x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Delaware
|
13-3319172
|
|
(State
or other jurisdiction
|
(IRS
Employer
|
|
of
incorporation or organization)
|
Identification
No.)
|
Page
Number
|
||||
PART
I - FINANCIAL INFORMATION
|
||||
Item
1. Financial Statements
|
||||
Condensed
Consolidated Balance Sheets -
|
||||
June
25, 2006 (unaudited) and December 25, 2005
|
3
|
|||
|
||||
Condensed
Consolidated Statements of Operations -
|
||||
For
the three months and six months ended June
|
||||
25,
2006 and June 26, 2005 (unaudited)
|
5
|
|||
Condensed
Consolidated Statements of Cash Flows -
|
||||
For
the six months ended June 25, 2006 and
|
||||
June
26, 2005 (unaudited)
|
6
|
|||
Notes
to Condensed Consolidated Financial Statements
|
7
|
|||
Item
2. Management's Discussion and Analysis of Financial
Condition
|
||||
and Results of Operations
|
20
|
|||
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
34
|
|||
Item
4. Evaluation of Disclosure Controls and Procedures
|
34
|
|||
PART
II - OTHER INFORMATION
|
||||
Item
1A. Risk Factors
|
35
|
|||
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
35
|
|||
Item
4. Submission of Matters to a Vote of Security Holders
|
35
|
|||
Item
6. Exhibits
|
36
|
|||
|
||||
SIGNATURES
|
37
|
June
25,
2006 |
|
December
25,
2005 |
|
||||
|
|
(Unaudited)
|
|
|
|||
Current
assets:
|
|||||||
Cash
|
$
|
2,648
|
$
|
3,161
|
|||
Inventories
|
744
|
727
|
|||||
Receivables,
net of reserve ($278 in
|
|||||||
2006
and $238 in 2005)
|
1,026
|
784
|
|||||
Note
receivable - current portion
|
12
|
11
|
|||||
Reimbursable
costs receivable
|
725
|
912
|
|||||
Prepaid
expenses and other current assets
|
865
|
401
|
|||||
|
|||||||
Total
current assets
|
6,020
|
5,996
|
|||||
Furniture,
equipment, and improvements, net
|
14,599
|
13,372
|
|||||
Restricted
cash
|
1,192
|
1,042
|
|||||
Note
receivable
|
65
|
79
|
|||||
Liquor
licenses
|
394
|
426
|
|||||
Deferred
tax asset
|
2,763
|
577
|
|||||
Other
assets
|
599
|
276
|
|||||
Goodwill,
net
|
205
|
205
|
|||||
Total
assets
|
$
|
25,837
|
$
|
21,973
|
June
25,
2006 |
|
December
25,
2005 |
|||||
Current
liabilities:
|
|
|
(unaudited)
|
||||
Accounts
payable
|
$
|
2,531
|
$
|
1,457
|
|||
Accrued
expenses
|
4,172
|
4,533
|
|||||
Accrued
managed outlet operating expenses
|
725
|
912
|
|||||
Current
portion of liability for debt extinguishment
|
50
|
-
|
|||||
Current
portion of long-term debt
|
40
|
48
|
|||||
Current
portion notes payable - related parties
|
155
|
312
|
|||||
Total
current liabilities
|
7,673
|
7,262
|
|||||
Long-term
debt
|
1,417
|
206
|
|||||
Notes
payable - related parties
|
-
|
671
|
|||||
Liability
