UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 29, 2008
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission File Number 1-6836
FLANIGAN'S ENTERPRISES, INC.
----------------------------
(Exact name of registrant as specified in its charter)
Florida 59-0877638
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5059 N.E. 18th Avenue, Fort Lauderdale, Florida 33334
----------------------------------------------- --------
(Address of principal executive offices) Zip Code
(954) 377-1961
--------------
(Registrant's telephone number, including area code)
--------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes|X| No|_|
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer|_| Accelerated filer|_| Non-accelerated filer|_|
Smaller reporting company|X|
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes|_| No|X|
On May 12, 2008, 1,886,033 shares of Common Stock, $0.10 par value per share,
were outstanding.
--------------------------------------------------------------------------------
FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES
---------------------------------------------
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION ............................................ 1
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ....... 1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME ............... 2
CONDENSED CONSOLIDATED BALANCE SHEETS ............................... 4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ........... 6
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ...... 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ..................................... 14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .... 27
ITEM 4T. CONTROLS AND PROCEDURES ...................................... 27
PART II. OTHER INFORMATION ............................................... 28
ITEM 1. LEGAL PROCEEDINGS ............................................. 28
ITEM 1A. RISK FACTORS ................................................. 28
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS ... 28
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ........... 28
ITEM 6. EXHIBITS ...................................................... 29
As used in this Quarterly Report on Form 10-Q, the terms "we," "us," "our," the
"Company" and "Flanigan's" mean Flanigan's Enterprises, Inc. and its
subsidiaries (unless the context indicates a different meaning).
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1
FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)
Thirteen Weeks Twenty Six Weeks
Ended Ended
March March March March
29, 2008 31, 2007 29, 2008 31, 2007
--------- --------- --------- ---------
REVENUES:
Restaurant food sales $ 10,785 $ 10,029 $ 20,532 $ 19,059
Restaurant bar sales 2,481 2,349 4,771 4,436
Package store sales 3,400 3,531 6,831 7,013
Franchise related revenues 211 308 542 608
Owner's fee 49 40 115 80
Other operating income 57 47 96 93
--------- --------- --------- ---------
16,983 16,304 32,887 31,289
--------- --------- --------- ---------
COSTS AND EXPENSES:
Cost of merchandise sold:
Restaurant and lounges 4,403 4,180 8,473 7,995
Package goods 2,396 2,519 4,861 5,063
Payroll and related costs 4,910 4,542 9,718 8,604
Occupancy costs 1,015 974 1,980 1,826
Selling, general and administrative expenses 3,289 3,279 6,705 6,279
--------- --------- --------- ---------
16,013 15,494 31,737 29,767
--------- --------- --------- ---------
Income from Operations 970 810 1,150 1,522
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest expense (121) (125) (241) (258)
Interest and other income 21 34 37 70
--------- --------- --------- ---------
(100) (91) (204) (188)
--------- --------- --------- ---------
Income before Provision for Income Taxes and Minority
Interest in (Earnings) Losses of Consolidated Limited
Partnerships 870 719 946 1,334
Provision for Income Taxes (197) (184) (349) (367)
Minority Interest in (Earnings) Losses of Consolidated
Limited Partnerships (203) (203) 58 (311)
--------- --------- --------- ---------
NET INCOME $ 470 $ 332 $ 655 $ 656
========= ========= ========= =========
2
FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)
(Continued)
Thirteen Weeks Twenty Six Weeks
Ended Ended
March March March March
29, 2008 31, 2007 29, 2008 31, 2007
-------- -------- -------- --------
Net Income Per Common Share:
Basic $ 0.25 $ 0.18 $ 0.35 $ 0.35
========= ========= ========= =========
Diluted $ 0.25 $ 0.17 $ 0.34 $ 0.34
========= ========= ========= =========
Weighted Average Shares and Equivalent Shares Outstanding
Basic 1,889,121 1,887,917 1,889,746 1,886,059
========= ========= ========= =========
Diluted 1,899,992 1,915,176 1,901,543 1,912,122
========= ========= ========= =========
See accompanying notes to unaudited condensed consolidated financial statements.
3
FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 29, 2008 (UNAUDITED) AND SEPTEMBER 29, 2007
(In Thousands)
ASSETS
March 29, 2008 September 29, 2007
-------------- ------------------
CURRENT ASSETS:
Cash and cash equivalents $ 4,420 $ 2,223
Notes and mortgages receivables,
current maturities, net 15 14
Prepaid income taxes 76 --
Due from franchisees 381 735
Other receivables 203 137
Inventories 2,119 2,165
Prepaid expenses 541 840
Deferred tax asset 159 208
-------- --------
Total Current Assets 7,914 6,322
-------- --------
Property and Equipment, Net 20,248 19,410
-------- --------
Investment in Limited Partnership 149 142
-------- --------
OTHER ASSETS:
Liquor licenses, net 345 347
Notes and mortgages receivable, net 37 44
Deferred tax asset 600 492
Leasehold purchases 1,969 2,085
Other 1,424 1,495
-------- --------
Total Other Assets 4,375 4,463
-------- --------
Total Assets $ 32,686 $ 30,337
======== ========
4
FLANIGAN'S ENTERPRISES, INC, AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 29, 2008 (UNAUDITED) AND SEPTEMBER 29, 2007
(In Thousands)
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 29, 2008 September 29, 2007
-------------- ------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 3,858 $ 3,666
Income taxes payable -- 331
Due to franchisees 322 312
Current portion of long term debt 172 196
Deferred revenues 39 45
Deferred rent 18 17
-------- --------
Total Current Liabilities 4,409 4,567
-------- --------
Long Term Debt, Net of Current Maturities 4,836 4,922
Line of Credit 1,562 962
Deferred Rent, Net of Current Portion 223 232
Minority Interest in Equity of
Consolidated Limited Partnerships 8,935 7,570
Commitments, Contingencies and
Subsequent Events
Stockholders' Equity:
Common stock, $.10 par value, 5,000,000
shares authorized; 4,197,642 shares issued 420 420
Capital in excess of par value 6,240 6,240
Retained earnings 11,986 11,331
Treasury stock, at cost, 2,309,109 shares
at March 29, 2008 and 2,306,909
shares at September 29, 2007 (5,925) (5,907)
-------- --------
Total Stockholders' Equity 12,721 12,084
-------- --------
Total Liabilities and Stockholders' Equity $ 32,686 $ 30,337
======== ========
See accompanying notes to unaudited condensed consolidated financial statements.
5
FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY SIX WEEKS ENDED MARCH 29, 2008 AND MARCH 31, 2007
(In Thousands)
March 29, 2008 March 31, 2007
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 655 $ 656
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,061 987
Amortization of leasehold purchases 116 92
Loss on abandonment of property and equipment 8 23
Deferred income tax (59) 34
Deferred rent (8) 20
Minority interest in earnings (loss) of
consolidated limited partnerships (58) 311
Income from unconsolidated limited partnership (13) (4)
Recognition of deferred revenue (6) (5)
Changes in operating assets and liabilities:
(increase) decrease in
Due from franchisees 354 357
Other receivables (66) 175
Prepaid income taxes (76) --
Inventories 46 (168)
Prepaid expenses 299 (478)
Other assets 34 (179)
Increase (decrease) in:
Accounts payable and accrued expenses 192 1,116
Income taxes payable (331) (172)
Due to franchisees 10 232
------- -------
Net cash provided by operating activities 2,158 2,997
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Collection on notes and mortgages receivable 6 5
Purchase of property and equipment (1,955) (1,738)
Purchase of leasehold interests -- (955)
Purchase of assets of franchised restaurant -- (100)
Proceeds from sale of fixed assets 85 92
Proceeds from sale of marketable securities -- 381
Distributions from unconsolidated limited partnerships 6 --
Proceeds from insurance settlement -- 112
------- -------
Net cash used in investing activities (1,858) (2,203)
------- -------
6
FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY SIX WEEKS ENDED MARCH 29, 2008 AND MARCH 31, 2007
(In Thousands)
(Continued)
March 29, 2008 March 31, 2007
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long term debt (110) (890)
Proceeds from long term debt -- 960
Proceeds from line of credit 600 1,200
Purchase of treasury stock (18) (9)
Purchase of minority limited partnership interest (120) --
Distributions to limited partnership (480) (418)
minority partners
Proceeds from limited partnership interests 2,025* --
Proceeds from exercise of stock options -- 34
------- -------
Net cash provided by financing activities 1,897 877
------- -------
Net Increase in Cash and Cash Equivalents 2,197 1,671
Beginning of Period 2,223 1,698
------- -------
End of Period $ 4,420 $ 3,369
======= =======
Supplemental Disclosure for Cash Flow Information:
Cash paid during period for:
Interest $ 241 $ 258
======= =======
Income taxes $ 816 $ 497
======= =======
Supplemental Disclosure of Non-Cash Investing and
Financing Activities:
Purchase of real property in exchange for debt -- $ 250
======= =======
* exclusive of the Company's investment in the limited partnership owning
the restaurant in Davie, FL of $1,850,000.
