UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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x
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the Quarterly Period Ended March 30, 2008
or
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¨
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the Transition Period from
to
.
Commission file number 0-25721.
BUCA, Inc.
(Exact name of
registrant as specified in its Charter)
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Minnesota
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41-1802364
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1300 Nicollet Mall, Suite 5003
Minneapolis, Minnesota 55403
(Address of principal executive offices) (Zip
Code)
(612) 225-3400
(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):
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Large Accelerated Filer
¨
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Accelerated Filer
¨
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Non-Accelerated Filer
¨
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Smaller Reporting Company
x
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes
¨
No
x
As of May 9, 2008 the registrant had 21,455,838 shares of common stock outstanding.
INDEX
BUCA, INC. AND SUBSIDIARIES
2
PART I. FINANCIAL INFORMATION
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Item 1.
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Financial Statements
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BUCA, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
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March 30,
2008
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December 30,
2007
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ASSETS
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CURRENT ASSETS:
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Cash
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$
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819
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$
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1,070
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Accounts receivable
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3,542
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4,260
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Inventories
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5,947
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6,084
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Prepaid expenses and other
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4,069
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4,470
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Total current assets
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14,377
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15,884
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PROPERTY AND EQUIPMENT, net
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96,725
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98,327
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OTHER ASSETS
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3,121
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3,186
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$
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114,223
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$
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117,397
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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CURRENT LIABILITIES:
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Accounts payable
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$
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7,948
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$
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6,634
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Unredeemed gift card liabilities
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2,369
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3,738
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Accrued payroll and benefits
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6,477
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7,483
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Accrued sales, property and income tax
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3,177
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3,897
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Other accrued expenses
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4,371
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4,876
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Line of credit borrowing
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3,510
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—
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Current maturities of long-term debt and capital leases
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325
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296
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Total current liabilities
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28,177
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26,924
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LONG-TERM DEBT AND CAPITAL LEASES, less current maturities
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15,904
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15,993
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DEFERRED RENT
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17,917
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18,002
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OTHER LIABILITIES
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3,671
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3,962
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Total liabilities
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65,669
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64,881
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COMMITMENTS AND CONTINGENCIES (Note 8)
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SHAREHOLDERS’ EQUITY:
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Undesignated stock, 5,000,000 shares authorized, none issued or outstanding
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—
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—
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Common stock, $.01 par value per share, 30,000,000 shares authorized; 21,438,453 and 21,088,651 shares issued and outstanding, respectively
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214
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211
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Additional paid-in capital
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173,081
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172,903
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Accumulated deficit
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(123,877
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)
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(119,678
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)
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Notes receivable from employee shareholders
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(864
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)
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(920
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Total shareholders’ equity
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48,554
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52,516
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$
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114,223
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$
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117,397
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See notes to Condensed Consolidated Financial Statements.
3
BUCA, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(Unaudited)
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Thirteen Weeks Ended
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March 30,
2008
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April 1,
2007
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Restaurant sales
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$
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60,105
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$
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62,811
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Restaurant costs:
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Product
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15,237
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15,378
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Labor
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20,417
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21,860
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Direct and occupancy
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19,134
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19,047
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Depreciation and amortization
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2,689
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2,954
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Loss on disposal of assets
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20
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100
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Total restaurant costs
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57,497
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59,339
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General and administrative expenses
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6,211
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5,624
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Loss on impairment of long-lived assets
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31
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50
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Lease termination charges
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—
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(3
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)
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Operating loss
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(3,634
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)
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(2,199
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)
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Interest income
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27
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137
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Interest expense
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(592
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)
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(561
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)
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Loss before income taxes
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(4,199
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)
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(2,623
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)
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Income taxes
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—
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—
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Net loss from continuing operations
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(4,199
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)
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(2,623
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)
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Net loss from discontinued operations
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—
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(172
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)
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Net loss
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$
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(4,199
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)
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$
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(2,795
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)
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Net loss from continuing operations per share—basic and diluted
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$
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(0.20
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)
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$
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(0.13
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)
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Net loss from discontinued operations per share—basic and diluted
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$
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—
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$
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(0.01
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)
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Net loss per share—basic and diluted
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$
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(0.20
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)
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$
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(0.14
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)
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Weighted average common shares outstanding—basic and diluted
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20,533,247
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20,410,184
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See notes to Condensed Consolidated Financial Statements.
4
BUCA, Inc. and Subsidiaries
Condensed Consolidated Statement of Shareholders’ Equity
For the Thirteen Weeks Ended March 30, 2008
(in thousands)
(Unaudited)
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Common Stock
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Additional
paid-in
capital
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Accumulated
deficit
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Notes
receivable
from
shareholders
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Total
shareholders’
equity
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Shares
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Amount
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Balance at December 30, 2007
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21,089
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$
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211
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$
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172,903
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$
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(119,678
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)
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$
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(920
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)
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$
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52,516
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Exercise of common stock options
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—
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—
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—
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—
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—
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—
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Issuance of common stock
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—
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—
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—
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—
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—
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—
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Repurchase of common stock from shareholders
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(12
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)
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—
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(13
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)
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—
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66
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53
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Collections on notes receivable from shareholders
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—
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—
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—
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—
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(10
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)
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(10
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)
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Common stock issued under employee stock purchase plan
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54
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—
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36
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—
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—
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36
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Issuance of restricted stock
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307
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3
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(3
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)
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—
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—
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—
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Share-based compensation
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—
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—
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158
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—
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—
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158
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Net loss
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—
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|
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—
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—
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(4,199
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)
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|
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—
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(4,199
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)
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Balance at March 30, 2008
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21,438
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$
|
214
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$
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173,081
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$
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(123,877
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)
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$
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(864
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)
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$
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48,554
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See notes to Condensed Consolidated Financial Statements.
