For
the Fiscal Year Ended December
26, 2005
|
Commission
File Number:
0-18668
|
DELAWARE
|
11-2948370
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
5050
NORTH 40TH STREET
|
||
SUITE
200, PHOENIX, ARIZONA
|
85018
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(602)
852-9000
|
||
Registrant's
telephone number, including area code
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Large
accelerated filer ¨
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Accelerated
Filer ¨
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Non-accelerated
filer x
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PART
I
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Page
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ITEM
1.
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1
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||
ITEM
1A.
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21
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ITEM
2.
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31
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ITEM
3.
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31
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||
ITEM
4.
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32
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||
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PART
II
|
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||
ITEM
5.
|
32
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||
ITEM
6.
|
33
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ITEM
7.
|
34
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||
ITEM
7A.
|
47
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||
ITEM
8.
|
47
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||
ITEM
9.
|
47
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||
ITEM
9A.
|
48
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||
ITEM
9B.
|
48
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||
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PART
III
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|
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ITEM
10.
|
49
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||
ITEM
11.
|
49
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||
ITEM
12.
|
49
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||
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|
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ITEM
13.
|
49
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||
ITEM
14.
|
49
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||
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||
PART
IV
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|
|
|
ITEM
15.
|
49
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||
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||
|
53
|
ITEM
1.
|
BUSINESS
|
·
|
capitalize
on the brand-name recognition and goodwill associated with TGI Friday’s
restaurants;
|
·
|
expand
our restaurant operations through
|
-
|
the
development of at least an additional 14 TGI Friday’s restaurants by 2009
in our existing development
territories,
|
-
|
remodel
the exterior and interiors of our older TGI Friday’s restaurants as part
of the new revitalization program,
|
-
|
the
limited development of additional Bamboo Club restaurants in certain
key
markets in the United States when our development capital allows,
and
|
-
|
the
possible acquisition or development of restaurants operating under
other
restaurant concepts;
|
·
|
improve
our profitability by continuing to enhance the dining experience
of our
guests and improving operating efficiency at all of our restaurant
brands;
|
·
|
reduce
our long-term debt; and
|
·
|
sell
non-core assets or close restaurants in underperforming
markets.
|
·
|
distinctive
exterior and interior design, decor, color scheme, and
furnishings;
|
·
|
uniform
specifications, procedures for operations, formal training, and
standardized menus featuring special recipes and menu
items;
|
·
|
advertising
and promotional programs;
|
·
|
requirements
for quality and uniformity of products and services offered;
and
|
·
|
requirements
that franchisees purchase or lease from approved suppliers equipment,
fixtures, furnishings, signs, inventory, recorded music, ingredients,