See accompanying notes to unaudited condensed consolidated financial statements
7
FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 29, 2008
(1) BASIS OF PRESENTATION:
The accompanying financial information for the periods ended March 29, 2008 and
March 31, 2007 are unaudited. Financial information as of September 29, 2007 has
been derived from the audited financial statements of the Company, but does not
include all disclosures required by generally accepted accounting principles. In
the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of the financial information for
the periods indicated have been included. For further information regarding the
Company's accounting policies, refer to the Consolidated Financial Statements
and related notes included in the Company's Annual Report on Form 10-K for the
year ended September 29, 2007. Operating results for interim periods are not
necessarily indicative of results to be expected for a full year.
These financial statements include estimates relating to performance based
officers' bonuses. The estimates are reviewed periodically and the effects of
any revisions are reflected in the financial statements in the period they are
determined to be necessary. Although these estimates are based on management's
knowledge of current events and actions it may take in the future, they may
ultimately differ from actual results.
(2) EARNINGS PER SHARE:
Statements of Financial Accounting Standards ("SFAS") No. 128, Earnings per
share establishes standards for computing and presenting earnings per share
("EPS"). This statement requires the presentation of basic and diluted EPS. The
data on Page 3 shows the amounts used in computing earnings per share and the
effects on income and the weighted average number of shares of potentially
dilutive common stock equivalents.
(3) RECLASSIFICATION:
Certain amounts in the fiscal year 2007 financial statements have been
reclassified to conform to the fiscal year 2008 presentation.
(4) RECENT ACCOUNTING PRONOUNCEMENTS:
In March 2008, the FASB issued Statement No. 161 "Disclosures about Derivative
Instruments and Hedging Activities" ("SFAS 161") to enhance disclosures about an
entity's derivative and hedging activities. SFAS 161 is effective for all
financial statements issued in fiscal years and interim periods beginning after
November 15, 2008 and early application is encouraged. SFAS 161 also encourages
but does not require comparative disclosures for earlier periods at initial
adoption. As we do not currently engage in derivative transactions or hedging
activities, we do not anticipate any significant financial statement disclosure
impact as a result of our evaluation of SFAS 161.
In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations" ("SFAS 141R"). SFAS 141R establishes principles and requirements
for how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any noncontrolling
interest in the acquiree and the goodwill acquired. SFAS 141R also establishes
disclosure
8
requirements to enable the evaluation of the nature and financial effects of the
business combination. SFAS 141R is effective for the fiscal years beginning
after December 15, 2008 and will be adopted by us for any acquisitions after
September 27, 2009.
In December 2007, the FASB issued Statement of Financial Accounting Standard No.
160, Noncontrolling Interests in Consolidated Financial Statements, an amendment
of ARB No. 51 ("SFAS 160"). SFAS 160 will change the accounting and reporting
for minority interests, which will be recharacterized as noncontrolling
interests (NCI) and classified as a component of equity. This new consolidation
method will significantly change the accounting for transactions with minority
interest holders. SFAS 160 is effective for fiscal years beginning after
December 15, 2008 (our fiscal year 2010). We have not yet determined the impact,
if any, of SFAS 160 on our consolidated financial statements.
In February 2007, the FASB issued SFAS 159, "Fair Value Option for Financial
Assets and Liabilities" which permits an entity to choose to measure many
financial instruments and certain other items at fair value. The standard
contains an amendment to SFAS 115 pertaining to available-for-sale and trading
securities. The objective of the standard is to improve financial reporting by
providing entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently without
having to apply complex hedge accounting provisions. The provisions of SFAS 159
are effective for financial statements issued for fiscal years beginning after
November 15, 2007. We do not expect the adoption of Statement 159 at the
beginning of fiscal year 2009 to have a material impact.
In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 provides a common
definition of fair value and establishes a framework to make the measurement of
fair value in generally accepted accounting principles more consistent and
comparable. SFAS 157 also requires expanded disclosures to provide information
about the extent to which fair value is used to measure assets and liabilities,
the methods and assumptions used to measure fair value and the effect of fair
value measures on earnings. SFAS 157 is effective for fiscal years beginning
after November 15, 2007 (our fiscal year 2009), although early adoption is
permitted. In September 2007, the FASB provided a one-year deferral for the
implementation of SFAS 157 only with regard to nonfinancial assets and
liabilities. We have not yet determined the impact, if any, of SFAS 157 on our
consolidated financial statements.
(5) INVESTMENT IN LIMITED PARTNERSHIP:
Davie, Florida
We are the sole general partner and a 48% limited partner in this limited
partnership which owns the restaurant in Davie, Florida. 9.5% of the remaining
limited partnership interest is owned by persons who are either officers,
directors or their family members. During the second quarter of fiscal year
2008, the limited partnership continued its renovations and upgrades to the
business premises. We anticipate that this location will be open for business as
a "Flanigan's Seafood Bar and Grill" restaurant during the fourth quarter of
fiscal year 2008. During the twenty six weeks ended March 29, 2008, the limited
partnership which owns the Davie, Florida restaurant completed its private
offering, raising the sum of $3,875,000, of which $1,850,000 represents our
investment. We did not advance any funds to this limited partnership in excess
of our investment. As of March 29, 2008 we still held $1,816,000 in funds from
the private offering, which we anticipate will be sufficient to complete the
renovations and upgrades to the Davie, Florida restaurant and provide working
capital.
9
(6) LINE OF CREDIT:
Under a secured line of credit with a third party financial institution we are
able to borrow up to $2,600,000. As of March 29, 2008, the amount outstanding
under the line of credit was $1,562,000, with a remaining availability of
$1,038,000. During the second quarter of fiscal year 2008, we made no draws on
our line of credit and paid monthly installments of interest payments, with no
principal payments. During the third quarter of fiscal year 2008, we extended
the maturity date of our secured line of credit from January 2, 2009 to April 2,
2009.
(7) INCOME TAXES:
Financial Accounting Standards Board Statement No. 109, Accounting for Income
Taxes, requires among other things, recognition of future tax benefits measured
at enacted rates attributable to deductible temporary differences between
financial statement and income tax basis of assets and liabilities and to tax
net operating loss carryforwards and tax credits to the extent that realization
of said tax benefits is more likely than not.
(8) STOCK OPTION PLANS:
We have two stock option plans under which qualified stock options may be
granted to our officers and other employees. Under these plans, the exercise
price for the qualified stock options must be at least 110% of the fair market
value of the Company's Common Stock on the date the options are granted. In
general, options granted under our stock option plans expire after a five (5)
year period and generally vest no later than one (1) year from the date of
grant. As of March 29, 2008, options to acquire 49,400 shares were outstanding
at an average exercise price of $6.31 per share. Under the plans, options to
acquire an aggregate of 45,000 shares are available for grant.
No stock options were granted during the twenty six weeks ended March 29, 2008,
nor were stock options granted during the twenty six weeks ended March 31, 2007.
There were no stock option exercises during the twenty six weeks ended March 29,
2008. Stock option exercises during the twenty six weeks ended March 31, 2007
resulted in cash inflow to the Company of $34,000. The corresponding intrinsic
value as of the exercise date of the 5,050 stock options exercised during the
twenty six weeks ended March 31, 2007 was $22,000.
Stock option activity during the twenty six weeks ended March 29, 2008 was as
follows:
Weighted Average
Total Options Exercise Price
------------- ----------------
Outstanding at September 29, 2007 50,300 $ 6.31
Granted -- --
Exercised -- --
Expired 900 $ 6.14
------- -------
Outstanding at March 29, 2008 49,400 $ 6.31
======= =======
Options exercisable at March 29, 2008 49,400 $ 6.31
======= =======
10
The weighted-average remaining contractual terms of stock options outstanding
and stock options exercisable at March 29, 2008 was approximately 1.0 year. The
aggregate intrinsic value of options outstanding and stock options exercisable
at March 29, 2008 was approximately $86,000.
(9) ACQUISITIONS:
Purchase of Company Common Stock
Pursuant to a discretionary plan approved by the Board of Directors, during the
second quarter ended March 29, 2008, we purchased 1,000 shares of our common
stock on the open market for an aggregate purchase price of $8,204. During the
twenty six weeks ended March 29, 2008, we purchased 2,200 shares of our common
stock for an aggregate purchase price of $17,804. Of the shares purchased, we
purchased 1,000 shares of our common stock on the open market for an aggregate
purchase price of $8,204 and 1,200 shares of our common stock in a private
transaction from the Joseph G. Flanigan Charitable Foundation for a purchase
price of $9,600.
Purchase of Limited Partnership Interests
During the second quarter of our fiscal year 2008, we purchased from a limited
partner (not a family member of any of our directors or officers) limited
partnership interests of 0.76% to 2.76% in our limited partnerships, with the
only exception being CIC Investors #55, Ltd., which limited partnership owns the
Davie, Florida restaurant, for $120,000.
(10) COMMITMENTS AND CONTINGENCIES:
Guarantees
We guarantee various leases for franchisees, limited partnerships that own
restaurants and locations sold in prior years. Remaining rental commitments
required under these leases are approximately $2,674,000. In the event of a
default under any of these agreements, we will have the right to repossess the
premises and operate the business to recover amounts paid under the guarantee
either by liquidating assets or operating the business.