for debt extinguishment
|
100
|
-
|
|||||
Other
long-term liabilities
|
8,039
|
7,398
|
|||||
Total
liabilities
|
17,229
|
15,537
|
|||||
Minority
interest
|
1,516
|
1,630
|
|||||
Stockholders'
equity:
|
|||||||
Preferred
Stock, 1,000,000 shares authorized,
|
|||||||
995,935
shares undesignated in 2006 and 2005
|
-
|
-
|
|||||
Series
II, 10% Convertible Preferred Stock, $.001 par
|
|||||||
value;
500 shares, authorized, 500 shares
|
|||||||
issued
and outstanding in 2006 and 2005
|
-
|
-
|
|||||
Common
stock, $.00004 par value; 12,000,000 shares
|
|||||||
authorized
in 2006 and 2005, 6,159,384 shares
|
|||||||
issued
and outstanding in 2006, 5,728,495 shares
|
|||||||
issued
and outstanding in 2005
|
-
|
-
|
|||||
Additional
paid-in capital
|
13,980
|
13,686
|
|||||
Accumulated
deficit
|
(6,888
|
)
|
(8,880
|
)
|
|||
Total
stockholders' equity
|
7,092
|
4,806
|
|||||
Total
liabilities, minority interest and
|
|||||||
stockholders'
equity
|
$
|
25,837
|
$
|
21,973
|
Three
Months Ended
|
|
Six
Months Ended
|
|
||||||||||
|
|
June
25, 2006
|
|
June
26, 2005
|
|
June
25, 2006
|
|
June
26, 2005
|
|||||
Revenues:
|
|||||||||||||
Sales
|
$
|
14,512
|
$
|
13,417
|
$
|
29,574
|
$
|
26,804
|
|||||
Cost
reimbursements
|
3,796
|
3,120
|
7,614
|
6,589
|
|||||||||
Management
and license fees
|
418
|
369
|
838
|
725
|
|||||||||
Total
revenues
|
18,726
|
16,906
|
38,026
|
34,118
|
|||||||||
Operating
expenses:
|
|||||||||||||
Cost
of sales
|
4,104
|
3,814
|
8,278
|
7,552
|
|||||||||
Restaurant
operating
|
8,639
|
8,047
|
17,579
|
15,748
|
|||||||||
Reimbursed
costs
|
3,796
|
3,120
|
7,614
|
6,589
|
|||||||||
General
and administrative
|
1,621
|
1,224
|
2,862
|
2,270
|
|||||||||
Depreciation
and amortization
|
530
|
482
|
1,061
|
943
|
|||||||||
Pre-opening
costs
|
124
|
153
|
124
|
244
|
|||||||||
Total
operating expenses
|
18,814
|
16,840
|
37,518
|
33,346
|
|||||||||
Income
(loss) from operations
|
(88
|
)
|
66
|
508
|
772
|
||||||||
Interest
expense, net
|
(86
|
)
|
(43
|
)
|
(107
|
)
|
(80
|
)
|
|||||
Debt
extinguishment costs
|
(279
|
)
|
-
|
(279
|
)
|
-
|
|||||||
Income
(loss) before provision for
|
|||||||||||||
income
taxes and minority interest
|
(453
|
)
|
23
|
122
|
692
|
||||||||
Benefit
(provision) for income taxes
|
2,043
|
(131
|
)
|
1,975
|
(209
|
)
|
|||||||
Minority
interest in net (profit)
|
|||||||||||||
loss
of subsidiaries
|
(80
|
)
|
233
|
(105
|
)
|
324
|
|||||||
Net
income
|
1,510
|
125
|
1,992
|
807
|
|||||||||
Preferred
dividends accrued
|
(12
|
)
|
(12
|
)
|
(25
|
)
|
(25
|
)
|
|||||
Net
income applicable to
|
|||||||||||||
common
stock
|
$
|
1,498
|
$
|
113
|
$
|
1,967
|
$
|
782
|
|||||
Net