and
other products and materials that conform with the standards and
specifications of TGI Friday’s Inc.
|
·
|
appetizers,
such as buffalo wings, stuffed potato skins, quesadillas, spinach
dip,
cheese sticks, and pot stickers;
|
·
|
a
variety of soups, salads, sandwiches, burgers, and
pasta;
|
·
|
southwestern,
oriental, and American specialty
items;
|
·
|
beef,
seafood, and chicken entrees, including Jack Daniel’s®, grill
items;
|
·
|
a
series of appetizers and entrees that are Atkins approved and low
in
carbohydrates;
|
·
|
a
children’s menu; and
|
·
|
desserts.
|
Restaurants
|
TGI
Friday's
|
Bamboo
Club “Asian Bistro”
|
Redfish
Seafood Grill and Bar
|
Alice
Cooper'stown
|
December
27, 2004
|
52
|
13
|
4
|
1
|
Closed/Sold/Terminated
|
-
|
(3)
|
-
|
-
|
Acquired
|
1
|
-
|
-
|
-
|
Opened
|
2
|
-
|
-
|
-
|
December
26, 2005
|
55
|
10*
|
4
|
1
|
Location
|
Square
Footage
|
Seating
Capacity
|
In
Operation Since
|
Operated
by Our Company Since
|
||||
Acquired
TGI Friday's Restaurants
|
||||||||
Phoenix,
Arizona
|
9,396
|
298
|
1985
|
1990
|
||||
Mesa,
Arizona
|
9,396
|
298
|
1985
|
1990
|
||||
Tucson,
Arizona
|
7,798
|
290
|
1982
|
1990
|
||||
Las
Vegas, Nevada
|
9,194
|
298
|
1982
|
1990
|
||||
Overland
Park, Kansas
|
6,000
|
220
|
1992
|
1993
|
||||
San
Diego, California
|
8,002
|
234
|
1979
|
1993
|
||||
Costa
Mesa, California
|
8,345
|
232
|
1980
|
1993
|
||||
Woodland
Hills, California
|
8,358
|
283
|
1980
|
1993
|
||||
Valencia,
California
|
6,500
|
232
|
1993
|
1993
|
||||
Torrance,
California
|
8,923
|
237
|
1982
|
1993
|
||||
La
Jolla, California
|
9,396
|
225
|
1984
|
1993
|
||||
Palm
Desert, California
|
9,194
|
235
|
1983
|
1993
|
||||
West
Covina, California
|
9,396
|
232
|
1984
|
1993
|
||||
North
Orange, California
|
9,194
|
213
|
1983
|
1993
|
||||
Ontario,
California
|
5,700
|
190
|
1993
|
1993
|
||||
Laguna
Niguel, California
|
6,730
|
205
|
1990
|
1993
|
||||
San
Bernardino, California
|
9,396
|
236
|
1986
|
1993
|
||||
Brea,
California
|
6,500
|
195
|
1991
|
1993
|
||||
Riverside,
California
|
6,500
|
172
|
1991
|
1993
|
||||
Pleasanton,
California
|
8,000
|
255
|
1995
|
1998
|
||||
Fresno,
California
|
5,950
|
230
|
1978
|
1998
|
||||
Omaha,
Nebraska
|
6,750
|
227
|
1992
|
2005
|
||||
|
||||||||
Developed
TGI Friday's Restaurants
|
|
|||||||
Glendale,
Arizona
|
5,200
|
230
|
1993
|
1993
|
||||
Albuquerque,
New Mexico
|
5,975
|
270
|
1993
|
1993
|
||||
Reno,
Nevada
|
6,500
|
263
|
1994
|
1994
|
||||
Oxnard,
California
|
6,500
|
252
|
1994
|
1994
|
||||
Carmel
Mountain, California
|
6,500
|
252
|
1995
|
1995
|
||||
Rancho
Santa Margarita, California
|
6,548
|
252
|
1995
|
1995
|
||||
Cerritos,
California
|
6,250
|
223
|
1996
|
1996
|
||||
Las
Vegas, Nevada
|
6,700
|
251
|
1997
|
1997
|
||||
Superstition
Springs (Mesa), Arizona
|
6,250
|
240
|
1998
|
1998
|
||||
Puente
Hills, California
|
5,800
|
272
|
1999
|
1999
|
||||
San
Diego, California
|
6,800
|
277
|
1999
|
1999
|
||||
Independence,
Missouri
|
5,800
|
240
|
1999
|
1999
|
||||
Rancho
(San Diego), California
|
5,800
|
240
|
1999
|
1999
|
||||
Yorba
Linda, California
|
5,800
|
240
|
1999
|
1999
|
||||
Simi
Valley, California
|
5,800
|
240
|
1999
|
1999
|
||||
Tucson,
Arizona
|
5,800
|
240
|
1999
|
1999
|
||||
Henderson,
Nevada
|
5,800
|
240
|
1999
|
1999
|
||||
Carlsbad,
California
|
8,146
|
302
|
1999
|
1999
|
||||
Temecula,
California
|
6,400
|
278
|
1999
|
1999
|
||||
Chandler,
Arizona
|
6,000
|
240
|
1999
|
1999
|
||||
Goodyear,
Arizona
|
6,000
|
207
|
2000
|
2000
|
||||
Shawnee,
Kansas
|
6,400
|
245
|
2000
|
2000
|
Location
|
Square
Footage
|
Seating
Capacity
|
In
Operation Since
|
Operated
by Our Company Since
|
||||
Thousand
Oaks, California
|
6,400
|
249
|
2000
|
2000
|
||||
Union
City(San Francisco), California
|
6,400
|
240
|
2000
|
2000
|
||||
Leawood,
Kansas
|
7,248
|
240
|
2000
|
2000
|
||||
North
Long Beach, California
|
7,177
|
291
|
2000
|
2000
|
||||
Scottsdale,
Arizona
|
7,100
|
263
|
2000
|
2000
|
||||
Albuquerque
West, New Mexico
|
6,426
|
241
|
2001
|
2001
|
||||
Porter
Ranch, California
|
6,426
|
245
|
2001
|
2001
|
||||
Chandler
Arizona
|
6,800
|
322
|
2002
|
2002
|
||||
Desert
Ridge Mall (Phoenix), Arizona
|
6,573
|
292
|
2003
|
2003
|
||||
Surprise,
Arizona
|
7,455
|
305
|
2005
|
2005
|
||||
Happy
Valley (North Phoenix), Arizona
|
7,077
|
304
|
2005
|
2005
|
||||
|