Litigation
We own the building where our corporate offices are located. On April 16, 2001,
we filed suit against the owner of the adjacent shopping center to determine our
right to non-exclusive parking in the shopping center. During fiscal year 2007,
the appellate court affirmed and upon re-hearing, again affirmed the granting of
a summary judgment in favor of the shopping center. The seller from whom we
purchased the building was named as a defendant in the lawsuit and is currently
asserting a claim against us for reimbursement of its attorneys' fees and costs
resulting from the litigation. We dispute the seller's entitlement to
reimbursement of its attorney's fees and costs and are appealing the ruling
against us by the trial court. We are also disputing the amount of the seller's
claim as excessive.
During fiscal year 2007, we and the limited partnership which owns the
restaurant in Pinecrest, Florida filed suit against the limited partnership's
landlord. We are the sole general partner and a 39% limited partner in this
limited partnership. We are seeking to recover the cost of structural repairs to
the business premises we paid, as we believe these structural repairs were the
landlord's responsibility under the lease. The lawsuit, in addition to
attempting to recover the amounts expended by us for structural repairs is also
attempting to recover the rent paid by the limited partnership while the repairs
were occurring. The claim
11
also includes a request by the limited partnership for the court to determine if
the limited partnership has the exclusive right to the use of a pylon sign which
was formerly in front of the business premises before being removed by the
landlord and to require the landlord to re-construct the same, at its cost. The
landlord filed its answer to the complaint denying liability for structural
repairs to the business premises, denying any obligation to reimburse the
limited partnership for any rent paid while structural repairs occurred and
denying the limited partnership's right to use the pylon sign which it removed.
The lawsuit is in the discovery stage.
(11) BUSINESS SEGMENTS:
We operate principally in two reportable segments - package stores and
restaurants. The operation of package stores consists of retail liquor sales and
related items. Information concerning the revenues and operating income for the
thirteen weeks and twenty six weeks ended March 29, 2008 and March 31, 2007, and
identifiable assets for the two reportable segments in which we operate, are
shown in the following table. Operating income is total revenue less cost of
merchandise sold and operating expenses relative to each segment. In computing
operating income, none of the following items have been included: interest
expense, other non-operating income and expense and income taxes. Identifiable
assets by segment are those assets that are used in our operations in each
segment. Corporate assets are principally cash, notes and mortgages receivable,
real property, improvements, furniture, equipment and vehicles. We do not have
any operations outside of the United States and transactions between restaurants
and package liquor stores are not material.
Thirteen Weeks Thirteen Weeks
Ending Ending
March 29, 2008 March 31, 2007
-------------- --------------
Operating Revenues:
Restaurants $ 13,266 $ 12,378
Package stores 3,400 3,531
Other revenues 317 395
--------- ---------
Total operating revenues $ 16,983 $ 16,304
========= =========
Operating Income Reconciled to Income Before Income
Taxes and Minority Interests in Earnings of Consolidated
Limited Partnerships
Restaurants $ 1,392 $ 1,269
Package stores 196 202
--------- ---------
1,588 1,471
Corporate expenses, net of other Revenues (618) (661)
--------- ---------
Operating income 970 810
Other income (expense) (100) (91)
--------- ---------
Income Before Income Taxes and Minority Interests in
Earnings of Consolidated Limited Partnerships $ 870 $ 719
========= =========
Depreciation and Amortization:
Restaurants $ 442 $ 401
Package stores 70 64
--------- ---------
512 465
Corporate 94 92
--------- ---------
Total Depreciation and Amortization $ 606 $ 557
========= =========
Capital Expenditures:
Restaurants $ 487 $ 1,295
Package stores 80 120
--------- ---------
567 1,415
Corporate 77 69
--------- ---------
Total Capital Expenditures $ 644 $ 1,484
========= =========
12
Twenty Six Weeks Twenty Six Weeks
Ending Ending
March 29, 2008 March 31, 2007
---------------- ----------------
Operating Revenues:
Restaurants $ 25,303 $ 23,495
Package stores 6,831 7,013
Other revenues 753 781
---------- ----------
Total operating revenues $ 32,887 $ 31,289
========== ==========
Operating Income Reconciled to Income Before Income
Taxes and Minority Interests in Earnings of Consolidated
Limited Partnerships
Restaurants $ 1,982 $ 2,172
Package stores 341 382
---------- ----------
2,323 2,554
Corporate expenses, net of other Revenues (1,173) (1,032)
---------- ----------
Operating income 1,150 1,522
Other income (expense) (204) (188)
---------- ----------
Income Before Income Taxes and Minority Interests in
Earnings of Consolidated Limited Partnerships $ 946 $ 1,334
========== ==========
Depreciation and Amortization:
Restaurants $ 860 $ 775
Package stores 132 123
---------- ----------
992 898
Corporate 185 181
---------- ----------
Total Depreciation and Amortization $ 1,177 $ 1,079
========== ==========
Capital Expenditures:
Restaurants $ 1,656 $ 2,454
Package stores 136 200
---------- ----------
1,792 2,654
Corporate 163 390
---------- ----------
Total Capital Expenditures $ 1,955 $ 3,044
========== ==========
13
March 29, September 29,
2008 2007
--------- -------------
Identifiable Assets:
Restaurants $ 18,756 $ 18,202
Package store 3,650 3,577
--------- ---------
22,406 21,779
Corporate 10,280* 8,558
--------- ---------
Consolidated Totals $ 32,686 $ 30,337
========= =========
* includes $1,816,000 as the balance raised through the private offering by the
limited partnership which owns the Davie, Florida location.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Reported financial results may not be indicative of the financial results of
future periods. All non-historical information contained in the following
discussion constitutes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Words such as "anticipates, appears, expects, trends, intends, hopes,
plans, believes, seeks, estimates, may, will," and variations of these words or
similar expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and involve a number of
risks and uncertainties, including but not limited to customer demand and
competitive conditions. Factors that could cause actual results to differ
materially are included in, but not limited to, those identified in the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," in the Annual Report on Form 10-K for the Company's fiscal year
ended September 29, 2007 and in this Quarterly Report on Form 10-Q. The Company
undertakes no obligation to publicly release the results of any revisions to
these forward-looking statements that may reflect events or circumstances after
the date of this report.
OVERVIEW
At March 29, 2008, we (i) operated 22 units, (excluding the adult entertainment
club referenced in (ii) below), consisting of restaurants, package stores and
combination restaurants/package stores that we either own or have operational
control over and partial ownership in; (ii) own but do not operate one adult
entertainment club; and (iii) franchise an additional six units, consisting of
two restaurants, (one of which we operate) and four combination
restaurants/package stores. The table below provides information concerning the
type (i.e. restaurant, package store or combination restaurant/package liquor
store) and ownership of the units (i.e. whether (i) we own 100% of the unit;
(ii) the unit is owned by a limited partnership of which we are the sole general
partner and/or have invested in; or (iii) the unit is franchised by us), as of
March 29, 2008 and as compared to March 31, 2007 and September 29, 2007. With
the exception of one restaurant we operate under the name "The Whale's Rib" and
in which we do not have an ownership interest, all of the restaurants operate
under our service mark "Flanigan's Seafood Bar and Grill" and all of the package
liquor stores operate under our service mark "Big Daddy's Liquors".
14
March 29, September March 31,
Types of Units 2008 29, 2007 2007
-------------- --------- --------- ---------
Company Owned:
Combination package and restaurant 4 4 4
Restaurant only 3 3 3
Package store only 5 5 5
Company Operated Restaurants Only:
Limited Partnerships 8 7 7 (1)
Franchise 1 1 1 (2)
Unrelated Third Party 1 1 1
Company Owned Club: 1 1 1
Total Company Owned/Operated Units 23 22 22
Franchised Units 6 6 6 (2)
Notes:
(1) Includes a restaurant located in Pembroke Pines, Florida which is owned by a
limited partnership in which we are the sole general partner and own 16% of the
limited partnership interest and commenced operating on October 29, 2007.
(2) We operate a restaurant for one (1) franchisee. This unit is included in the
table both as a franchised restaurant, as well as a restaurant operated by the
Company.