5
BUCA, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
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Thirteen Weeks Ended
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March 30,
2008
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April 1,
2007
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CASH FLOWS FROM OPERATING ACTIVITIES:
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|
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Net loss
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$
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(4,199
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)
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$
|
(2,795
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)
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Adjustments to reconcile net loss to net cash used in operating activities:
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Depreciation and amortization
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2,689
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2,954
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Loss on disposal of assets
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20
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100
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Share-based compensation
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158
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317
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Loss on impairment of long-lived assets
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31
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50
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Deferred rent
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(85
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)
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(599
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)
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Amortization of loan acquisition costs
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120
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99
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Other non cash loss/(gain)
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42
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(22
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)
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Change in assets and liabilities:
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Accounts receivable
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718
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931
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Inventories
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137
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286
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Prepaid expenses and other
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401
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(68
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)
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Accounts payable
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1,190
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(507
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)
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Accrued expenses
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(2,383
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)
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(4,353
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)
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Other
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(169
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)
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(401
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)
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|
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|
|
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Net cash used in operating activities
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(1,330
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)
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|
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(4,008
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)
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CASH FLOWS FROM INVESTING ACTIVITIES:
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|
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Purchase of property and equipment
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(2,254
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)
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(206
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)
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Proceeds from sale of property and equipment
|
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|
6
|
|
|
|
—
|
|
|
|
|
|
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|
|
|
|
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Net cash used in investing activities
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|
|
(2,248
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)
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|
|
(206
|
)
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|
|
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CASH FLOWS FROM FINANCING ACTIVITIES:
|
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|
|
|
|
|
|
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Proceeds from line of credit borrowings
|
|
|
3,510
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|
|
|
7,007
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|
|
Payments for line of credit borrowings
|
|
|
—
|
|
|
|
(3,437
|
)
|
|
Principal payments on long-term debt
|
|
|
(59
|
)
|
|
|
(43
|
)
|
|
Financing costs
|
|
|
(150
|
)
|
|
|
(50
|
)
|
|
Collection on notes receivable from shareholders
|
|
|
(10
|
)
|
|
|
61
|
|
|
Net proceeds from issuance of common stock
|
|
|
36
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
3,327
|
|
|
|
3,577
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
(251
|
)
|
|
|
(637
|
)
|
|
Cash at the beginning of period
|
|
|
1,070
|
|
|
|
1,567
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at the end of period
|
|
$
|
819
|
|
|
$
|
930
|
|
|
|
|
|
|
|
|
|
|
|
See notes to Condensed Consolidated Financial Statements.
6
BUCA, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION
BUCA, Inc. and subsidiaries (“BUCA,” “we,” “our,” or “us”) develop, own and operate Italian restaurants under
the name Buca di Beppo. At March 30, 2008, we owned 89 Buca di Beppo restaurants located in 25 states and the District of Columbia.
The accompanying
condensed consolidated financial statements have been prepared by us without audit and reflect all adjustments which are, in the opinion of management, necessary for a fair statement of financial position and the results of operations for the
interim periods. The statements have been prepared in accordance with accounting principles generally accepted in the United States of America (generally accepted accounting principles) and with the regulations of the Securities and Exchange
Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to rules and regulations relative
to interim financial statements. Operating results for the thirteen weeks ended March 30, 2008 are not necessarily indicative of the results that may be expected for the year ending December 28, 2008.
The balance sheet at December 30, 2007 has been derived from the audited financial statements at that date, but does not include all of the information and notes
required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended
December 30, 2007.
As described in Note 3,
Discontinued Operations and Assets Held for Sale
, we have reclassified Vinny T’s of
Boston and three Buca di Beppo closed restaurants’ financial results as discontinued operations for all periods presented. These notes to our Condensed Consolidated Financial Statements, except where otherwise indicated, relate to continuing
operations only.
2. STOCK-BASED COMPENSATION
We have
stock-based compensation plans under which we issue stock options, non-vested share awards (restricted stock) and discounted purchase rights. Our 2006 Omnibus Stock Plan (the 2006 Plan) allows our board of directors to grant options to purchase
shares of our stock to eligible employees for both incentive and non-statutory stock options. Options granted under the 2006 Plan vest as determined by the board of directors (generally five years) and are exercisable for a term not to exceed ten
years. The 2006 Plan was approved by our shareholders in June 2006, at which time we ceased granting any future awards under our prior stock option plans. A total of 2,100,000 shares are reserved under the 2006 Plan.
Our employee stock purchase plan (ESPP) permits eligible employees to purchase our stock at 85% of the fair market value on either the first or last day of the purchase
period.
It is our policy to issue new shares when options are exercised, upon granting restricted stock and to fulfill employee purchases through the
ESPP.
In the first quarter of fiscal 2008, our board of directors granted 575,000 stock appreciation units (“Units”) to certain officers of
the Company which grant the officers Units representing the right to receive in cash the difference, if any, between the fair market value of a share of our common stock when the Units vest (as described below) and the base price per share. On
December 20, 2007, we announced our intention to explore strategic alternatives to enhance the shareholder value of the Company, including the possible combination, sale or merger of us with another entity. Our board of directors approved the
grants of Units after determining that it would be in the best interests of the Company and its shareholders to adopt an incentive program intended to retain certain key executives throughout the process of identifying and implementing the desired
strategic alternative and to motivate these executives to maximize shareholder value in connection with any transaction resulting from this process. The Units vest and will be paid (if at all) three years from the date of grant or earlier upon the
occurrence of a Covered Transaction (as defined in the Stock Appreciation Unit Agreements and generally includes a merger, sale, dissolution or liquidation of us). The Units have a base price per share of $1.00.
We account for our share-based compensation plans under the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123(R),
Share-Based Payment,
using the modified prospective transition method. Under that transition method, compensation expense includes expense associated with the fair value of all awards granted on and after December 26, 2005 (the beginning
of our 2006 fiscal year), expense for the unvested portion of previously granted awards outstanding on December 26, 2005, and compensation for the discount eligible employees receive as part of the
7
ESPP. We recognize compensation expense for stock options and restricted stock awards on a straight-line basis over the requisite service period of the
award. We recognize compensation expense for stock appreciation units on a straight-line basis over the requisite service period of the award based on the fair value of each unit at the period end. Total share-based compensation included in general
and administrative expense in our Condensed Consolidated Statement of Operations was $0.2 million for the thirteen weeks ended March 30, 2008 and $0.3 million for the thirteen weeks ended April 1, 2007.