income per share applicable
|
|||||||||||||
to
common stock:
|
|||||||||||||
Basic
net income
|
$
|
0.26
|
$
|
0.02
|
$
|
0.34
|
$
|
0.14
|
|||||
Diluted
net income
|
$
|
0.23
|
$
|
0.02
|
$
|
0.31
|
$
|
0.13
|
|||||
Weighted
average shares outstanding:
|
|||||||||||||
Basic
|
5,837,306
|
5,652,230
|
5,795,036
|
5,651,188
|
|||||||||
Diluted
|
6,456,751
|
6,064,781
|
6,415,287
|
6,018,508
|
Six
Months Ended
|
|
||||||
|
|
June
25, 2006
|
|
June
26, 2005
|
|||
Cash
flows from operating activities:
|
|||||||
Net
income
|
$
|
1,992
|
$
|
807
|
|||
Adjustments
to reconcile net income to net cash
|
|||||||
provided
by operating activities:
|
|||||||
Depreciation
and amortization
|
1,061
|
943
|
|||||
Amortized
deferred rent and lease incentives
|
(318
|
)
|
(329
|
)
|
|||
Amortization
of debt issuance costs
|
35
|
-
|
|||||
Deferred
tax asset
|
(2,186 | ) | - | ||||
Stock
based compensation
|
108
|
-
|
|||||
Provision
for doubtful accounts
|
40
|
39
|
|||||
Loss
on debt extinguishment
|
219
|
-
|
|||||
Gain
on sale of assets
|
(19
|
)
|
-
|
||||
Minority
interest in net profit (loss) of subsidiaries
|
105
|
(324
|
)
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Inventories
|
(17
|
)
|
(55
|
)
|
|||
Receivables
|
(282
|
)
|
(63
|
)
|
|||
Prepaid
expenses and other current assets
|
(158
|
)
|
(75
|
)
|
|||
Tenant
improvement allowances
|
653
|
1,772
|
|||||
Other
assets
|
51
|
(4
|
)
|
||||
Accounts
payable
|
1,074
|
(329
|
)
|
||||
Accrued
expenses
|
(423
|
)
|
419
|
||||
Net
cash provided by operating activities
|
1,935
|
2,801
|
|||||
Cash
flows from investing activities:
|
|||||||
Proceeds
from sale of liquor license
|
55
|
-
|
|||||
Collections
on note receivable
|
15
|
15
|
|||||
Restricted
cash
|
(150
|
)
|
(160
|
)
|
|||
Purchase
of liquor license
|
-
|
(61
|
)
|
||||
Purchase
of furniture, equipment and improvements
|
(2,283
|
)
|
(3,248
|
)
|
|||
Net
cash used in investing activities
|
(2,363
|
)
|
(3,454
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Capital
contributions from minority interests in LLCs
|
25
|
976
|
|||||
Debt
issuance costs
|
(413
|
)
|
-
|
||||
Return
of capital and profits to minority shareholder
|
(184
|
)
|
(143
|
)
|
|||
Proceeds
from line of credit and equipment financing
|
1,233
|
118
|
|||||
Proceeds
from exercise of stock options and warrants
|
186
|
24
|
|||||
Payments
on notes payable - to member of Chicago Grill
|
(902
|
)
|
(68
|
)
|
|||
Payments
on long-term debt
|
(30
|
)
|
(124
|
)
|
|||
Net
cash provided by financing activities
|
(85
|
)
|
783
|
||||
Net
increase (decrease) in cash
|
(513
|
)
|
130
|
||||
Cash,
beginning of period
|
3,161
|
1,407