||||||||
Acquired
Redfish Restaurants
|
|
|||||||
Chicago,
Illinois
|
6,200
|
214
|
1996
|
1997
|
||||
Cincinnati,
Ohio
|
7,133
|
239
|
1997
|
1997
|
||||
|
||||||||
Developed
Redfish Restaurants
|
|
|||||||
Scottsdale,
Arizona
|
7,285
|
218
|
2001
|
2001
|
||||
Chandler,
Arizona
|
7,216
|
334
|
2002
|
2002
|
||||
|
||||||||
Acquired
Bamboo Club Restaurants
|
|
|||||||
Phoenix,
Arizona
|
5,400
|
200
|
1995
|
2000
|
||||
Scottsdale,
Arizona
|
5,400
|
200
|
1997
|
2000
|
||||
|
||||||||
Developed
Bamboo Club Restaurants
|
|
|||||||
Tampa,
Florida
|
8,100
|
235
|
2001
|
2001
|
||||
West
Palm Beach, Florida
|
6,317
|
180
|
2001
|
2001
|
||||
Tempe,
Arizona
|
6,400
|
210
|
2001
|
2001
|
||||
Tucson,
Arizona
|
6,422
|
277
|
2002
|
2002
|
||||
King
of Prussia, Pennsylvania
|
7,391
|
243
|
2002
|
2002
|
||||
Novi,
Michigan
|
6,941
|
291
|
2003
|
2003
|
||||
Desert
Ridge Mall (Phoenix), Arizona
|
7,000
|
293
|
2003
|
2003
|
||||
Raleigh/Durham,
North Carolina
|
7,217
|
271
|
2003
|
2003
|
||||
Fairfax,
Virginia(a)
|
6,294
|
198
|
2004
|
2004
|
||||
|
||||||||
(a)
Closed on January 31, 2006
|
|
|||||||
|
||||||||
Developed
Cooper'stown Restaurant
|
|
|||||||
Cleveland,
Ohio
|
11,160
|
356
|
2002
|
2002
|
State
|
TGI
Friday’s
|
Bamboo
Club
|
Redfish
|
Cooper’stown
|
||||
California
|
31
|
__
|
__
|
__
|
||||
Arizona
|
13
|
5
|
2
|
1
|
||||
Nevada
|
4
|
__
|
__
|
__
|
||||
Florida
|
__
|
2
|
__
|
__
|
||||
New
Mexico
|
4
|
__
|
__
|
__
|
||||
Kansas
|
3
|
__
|
__
|
__
|
||||
Missouri
|
1
|
__
|
__
|
__
|
||||
Ohio
|
1
|
__
|
1
|
1
|
||||
Nebraska
|
1
|
__
|
__
|
__
|
||||
Illinois
|
__
|
__
|
1
|
__
|
||||
Pennsylvania
|
__
|
1
|
__
|
__
|
||||
North
Carolina
|
__
|
1
|
__
|
__
|
||||
Michigan
|
__
|
1
|
__
|
__
|
||||
Total
|
55
|
10
|
4
|
1
|
Year
|
Southern
California
Territory(a)
|
Southwest
Territory(b)
|
Midwest
Territory(
c)
|
Total
|
||||
2005
|
1 (d)
|
-(e)
|
-
|
1
|
||||
2006
|
2
|
1
|
-
|
3
|
||||
2007
|
2
|
1(f)
|
-
|
3
|
||||
2008
|
2
|
1(f)
|
-
|
3
|
||||
2009
|
3
|
1
|
-
|
4
|
||||
Minimum
Requirements
|
10
|
4
|
-
|
14
|
||||
Existing
Restaurants
|
31
|
19
|
5
|
55
|
(a)
|
Consists
of Southern California. Agreement expires at the end of 2009.
|
(b)
|
Consists
of the states of Arizona and Nevada, most of the state of New Mexico,
and
El Paso, Texas. Agreement expires at the end of
2009.
|
(c)
|
Former
development territory consisting of metropolitan Kansas City, Kansas
and
Kansas City, Missouri. Agreement terminated in first quarter of
2004.
|
(d)
|
This
obligation has been modified to June 30,
2006.
|
(e)
|
Two
restaurants were opened in 2005.
|
(f)
|
These
restaurants will likely open in
2006.
|
Name
|
Age
|
Position
|
||
William
G. Shrader
|
58
|
President,
Chief Executive Officer, and Director
|
||
Michael
Garnreiter
|
53
|
Executive
Vice President, Treasurer, and Chief Financial Officer
|
||
Stuart
K. Gee
|
42
|
Executive
Vice President-Restaurant Operations
|
||
Michael
J. Herron
|
65
|
General
Counsel, Vice President, and Secretary
|
||
Cynthia
A. Ward
|
45
|
Vice
President-Accounting and Controller
|
||
Stephanie
Barbini
|
36
|
Vice
President-Human Resources and Training
|
||
Judy
Schumacher
|
44
|
Vice
President-Marketing
|
ITEM
1A.
|
RISK
FACTORS
|
·
|
any
business reversals that TGI Friday’s Inc. may
encounter;
|
·
|
a
failure by TGI Friday’s Inc. to promote the TGI Friday's name or
restaurant concept;
|
·
|
the
inability or failure of TGI Friday’s Inc. to support its franchisees,
including our company;
|
·
|
the
failure to operate successfully the TGI Friday's restaurants that
TGI
Friday’s Inc. itself owns; and
|
·
|
negative
publicity with respect to TGI Friday’s Inc. or the TGI Friday's
name.
|
·
|
the
hiring, training, and retention of qualified operating personnel,
especially managers;
|
·
|
reliance
on the knowledge of our executives to identify available and suitable
restaurant sites;
|
·
|
competition
for restaurant sites;
|
·
|
negotiation
of favorable lease terms;
|
·
|
timely
development of new restaurants, including the availability of construction
materials and labor;
|
·
|
management
of construction and development costs of new
restaurants;
|
·
|
securing
required governmental approvals and permits in a timely manner, or
at
all;
|
·
|
cost
and availability of capital;
|
·
|
competition
in our markets; and
|
·
|
general
economic conditions.