RESULTS OF OPERATIONS
Thirteen Weeks Ended
March 29, 2008 March 31, 2007
--------------------------- ------------------------
Amount Amount
-------------- --------------
(In thousands) Percent (In thousands) Percent
-------------- ---------- -------------- -------
Restaurant food sales $ 10,785 64.71 $ 10,029 63.04
Restaurant bar sales 2,481 14.89 2,349 14.77
Package store sales 3,400 20.40 3,531 22.19
--------- ------ --------- -------
Total Sales $ 16,666 100.00 $ 15,909 100.00
Franchise related revenues 211 308
Owner's fee 49 40
Other operating income 57 47
--------- ---------
Total Revenue $ 16,983 $ 16,304
========= =========
Twenty Six Weeks Ended
March 29, 2008 March 31, 2007
--------------------------- ------------------------
Amount Amount
-------------- --------------
(In thousands) Percent (In thousands) Percent
-------------- ---------- -------------- -------
Restaurant food sales $ 20,532 63.89 $ 19,059 62.47
Restaurant bar sales 4,771 14.85 4,436 14.54
Package store sales 6,831 21.26 7,013 22.99
--------- ------ --------- -------
Total Sales $ 32,134 100.00 $ 30,508 100.00
Franchise related revenues 542 608
Owner's fee 115 80
Other operating income 96 93
--------- ---------
Total Revenue $ 32,887 $ 31,289
========= =========
15
Franchise Financial Arrangement: In exchange for our providing management and
related services to our franchisees and granting them the right to use our
service marks "Flanigan's Seafood Bar and Grill" and "Big Daddy's Liquors", our
franchisees (five of which are franchised to members of the family of our
Chairman of the Board, officers and/or directors), are required to (i) pay to us
a royalty equal to 1% of gross package sales and 3% of gross restaurant sales;
and (ii) make advertising expenditures equal to between 1.5% to 3% of all gross
sales based upon our actual advertising costs allocated between stores,
pro-rata, based upon gross sales.
Limited Partnership Financial Arrangement: We manage and control the operations
of all restaurants owned by limited partnerships, except the Fort Lauderdale,
Florida restaurant which is owned by a related franchisee. Accordingly, the
results of operations of all limited partnership owned restaurants, except the
Fort Lauderdale, Florida restaurant are consolidated into our operations for
accounting purposes. The results of operations of the Fort Lauderdale, Florida
restaurant are accounted for by us utilizing the equity method. In general,
until the investors' cash investment in a limited partnership (including any
cash invested by us and our affiliates) is returned in full, the limited
partnership distributes to the investors annually out of available cash from the
operation of the restaurant up to 25% of the cash invested in the limited
partnership, with no management fee paid to us. Any available cash in excess of
the 25% of the cash invested in the limited partnership distributed to the
investors annually, is paid one-half (1/2) to us as a management fee, with the
balance distributed to the investors. Once the investors in the limited
partnership have received, in full, amounts equal to their cash invested, an
annual management fee is payable to us equal to one-half (1/2) of cash available
to the limited partnership, with the other one half (1/2) of available cash
distributed to the investors (including us and our affiliates). As of March 29,
2008, limited partnerships owning three (3) restaurants have returned all cash
invested and we receive an annual management fee equal to one-half (1/2) of the
cash available for distribution by the limited partnership. In addition to its
receipt of distributable amounts from the limited partnerships, we receive a fee
equal to 3% of gross sales for use of the service mark "Flanigan's Seafood Bar
and Grill".
Comparison of Thirteen Weeks Ended March 29, 2008 and March 31, 2007.
---------------------------------------------------------------------
Revenues. Total revenue for the thirteen weeks ended March 29, 2008 increased
$679,000 or 4.16% to $16,983,000 from $16,304,000 for the thirteen weeks ended
March 31, 2007. This increase resulted from sales from two restaurant locations,
the Pembroke Pines, Florida limited partnership owned restaurant ($928,000)
which was opened after March 31, 2007, and the Company owned Lake Worth, Florida
restaurant ($389,000), which was opened on March 4, 2007, offset by the decline
in same store restaurant food and bar sales. Prior to March 4, 2007, the Lake
Worth, Florida restaurant was franchised by the Company. The Lake Worth, Florida
restaurant generated $146,000 of revenues during the thirteen weeks ended March
31, 2007. Without giving effect to the revenues generated from the Pembroke
Pines, Florida restaurant, ($928,000), and the increased revenue generated from
the Lake Worth, Florida restaurant, ($243,000), total revenue for the thirteen
weeks ended March 29, 2008 would have decreased $492,000 or 3.02% to $15,812,000
from $16,304,000 for the thirteen weeks ended March 31, 2007. The Pembroke
Pines, Florida restaurant opened for business on October 29, 2007.
16
Restaurant Food Sales. Restaurant revenue generated from the sale of food
at restaurants totaled $10,785,000 for the thirteen weeks ended March 29, 2008
as compared to $10,029,000 for the thirteen weeks ended March 31, 2007. The
increase in restaurant food sales is due to sales from the Pembroke Pines,
Florida and Lake Worth, Florida restaurants. The Pembroke Pines, Florida and
Lake Worth, Florida locations generated $783,000 and $308,000 of revenues,
respectively, from the sale of food during the thirteen weeks ended March 29,
2008, while the Lake Worth, Florida restaurant generated $119,000 of revenue
from the sale of food during the thirteen weeks ended March 31, 2007. Without
giving effect to the revenue generated from the Pembroke Pines, Florida
restaurant, ($783,000), and the increased revenue generated from the Lake Worth,
Florida restaurant, ($189,000), revenue from the sale of food for the thirteen
weeks ended March 29, 2008 would have decreased $216,000 or 2.15% to $9,813,000
from $10,029,000 for the thirteen weeks ended March 31, 2007. Comparable weekly
restaurant food sales (for restaurants open for all of the second quarter of our
fiscal year 2008 and the second quarter of our fiscal year 2007, which consists
of six restaurants owned by us and seven restaurants owned by affiliated limited
partnerships) was $716,000 and $732,000 for the thirteen weeks ended March 29,
2008 and March 31, 2007, respectively, a decrease of 2.19%. Comparable weekly
restaurant food sales for Company owned restaurants only was $329,000 and
$322,000 for the second quarter of our fiscal year 2008 and the second quarter
of our fiscal year 2007, respectively, an increase of 2.17%. Comparable weekly
restaurant food sales for affiliated limited partnership owned restaurants only
was $388,000 and $410,000 for the second quarter of our fiscal year 2008 and the
second quarter of our fiscal year 2007, respectively, a decrease of 5.37%. We
anticipate that restaurant food sales will continue to increase through our
fiscal year 2008 due to, among other things, the operation of the Pembroke
Pines, Florida limited partnership owned restaurant through the balance of our
fiscal year 2008 and the expected opening of the Davie, Florida restaurant
during the fourth quarter of our fiscal year 2008, offset by a decline in same
store restaurant food sales.
Restaurant Bar Sales. Restaurant revenue generated from the sale of
alcoholic beverages at restaurants (bar sales) totaled $2,481,000 for the
thirteen weeks ended March 29, 2008 as compared to $2,349,000 for the thirteen
weeks ended March 31, 2007. The increase in restaurant bar sales is due to sales
from the Pembroke Pines, Florida and Lake Worth, Florida restaurants. The
Pembroke Pines, Florida and Lake Worth, Florida locations generated $145,000 and
$81,000 of revenues from restaurant bar sales during the thirteen weeks ended
March 29, 2008, respectively, while the Lake Worth, Florida restaurant generated
$28,000 of revenue from restaurant bar sales during the thirteen weeks ended
March 31, 2007. Without giving effect to the revenue from restaurant bar sales
generated from the Pembroke Pines, Florida restaurant, ($145,000), and the
increased revenue from restaurant bar sales generated from the Lake Worth,
Florida restaurant, ($53,000), revenue from restaurant bar sales for the
thirteen weeks ended March 29, 2008 would have decreased $66,000 or 2.81% to
$2,283,000 from $2,349,000 for the thirteen weeks ended March 31, 2007.
Comparable weekly restaurant bar sales (for restaurants open for all of the
second quarter of our fiscal year 2008 and the second quarter of our fiscal year
2007, which consists of six restaurants owned by us and seven restaurants owned
by affiliated limited partnerships) was $173,000 and $179,000 for the thirteen
weeks ended March 29, 2008 and March 31, 2007, respectively, a decrease of
3.35%. Comparable weekly restaurant bar sales for Company owned restaurants only
was $72,000 and $71,000 for the second quarter of our fiscal year 2008 and the
second quarter of our fiscal year 2007, respectively, an increase of 1.41%.
Comparable weekly restaurant bar sales for affiliated limited partnership owned
restaurants only was $100,000 and $108,000 for the second quarter of our fiscal
year 2008 and the second quarter of our fiscal year 2007, respectively, a
decrease of 7.41%. We anticipate that restaurant bar sales will continue to
increase through our fiscal year 2008 due to, among other things, the operation
of the Pembroke Pines, Florida restaurant through the balance of our fiscal year
2008 and the expected opening of the Davie, Florida restaurant during the fourth
quarter of our fiscal year 2008, offset by a decline in same store restaurant
bar sales.
17
Package Store Sales. Revenue generated from sales of liquor and related
items at package stores totaled $3,400,000 for the thirteen weeks ended March
29, 2008 as compared to $3,531,000 for the thirteen weeks ended March 31, 2007,
a decrease of 3.71%. The weekly average of same store package store sales was
$262,000 and $272,000 for the thirteen weeks ended March 29, 2008 and March 31,
2007, respectively, a decrease of 3.68%. The decrease was primarily due to
increased competition. Package store sales are expected to decline through the
balance of our fiscal year 2008. Increased competition has had a greater adverse
impact upon package store sales when customers routinely make larger volume
purchases, which historically have been more likely to occur during the first
and second quarters of our fiscal year.