The following table summarizes the stock option transactions for the thirteen weeks ended March 30, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Weighted Average
Exercise Price
|
|
Price Range
|
|
Options
Available For
Future Grant
|
|
Aggregate
Intrinsic Value
|
|
Outstanding, December 30, 2007
|
|
2,136,716
|
|
$
|
6.06
|
|
$
|
2.07-16.63
|
|
1,513,078
|
|
|
|
|
Granted
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Exercised
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
$
|
—
|
|
Forfeited
|
|
91,700
|
|
|
5.36
|
|
|
3.42-12.94
|
|
|
|
|
|
|
Expired
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, March 30, 2008
|
|
2,045,016
|
|
$
|
6.09
|
|
$
|
2.07-16.63
|
|
1,254,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable, March 30, 2008
|
|
1,639,083
|
|
$
|
6.25
|
|
$
|
3.99-16.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information regarding options outstanding and exercisable at March 30, 2008 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
Exercisable
|
|
Range of Exercise
Prices
|
|
Number of
Shares
|
|
Weighted
Average
Remaining
Contractual Life
(Years)
|
|
Weighted
Average
Exercise Price
|
|
Aggregate
Intrinsic Value
|
|
Number of
Shares
|
|
Weighted
Average
Exercise Price
|
|
$2.07-5.00
|
|
526,000
|
|
6.75
|
|
$
|
4.40
|
|
$
|
—
|
|
476,900
|
|
$
|
4.42
|
|
5.01-8.00
|
|
1,316,432
|
|
6.43
|
|
|
5.89
|
|
|
—
|
|
959,599
|
|
|
5.97
|
|
8.01-12.00
|
|
136,184
|
|
2.29
|
|
|
11.05
|
|
|
—
|
|
136,184
|
|
|
11.05
|
|
12.01-16.63
|
|
66,400
|
|
2.79
|
|
|
13.48
|
|
|
—
|
|
66,400
|
|
|
13.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$2.07-16.63
|
|
2,045,016
|
|
6.12
|
|
$
|
6.09
|
|
$
|
—
|
|
1,639,083
|
|
$
|
6.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair value of each option is determined on the date of grant using the Black-Scholes option-pricing model and
the assumptions noted in the following table. Forfeiture estimates are based on historical company experience and qualitative judgments regarding the employee population.
|
|
|
|
|
|
|
|
|
Assumptions
|
|
2008
|
|
2007
|
|
|
Expected volatility (1)
|
|
N/A
|
|
|
50.4
|
%
|
|
Expected dividends
|
|
None
|
|
|
None
|
|
|
Risk-free interest rate (2)
|
|
N/A
|
|
|
4.7
|
%
|
|
Expected term (in years) (3)
|
|
N/A
|
|
|
6.0-7.5
|
|
|
Weighted average fair value per option
|
|
N/A
|
|
$
|
2.18
|
|
|
(1)
|
Expected stock price volatility is based on historical market price data.
|
|
(2)
|
Based on the U.S. Treasury interest rates whose term is consistent with the expected life of our stock options.
|
|
(3)
|
We estimate the expected term of stock options consistent with the simplified method identified in Staff Accounting Bulletin No. 107 which considers the average of the vesting
term and the contractual term to be the expected term. In December 2007, the SEC issued Staff Accounting Bulletin No. 110 which extends the use of the simplified method for “plain vanilla” awards in certain situations. We currently
use the simplified method to estimate the expected term for share option grants as we do not have enough historical experience to provide a reasonable estimate.
|
There were no net cash proceeds from the exercise of stock options for the thirteen weeks ended March 30, 2008 or April 1, 2007.
8
The fair value of restricted share awards is determined based on the closing market price of our stock on the date of
grant. The following table summarizes the restricted share transactions for the thirteen weeks ended March 30, 2008:
|
|
|
|
|
|
|
|
Restricted Share Awards
|
|
Shares
|
|
Weighted-
Average Grant-
Date Fair Value
|
|
Outstanding, December 30, 2007
|
|
575,408
|
|
$
|
4.96
|
|
Granted
|
|
357,000
|
|
|
0.86
|
|
Vested
|
|
—
|
|
|
—
|
|
Forfeited
|
|
49,364
|
|
|
5.89
|
|
|
|
|
|
|
|
|
Outstanding, March 30, 2008
|
|
883,044
|
|
$
|
3.28
|
|
|
|
|
|
|
|
As of March 30, 2008, there was approximately $1.9 million of total unrecognized compensation cost related to
share-based compensation arrangements granted under all equity compensation plans. Total unrecognized compensation expense will be adjusted for future changes in estimated forfeitures. We expect to recognize that cost over a weighted-average period
of 2.3 years.
3. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
In 2005, our board of directors approved the engagement of an investment banker to represent us in the planned sale of the Vinny T’s of Boston restaurants. Also in 2005, we closed three Buca di Beppo restaurants.
The Vinny T’s of Boston brand and associated assets and the three individual restaurants, as aggregated, meet the definition of a “component of an entity”. Operations and cash flows can be clearly distinguished and measured at the
restaurant level and, when aggregated with the Vinny T’s of Boston events noted above, the financial results of the three closed restaurants were determined to be material to our Consolidated Financial Statements. At December 25, 2005,
Vinny T’s of Boston was accounted for as an “asset held for sale” and, along with the three closed restaurants, was included in discontinued operations in the Consolidated Statements of Operations and assets held for sale in the
Consolidated Balance Sheets in accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets.
We completed the
sale of the Vinny T’s of Boston restaurants to Bertucci’s Corporation on September 25, 2006 (first day of our fiscal fourth quarter). Based on the sale proceeds, less anticipated costs to sell, we analyzed the carrying values of the
Vinny T’s of Boston long-lived assets and intangibles and recorded an impairment in accordance with SFAS No. 144 of approximately $0.4 million as of September 24, 2006. The sale price was $6.8 million; of which $3.0 million was paid
in cash at the closing ($2.6 million net of banker fees and other expenses) and $3.8 million was paid through a promissory note issued at closing. The sale resulted in a $0.3 million gain that was recorded as of December 31, 2006.
The promissory note was set to mature on June 15, 2008 or earlier upon the occurrence of certain other events, including a change in control of Bertucci’s
or the repayment or refinancing of Bertucci’s outstanding senior notes. Bertucci’s prepaid the note on July 17, 2007; as a result, we received $3.9 million in full payment of the note.
There were no assets or liabilities classified as discontinued operations as of December 30, 2007 or March 30, 2008.