|
·
|
the
availability and cost of suitable restaurant locations for
development;
|
·
|
the
availability of restaurant acquisition
opportunities;
|
·
|
the
hiring, training, and retention of additional management and restaurant
personnel;
|
·
|
the
availability of adequate financing;
|
·
|
the
continued development and implementation of management information
systems;
|
·
|
competitive
factors; and
|
·
|
general
economic and business conditions.
|
·
|
quarterly
variations in our operating results or those of other restaurant
companies;
|
·
|
changes
in analysts' estimates of our financial
performance;
|
·
|
changes
in national and regional economic conditions, the financial markets,
or
the restaurant industry;
|
·
|
natural
disasters;
|
·
|
other
developments affecting our business or other restaurant
companies;
|
·
|
actual
or anticipated variations in our quarterly results of
operations;
|
·
|
changes
in market valuations of companies in our
industry;
|
·
|
changes
in expectations of future financial performance or changes in estimates
of
securities analysts;
|
·
|
fluctuations
in stock market prices and volumes;
|
·
|
issuances
of common stock or other securities in the future;
and
|
·
|
the
addition or departure of key
personnel.
|
·
|
authorize
our board of directors to establish one or more series of preferred
stock,
the terms of which can be determined by the board of directors at
the time
of issuance;
|
·
|
require
that any action required or permitted to be taken by our stockholders
must
be effected at a duly called annual or special meeting of the stockholders
and may not be effected by any consent in
writing;
|
·
|
state
that special meetings of our stockholders may be called only by the
board
of directors or by a committee of the board of directors to which
the
board of directors has delegated such
authority;
|
·
|
establish
advance notice requirements for submitting nominations for election
to the
board of directors and for proposing matters that can be acted upon
by
stockholders at the meeting;
|
·
|
provide
that certain provisions of our certificate of incorporation can be
amended
only by supermajority vote of the outstanding shares;
|
·
|
allow
our directors to fill vacancies on our board of directors;
and
|
·
|
provide
that the authorized number of directors may be changed by resolution
of
the board of directors.
|
ITEM
2.
|
PROPERTIES
|
ITEM
3.
|
LEGAL
PROCEEDINGS
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
ITEM
5.
|
MARKET
FOR THE REGISTRANT'S COMMON EQUITY RELATED STOCKHOLDER MATTERS AND
ISSUER
PURCHASES OF EQUITY
SECURITIES
|
High
|
Low
|
||||||
2004
|
|||||||
First
Quarter
|
$
|
4.45
|
$
|
1.91
|
|||
Second
Quarter
|
2.79
|
1.81
|
|||||
Third
Quarter
|
2.11
|
1.43
|
|||||
Fourth
Quarter
|
1.82
|
1.20
|
|||||
2005
|
|||||||
First
Quarter
|
$
|
2.60
|
$
|
1.44
|
|||
Second
Quarter
|
3.93
|
2.17
|
|||||
Third
Quarter
|
6.91
|
3.31
|
|||||
Fourth
Quarter
|
5.96
|
4.23
|
|||||
2006
|
|||||||
First
Quarter (through March 1, 2006)
|
$
|
5.60
|
$
|
3.51
|
Plan
Category
|
(a)Number
of Securities to be Issued Upon Exercise of Outstanding Options,
Warrants,
and Rights
|
(b)Weighted
Average Exercise Price of Outstanding Options, Warrants,
and Rights
|
(c)Number
of Securities Remaining Available for Future Issuance Under Equity
Compensation Plans (Excluding Securities Reflected
in Column (a))
|
|||||||
Equity
Compensation Plans Approved by Stockholders (1)
|
3,503,335
|
$
|
3.30
|
432,915
|
||||||
Equity
Compensation Plans Not Approved by Stockholders (2)
|
581,395
|
3.01
|
-
|
|||||||
Total
|
4,084,730
|
432,915
|
(1) |
Includes
3,370,835 of outstanding options and 132,500 shares of restricted
stock.
|
(2) |
Represents
warrants issued to CIC Partners LP (see Note
6).
|
ITEM 6. |
SELECTED
CONSOLIDATED FINANCIAL
DATA
|
Fiscal
Years Ended
|
||||||||||||||||
(in
thousands, except for per share amounts)
|
||||||||||||||||
Dec.
26, 2005
|
Dec.
27, 2004
|
Dec.
29, 2003
|
Dec.
30, 2002
|
Dec.