Operating Costs and Expenses. Operating costs and expenses, (consisting of cost
of merchandise sold, payroll and related costs, occupancy costs and selling,
general and administrative expenses), for the thirteen weeks ended March 29,
2008 increased $519,000 or 3.35% to $16,013,000 from $15,494,000 for the
thirteen weeks ended March 31, 2007. The increase was primarily due to expenses
related to the operation of the Pembroke Pines, Florida and Lake Worth, Florida
restaurants and to a lesser extent a general increase in food costs. We
anticipate that our operating costs and expenses will continue to increase
through our fiscal year 2008 due to, among other things, the expected opening of
the Davie, Florida restaurant during the fourth quarter of fiscal year 2008.
Operating costs and expenses decreased as a percentage of total sales to
approximately 94.29% in the second quarter of our fiscal year 2008 from 95.03%
in the second quarter of our fiscal year 2007.
Gross Profit. Gross profit is calculated by subtracting the cost of merchandise
sold from sales.
Restaurant Food and Bar Sales. Gross profit for food and bar sales for the
thirteen weeks ended March 29, 2008 increased to $8,863,000 from $8,198,000 for
the thirteen weeks ended March 31, 2007. Our gross profit margin for restaurant
food and bar sales (calculated as gross profit reflected as a percentage of
restaurant food and bar sales), increased to 66.81% for the thirteen weeks ended
March 29, 2008 compared to 66.23% for the thirteen weeks ended March 31, 2007.
The increase in our gross profit margin for restaurant and bar sales for the
second quarter of our fiscal year 2008 was primarily due to menu price increases
instituted at the end of the first quarter of our fiscal year 2008, introduction
of lower cost menu items and a decrease in the cost of ribs during calendar year
2008.
Package Store Sales. Gross profit for package store sales for the thirteen
weeks ended March 29, 2008 decreased to $1,004,000 from $1,012,000 for the
thirteen weeks ended March 31, 2007. Our gross profit margin, (calculated as
gross profit reflected as a percentage of package store sales), was 29.53% for
the thirteen weeks ended March 29, 2008 compared to 28.66% for the thirteen
weeks ended March 31, 2007. The increase in our gross profit margin, (0.87%),
was primarily due to the purchase of "close out" and inventory reduction
merchandise from wholesalers. We anticipate the gross profit margin for package
store sales to decrease throughout the balance of our fiscal year 2008 as we do
not expect to be able to purchase "close out" and inventory reduction
merchandise from wholesalers to the same extent that we were able to make such
purchases during the first and second quarters of our fiscal year 2008.
Payroll and Related Costs. Payroll and related costs for the thirteen weeks
ended March 29, 2008 increased $368,000 or 8.10% to $4,910,000 from $4,542,000
for the thirteen weeks ended March 31, 2007. This increase is primarily
attributable to the Pembroke Pines, Florida and Lake Worth, Florida restaurants.
We anticipate that our payroll costs and related expenses will continue to
increase through our fiscal year 2008 due to, among other things, the operation
of the Pembroke Pines, Florida restaurant through the balance of our fiscal year
2008 and the expected opening of the Davie, Florida restaurant during the fourth
quarter of fiscal year 2008. Payroll and related costs as a percentage of total
sales was 28.91% in the second quarter of our fiscal year 2008 and 27.86% of
total sales in the second quarter of
18
our fiscal year 2007. This increase as a percentage of sales was primarily due
to the need to pay higher wages to attract and retain employees.
Occupancy Costs. Occupancy costs (consisting of rent, common area maintenance,
repairs, real property taxes and amortization of leasehold purchases) for the
thirteen weeks ended March 29, 2008 increased $41,000 or 4.21% to $1,015,000
from $974,000 for the thirteen weeks ended March 31, 2007. This increase is due
to, (i) rental payments for the Lake Worth, Florida restaurant for the entire
second quarter of our fiscal year 2008, ($21,000), as compared to one month for
the second quarter of our fiscal year 2007, ($7,000); and (ii) increases in real
property taxes and common area maintenance, which generally includes a pro-rata
share of property insurance for units located within shopping centers. We
anticipate that our occupancy costs will stabilize throughout the balance of our
fiscal year 2008.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses (consisting of general corporate expenses, including but
not limited to advertising, insurance, professional costs, clerical and
administrative overhead) for the thirteen weeks ended March 29, 2008 decreased
$10,000 or 0.30% to $3,289,000 from $3,279,000 for the thirteen weeks ended
March 31, 2007. Selling, general and administrative expenses decreased as a
percentage of total sales in the second quarter of our fiscal year 2008 to
19.37% as compared to 20.11% in the second quarter of our fiscal year 2007. This
decrease is primarily attributable to reduced advertising by the Company and
increased advertising credits and rebates from our food distributor, which
offset the increase in other selling, general and administrative expenses
primarily attributable to the operation of the Pembroke Pines, Florida and Lake
Worth, Florida restaurants and an overall increase in expenses. We anticipate
that our selling, general and administrative expenses will increase throughout
the balance of our fiscal year 2008 due to, among other things, the operation of
our Pembroke Pines, Florida restaurant throughout the balance of our fiscal year
2008, the expected opening of the Davie, Florida restaurant during the fourth
quarter of fiscal year 2008 and the continuation of an overall increase in
expenses.
Depreciation. Depreciation for the thirteen weeks ended March 29, 2008 and March
31, 2007 was $606,000 and $557,000 respectively. As a percentage of revenue,
depreciation expense was 3.57% of revenue in the thirteen weeks ended March 29,
2008 and 3.42% of revenue in the thirteen weeks ended March 31, 2007.
Other Income and Expense. Other income and expenses was an expense of $100,000
for the thirteen weeks ended March 29, 2008, as compared to an expense of
$91,000 for the thirteen weeks ended March 31, 2007. Other income and expense
for the thirteen weeks ended March 29, 2008 includes interest expense of
$121,000, as compared to interest expense of $125,000 for the thirteen weeks
ended March 31, 2007.
Interest Expense, Net. Interest expense, net, for the thirteen weeks ended March
29, 2008 decreased $4,000 to $121,000 from $125,000 for the thirteen weeks ended
March 31, 2007.
Net Income. Net income for the thirteen weeks ended March 29, 2008 increased
$138,000 or 41.57% to $470,000 from $332,000 for the thirteen weeks ended March
31, 2007. As a percentage of sales, net income for the second quarter of our
fiscal year 2008 is 2.77%, as compared to 2.04% in the second quarter of our
fiscal year 2007. The increase in net income as a percentage of sales (0.73%) is
primarily due to higher gross profit in both our restaurant and package liquor
store divisions, improved control over expenses, offset by our share of the
pre-opening expenses associated with the Davie, Florida restaurant, ($33,000)
during the second quarter of fiscal year 2008. During the second quarter of
fiscal year 2007, we had pre-opening expenses associated with the Pembroke
Pines, Florida restaurant, ($45,000), and the Davie, Florida restaurant,
($56,000), which adversely affected net income.
19
Comparison of Twenty Six Weeks Ended March 29, 2008 and March 31, 2007.
-----------------------------------------------------------------------
Revenues. Total revenue for the twenty six weeks ended March 29, 2008 increased
$1,598,000 or 5.11% to $32,887,000 from $31,289,000 for the twenty six weeks
ended March 31, 2007. This increase resulted from sales from two restaurant
locations, the Pembroke Pines, Florida limited partnership owned restaurant
($1,675,000) which was opened after March 31, 2007, and the Company owned Lake
Worth, Florida restaurant ($797,000), which was opened on March 4, 2007, offset
by the decline in same store restaurant food and bar sales. Prior to March 4,
2007, the Lake Worth, Florida restaurant was franchised by the Company. The Lake
Worth, Florida restaurant generated $147,000 of revenue during the twenty six
weeks ended March 31, 2007. Without giving effect to the revenue generated from
the Pembroke Pines, Florida restaurant, ($1,675,000), and the increased revenue
generated from the Lake Worth, Florida restaurant, ($650,000), total revenue for
the twenty six weeks ended March 29, 2008 would have decreased $727,000 or 2.32%
to $30,562,000 from $31,289,000 for the twenty six weeks ended March 31, 2007.
The Pembroke Pines, Florida restaurant opened for business on October 29, 2007.
Restaurant Food Sales. Restaurant revenue generated from the sale of food at
restaurants totaled $20,532,000 for the twenty six weeks ended March 29, 2008 as
compared to $19,059,000 for the twenty six weeks ended March 31, 2007. The
increase in restaurant food sales is due to sales from the Pembroke Pines,
Florida and Lake Worth, Florida restaurants. The Pembroke Pines, Florida and
Lake Worth, Florida locations generated $1,403,000 and $644,000 of revenues,
respectively, from the sale of food during the twenty six weeks ended March 29,
2008, while the Lake Worth, Florida restaurant generated $119,000 of revenue
from the sale of food during the twenty six weeks ended March 31, 2007. Without
giving effect to the revenue generated from the Pembroke Pines, Florida
restaurant, ($1,403,000), and the increased revenue generated from the Lake
Worth, Florida restaurant, ($525,000), revenue from the sale of food for the
twenty six weeks ended March 29, 2008 would have decreased $455,000 or 2.39% to
$18,604,000 from $19,059,000 for the twenty six weeks ended March 31, 2007.