|
|||||
Cash,
end of period
|
$
|
2,648
|
$
|
1,537
|
|||
Supplemental
cash flow information:
|
|||||||
Cash
paid during the period for:
|
|||||||
Interest
|
$
|
113
|
$
|
81
|
|||
Income
taxes
|
709
|
129
|
|
|
Three
Months
Ended
|
|
Six
Months
Ended |
|||
(in
thousands, except per share amounts)
|
June
26, 2005
|
June
26,2005
|
|||||
Net
income, as reported
|
$
|
125
|
$
|
807
|
|||
Deduct:
stock compensation expense under fair value method, net of
taxes
|
(36
|
)
|
(76
|
)
|
|||
Net
income, pro forma
|
$
|
89
|
$
|
731
|
|||
Net
income per share, as reported:
|
|||||||
Basic
|
$
|
0.02
|
$
|
0.14
|
|||
Diluted
|
$
|
0.02
|
$
|
0.13
|
|||
Net
income per share, pro forma:
|
|||||||
Basic
|
$
|
0.01
|
$
|
0.12
|
|||
Diluted
|
$
|
0.01
|
$
|
0.12
|
Shares
|
Weighted
Average Exercise
Price
|
Weighted
Average Remaining Contractual Term
(in years)
|
Aggregate
Intrinsic
Value
|
||||||||||
Outstanding
at December 25, 2005
|
713,275
|
$
|
2.89
|
||||||||||
Granted
|
153,750
|
3.17
|
|||||||||||
Exercised
|
(17,400
|
)
|
2.06
|
||||||||||
Cancelled
|
(6,700
|
)
|
2.549
|
||||||||||
Outstanding
at June 25, 2006
|
842,925
|
2.96
|
6.1
|
$
|
386,906
|
||||||||
Vested
and expected to vest at June 25, 2006
|
769,277
|
2.71
|
6.2
|
$
|
458,586
|
||||||||
Exercisable
at June 25, 2006
|
480,645
|
2.83
|
4.4
|
$
|
284,291
|
Options
Outstanding .
|
Options
Exercisable
|
|||||||||||||||
Range
of
Exercise
Price
|
Number
Outstanding
at
June
25,
2006
|
Weighted-
Average
Remaining
Contractual
Life
|
Weighted-
Average
Exercise
Price
|
Number
Outstanding
at
June
25,
2006
|
Weighted-
Average
Exercise
Price
|
|||||||||||
$
1.25
|
1,750
|
4.0
|
$
|
1.25
|
1,750
|
$
|
1.25
|
|||||||||
$
1.55
|
41,000
|
4.2
|
$
|
1.55
|
41,000
|
$
|
1.55
|
|||||||||
$
1.65
|
91,500
|
5.0
|
$
|
1.65
|
74,600
|
$
|
1.65
|
|||||||||
$
1.70
|
34,750
|
6.9
|
$
|
1.70
|
20,050
|
$
|
1.70
|
|||||||||
$
2.19
|
49,050
|
5.2
|
$
|
2.19
|
38,520
|
$
|
2.19
|
|||||||||
$
2.23
|
50,000
|
8.1
|
$
|
2.23
|
10,000
|
$
|
2.23
|
|||||||||
$
2.46
|
19,000
|
1.3
|
$
|
2.46
|
19,000
|
$
|
2.46
|
|||||||||
$
2.86
|
69,250
|
6.2
|
$
|
2.86
|
42,850
|
$
|
2.86
|
|||||||||
$
3.14
|
25,000
|
2.8
|
$
|
3.14
|
10,000
|
$
|
3.14
|
|||||||||
$
3.16
|
203,750
|
6.9
|
$
|
3.16
|
121,000
|
$
|
3.16
|
|||||||||
$
3.19
|
50,000
|
9.7
|
$
|
3.19
|
-
|
$
|
3.19
|
|||||||||
$
3.30
|
18,500
|
0.0
|
$
|
3.30
|
18,500
|
$
|
3.30
|
|||||||||
$
3.45
|
25,000
|
9.4
|
$
|
3.45
|
-
|
$
|
3.45
|
|||||||||
$
4.00 to $ 4.68
|
146,750
|
6.5
|
$
|
4.20
|
65,750
|
$
|
4.17
|
|||||||||
$
5.36 to $14.00
|
17,625
|
0.7
|
$
|
6.40
|
17,625
|
$
|
6.40
|
(in
thousands)
|
2006
|
2005
|
|||||
Lease