We closed three Buca di Beppo restaurants in November 2005. We reached agreement with the landlords of two of the restaurants to terminate the leases and have reached an
agreement to sublease one of the properties. The fair value of these liabilities were estimated in accordance with the requirements of SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities.
This required us to
either negotiate a settlement with the landlord or estimate the present value of the future minimum lease obligations offset by the estimated sublease rentals that could be reasonably obtained for the properties.
Discontinued operations’ financial results for the thirteen weeks ended March 30, 2008 and April 1, 2007 consisted of (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
|
|
|
March 30,
2008
|
|
April 1,
2007
|
|
|
Restaurant costs
|
|
$
|
—
|
|
$
|
30
|
|
|
Other
|
|
|
—
|
|
|
142
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from discontinued operations
|
|
$
|
—
|
|
$
|
(172
|
)
|
|
|
|
|
|
|
|
|
|
9
4. LOSS ON IMPAIRMENT OF LONG-LIVED ASSETS
We review our long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset or group of assets may not be recoverable, but at least quarterly. We consider a
history of consistent and significant operating losses to be a primary indicator of potential asset impairment. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows, primarily the individual
restaurants. A restaurant is deemed to be impaired if a forecast of its future operating cash flows directly related to the restaurant is less than its carrying amount. If a restaurant is determined to be impaired, the loss is measured as the amount
by which the carrying amount of the restaurant exceeds its fair value. Fair value is an estimate based on the best information available including prices for similar assets or the results of valuation techniques such as discounted estimated future
cash flows, as if the decision to continue to use the impaired restaurant was a new investment decision. If these assumptions change in the future, we may be required to take additional impairment charges for the related assets. Considerable
management judgment is necessary to estimate undiscounted future cash flows. Accordingly, actual results could vary significantly from such estimates.
We
recorded approximately $31,000 of losses during the thirteen weeks ended March 30, 2008 and approximately $50,000 of losses during the thirteen weeks ended April 1, 2007 related to the purchase of property and equipment in restaurants that
previously have been fully impaired due to amounts not being recoverable by future cash flows of the restaurant.
5. NET LOSS FROM CONTINUING OPERATIONS
PER SHARE
Net loss from continuing operations per share is computed in accordance with SFAS No. 128,
Earnings per Share
. Basic loss per
share is computed by dividing net loss by the weighted average number of common shares outstanding. The following table sets forth the calculation of basic and diluted net loss from continuing operations per common share (in thousands, except share
and per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
|
|
|
March 30,
2008
|
|
|
April 1,
2007
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
Net loss from continuing operations
|
|
$
|
(4,199
|
)
|
|
$
|
(2,623
|
)
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding – basic
|
|
|
20,533,247
|
|
|
|
20,410,184
|
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding – diluted
|
|
|
20,533,247
|
|
|
|
20,410,184
|
|
|
Net loss from continuing operations per common share
|
|
$
|
(0.20
|
)
|
|
$
|
(0.13
|
)
|
Diluted loss from continuing operations per common share excludes 2.0 million stock options at a weighted
average price of $6.09 in the thirteen weeks ended March 30, 2008 and 1.2 million stock options at a weighted average price of $7.36 in the thirteen weeks ended April 1, 2007 due to their anti-dilutive effect.
6. RECENT ACCOUNTING PRONOUNCEMENTS
Effective December 31,
2007, The Company adopted SFAS No. 157,
Fair Value Measurements
. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value
measurements. The adoption of SFAS No. 157 did not have a material impact on the Company’s financial condition or results of operations.
10
SFAS No. 157 defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or
most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS No. 157 also describes three levels of inputs that may be used to measure fair value:
|
|
•
|
|
Level 1 – quoted prices in active markets for identical assets and liabilities.
|
|
|
•
|
|
Level 2 – observable inputs other than quoted prices in active markets for identical assets and liabilities.
|
|
|
•
|
|
Level 3 – unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions.
|
The Company’s cash and cash equivalents are valued using quoted prices.
In February 2008, the Financial Accounting Standards Board (FASB) issued FSP FAS 157-2, Effective Date of FASB Statement No. 157 (“FSP FAS 157-2”). FSP
157-2 delays the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The Company will
adopt FAS 157 for non-financial assets and non-financial liabilities on January 1, 2009, and do not anticipate this adoption will have a material impact on the financial statements.
In February 2007, the FASB issued SFAS No. 159,
The Fair Value Option for Financial Assets and Financial Liabilities
, which permits entities to choose to measure many financial assets and financial
liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company adopted
SFAS 159 on December 31, 2007. The Company did not elect the fair value of accounting option for any of its eligible assets or liabilities; therefore, the adoption of this statement did not have an effect on our financial statements.
In December 2007, the FASB issued SFAS No. 141(R)
Business Combinations
, which establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets acquired, including goodwill, the liabilities assumed and any non-controlling interest in the acquiree. SFAS 141(R) also establishes disclosure requirements to enable the
evaluation of the nature and financial effects of the business combination. SFAS 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after
December 15, 2008. The impact of adopting SFAS 141(R) will be dependent on the future business combinations that we may pursue after its effective date.
In December 2007, the FASB issued SFAS No. 160
Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51,
which changes the accounting and reporting for minority interests. These minority
interests will be characterized as noncontrolling interests and classified as a component of an entity. SFAS No. 160 is effective for fiscal years beginning after December 15, 2007. The adoption of this statement did not have an effect on
our financial statements.
In December 2007, the SEC issued Staff Accounting Bulletin No. 110 (SAB 110). SAB 110 amends and replaces Question 6
of Section D.2 of Topic 14,
Share-Based Payment
. SAB 110 expresses the views of the staff regarding the use of the “simplified” method in developing an estimate of expected term of “plain vanilla” share options in
accordance with FASB Statement No. 123(R),
Share Based Payment.
The use of the “simplified” method was scheduled to expire on December 31, 2007. SAB 110 extends the use of the “simplified” method for “plain
vanilla” awards in certain situations. We currently use the “simplified” method to estimate the expected term for share option grants as we do not have enough historical experience to provide a reasonable estimate. We will continue to
use the “simplified” method until we have enough historical experience to provide a reasonable estimate of expected term in accordance with SAB 110. SAB 110 is effective for options granted after December 31, 2007.