Comparable weekly restaurant food sales (for restaurants open for all of the
twenty six weeks ended March 29, 2008 and the twenty six weeks ended March 31,
2007, which consists of six restaurants owned by us and seven restaurants owned
by affiliated limited partnerships) was $696,000 and $713,000 for the twenty six
weeks ended March 29, 2008 and March 31, 2007, respectively, a decrease of
2.38%. Comparable weekly restaurant food sales for Company owned restaurants
only was $306,000 and $302,000 for the twenty six weeks ended March 29, 2008 and
the twenty six weeks ended March 31, 2007, respectively, an increase of 1.32%.
Comparable weekly restaurant food sales for affiliated limited partnership owned
restaurants only was $390,000 and $411,000 for the twenty six weeks ended March
29, 2008 and the twenty six weeks ended March 31, 2007, respectively, a decrease
of 5.11%. We anticipate that restaurant food sales will continue to increase
through our fiscal year 2008 due to, among other things, the operation of the
Pembroke Pines, Florida restaurant through the balance of our fiscal year 2008
and the expected opening of the Davie, Florida restaurant during the fourth
quarter of our fiscal year 2008, offset by a decline in same store restaurant
food sales.
Restaurant Bar Sales. Restaurant revenue generated from the sale of
alcoholic beverages at restaurants (bar sales) totaled $4,771,000 for the twenty
six weeks ended March 29, 2008 as compared to $4,436,000 for the twenty six
weeks ended March 31, 2007. The increase in restaurant bar sales is due to sales
from the Pembroke Pines, Florida and Lake Worth, Florida restaurants. The
Pembroke Pines, Florida and Lake Worth, Florida locations generated $272,000 and
$153,000 of revenues from restaurant bar sales during the twenty six weeks ended
March 29, 2008, respectively, while the Lake Worth, Florida restaurant generated
$28,000 of revenue from restaurant bar sales during the twenty six weeks ended
March 31, 2007. Without giving effect to the revenue from restaurant bar sales
generated from the Pembroke Pines, Florida restaurant, ($272,000), and the
increased revenue from restaurant bar sales generated from the Lake Worth,
Florida restaurant, ($125,000), revenue from restaurant bar sales for the twenty
six weeks ended March 29, 2008 would have decreased $62,000 or 1.40% to
$4,374,000 from
20
$4,436,000 for the twenty six weeks ended March 31, 2007. Comparable weekly
restaurant bar sales (for restaurants open for all of the twenty six weeks ended
March 29, 2008 and the twenty six weeks ended March 31, 2007, which consists of
six restaurants owned by us and seven restaurants owned by affiliated limited
partnerships) was $167,000 and $170,000 for the twenty six weeks ended March 29,
2008 and March 31, 2007, respectively, a decrease of 1.77%. Comparable weekly
restaurant bar sales for Company owned restaurants only was $69,000 and $67,000
for the twenty six weeks ended March 29, 2008 and the twenty six weeks ended
March 31, 2007, respectively, an increase of 2.99%. Comparable weekly restaurant
bar sales for affiliated limited partnership owned restaurants only was $98,000
and $103,000 for the twenty six weeks ended March 29, 2008 and the twenty six
weeks ended March 31, 2007, respectively, a decrease of 4.85%. We anticipate
that restaurant bar sales will continue to increase through our fiscal year 2008
due to, among other things, the operation of the Pembroke Pines, Florida
restaurant through the balance of our fiscal year 2008 and the expected opening
of the Davie, Florida restaurant during the fourth quarter of our fiscal year
2008, offset by a decline in same store restaurant bar sales.
Package Store Sales. Revenue generated from sales of liquor and related
items at package stores totaled $6,831,000 for the twenty six weeks ended March
29, 2008 as compared to $7,013,000 for the twenty six weeks ended March 31,
2007, a decrease of 2.60%. The weekly average of same store package store sales
was $263,000 and $270,000 for the twenty six weeks ended March 29, 2008 and
March 31, 2007, respectively. The decrease was primarily due to increased
competition. Package store sales are expected to decline through the balance of
our fiscal year 2008. Increased competition has had a greater adverse impact
upon package store sales when customers routinely make larger volume purchases,
which historically have been more likely to occur during the first and second
quarters of our fiscal year.
Operating Costs and Expenses. Operating costs and expenses, (consisting of cost
of merchandise sold, payroll and related costs, occupancy costs and selling,
general and administrative expenses), for the twenty six weeks ended March 29,
2008 increased $1,970,000 or 6.62% to $31,737,000 from $29,767,000 for the
twenty six weeks ended March 31, 2007. The increase was primarily due to
expenses related to the operation of the Pembroke Pines, Florida and Lake Worth,
Florida restaurants and to a lesser extent a general increase in food costs. We
anticipate that our operating costs and expenses will continue to increase
through our fiscal year 2008 due to, among other things, the expected opening of
the Davie, Florida restaurant during the fourth quarter of fiscal year 2008.
Operating costs and expenses increased as a percentage of total sales to
approximately 96.50% for the twenty six weeks ended March 29, 2008 from 95.14%
for the twenty six weeks ended March 31, 2007.
Gross Profit. Gross profit is calculated by subtracting the cost of merchandise
sold from sales.
Restaurant Food and Bar Sales. Gross profit for food and bar sales for the
twenty six weeks ended March 29, 2008 increased to $16,830,000 from $15,500,000
for the twenty six weeks ended March 31, 2007. Our gross profit margin for
restaurant food and bar sales (calculated as gross profit reflected as a
percentage of restaurant food and bar sales), increased to 66.51% for the twenty
six weeks ended March 29, 2008 compared to 65.97% for the twenty six weeks ended
March 31, 2007. This increase in gross profit for restaurant and bar sales for
the twenty six weeks ended March 29, 2008 was primarily due to menu price
increases instituted at the end of the first quarter of our fiscal year 2008,
introduction of lower cost menu items and a decrease in the cost of ribs during
calendar year 2008.
Package Store Sales. Gross profit for package store sales for the twenty
six weeks ended March 29, 2008 increased to $1,970,000 from $1,950,000 for the
twenty six weeks ended March 31, 2007. Our gross profit margin, (calculated as
gross profit reflected as a percentage of package store sales), was 28.84% for
the twenty six weeks ended March 29, 2008 compared to 27.81% for the twenty six
weeks ended March 31, 2007. The increase in our gross profit margin, (1.03%),
was primarily due to the
21
purchase of "close out" and inventory reduction merchandise from wholesalers. We
anticipate the gross profit margin for package store sales to decrease
throughout the balance of our fiscal year 2008 as we do not expect to be able to
purchase "close out" and inventory reduction merchandise from wholesalers to the
same extent that we were able to make such purchases during the twenty six weeks
ended March 29, 2008.
Payroll and Related Costs. Payroll and related costs for the twenty six weeks
ended March 29, 2008 increased $1,114,000 or 12.95% to $9,718,000 from
$8,604,000 for the twenty six weeks ended March 31, 2007. This increase is
primarily attributable to the Pembroke Pines, Florida and Lake Worth, Florida
restaurants. We anticipate that our payroll costs and related expenses will
continue to increase through our fiscal year 2008 due to, among other things,
the operation of the Pembroke Pines, Florida restaurant through the balance of
our fiscal year 2008 and the expected opening of the Davie, Florida restaurant
during the fourth quarter of fiscal year 2008. Payroll and related costs as a
percentage of total sales was 29.55% for the twenty six weeks ended March 29,
2008 and 27.50% of total sales for the twenty six weeks ended March 31, 2007.
This increase as a percentage of sales was primarily due to the need to pay
higher wages to attract and retain employees.
Occupancy Costs. Occupancy costs (consisting of rent, common area maintenance,
repairs, real property taxes and amortization of leasehold purchases) for the
twenty six weeks ended March 29, 2008 increased $154,000 or 8.43% to $1,980,000
from $1,826,000 for the twenty six weeks ended March 31, 2007. This increase is
due to, (i) rental payments for the entire twenty six weeks ended March 29, 2008
at three additional restaurant locations (Pembroke Pines, Florida, - $72,000,
Davie, Florida - $65,000, and Lake Worth, Florida - $42,000), as compared to
rental payments for a part of the twenty six weeks ended March 31, 2007 at the
same three additional restaurant locations, (Pembroke Pines, Florida - $18,000
(non-cash pre-opening rent) and $35,000 (cash pre-opening rent), Davie, Florida
- $48,000 and Lake Worth, Florida - $7,000): and (ii) increases in real property
taxes and common area maintenance, which generally includes a pro-rata share of
property insurance for units located within shopping centers. We anticipate that
our occupancy costs will stabilize throughout the balance of our fiscal year
2008.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses (consisting of general corporate expenses, including but
not limited to advertising, insurance, professional costs, clerical and
administrative overhead) for the twenty six weeks ended March 29, 2008 increased
$426,000 or 6.78% to $6,705,000 from $6,279,000 for the twenty six weeks ended
March 31, 2007. Selling, general and administrative expenses increased as a
percentage of total sales for the twenty six weeks ended March 29, 2008 to
20.39% as compared to 20.27% for the twenty six weeks ended March 31, 2007. This
increase is attributable to the operation of the Pembroke Pines, Florida and
Lake Worth, Florida restaurants and an overall increase in expenses. We
anticipate that our selling, general and administrative expenses will increase
throughout the balance of our fiscal year 2008 due to, among other things, the
operation of our Pembroke Pines, Florida restaurant throughout the balance of
our fiscal year 2008, the expected opening of the Davie, Florida restaurant
during the fourth quarter of fiscal year 2008 and the continuation of an overall
increase in expenses, which will not be offset in their entirety by reduced
advertising and increased advertising credits and rebates from our food
distributor.