incentives receivable
|
$
|
306
|
$
|
-
|
|||
Prepaid
expenses, other
|
559
|
401
|
|||||
Total
prepaid expenses and other current assets
|
$
|
865
|
$
|
401
|
|||
(in
thousands)
|
|
2006
|
|
2005
|
|||
Lease
Incentives
|
$
|
5,828
|
$
|
5,140
|
|||
Deferred
Rent
|
2,211
|
2,258
|
|||||
Total
Other Long-Term Liabilities
|
$
|
8,039
|
$
|
7,398
|
(in
thousands)
|
San
Jose Grill, LLC
|
Chicago
Grill On The Alley, LLC
|
The
Grill On Hollywood, LLC
|
||||||||||||||||
Members
|
Company
|
Members
|
Company
|
Members
|
Company
|
||||||||||||||
Distributions
of profit and note repayments during the quarter ended June 25,
2006:
|
$
|
184
|
$
|
184
|
$
|
972
(a
|
)
|
-
|
-
|
-
|
|||||||||
Unreturned
Initial Capital Contributions at June 25, 2006:
|
-
|
-
|
-
|
-
|
$
|
1,200
|
$
|
250
|
|||||||||||
Preferred
Return rate:
|
10
|
%
|
10
|
%
|
8
|
%
|
-
|
12
|
%
|
12
|
%
|
||||||||
Accrued
but unpaid Preferred Returns at June 25, 2006:
|
-
|
-
|
-
|
-
|
(b
|
)
|
(b
|
)
|
South
Bay Daily Grill
(Continental
Park, LLC)
|
Universal
Citywalk Daily Grill
|
Downtown
Daily Grill
(612
Flower Daily Grill, LLC)
|
|||||||||||||||||
Members
|
Company
|
Members
|
Company
|
Members
|
Company
(d)
|
||||||||||||||
Distributions
of profit during the quarter ended June 25, 2006:
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Unreturned
Initial and Additional Capital Contributions at June 25,
2006:
|
$
|
1,100
|
$
|
450
|
$
|
1,396
|
$
|
296
|
$
|
1,400
|
$
|
313
|
|||||||
Preferred
Return rate:
|
10
|
%
|
10%
(c
|
)
|
-
|
-
|
9
|
%
|
9
|
%
|
|||||||||
Accrued
but unpaid Preferred Returns at June 25, 2006:
|
(b
|
)
|
(b
|
)
|
(b
|
)
|
-
|
$
|
91
|
$
|
23
|
(a) |
Distribution
of capital and note repayments as of June 25, 2006 includes $902,000
of
retirement of collateralized subordinated notes and mandatorily redeemable
capital obligations and $70,000 of interest and preferred return.
|
(b) |
Due
to the under performance of the restaurants the preferred return
is not
being accrued. The Company is not liable to pay the preferred return
distributions, such that they represent a non-recourse obligation
of the
subsidiary entity. If preferred returns were accrued for The Grill
on
Hollywood the member would have an accrued preferred return of $866,000
and the Company would have an accrued preferred return of $180,000.
If
preferred returns were accrued for the South Bay Daily Grill the
member
would have an accrued preferred return of $427,000 and the Company
would
have an accrued preferred return of $167,000. If
preferred returns were accrued for the CityWalk Partnership the Member
would have an accrued preferred return of $611,000.