7. SUPPLEMENTAL CASH FLOW INFORMATION
The following is supplemental
cash flow information for the thirteen weeks ended March 30, 2008 and April 1, 2007 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
March 30,
2008
|
|
April 1,
2007
|
|
|
Cash paid during period for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
464
|
|
$
|
463
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Shareholder receivable from issuance of stock
|
|
|
—
|
|
|
(50
|
)
|
|
Shareholder receivable reduction due to retirement of stock
|
|
$
|
66
|
|
$
|
53
|
|
11
8. COMMITMENTS AND CONTINGENCIES
Litigation
– Three virtually identical civil actions were commenced against our company and three former officers in the United States District Court for the District of Minnesota between August 7,
2005 and September 7, 2005. The three actions have been consolidated. The four lead plaintiffs filed and served a Consolidated Amended Complaint (the “Complaint”) on January 11, 2006. The Complaint was brought on behalf of a
class consisting of all persons who purchased our common stock in the market during the time period from February 6, 2001 through March 11, 2005 (the “class period”). We filed a motion to dismiss the Complaint, which was granted
on October 16, 2006. On December 18, 2006, the lead plaintiffs filed a Second Amended Consolidated Complaint (“Second Complaint”). The Second Complaint alleged that in press releases and SEC filings issued during the class
period, defendants made materially false and misleading statements about our company’s income, revenues, and internal controls, which allegedly had the result of artificially inflating the market price for our stock. The lead plaintiffs
asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and sought compensatory damages in an unspecified amount, plus an award of attorneys’ fees and costs of litigation. We filed a motion to dismiss the Second
Complaint, which was granted on August 30, 2007. Judgment was entered against the plaintiffs. Plaintiffs filed an appeal to the United States Court of Appeals for the Eighth Circuit. As of March 20, 2008, the parties entered into a
Stipulation of Settlement to settle the securities litigation on a class wide basis for the total amount of $1.6 million. The $1.6 million will be paid by National Union Fire Insurance Company of Pittsburgh, PA, our director’s and
officer’s liability insurance carrier. The settlement is contingent upon approval by the Court, after giving notice to class members. The process of getting the settlement approved, and a final judgment entered dismissing the
securities litigation with prejudice, likely will take until fall 2008. If the settlement is not approved and a final judgment is not entered, then we will continue to defend this action. Such continued defense may be costly and disruptive and we
are not able to predict the ultimate outcome. Federal securities litigation can result in substantial costs and divert our management’s attention and resources, which may have a material adverse effect on our business and results of operations,
including cash flows.
In January 2008, one of our former hourly employees filed a purported class action suit against us in the Los Angeles County
Superior Court, State of California, where it is currently pending. The complaint alleges causes of action for failure to pay wages/overtime, failure to provide meal breaks, failure to provide accurate wage statements, failure to ensure that
paychecks can be cashed without discount, failure to pay wages at termination, negligent misrepresentation, and unfair business practices. On April 23, 2008, we agreed to settle the matter for a cash payment by us of $650,000 to be paid upon
the earliest to occur of (1) March 31, 2009, (2) 30 days following a sale, merger or other business combination of us with another company or (3) us filing a petition for bankruptcy. The settlement received preliminary approval
from the court on May 7, 2008. If the settlement does not receive final approval and a final judgment is not entered, then we will continue to defend this action. Such continued defense may be costly and disruptive and we are not able to
predict the ultimate outcome. Lawsuits such as this can result in substantial costs and divert our management’s attention and resources, which may have a material adverse effect on our business and results of operations, including cash flows.
We are subject to certain other legal actions arising in the normal course of business, none of which is expected to have a material adverse effect on our
results of operations, financial condition or cash flows.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Overview
At March 30, 2008, we owned and operated 89 Buca di Beppo restaurants. These full service restaurants
offer high quality, Italian cuisine served family-style in small and large family-sized portions in a fun and energetic atmosphere that parodies the decor and ambiance of post-War Italian/American restaurants.
12
During fiscal 2007, we closed three restaurants and did not open any new restaurants. During the first thirteen weeks in
fiscal 2008, we closed one restaurant and did not open any new restaurants. We are currently focused on the development and implementation of appropriate strategies to improve our operations and improve our comparable restaurant sales and margins.
We do not expect to open any new restaurants in fiscal 2008. We intend to explore the option of franchising and selling development rights to our restaurants in certain select markets in the future.
In December 2007, we announced that our board of directors had decided to explore strategic alternatives to enhance shareholder value, including but not limited to, the
raising of capital, a recapitalization, and the combination, sale or merger of us with another entity. In May 2008, we announced that the primary strategic alternative being pursued is a sale of the Company. We are in the midst of the process now
and we do not intend to provide updates while the process is on-going. This process can be lengthy and has inherent costs. There can be no assurance that the exploration of strategic alternatives will result in any specific action or transaction or
the terms or timing of any such action or transaction.
In April 2008, we entered into an agreement for the sale and simultaneous leaseback of our one
remaining owned restaurant location. The net proceeds of the transaction will be used to repay a portion of our revolving credit facility. The sale agreement contains conditions to closing that must still be fulfilled. There can be no assurance that
the sale-leaseback transaction will close on a timely basis, if at all.
Our capital requirements have been significant. We need capital from our current
credit facility to finance our on-going operations. Given the current economic environment, our recent results of operation and our current financial condition, we have taken a number of steps to ensure that we have cash sufficient to fund our
on-going operations including various efforts to increase restaurant sales, managing working capital to conserve available cash, pursuing the sale-leaseback and amendments and waivers to our credit facility to try to assure availability. The
adequacy of available funds and our future capital requirements will depend on many factors, including our restaurant sales and the costs associated with our operations, our ability to satisfy the covenants contained in our credit facility, the
continued willingness of our lender to waive any defaults on such covenants and the willingness of our lender to make additional proceeds from the sale-leaseback available to us.
In January 2008, we announced a reduction in workforce eliminating a number of the positions at our Minneapolis headquarters. This reduction is expected to save approximately $2.1 million annually in general and
administrative expenses going forward, after an initial charge of approximately $0.8 million taken in the first quarter of fiscal 2008 related to severance and other expenses related to the reduction in force.