31, 2001
|
||||||||||||
Statement
of Operations Data:
|
||||||||||||||||
Revenue
|
$
|
239,729
|
$
|
224,751
|
$
|
224,494
|
$
|
220,151
|
$
|
211,823
|
||||||
Restaurant
operating expenses:
|
||||||||||||||||
Cost
of sales
|
63,265
|
59,025
|
60,299
|
61,270
|
59,139
|
|||||||||||
Operating
income (loss)
|
(2,423
|
)
|
4,747
|
(1,454
|
)
|
(3,491
|
)
|
2,921
|
||||||||
Net
income (loss)(1)(2)
|
$
|
(7,796
|
)
|
$
|
953
|
$
|
(2,144
|
)
|
$
|
(8,750
|
)
|
$
|
(259
|
)
|
||
Diluted
earnings per share:
|
||||||||||||||||
Net
income (loss) (1)(2)
|
$
|
(0.48
|
)
|
$
|
0.07
|
$
|
(0.15
|
)
|
$
|
(0.62
|
)
|
$
|
(0.01
|
)
|
||
Weighted
average shares outstanding - diluted
|
16,321
|
14,649
|
14,179
|
14,105
|
14,048
|
|||||||||||
Balance
Sheet Data:
|
||||||||||||||||
Working
capital (deficiency)
|
$
|
(18,069
|
)
|
$
|
(19,701
|
)
|
$
|
(17,946
|
)
|
$
|
(15,822
|
)
|
$
|
(8,135
|
)
|
|
Total
assets
|
99,409
|
103,172
|
106,207
|
112,395
|
112,462
|
|||||||||||
Long-term
debt, net of current portion
|
34,902
|
42,232
|
47,869
|
51,998
|
47,232
|
|||||||||||
Stockholders'
equity
|
28,949
|
29,285
|
28,124
|
28,816
|
39,686
|
(1)
|
Fiscal
2005, 2004, 2003, and 2002 include a charge of $939,000, $80,000,
$270,000, and $46,000, respectively, for early extinguishment or
refinancing of debt.
|
(2)
|
Fiscal
2002 includes a full valuation allowance against deferred tax
assets.
|
Fiscal
Quarter Ended
|
|||||||||||||||||||||||||
(In
thousands, except per share amounts)
|
|||||||||||||||||||||||||
2005
|
2004
|
||||||||||||||||||||||||
Dec.
26
|
Sept.
26
|
June
27
|
Mar.
28
|
Dec.
27
|
Sept.
27
|
June
28
|
Mar.
29
|
||||||||||||||||||
Revenue
|
$
|
57,507
|
$
|
59,120
|
$
|
61,670
|
$
|
61,432
|
$
|
52,218
|
$
|
54,845
|
$
|
56,610
|
$
|
59,079
|
|||||||||
Cost
of sales
|
15,195
|
15,632
|
16,164
|
16,274
|
14,280
|
14,197
|
14,902
|
15,646
|
|||||||||||||||||
Income
(loss) before income taxes (1)(2)
|
(10,368
|
)
|
(346
|
)
|
1,550
|
1,571
|
(1,113
|
)
|
179
|
870
|
1,129
|
||||||||||||||
Net
income(loss) (1)(2)
|
$
|
(10,570
|
)
|
$
|
(236
|
)
|
$
|
1,550
|
$
|
1,461
|
$
|
(1,113
|
)
|
$
|
117
|
$
|
820
|
$
|
1,129
|
||||||
|
|||||||||||||||||||||||||
Net
income (loss) per share before income taxes (1)(2)
|
$
|
(0.60
|
)
|
$
|
(0.02
|
)
|
$
|
0.10
|
$
|
0.11
|
$
|
(0.08
|
)
|
$
|
0.01
|
$
|
0.06
|
$
|
0.08
|
||||||
Net
income (loss) per share (1)(2)
|
$
|
(0.61
|
)
|
$
|
(0.01
|
)
|
$
|
0.10
|
$
|
0.10
|
$
|
(0.08
|
)
|
$
|
0.01
|
$
|
0.06
|
$
|
0.08
|
(1)
|
|
Fourth
quarter fiscal 2005 and 2004 include asset impairment charges and
other
and lease termination fees of $6,867,000 and $1,385,000, respectively,
including an allocation of goodwill in fiscal 2005 of
$1,000,000.
|
(2)
|
|
Fourth
quarter fiscal 2005 includes $1,366,000 in interest expense related
to the
write-down of our swap agreements ($939,000) and the write-off of
deferred
financing fees ($427,000) associated with the refinancing of debt
as
discussed in Note 2 and Note 5 to our financial
statements.
|
ITEM
7.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Year
|
Annual
|
First
Qtr
|
Second
Qtr
|
Third
Qtr
|
Fourth
Qtr
|
|||||
2005
|
7.7%
|
6.3%
|
10.8%
|
8.5%
|
5.0%
|
|||||
2004
|
2.4%
|
5.0%
|
(1.6)%
|
1.3%
|
4.2%
|
|||||
2003
|
1.1%
|
1.2%
|
(1.2)%
|
2.3%
|
1.4%
|
|||||
2002
|
0.4%
|
2.4%
|
1.5%
|
(3.6)%
|
(0.8)%
|
|
2005
|
2004
|
Brand
Revenues
|
$203,800
|
$188,538
|
Restaurant
level Operating Profit
|
$
19,656
|
$
16,527
|
Restaurant
level Cash Flow (EBITDA)
|
$
26,337
|
$
22,844
|
EBITDA
as % of Revenue
|
12.9%
|
12.1%
|
Average
Number of Restaurants
|
53.6
|
53.0
|
Average
Annual Unit Volumes
|
$
3,802
|
$
3,557
|
2005
|
|||||||||||||
Sales
|
ROP
|
EBITDA
|
#
of Locations
|
||||||||||
Closed
Locations (a)
|
$
|
1,600
|
$
|
(1,400
|
)
|
$
|
(1,100
|
)
|
3
|
||||
Arizona
and Florida
|
18,600
|
200
|
1,400
|
7
|
|||||||||
Other
Markets (b)
|
5,800
|
(1,300
|
)
|
(800
|
)
|
3
|
|||||||
Brand
Totals
|
$
|
26,000
|
$
|
(2,500
|
)
|
$
|
(500
|
)
|
(a)
|
Represents
the 2005 operating activities of restaurants closed in 2005 (Newport,
Kentucky and Aventura, Florida) and early 2006 (Fairfax, Virginia).