Depreciation. Depreciation for the twenty six weeks ended March 29, 2008 and
March 31, 2007 was $1,177,000 and $1,079,000 respectively. As a percentage of
revenue, depreciation expense was 3.58% of revenue in the twenty six weeks ended
March 29, 2008 and 3.45% of revenue in the twenty six weeks ended March 31,
2007.
Other Income and Expense. Other income and expenses was an expense of $204,000
for the twenty six weeks ended March 29, 2008, as compared to an expense of
$188,000 for the twenty six weeks ended March 31, 2007. Other income and expense
for the twenty six weeks ended March 29, 2008 includes
22
interest expense of $241,000, as compared to interest expense of $258,000 for
the twenty six weeks ended March 31, 2007. The decrease in interest expense is
attributable to a decreased average balance outstanding on our line of credit
during the twenty six weeks ended March 29, 2008.
Interest Expense, Net. Interest expense, net, for the twenty six weeks ended
March 29, 2008 decreased $17,000 to $241,000 from $258,000 for the twenty six
weeks ended March 31, 2007. This decrease was attributable to a decreased
average balance outstanding on our line of credit.
Net Income. Net income for the twenty six weeks ended March 29, 2008 and the
twenty six weeks ended March 31, 2007 was approximately equal at $655,000 and
$656,000, respectively. As a percentage of sales, net income for the twenty six
weeks ended March 29, 2008 is 1.99%, as compared to 2.10% for the twenty six
weeks ended March 31, 2007. The decrease in net income as a percentage of sales
(-0.11%) is primarily due to our share of the pre-opening expenses associated
with the Davie, Florida restaurant, ($36,000) during the twenty six weeks ended
March 29, 2008, higher food costs and overall expenses, including electric, gas
and real property taxes. During the twenty six weeks ended March 31, 2007, we
had pre-opening expenses associated with the Pembroke Pines, Florida restaurant,
($65,000), and the Davie, Florida restaurant, ($56,000), which adversely
affected net income.
New Limited Partnership Restaurants
The limited partnership owned restaurant located in Pembroke Pines, Florida
opened for business during the first quarter of our fiscal year 2008 (October
29, 2007) and we anticipate that the limited partnership owned restaurant
located in Davie, Florida will open for business during the fourth quarter of
our fiscal year 2008. As new restaurants open, our income from operations will
be adversely affected due to our obligation to fund pre-opening costs, including
but not limited to pre-opening rent for the new locations. During the twenty six
weeks ended March 29, 2008, we recognized non-cash pre-opening rent in the
approximate amount of $6,000 and recognized cash pre-opening rent in the
approximate amount of $12,000 for the recently opened Pembroke Pines, Florida
restaurant. During the twenty six weeks ended March 29, 2008, we also paid and
expensed pre-opening rent in the approximate amount of $67,000 for the currently
unopened Davie, Florida restaurant, which is the full rent provided in the
lease. During the twenty six weeks ended March 31, 2007, we recognized non-cash
pre-opening rent in the approximate amount of $18,000 and recognized cash
pre-opening rent in the approximate amount of $35,000 for the recently opened
Pembroke Pines, Florida restaurant and in the approximate amount of $48,000 for
the currently unopened Davie, Florida restaurant. We are recognizing rent
expense on a straight line basis over the term of the lease.
During the twenty six weeks ended March 29, 2008, the limited partnership
restaurant in Davie, Florida reported losses of $245,000 primarily due to
pre-opening costs, thus contributing to a reduction in the operating income for
the twenty six weeks ended March 29, 2008. During the twenty six weeks ended
March 31, 2007, the limited partnership restaurant in Pembroke Pines, Florida
reported a loss of $65,000 primarily due to pre-opening costs and the limited
partnership restaurant in Davie, Florida reported a loss of $56,000 primarily
due to pre-opening costs, thus contributing to a reduction in the operating
income for the twenty six weeks ended March 31, 2007.
Throughout the balance of fiscal year 2008, income from operations will be
adversely affected by pre-opening costs, including but not limited to
pre-opening rent, to be incurred for the Davie, Florida restaurant. Management
believes that our current cash availability from our line of credit and expected
cash from operations will be sufficient to fund operations and capital
expenditures for at least the next twelve months.
23
Trends
During the next twelve months, we expect continued increases in restaurant sales
due primarily to the Pembroke Pines, Florida restaurant being open for the
entire twelve month period and the anticipated opening of the new restaurant in
Davie, Florida. Same store restaurant food and bar sales are expected to decline
over the next twelve month period, with decreases primarily in restaurants in
Palm Beach County, Florida and to a lesser extent in Broward County, Florida,
offset partially by increases in same store restaurant food and bar sales in
Miami-Dade County, Florida, due to our strong name recognition in that county.
Package store sales are expected to decrease due primarily to increased
competition. Management also expects higher food costs and overall expenses to
increase. We are reviewing our food costs and overall expenses looking for ways
to reduce and/or control the same, including but not limited to new lower cost
menu items and/or ingredients, without sacrificing our food quality and service.
During the first quarter of our fiscal year 2007, we raised menu prices to
offset the higher food costs and overall expenses. During the first quarter of
our fiscal year 2008, we again raised menu prices to offset higher food costs
and overall expenses and will continue to do so whenever necessary and wherever
competitively possible.
Liquidity and Capital Resources
We fund our operations through cash from operations and borrowings under our
line of credit. As of March 29, 2008, we had cash of approximately $4,420,000,
an increase of $2,197,000 from our cash balance of $2,223,000 as of September
29, 2007. The increase in cash was due primarily to amounts which have been
raised but have not yet been required to be used for expenses by the limited
partnership which owns the Davie, Florida location, ($1,816,000).
Cash Flows
The following table is a summary of our cash flows for the twenty six weeks of
fiscal years 2008 and 2007.
Twenty Six Weeks Ended
March 29, 2008 March 31, 2007
-------------- --------------
(in Thousands)
Net cash provided by operating activities $ 2,158 $ 2,997
Net cash used in investing activities (1,858) (2,203)
Net cash provided by financing activities 1,897 877
-------- -------
Net Increase in Cash and Cash Equivalents 2,197 1,671
Cash and Cash Equivalents, Beginning 2,223 1,698
-------- -------
Cash and Cash Equivalents, Ending $ 4,420 $ 3,369
======== =======
We have recently determined that we must retain any earnings for the development
and operation of our business and accordingly, we do not intend to pay any cash
dividends in the foreseeable future.
Capital Expenditures
We acquired property and equipment of $1,955,000 during the twenty six weeks
ended March 29, 2008, including $268,000 for renovations to one (1) existing
Company owned restaurant, as compared to
24
$3,043,000, (of which $250,000 was financed), during the twenty six weeks ended
March 31, 2007, which included $802,500 for the purchase of real property and
$204,000 for renovations to two (2) existing Company restaurants. During the
twenty six weeks ended March 29, 2008, the limited partnership which owns the
Davie, Florida restaurant completed its private offering, raising the sum of
$3,875,000, of which $1,850,000 represents our investment. We did not advance
any funds to this limited partnership in excess of our investment. The funds
from the private offering are being used to complete the renovations to the
business premises for operation of a "Flanigan's Seafood Bar and Grill"
restaurant and provide working capital.
In addition, during the twenty six weeks ended March 31, 2007, we purchased the
leasehold interests for the Pembroke Pines, Florida ($305,000), Davie, Florida
($650,000) and Lake Worth, Florida ($45,000) locations, the cost of which is
being amortized as additional rent over the life of the lease. The purchase of
the leasehold interest for the Lake Worth, Florida location occurred as a part
of the purchase of the previously franchised restaurant.
All of the Company owned units require periodic refurbishing in order to remain
competitive. Management anticipates the cost of this refurbishment in fiscal
year 2008 to be approximately $375,000, of which $268,000 has been spent through
March 29, 2008.
Purchase of Limited Partnership Interests
During the second quarter of our fiscal year 2008, we purchased from a limited
partner (not a family member of any of our directors or officers) for $120,000
the following percentage interests in the following locations:
------------------------------------------------------------------------------------------------
Type of Location Percentage Owned by
(Restaurant only, Company effective as
Location Combo, etc.) Percentage Acquired of 3/31/08
------------------------------------------------------------------------------------------------
CIC Investors #13, Ltd.