In 2005, our board of directors approved the engagement of an investment banker to represent us in the planned sale of the Vinny T’s of Boston restaurants. Vinny
T’s of Boston was accounted for as “assets held for sale” as of December 25, 2005 and has been included in discontinued operations in accordance with Statement of Financial Standards (SFAS) No. 144,
Accounting for the
Impairment or Disposal of Long-Lived Assets.
Financial results related to the three Buca di Beppo restaurants we closed in 2005 have also been classified as discontinued operations in our Condensed Consolidated Financial Statements. See Note 3
to our Condensed Consolidated Financial Statements for more information on assets held for sale and discontinued operations. Except where otherwise indicated, the following discussion relates to continuing operations only.
During fiscal 2007, we implemented a price increase of approximately 2.0% on select food items during each of the first, second and fourth quarters. During the first
thirteen weeks of fiscal 2008, we also implemented a price increase of 3.0% on food items. The primary reason we increase our food prices is to offset rising operational costs, particularly in product, labor and occupancy expenses.
During fiscal 2007, we continued to increase the number of restaurants that are open for lunch. As of the end of fiscal 2007, 84% of our restaurants were open for lunch.
In the thirteen weeks ended March 30, 2008, we added the lunch menu to an additional four restaurants, bringing the total percentage of restaurants open for lunch to 89%. We also began to offer catering services late in the third quarter of
fiscal 2007. At the end of fiscal 2007, we offered catering in 13 of our restaurants. We expanded this initiative in the first quarter of fiscal 2008 with the addition of 21 restaurants offering catering, bringing the total number of catering
restaurants to 34.
13
Results of Operations
Our operating results for the thirteen weeks ended March 30, 2008 and April 1, 2007 expressed as a percentage of restaurant sales were as follows:
|
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|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
|
|
|
March 30,
2008
|
|
|
April 1,
2007
|
|
|
Restaurant sales (in thousands)
|
|
$
|
60,105
|
|
|
$
|
62,811
|
|
|
Restaurant costs:
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|
|
|
|
|
|
|
|
Product
|
|
|
25.4
|
%
|
|
|
24.5
|
%
|
|
Labor
|
|
|
34.0
|
%
|
|
|
34.8
|
%
|
|
Direct and occupancy
|
|
|
31.8
|
%
|
|
|
30.3
|
%
|
|
Depreciation and amortization
|
|
|
4.5
|
%
|
|
|
4.7
|
%
|
|
Loss on disposal of assets
|
|
|
0.0
|
%
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total restaurant costs
|
|
|
95.7
|
%
|
|
|
94.5
|
%
|
|
General and administrative expenses
|
|
|
10.2
|
%
|
|
|
8.9
|
%
|
|
Loss on impairment and sale of long-lived assets
|
|
|
0.1
|
%
|
|
|
0.1
|
%
|
|
Lease termination charges
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(6.0
|
)%
|
|
|
(3.5
|
)%
|
|
Interest income
|
|
|
0.0
|
%
|
|
|
0.2
|
%
|
|
Interest expense
|
|
|
1.0
|
%
|
|
|
0.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(7.0
|
)%
|
|
|
(4.2
|
)%
|
|
Income taxes
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from continuing operations
|
|
|
(7.0
|
)%
|
|
|
(4.2
|
)%
|
|
Net loss income from discontinued operations
|
|
|
0.0
|
%
|
|
|
(0.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(7.0
|
)%
|
|
|
(4.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended March 30, 2008 Compared to the Thirteen Weeks Ended April 1, 2007
Restaurant Sales
. Our restaurant sales are primarily comprised of food and beverage sales. Restaurant sales decreased by approximately $2.7 million,
or 4.3%, to $60.1 million in the first quarter of fiscal 2008 from $62.8 million in the first quarter of fiscal 2007. The decrease in restaurant sales was primarily due to the closure of four restaurants since the beginning of fiscal 2007 and the
decline in comparable restaurant sales for the thirteen weeks ended March 30, 2008. The decline in comparable restaurant sales was partially offset by the addition of the New Year’s Eve and Easter holidays to the first quarter of fiscal
2008 as compared to the same period of the prior year.
Our calculation of comparable restaurant sales includes restaurants open for 18 full months and
results compared on a 52-week comparable basis. For the first quarter of fiscal 2008, comparable restaurant sales decreased 2.5% at our restaurants. The decrease in comparable restaurant sales was primarily driven by reduced guest counts as compared
to the same period in the prior year. We expect that our comparable restaurant sales will be negative for the second quarter of fiscal 2008.
Product
. Product costs decreased by approximately $0.2 million, or approximately 0.9%, to $15.2 million in the first quarter of fiscal 2008 from $15.4 million in the first quarter of fiscal 2007. Product costs as a percentage of
sales increased to 25.4% in the first quarter of fiscal 2008 from 24.5% in the first quarter of fiscal 2007. The decrease in product costs in dollars was primarily due to reductions in sales and the closure of four restaurants. The corresponding
increase in product costs as a percentage of sales was primarily driven by the elimination of our Paisano Conference in first quarter 2008. The Paisano Conference is our annual strategic and celebratory meeting of our Paisano Partners, Divisional
Vice Presidents and company executives. Because a portion of our Paisano Conference is typically sponsored by selected vendors, vendor sponsorship payments are accounted for as a reduction in product cost. The cancellation of the conference in the
first quarter of fiscal 2008 has a corresponding negative impact on product costs as a percentage of sales. We expect that product costs as a percentage of sales will be slightly higher in the second quarter of fiscal 2008 as compared to the second
quarter of fiscal 2007.
Labor
. Labor costs include direct hourly labor and management wages, bonuses, taxes and benefits for restaurant employees.
Labor costs decreased by approximately $1.5 million, or 6.6%, to $20.4 million in the first quarter of fiscal 2008 from $21.9 million in the first quarter of fiscal 2007. The decrease in labor cost dollars was primarily related to the closure of
four restaurants. Labor cost as a percentage of sales decreased to 34.0% in the first quarter of fiscal 2008 from 34.8% in the first quarter of fiscal 2007. The decrease in labor costs as a percentage of sales was primarily related to a decrease in
medical claims in the first quarter of fiscal 2008 as compared to the first quarter of fiscal 2007 and reductions in non-exempt staffing resulting from our labor management initiative, partially offset by increases in restaurant-level management
staffing. We expect that labor costs as a percentage of sales will decrease in the second quarter of fiscal 2008 as compared to the second quarter of fiscal 2007.