Does
not include any asset write-off or lease termination payments for
these
locations.
|
(b) |
Other
markets represent restaurants located in Novi, Michigan; King of
Prussia,
Pennsylvania; and Raleigh, North Carolina.
|
Forecasted
EBITDA Reconciliation:
|
Forecasted
Twelve Months Ending December 25, 2006 (in
millions)
|
Net
Income (*)
|
$4.2
|
Add-Income
taxes
|
.3
|
-Interest
expense
|
4.0
|
-Depreciation
and Amortization
|
9.5
|
EBITDA
|
$18.0
|
Fiscal
Year Ended
|
||||||||||
December
26, 2005
|
December
27, 2004
|
December
29, 2003
|
||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||
Restaurant
operating expenses:
|
||||||||||
Cost
of sales
|
26.4
|
26.3
|
26.9
|
|||||||
Payroll
and benefits
|
30.5
|
30.8
|
31.4
|
|||||||
Depreciation
and amortization
|
3.7
|
3.8
|
3.7
|
|||||||
Other
operating expenses
|
31.7
|
31.8
|
31.3
|
|||||||
|
||||||||||
Total
restaurant operating expenses
|
92.6
|
92.7
|
93.3
|
|||||||
|
||||||||||
Amortization
of intangibles
|
0.4
|
0.3
|
0.3
|
|||||||
General
and administrative expenses(a)
|
4.8
|
4.1
|
4.0
|
|||||||
Preopening
expenses
|
0.1
|
0.1
|
0.4
|
|||||||
New
manager training expenses
|
--
|
--
|
0.1
|
|||||||
Impairment
charges and other
|
2.9
|
0.6
|
2.6
|
|||||||
|
||||||||||
Operating
income (loss)
|
(0.8
|
)
|
2.1
|
(0.6
|
)
|
|||||
Gain
from sale of assets
|
--
|
--
|
(1.7
|
)
|
||||||
Interest
expense and other, net (b)
|
2.3
|
1.7
|
2.0
|
|||||||
Income
(loss) before income taxes
|
(3.2
|
)%
|
0.4
|
%
|
(1.0
|
)%
|
(a)
|
Includes
an estimated legal settlement reserve of $1.5 million (see Note 7
to our
financial statements).
|
(b)
|
Reduction
in swap liability of $939,000 recorded as additional interest expense
upon
debt refinance.
|
(i)
|
The
creation of other liens on our assets or
revenues.
|
(ii)
|
Investments
or the extensions of credit to others, including employees and
officers.
|
(iii)
|
The
incurrence of any additional
indebtedness
|
(iv)
|
Any
fundamental change in our business, such as a merger, acquisition
or
disposition of assets or restaurants, except as are permitted under
the
credit facility.
|
(v)
|
The
payment of cash dividends, distributions to stockholders or the repurchase
of our common stock.
|
Total
|
Less
than one
year
|
One
to three years
|
Three
to five years
|
Greater
than five
years
|
||||||||||||
Debt
Maturities
|
$
|
38,285
|
$
|
3,383
|
$
|
7,660
|
$
|
9,017
|
$
|
18,225
|
||||||
Minimum
Lease Commitment
|
162,180
|
12,981
|
27,031
|
26,673
|
95,493
|
|||||||||||
Purchase
Commitments
|
16,800
|
11,200
|
5,600
|
--
|
--
|
|||||||||||
Total
|
$
|
217,265
|
$
|
27,564
|
$
|
40,291
|
$
|
34,535
|
$
|
106,310
|
ITEM
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
ITEM
8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY
DATA
|
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
ITEM
9A.
|
CONTROLS
AND PROCEDURES
|
ITEM
9B.
|
OTHER
INFORMATION
|
ITEM
10.
|
DIRECTORS
AND EXECUTIVE OFFICERS OF THE
REGISTRANT
|
ITEM
11.
|
EXECUTIVE
COMPENSATION
|
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED
TRANSACTIONS
|
ITEM
14.
|
PRINCIPAL
ACCOUNTING FEES AND
SERVICES
|
ITEM
15.
|
EXHIBITS
AND FINANCIAL STATEMENT
SCHEDULES
|
(a)
|
Financial
Statements and Financial Statement
Schedules.
|
(1)
|
Financial
statements are listed in the index to the consolidated financial
statements on page F-1 of this
Report.