|
(c) | The Company’s preferred return with respect to the South Bay Daily Grill is based on unrecovered capital contribution and accrued but unpaid management fees. |
(d) | The Company is a non-managing member, and a wholly owned subsidiary of the Company is the Manager of this restaurant |
Six
months
|
2006
|
2005
|
|||||||||||
(in
thousands, except share data)
|
Earnings
|
Shares
|
Earnings
|
Shares
|
|||||||||
Net
income
|
$
|
1,992
|
$
|
807
|
|||||||||
Less:
preferred stock dividend
|
(25
|
)
|
(25
|
)
|
|||||||||
Earnings
available for common stockholders
|
1,967
|
5,795,036
|
782
|
5,651,188
|
|||||||||
Dilutive
securities:
|
|||||||||||||
Stock
options
|
-
|
96,264
|
-
|
93,196
|
|||||||||
Warrants
|
-
|
398,988
|
-
|
274,124
|
|||||||||
Convertible
Preferred Stock
|
-
|
125,000
|
-
|
-
|
|||||||||
Dilutive
earnings available to common stockholders
|
$
|
1,967
|
6,415,287
|
$
|
782
|
6,018,508
|
|||||||
Three
months
|
2006
|
2005
|
|||||||||||
(in
thousands, except share data)
|
Earnings
|
Shares
|
Earnings
|
Shares
|
|||||||||
Net
income
|
$
|
1,510
|
$
|
125
|
|||||||||
Less:
preferred stock dividend
|
(12
|
)
|
(12
|
)
|
|||||||||
Earnings
available for common stockholders
|
1,498
|
5,837,306
|
113
|
5,652,230
|
|||||||||
Dilutive
securities:
|
|||||||||||||
Stock
options
|
-
|
102,133
|
-
|
99,561
|
|||||||||
Warrants
|
-
|
392,312
|
-
|
312,990
|
|||||||||
Convertible
preferred stock
|
-
|
125,000
|
-
|
-
|
|||||||||
Dilutive
earnings available to common stockholders
|
$
|
1,498
|
6,456,751
|
$
|
113
|
6,064,781
|
|||||||
Three
Months
Ended |
|
Six
Months
Ended |
|
||||||||||
|
|
June
25, 2006
|
|
June
26,2005
|
|
June
25, 2006
|
|
June
26, 2005
|
|||||
Revenues:
|
% | % | % | % | |||||||||
Sales
|
77.5
|
79.4
|
77.8
|
78.6
|
|||||||||
Cost
reimbursements
|
20.3
|
18.5
|
20.0
|
19.3
|
|||||||||
Management
and license fees
|
2.2
|
2.2
|
2.2
|
2.1
|
|||||||||
Total
revenues
|
100.0
|
100.0
|
100.0
|
100.0
|
|||||||||
Operating
expenses:
|
|||||||||||||
Cost
of sales
|
21.9
|
22.6
|
21.8
|
22.1
|
|||||||||
Restaurant
operating
|
46.1
|
47.6
|
46.3
|
46.2
|
|||||||||
Reimbursed
costs
|
20.3
|
18.5
|
20.0
|
19.3
|
|||||||||
General
and administrative
|
8.7
|
7.2
|
7.5
|
6.7
|
|||||||||
Depreciation
and amortization
|
2.8
|
2.9
|
2.8
|
2.8
|
|||||||||
Pre-opening
costs
|
0.7
|
0.9
|
0.3
|
0.7
|
|||||||||
Total
operating expenses