11415 S Dixie Highway
Pinecrest, FL Restaurant only 0.76% 39.85%
------------------------------------------------------------------------------------------------
CIC Investors #50, Ltd.
17185 Pines Boulevard
Pembroke Pines, FL Restaurant only 1.06% 17.23%
------------------------------------------------------------------------------------------------
CIC Investors #60, Ltd.
9516 Harding Avenue
Surfside, FL Restaurant only 2.67% 44.80%
------------------------------------------------------------------------------------------------
CIC Investors #65, Ltd.
2335 State Road 7
Suite 100
Wellington, FL Restaurant only 1.35% 27.84%
------------------------------------------------------------------------------------------------
CIC Investors #70, Ltd.
12790 SW 88th Street
Kendall, FL Restaurant only 1.03% 41.03%
------------------------------------------------------------------------------------------------
CIC Investors #75, Ltd.
950 S. Federal Highway
Stuart, FL. Restaurant only 1.33% 13.33%
------------------------------------------------------------------------------------------------
CIC Investors #80, Ltd.
8695 N.W. 12th Street
Miami, Fl. Restaurant only 1.82% 26.91%
------------------------------------------------------------------------------------------------
CIC Investors #95, Ltd.
2460 Weston Road
Weston, FL Restaurant only 1.82% 29.82%
------------------------------------------------------------------------------------------------
25
Long Term Debt
As of March 29, 2008, we had long term debt of $6,570,000, as compared to
$6,741,000 as of March 31, 2007, and $6,080,000 as of September 29, 2007. The
net decrease in long term debt as of March 29, 2008 as compared to long term
debt as of March 31, 2007 is primarily attributed to a lesser amount outstanding
under our line of credit ($200,000) from an unaffiliated financial institution.
The net increase in long term debt as of March 29, 2008 as compared to long term
debt as of September 29, 2007 is attributed to the borrowing of $600,000 under
our secured line of credit during the first quarter of our fiscal year 2008 to
pay the balance of the purchase price for our limited partnership units in the
limited partnership which owns the Davie, Florida restaurant.
As of March 29, 2008, the amount outstanding under our secured line of credit
was $1,562,000. During the third quarter of fiscal year 2008, we extended the
maturity date of our secured line of credit from January 2, 2009 to April 2,
2009.
Purchase Commitments
In order to fix the cost and ensure adequate supply of baby back ribs for our
restaurants, effective November 20, 2007, we entered into a purchase agreement
with our rib supplier, whereby we agreed to purchase approximately $3,200,000 of
baby back ribs during calendar year 2008 from this vendor at a fixed cost. While
we anticipate purchasing all of our rib supply from this vendor, we believe
there are several other alternative vendors available, if needed.
Working Capital
The table below summarizes the current assets, current liabilities, and working
capital for our fiscal quarters ended March 29, 2008, March 31, 2007 and our
fiscal year ended September 29, 2007.
Item Mar. 29, 2008 Mar. 31, 2007 Sept 29, 2007
----- ------------- ------------- --------------
(in Thousands)
Current Assets $ 7,914 $ 7,620 $ 6,322
Current Liabilities 4,409 6,091 4,567
------- ------- -------
Working Capital $ 3,505 $ 1,529 $ 1,755
Working capital as of March 29, 2008 increased by 129.23% from the working
capital for the fiscal quarter ending March 31, 2007 and increased by 99.72%
from the working capital for the fiscal year ending September 29, 2007. Our
working capital improved during the second quarter of our fiscal year 2008 due
primarily to the amounts which have been raised but not yet required to be used
for expenses by the limited partnership which owns the Davie, Florida
restaurant, ($1,816,000). Working capital also continued to improve during the
fiscal quarter ending March 29, 2008 due to the minimal demand upon our cash
flow for extraordinary items during the fiscal quarter.
We believe that positive cash flow from operations will adequately fund
operations and debt reduction through the balance of our fiscal year 2008.
During the second quarter of our fiscal year 2008, we contracted for the
purchase of a new point of sale system for our package stores, at a cost of
26
approximately $218,000, excluding a surveillance camera system which we estimate
will cost an additional $90,000. As of March 29, 2008, we have already paid
approximately $166,000 on account of the new point of sale system for our
package stores, including the cost to customize and test the new point of sale
system. We also paid approximately $50,000 to purchase universal wireless
hand-held scanners, which payment is in addition to the contracted amount. We
anticipate that this new point of sale system for our package stores will be
installed and fully operational by the end of our fiscal year 2008.
Off-Balance Sheet Arrangements
The Company does not have off-balance sheet arrangements.
Inflation
The primary inflationary factors affecting our operations are food, beverage and
labor costs. A large number of restaurant personnel are paid at rates based upon
applicable minimum wage and increases in minimum wage directly affect labor
costs. To date, inflation has not had a material impact on our operating
results, but this circumstance may change in the future if food and fuel costs
continue to rise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We do not ordinarily hold market risk sensitive instruments for trading purposes
and as of March 29, 2008 held no equity securities.
Interest Rate Risk
At March 29, 2008, of the Company's debt arrangements, only borrowings under our
line of credit bear interest at a variable annual rate equal to the prime rate
of interest. Increases in interest rates may have a material affect upon results
of operations, depending upon the outstanding principal balance on our line of
credit from time to time.
At March 29, 2008, our cash resources earn interest at variable rates.
Accordingly, our return on these funds is affected by fluctuations in interest
rates.
ITEM 4T. CONTROLS AND PROCEDURES
Under the supervision and with the participation of certain members of our
management, including our Chairman of the Board, Chief Executive Officer and
Chief Financial Officer, we completed an evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) to the Securities Exchange Act of 1934, as amended
(the "Exchange Act")). Based on that evaluation, we and our management have
concluded that, our disclosure controls and procedures at March 29, 2008 were
effective to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the SEC, and are designed to ensure that information required to be disclosed
by us in these reports is accumulated and communicated to our management, as
appropriate to allow timely decisions regarding required disclosures. In the
thirteen weeks ended March 29, 2008, there has been no change in our internal
control over financial reporting that has materially affected, or is reasonably
likely to affect, our internal control over financial reporting. Management does
not expect that disclosure controls and procedures or internal controls can
prevent all errors and all fraud. A control system, no matter how well conceived
and operated, can provide only reasonable and not absolute assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of
27
controls must be considered relative to their costs. While management believes
that its disclosure controls and procedures provide reasonable assurance that
fraud can be detected and prevented, because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, have been detected.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See "Litigation" on page 11 of this Report and Item 1 and Item 3 to Part 1 of
the Annual Report on Form 10-K for the fiscal year ended September 29, 2007 for
a discussion of other legal proceedings resolved in prior years.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors previously disclosed in
our Annual Report on Form 10-K for the fiscal year ended September 29, 2007 and
in other reports filed from time to time with the SEC since the date we filed
our Form 10-K. Readers are urged to carefully review these risk factors since
they may cause our results to differ from the "forward-looking statements" made
in this report or otherwise made by or on our behalf. Those risk factors are not
the only ones we face. Additional risks not presently known to us or other
factors not perceived by us to present significant risks to our business at this
time also may impair our business operations. We do not undertake to update any
of these forward-looking statements or to announce the results of any revisions
to these forward-looking statements except as required by law.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Purchase of Company Common Stock
Pursuant to a discretionary plan approved by the Board of Directors, during the
second quarter ended March 29, 2008, we purchased 1,000 shares of our common
stock on the open market for an aggregate purchase price of $8,204, as follows:
Number of
Shares Per Share Purchase
Date of Purchase Purchased Price Price
---------------- --------- --------- --------
2/25/2008 100 $ 8.64 $ 864
2/29/2008 100 $ 8.64 $ 864
3/11/2008 500 $ 8.088 $ 4,044
3/13/2008 100 $ 8.12 $ 812
3/17/2008 200 $ 8.10 $ 1,620
----- -------
Total: 1,000 $ 8,204
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The 2008 Annual Meeting of Shareholders of the Company was held on
February 29, 2008.
28
(b) The following nominees, having received the FOR votes set forth
opposite their respective names, constituting a plurality of the
votes cast at the Annual Meeting for the election of Directors, were
duly elected Directors of the Company:
DIRECTOR FOR WITHHOLD AUTHORITY
-------------------------------- --------------- ------------------------
August Bucci 1,571,830 97,818
Germaine M. Bell 1,657,185 12,463
Patrick J. Flanigan 1,571,995 97,653
The terms of office of the following Directors continued after the
meeting:
James G. Flanigan, Jeffrey D. Kastner, Michael B Flanigan, Barbara J.
Kronk, Mike Roberts and Christopher O'Neil.
ITEM 6. EXHIBITS
The following exhibits are filed with this Report:
Exhibit Description
--------- ------------
31.1 Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
29
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FLANIGAN'S ENTERPRISES, INC.
Date: May 12, 2008 /s/ James G. Flanigan
---------------------------------------------------------
JAMES G. FLANIGAN, Chief Executive Officer and President
/s/ Jeffrey D. Kastner
---------------------------------------------------------
JEFFREY D. KASTNER, Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
30