|
(2)
|
No
financial statement schedules are included because they are not applicable
or are not required or the information required to be set forth therein
is
included in the consolidated financial statements or notes
thereto.
|
Exhibit
Number
|
Exhibit
|
3.1
|
Restated
Certificate of Incorporation of the Company (1)
|
3.2
|
Certificate
of Amendment of Restated Certificate of Incorporation
(l)
|
3.3
|
Amended
and Restated Bylaws of the Company (1)
|
3.4
|
Certificate
of Amendment of Restated Certificate of Incorporation
(2)
|
3.5
|
Certificate
of Elimination of the Class A Preferred Stock (3)
|
3.6
|
Certificate
of Elimination of the Class B Preferred Stock
(3)
|
Exhibit
Number
|
Exhibit
|
3.7
|
Certificate
of Designations of Series A Junior Participating Preferred Stock
(3)
|
4.1
|
Sergio
Zyman registration rights (4)
|
4.2
|
Warrant
issued to CIC MSRG LP (5)
|
4.3
|
Registration
Rights Agreement, dated as of April 27, 2005, between the Company
and CIC
MSRG LP (5)
|
4.4
|
Rights
Agreement, dated as of May 23, 2005, between the Company and Computershare
Trust Company, Inc., as Rights Agent (3)
|
10.1
|
Company's
1990 Stock Option Plan (6)
|
10.5
|
Form
of Franchise Agreement between the Company and TGI Friday’s Inc.
(7)
|
10.8
|
General
Release and Retirement Separation Agreement, dated November 19, 2003,
between the Company and Bart A. Brown, Jr. (8)
|
10.9
|
Development
Agreement, dated March 15, 2004, between TGI Friday’s Inc. and Cornerstone
Productions, Inc., a wholly owned subsidiary of the Company
(8)
|
10.10
|
Development
Agreement, dated March 15, 2004, between TGI Friday’s Inc. and Main St.
California, Inc., a wholly owned subsidiary of the Company
(8)
|
10.11
|
First
Amendment to Development Agreement, dated February 17, 2005, between
TGI
Friday’s Inc. and Main St. California, Inc., a wholly owned subsidiary of
the Company (8)
|
10.12
|
CA
Development Incentive Agreement, dated March 25, 2004, between Main
Street
California, Inc. and TGI Friday’s Inc. (8)
|
10.13
|
Promissory
Note between the Company and CNL Financial I, Inc. (9)
|
10.14
|
Promissory
Note between the Company and CNL Financial I, Inc. (9)
|
10.15
|
Promissory
Note between the Company and CNL Financial I, Inc. (9)
|
10.16
|
1995
Stock Option Plan (10)
|
10.22
|
Stock
Option Agreement, dated August 5, 1996, between the Company and John
F.
Antioco for 800,000 shares of Common Stock (10)
|
10.22A
|
Stock
Option Agreement, dated June 15, 1998, between the Company and John
F.
Antioco amending the Stock Option Agreement dated August 5, 1996
(10)
|
10.23
|
Stock
Option Agreement, dated December 16, 1996, between the Company and
Bart A.
Brown, Jr. for 250,000 shares of Common Stock. (The Company issued
three
additional Stock Option Agreements that are substantially identical
in all
material respects, except as to number of shares. The four Stock
Option
Agreements give rights to purchase a total of 625,000 shares of Common
Stock. (10)
|
10.23A
|
Schedule
of Stock Option Agreements substantially identical to Exhibit 10.23
(10)
|
10.24
|
Stock
Option Agreement, dated July 14, 1997, between the Company and Bart
A.
Brown, Jr. for 75,000 shares of Common Stock. (The Company issued
one
additional Stock Option Agreement that is substantially identical
in all
material respects, except as to number of shares. The two Stock Option
Agreements give rights to purchase a total of 175,000 shares of Common
Stock. (10)
|
10.24A
|
Schedule
of Stock Option Agreements substantially identical to Exhibit 10.24
(10)
|
10.25
|
Stock
Option Agreement, dated June 15, 1998, between the Company and James
Yeager for 15,000 shares of Common Stock. (The Company issued two
additional Stock Option Agreements that are substantially identical
in all
material respects, except as to option holder and number of shares.
The
three Stock Option Agreements give rights to purchase a total of
50,000
shares of Common Stock. (10)
|
10.25A
|
Schedule
of Stock Option Agreements substantially identical to Exhibit 10.25
(10)
|
10.26
|
Stock
Option Agreement, dated December 31, 1998, between the Company and
Tim
Rose for 10,000 shares of Common Stock. (The Company issued one additional
Stock Option Agreement that is substantially identical in all material
respects, except as to option holder and number of shares. The two
Stock
Option Agreements give rights to purchase a total of 160,000 shares
of
Common Stock. (10)
|
Exhibit
Number
|
Exhibit
|
10.26A
|
Schedule
of Stock Option Agreements substantially identical to Exhibit 10.26
(10)
|
10.27
|
Registration
Rights Agreement, dated August 5, 1996, between the Company and John
F.
Antioco (11)
|
10.28
|
1999
Incentive Stock Plan (12)
|
10.29
|
Employment
Agreement, dated November 19, 2004, between the Company and William
G.