14
Direct and Occupancy
. Direct and occupancy expenses include supplies, marketing, rent, utilities,
real estate taxes, repairs and maintenance, workers compensation, general liability insurance expense, rental expenses and other related restaurant costs. Direct and occupancy expenses increased by approximately $0.1 million, or 0.5%, to $19.1
million in the first quarter of fiscal 2008 from $19.0 million in the first quarter of fiscal 2007. Direct and occupancy costs as a percentage of sales increased to 31.8% in the first quarter of fiscal 2008 from 30.3% in the same period in fiscal
2007. The increase in direct and occupancy expenses in dollars was primarily driven by an increase in supply expense required for the expansion of catering and investments in food cost saving initiatives and increased repair and maintenance
expenses. The increase was also caused by increases in utilities costs and a decrease in gift card breakage income, partially offset by a reduction in credit card fees and the cancellation of the Paisano Conference. We expect that direct and
occupancy expenses as a percentage of sales will increase slightly in the second quarter of fiscal 2008 as compared to the second quarter of fiscal 2007.
Depreciation and Amortization
. Depreciation and amortization includes depreciation on property and equipment for our restaurants and the Paisano Support Center. Depreciation and amortization decreased by approximately $0.3 million,
or 9.0%, to $2.7 million for the first quarter of fiscal 2008 from $3.0 million during the first quarter of fiscal 2007. Depreciation and amortization decreased as a percentage of sales to 4.5% in the first quarter of fiscal 2008 from 4.7% in the
first quarter of fiscal 2007. The decreases in dollars and as a percentage of sales were primarily due to the impairment of three restaurants in fiscal 2007 and reduced depreciation expense as our assets become more fully depreciated. We expect
depreciation and amortization to decrease slightly as a percentage of sales in the second quarter of fiscal 2008 as compared to the second quarter of fiscal 2007.
General and Administrative
. General and administrative expenses include management and staff salaries, employee benefits, travel, information systems, guest services, training, and market research expenses associated with the Paisano
Support Center. General and administrative expenses increased by approximately $0.6 million, or 10.4%, to $6.2 million in the first quarter of fiscal 2008. General and administrative expenses as a percentage of sales increased to 10.2% in the first
quarter of fiscal 2008 from 8.9% in the first quarter of fiscal 2007. The increase in general and administrative expenses in dollars and as a percentage of sales was primarily due to an accrual of $0.7 million for a legal settlement and $0.8 million
of severance expense, partially offset by the decline in payroll expense due to the reduction in force implemented in January 2008. We expect general and administrative expenses to decrease as a percentage of sales in the second quarter of fiscal
2008 as compared to the same quarter of fiscal 2007.
Interest Expense
. Interest expense includes the financing costs of our credit facility and
capital leases. Interest expense remained relatively flat at $0.6 million in the first quarter of fiscal 2008, compared to the first quarter of fiscal 2007. Interest expense on our credit facility was approximately $0.2 million while interest
expense on our capital leases was approximately $0.3 million in the first quarter of 2008.
Income Taxes.
We did not record a benefit from or
provision for income taxes in the first quarter of fiscal 2008 or 2007. We recorded a tax valuation allowance because we concluded that we remained in a position that may not allow for realization of our deferred tax assets. We will continue to
record a tax valuation allowance until it becomes more likely than not that we will be able to recover the value of our deferred tax assets.
Net
Loss.
The first quarter of fiscal 2008 resulted in a net loss of $4.2 million compared to net loss of $2.8 million during the same period in fiscal 2007. As a percentage of sales, net loss for the first quarter of fiscal 2008 was 7.0% compared
to a net loss of 4.4% of sales in the first quarter of fiscal 2007. The increase in absolute dollars and as a percentage of sales was primarily a result of decreased sales.
Liquidity and Capital Resources
Liquidity
.
Our primary source of liquidity is cash
provided by operations, supplemented by borrowings under our credit facility. We incurred net losses of $16.2 million in fiscal 2007 and $4.2 in the first quarter of fiscal 2008 and used $2.5 million in cash for operating activities during
fiscal 2007 and $1.3 million in cash for operating activities in the first quarter of fiscal 2008. In addition, our $1.1 million cash balance at the end of fiscal 2007 has decreased to $0.8 million as of the end of the first quarter of
fiscal 2008.
In April 2008, we entered into an agreement for the sale and simultaneous leaseback of our one remaining owned restaurant location. The net
proceeds of the transaction will be used to repay a portion of our revolving credit facility. The sale agreement contains conditions to closing that must still be fulfilled. There can be no assurance that the sale-leaseback transaction will close on
a timely basis, if at all. Under the terms of the agreement, the sale price of the property is approximately $3.2 million.
15
Our capital requirements have been significant. We reduced our development plans beginning in fiscal 2005 while we
implemented strategies designed to improve our comparable restaurant sales and our cash flow from operations. We need capital from our current credit facility to finance our on-going operations. Given the current economic environment, our recent
results of operations and our current financial condition, we have taken a number of steps to ensure that we have cash sufficient to fund our on-going operations including various efforts to increase restaurant sales, managing working capital to
conserve available cash, pursuing the sale-leaseback and amendments and waivers to our credit facility to try to assure availability. In addition, we have incurred and may incur additional significant costs related to capital expenditures, on-going
litigation and related matters. We believe that the available proceeds from the sale-leaseback, together with prudent cash management of working capital and other measures, will be sufficient to fund our capital requirements through the remainder of
fiscal 2008. The adequacy of available funds and our future capital requirements will depend on many factors, including our restaurant sales and the costs associated with our operations, our ability to satisfy the covenants contained in our credit
facility, the continued willingness of our lender to waive any defaults on such covenants and the willingness of our lender to make additional proceeds from the sale-leaseback available to us. If these expected funds and other actions are not
realized or are insufficient to fund future operations, we will need to explore other steps to meet our cash needs, including raising additional capital through public or private equity or debt financing. The sale of additional equity or debt
securities could result in additional dilution to our shareholders. We cannot predict whether additional capital will be available on favorable terms, if at all. In addition, our funding requirements and sources could be significantly affected if we
enter into a sale transaction in connection with our exploration of strategic alternatives. However, there is no assurance that our exploration of strategic alternatives will result in a sale transaction, nor the terms or timing of such a
transaction, if completed.