|
100.5
|
99.6
|
98.7
|
97.7
|
|||||||||
Income
(loss) from operations
|
(0.5
|
)
|
0.4
|
1.3
|
2.3
|
||||||||
Interest
expense, net
|
(0.5
|
)
|
(0.2
|
)
|
(0.3
|
)
|
(0.2 | ) | |||||
Extinguishment
of debt
|
(1.5
|
)
|
-
|
(0.7
|
)
|
-
|
|||||||
Income
(loss) before provision for income
|
|||||||||||||
taxes
and minority interest
|
(2.4
|
)
|
0.2
|
0.3
|
2.1
|
||||||||
Benefit
(provision) for income taxes
|
10.9
|
(0.7
|
)
|
5.2
|
(0.6
|
)
|
|||||||
Minority
interest in net (profit) loss of
|
|||||||||||||
subsidiaries
|
(0.4
|
)
|
1.2
|
(0.3
|
)
|
0.9
|
|||||||
Net
income
|
8.1
|
0.7
|
5.2
|
2.3
|
Three
Months Ended
|
|
Six
Months Ended
|
|
||||||||||
|
|
June
25,
2006 |
|
June
26,
2005 |
|
June
25,
2006 |
|
June
26,
2005 |
|||||
Revenues
|
% | % | % |
%
|
|
||||||||
Sales
|
100.0
|
100.0
|
100.0
|
100.0
|
|||||||||
Cost
of sales
|
28.3
|
28.4
|
28.0
|
28.2
|
|||||||||
Restaurant
operating expenses
|
60.0
|
60.0
|
59.5
|
58.8
|
|
Second
Quarter Openings
|
|
Year-to-date
Openings
|
|
Total
open at
End of Quarter
|
|
|||||||||||||
|
|
2006
|
|
2005
|
|
2006
|
|
2005
|
|
2006
|
|
2005
|
|||||||
Daily
Grill restaurants:
|
|||||||||||||||||||
Company
owned
|
-
|
1
|
-
|
2
|
12
|
13
|
|||||||||||||
Managed
and/or licensed
|
-
|
-
|
-
|
-
|
8
|
8
|
|||||||||||||
Grill
on the Alley restaurants:
|
|||||||||||||||||||
Company
owned
|
-
|
-
|
-
|
-
|
4
|
4
|
|||||||||||||
Total
|
-
|
1
|
-
|
2
|
24
|
25
|
Three
Months Ended
|
|
Six Months Ended
|
|
||||||||||
|
|
June
25, 2006
|
|
June
26, 2005
|
|
June
25, 2006
|
|
June
26,2005
|
|||||
Weighted
average weekly sales
|
|||||||||||||
per
company owned restaurant:
|
|||||||||||||
Daily
Grill
|
$
|
59,200
|
$
|
58,824
|
$
|
64,964
|
$
|
61,792
|
|||||
Grill
on the Alley
|
86,697
|
79,939
|
89,476
|
80,826
|
|||||||||
Change
in comparable restaurant sales (1):
|
|||||||||||||
Daily
Grill
|
6.8
|
%
|
(1.5
|
)%
|
5.3
|
%
|
(1.3
|
)%
|
|||||
Grill
on the Alley
|
8.5
|
%
|
13.4
|
%
|
10.7
|
%
|
9.5
|
%
|
|||||
Total
sales (in thousands):
|
|||||||||||||
Daily
Grill
|
$
|
10,004
|
$
|
9,260
|
$
|
20,269
|
$
|
18,398
|
|||||
Grill
on the Alley
|
4,508
|
4,157
|
9,305
|
8,406
|
|||||||||
Total
consolidated sales
|
$
|
14,512
|
$
|
13,417
|
$
|
29,574
|
$
|
26,804
|
(1) |
When
computing comparable restaurant sales, restaurants open for at least
12
months are compared from period to
period.