Shrader (8)
|
10.30
|
Employment
Agreement, dated November 19, 2004, between the Company and Michael
Garnreiter (8)
|
10.31
|
Securities
Purchase Agreement, dated as of April 27, 2005, between the Company
and
CIC MSRG LP (5)
|
10.40
|
401(k)
Profit Sharing Plan (13)
|
10.42
|
Credit
Agreement, dated as of October 31, 2005, among the Company, Bank
of
America, N.A., as Administrative Agent and L/C Issuer, and the other
Lending Parties thereto (14)
|
10.43
|
Security
Agreement, dated as of October 31, 2005, among the Company, each
of its
subsidiaries, and Bank of America, N.A., as Administrative Agent
(14)
|
10.44
|
Guaranty
Agreement, dated as of October 31, 2005, among each of the Company’s
subsidiaries and Bank of America, N.A., as Administrative Agent
(14)
|
List
of Subsidiaries
|
|
Consent
of Mayer Hoffman McCann P.C.
|
|
Certification
of President and Chief Executive Officer pursuant to Rule 13a-14(a)
and
Rule 15d-14(a), promulgated under the Securities Exchange Act of
1934, as
amended
|
|
Certification
of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a), promulgated under the Securities Exchange Act of 1934,
as
amended
|
|
Certification
of President and Chief Executive Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of
2002
|
|
Certification
of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
(1) |
Incorporated
by reference to the Company's Form 10-K for the year ended December
30,
1991, filed
with the Securities and Exchange Commission on March 30,
1992.
|
(2)
|
Incorporated
by reference to the Company's Form 8-K Report filed with the Commission
on
July 15, 2004.
|
(3)
|
Incorporated
by reference to the Company's Form 8-A filed with the Securities
and
Exchange Commission on May 24,
2005.
|
(4)
|
Incorporated
by reference to the Company's Form 10-K for the year ended December
29,
2003, filed with the Securities and Exchange Commission on March
23,
2004.
|
(5)
|
Incorporated
by reference to the Company’s Form 8-K filed with the Securities and
Exchange Commission on May 4, 2005.
|
(6)
|
Incorporated
by reference to the Company's Registration Statement on Form S-1
(Registration No. 33-40993), which became effective in September
1991.
|
(7)
|
Incorporated
by reference to the Company's Form 8-K filed with the Securities
and
Exchange Commission on April 15,
1994.
|
(8)
|
Incorporated
by reference to the Company's Form 10-K for the year ended December
27,
2004, filed with the Securities and Exchange Commission on March
8,
2005.
|
(9)
|
Incorporated
by reference to the Company's Form 10-K for the year ended December
30,
1996, filed with the Securities and Exchange Commission on April
14,
1997.
|
(10)
|
Incorporated
by reference to the Company's Registration Statement on Form S-8
(Registration No. 333-78155) filed with the Securities and Exchange
Commission on May 10, 1999.
|
(11)
|
Incorporated
by reference to the Company's Registration Statement on Form S-3
(Registration No. 333-78161) filed with the Securities and Exchange
Commission on May 10, 1999.
|
(12)
|
Incorporated
by reference to Company's Registration Statement on Form S-8 (Registration
No. 333-89931) filed with the Securities and Exchange Commission
on
October 29, 1999.
|
(13)
|
Incorporated
by reference to the Company's Registration Statement on Form S-8
(Registration No. 333-55100) filed with the Securities and Exchange
Commission on February 6, 2001.
|
(14)
|
Incorporated
by reference to the Company's Form 8-K filed with the Securities
and
Exchange Commission on November 4,
2005.
|
MAIN
STREET RESTAURANT GROUP, INC.
|
|||
Date:
March 22, 2006
|
By:
|
/s/
William G. Shrader.
|
|
William
G. Shrader
|
|||
Chief
Executive Officer and President
|
Signature
|
Position
|
Date
|
||
/s/
John F. Antioco
|
Chairman
of the Board
|
March
22, 2006
|
||
John
F. Antioco
|
||||
/s/
William G. Shrader
|
Chief
Executive Officer, President and Director
|
March
22, 2006
|
||
William
G. Shrader
|
(Principal
Executive Officer)
|
|||
/s/
Michael Garnreiter
|
Chief
Financial Officer, Executive Vice President
|
March
22, 2006
|
||
Michael
Garnreiter
|
and
Treasurer (Principal Financial and Accounting Officer)
|
|
||
/s/
Kenda B. Gonzales
|
Director
|
March
22, 2006
|
||
Kenda
B. Gonzales
|
||||
/s/
Wanda Williams
|
Director
|
March
22, 2006
|
||
Wanda
Williams
|
||||
|
Director
|
|
||
Sergio
S. Zyman
|
||||
/s/
Michael Rawlings
|
Director
|
March
22, 2006
|
||
Michael Rawlings |
Page | |
Report
of Independent Registered Public Accounting Firm.
|
F-2
|
|
|
Consolidated
Balance Sheets as of December 26, 2005 and December 27,
2004
|
F-3
|
|
|
|