2001 and December 29, 1999:
FISCAL QUARTER
------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
----- ------ ----- ------ -----
$ In thousands,
except per share amounts
2000
Sales $10,591 $10,180 $9,249 $9,940 39,960
Gross profit 6,500 6,251 5,607 6,133 24,491
Net earnings (loss) 538 275 (343) (517) (47)
Basic earnings (loss)
per share .22 .11 (.14) (.21) (.02)
Diluted earnings (loss)
per share .22 .11 (.14) (.21) (.02)
1999
Sales $10,146 $10,143 $9,238 $9,378 38,905
Gross profit 6,204 6,199 5,638 5,703 23,744
Net earnings (loss) 234 (192) (1,200) (824) (1,982)
Basic earnings (loss)
per share .10 (.08) (.50) (.34) (.82)
Diluted earnings (loss)
per share .10 (.08) (.50) (.34) (.82)
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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 2001 Annual
Meeting of Shareholders, which will be filed with the Securities and Exchange
Commission prior to May 3, 2001, is incorporated herein by reference.
The information regarding executive officers is set forth in Item 1 of
this report under the caption "Executive Officers."
The information regarding reports required under section 16(a) of the
Securities Exchange Act of 1934 contained under caption "Section 16(a)
Beneficial Ownership Reporting Compliance" in the Company's proxy statement for
the 2001 Annual Meeting of Shareholders, which will be filed with Securities and
Exchange Commission prior to May 3, 2001 is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the caption "Executive Pay" in the
Company's Proxy Statement for the 2001 Annual Meeting of Shareholders, which
will be filed with the Securities and Exchange Commission prior to May 3, 2001,
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 2001 Annual Meeting of Shareholders, which will be filed with the Securities
and Exchange Commission prior to May 3, 2001, is incorporated herein by
reference.
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17
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
2001 Annual Meeting of Shareholders, which will be filed with the Securities and
Exchange Commission prior to May 3, 2001, is incorporated herein by reference.
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 2000 Annual Report to Shareholders. With
the exception of the pages listed below, the 2000 Annual
Report to Shareholders is not deemed "filed" as a part of this
report on Form 10-K.
PAGE
REFERENCE
--------------------
FORM 2000
10-K ANNUAL REPORT
---- -------------
Consent of Independent Certified
Public Accountants 22
Independent Auditors' Report 28
Consolidated Statements of Operations 11
Consolidated Balance Sheets 12
Consolidated Statements of
Shareholders' Equity 13
Consolidated Statements of Cash Flows 14
Notes to Consolidated Financial
Statements 15
(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.
(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.)
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18
NO. EXHIBIT
--- -------
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.)
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.)
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.)
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19
NO. EXHIBIT
--- -------
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 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.)
10.04 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.)
10.05 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.)
10.06 Agreement between the Company and Kraft Foodservice, Inc., 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.)
10.07 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.)
19
20
NO. EXHIBIT
--- -------
10.08 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.)
10.09 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.)
10.10 $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.)
10.11 $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.)
10.12 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.)
10.13 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.)
10.14 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.)
10.15 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.)
20
21
NO. EXHIBIT
--- -------
10.16 Commitment for construction financing for two restaurants from
FFCA Acquisition Corporation, dated October 2, 1998. (Exhibit
10.02 to the Company's Quarterly Report on Form 10-Q filed
with the commission on November 16, 1998 is incorporated
herein by reference.)
10.17 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).
10.18 Employment Agreement between the Company and Lewis E.
Christman, Jr., dated as of January 26, 1998. (Exhibit 10.17
to the Company's Annual Report on Form 10-K, filed with the
Commission on March 31, 1998 is hereby incorporated by
reference).
10.19 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.)
10.20 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.)
10.21 Commitment for construction financing for two restaurants from
FFCA Acquisition Corporation, dated July 18, 2000.
13.01 2000 Annual Report to Shareholders.
21.01 Subsidiaries of the Company.
23.01 Consent of Independent Certified Public Accountants - Deloitte
& Touche LLP.
(b) None.
(c) See (a)3. above for a list of all exhibits filed herewith and the Exhibit
Index.
(d) None.
21
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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 of our report dated February 23,
2001, appearing in the 2000 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 23, 2001 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 3, 2001.
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
23, 2001 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 3,
2001.
We further consent to the incorporation by reference in Registration Statement
No. 33-62101 pertaining to the 1995 Long Term Incentive Plan of Family Steak
Houses of Florida, Inc. on Form S-8 of our report dated February 23, 2001
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 3, 2001.
Deloitte & Touche LLP
Certified Public Accountants
Jacksonville, Florida
March 19, 2001
22
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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 9, 2001 BY: /s/ GLEN F. CEILEY
-------------------------------
Glen F. Ceiley
(Principal Executive 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 Executive Vice President 3/2/01
- ----------------------- (Principal Financial and
Edward B. Alexander Accounting Officer)
/s/ GLEN F. CEILEY Chairman of the Board 3/6/01
- -----------------------
Glen F. Ceiley
/s/ STEVE CATANZARO Director 3/2/01
- -----------------------
Steve Catanzaro
/s/ JAY CONZEN Director 3/2/01
- -----------------------
Jay Conzen
/s/ WILLIAM MEANS Director 3/2/01
- -----------------------
William Means
23