|
Three
Months Ended
|
|
Six
Months Ended
|
|||||||||||
(in
thousands)
|
|
June
25, 2006
|
|
June
26, 2005
|
|
June
25, 2006
|
|
June
26,2005
|
|||||
Managed
Daily Grills
|
$
|
5,196
|
$
|
4,512
|
$
|
10,497
|
$
|
9,113
|
|||||
Licensed
Daily Grills
|
1,988
|
1,961
|
3,685
|
3,770
|
|||||||||
|
$
|
7,184
|
$
|
6,473
|
$
|
14,182
|
$
|
12,883
|
|||||
Management
and license fees
|
$
|
418
|
$
|
369
|
$
|
838
|
$
|
725
|
|||||
Percent
of gross sales
|
5.8
|
%
|
5.7
|
%
|
5.9
|
%
|
5.6
|
%
|
(in
thousands)
|
2006
|
2005
|
|||||
Net
cash provided by operating activities
|
$
|
1,935
|
$
|
2,801
|
|||
Net
cash used in investing activities
|
(2,363
|
)
|
(3,454
|
)
|
|||
Net
cash provided by (used in) financing activities
|
(85
|
)
|
783
|
||||
Net
increase (decrease) in cash
|
$
|
(513
|
)
|
$
|
130
|
Payments
due by period (in thousands)
|
||||||||||||||||
Total
|
2006
|
2007
- 2008
|
2009
- 2010
|
Thereafter
|
||||||||||||
Long-term
debt
|
$
|
1,612
|
$
|
193
|
$
|
82
|
$
|
1,299
|
$
|
38
|
||||||
Capital
lease obligations
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Operating
lease commitments
|
30,139
|
3,647
|
7,324
|
6,061
|
13,107
|
|||||||||||
Other
contractual purchase
Obligations
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Other
long-term liabilities
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Total
|
$
|
31,751
|
$
|
3,840
|
$
|
7,406
|
$
|
7,360
|
$
|
13,145
|
(in
thousands)
|
San
Jose Grill, LLC
|
Chicago
Grill On The Alley, LLC
|
The
Grill On
Hollywood, LLC
|
|||||||||||||||||||
Members
|
Company
|
Members
|
Company
|
Members
|
Company
|
|||||||||||||||||
Distributions
of profit and note repayments during the quarter ended June 25,
2006:
|
$
|
184
|
$
|
184
|
$
|
972
(a
|
)
|
-
|
-
|
-
|
||||||||||||
Unreturned
Initial Capital Contributions at June 25, 2006:
|
-
|
-
|
-
|
-
|
$
|
1,200
|
$250
|
|||||||||||||||
Preferred
Return rate:
|
10
|
%
|
10
|
%
|
8
|
%
|
-
|
12
|
%
|
12%
|
||||||||||||
Accrued
but unpaid Preferred Returns at June 25, 2006:
|
-
|
-
|
-
|
-
|
(b
|
)
|
(b)
|
South
Bay Daily Grill
(Continental
Park, LLC)
|
Universal
Citywalk Daily Grill
|
Downtown
Daily Grill
(612
Flower Daily Grill, LLC)
|
|||||||||||||||||
Members
|
Company
|
Members
|
Company
|
Members
|
Company
(d)
|
||||||||||||||
Distributions
of profit during the quarter ended June 25, 2006:
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Unreturned
Initial and Additional Capital Contributions at June 25,
2006:
|
$
|
1,100
|
$
|
450
|
$
|
1,396
|
$
|
296
|
$
|
1,400
|
$
|
313
|
|||||||
Preferred
Return rate:
|
10
|
%
|
10%
(c
|
)
|
-
|
-
|
9
|
%
|
9
|
%
|
|||||||||
Accrued
but unpaid Preferred Returns at June 25, 2006
|
(b
|
)
|
(b
|
)
|
(b
|
)
|
-
|
$
|
91
|
$
|
23
|
a) |
Distribution
of capital and note repayments as of June 25, 2006 includes $902,000
of
retirement of collateralized subordinated notes and mandatorily redeemable
capital obligations and $70,000 of interest and preferred
return.
|
b) |
Due
to the under performance of the restaurants the preferred return
is not
being accrued. The Company is not liable to pay the preferred return
distributions, such that they represent a non-recourse obligation
of the
subsidiary entity. If preferred returns were accrued for The Grill
on
Hollywood the Member would have an accrued preferred return of $866,000
and the Company would have an accrued preferred return of $180,000.
If
preferred returns were accrued for the South Bay Daily Grill the
Member
would have an accrued preferred return of $427,000 and the Company
would
have a preferred return of $167,000. If preferred returns were accrued
for
the CityWalk Partnership the Member would have an accrued preferred
return
of $611,000.
|
c) | The Company’s preferred return with respect to the South Bay Daily Grill is based on unrecovered capital contribution and accrued but unpaid management fees. |
d) | The Company is a non-managing member and a wholly owned subsidiary of the Company is the Manager of this restaurant. |