Cash Flow Analysis
. The following table presents a summary of our cash flow for the thirteen weeks ended
March 30, 2008 and April 1, 2007 (in thousands):
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|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
|
|
|
March 30,
2008
|
|
|
April 1,
2007
|
|
|
Net cash used in operating activities
|
|
$
|
(1,330
|
)
|
|
$
|
(4,008
|
)
|
|
Net cash used in investing activities
|
|
|
(2,248
|
)
|
|
|
(206
|
)
|
|
Net cash provided by financing activities
|
|
|
3,327
|
|
|
|
3,577
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
$
|
(251
|
)
|
|
$
|
(637
|
)
|
|
|
|
|
|
|
|
|
|
|
Operating Activities.
The decrease of $2.7 million in the use of cash in operating activities is primarily
related to the absence of management bonus payments in the first quarter of fiscal 2008 as compared to the management bonus paid in the first quarter of fiscal 2007 and settlement payments in the first quarter of fiscal 2007 related to the previous
California wage and hour class action lawsuit. These benefits in working capital are offset in part by decreased sales volume in the first quarter of fiscal 2008 compared to the first quarter of fiscal 2007. The fiscal 2008 activity did not include
any operating cash uses related to discontinued operations.
Investing Activities
. The increase of $2.0 million in the use of cash in investing
activities is primarily related to capital expenditures for the renovation of our San Francisco restaurant of approximately $1.2 million, which was accrued for in fiscal 2007, but not paid until the first quarter of 2008. In addition to this
expenditure, we also purchased catering vehicles for an additional 21 stores in conjunction with the expansion of our catering service. The fiscal 2008 activity did not include any investing cash uses relating to discontinued operations.
Financing Activities
. Financing activities during the first quarters of each of fiscal 2008 and 2007 primarily included borrowing and repayments under our
credit facility.
Credit Facility
. In 2004, we entered into a credit agreement with Wells Fargo Foothill, Inc. and Ableco Finance LLC, as lenders,
and with Wells Fargo Foothill, Inc., as the arranger and administrative agent for the lenders. The credit agreement expires on November 15, 2009. We are also required under the credit agreement to pay certain of our lenders an annual fee, an
unused line of credit fee and a prepayment fee in the event of early termination of the agreement.
The credit agreement includes various affirmative and
negative covenants, including certain financial covenants such as minimum EBITDA as defined in the agreement, minimum fixed charge coverage ratio and maximum limits on capital
16
expenditures and the acquisition or construction of new restaurants in any fiscal year. Payments under the credit agreement may be accelerated upon the
occurrence of an event of default, as defined in the credit agreement, that is not otherwise waived or cured.
On September 25, 2006, we completed the
sale of Vinny T’s of Boston restaurants to Bertucci’s at a sale price of $6.8 million; of which $3.0 million was paid in cash at the closing and $3.8 million was paid through a promissory note issued at closing. The net proceeds from the
sale of Vinny T’s of Boston were used to prepay, in its entirety, the outstanding term loan A facility with Wells Fargo Foothill and pay down a portion of our outstanding indebtedness under the Wells Fargo Foothill revolving credit facility.
The promissory note was set to mature on June 15, 2008 or earlier upon the occurrence of certain other events, including a change in control of Bertucci’s or the repayment or refinancing of Bertucci’s outstanding senior notes.
Bertucci’s prepaid the note on July 17, 2007; as a result, we received $3.9 million in full payment of the note which was applied against our outstanding borrowings under the revolving credit facility.
On March 8, 2007, we executed an amendment to our credit agreement with Wells Fargo Foothill. Pursuant to the amendment, the lenders agreed to expand our maximum
revolver amount to $25 million and agreed to amend the credit agreement in certain other respects. In exchange for the amendment, we paid our lender a fee of $50,000. As of April 1, 2007, July 1, 2007 and September 30, 2007, we
were in default of the financial covenant regarding minimum EBITDA. As of December 30, 2007, we were in default of the financial covenants regarding minimum EBITDA and fixed charge coverage. As of March 30, 2008, we were in default of the
financial covenant regarding fixed charge coverage. As a result, we negotiated and received waivers in each of May 2007, August 2007, November 2007, March 2008 and May 2008. In exchange for the waivers, we paid our lender a waiver fee
of $25,000 in May 2007, $50,000 in August 2007, $75,000 in November 2007 and $150,000 in March 2008.
The interest rate on our revolving credit facility is
Wells Fargo’s reference rate plus a margin. The specific margin corresponds to a range (0.5 to 2.0 percentage points) as determined by our leverage ratio. We also have the option of utilizing a London Interbank Offered Rate (LIBOR) plus a
specific margin as determined by our leverage ratio. Our interest rate on the revolving credit facility was 7.25% on March 30, 2008 and 9.25% on December 30, 2007. Under the credit facility, our annual capital expenditures are limited to
$13.0 million and the agreement includes covenants that place restrictions on sales of properties, transactions with affiliates, creation of additional debt, limitations on our ability to sign leases for new restaurants, maintenance of certain
financial covenants and other customary covenants.
Amounts borrowed under the credit facility are secured by substantially all of our tangible and
intangible assets. Availability under the credit facility is based on a multiple of our adjusted earnings before income tax, depreciation and amortization (as defined in our credit agreement) for the trailing twelve months less outstanding letters
of credit, the “sale-leaseback reserve” and current borrowings under our revolving credit facility. The sale-leaseback reserve is defined as a reserve in an amount equal to the greater of (1) $1.5 million and (2) 50% of the net cash
proceeds received by us from the sale-leaseback transaction described above. The reserve may be released or reinstated in whole or in part from time to time by our lender in its sole and absolute discretion. While we can make no assurances, we
believe that the net proceeds from the sale-leaseback transaction will be available to us for future borrowing under our credit facility. As of May 9, 2008, we had outstanding borrowings of approximately $3.6 million under our revolving credit
facility and our availability under the revolving credit facility was approximately $1.4 million.
Off-Balance Sheet Arrangements
We do not have off-balance sheet arrangements.
17
Application of Critical Accounting Policies and Estimates
Critical accounting policies are those we believe are both most important to the portrayal of our financial condition and operating results, and require our most
difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in materially
different amounts being reported under different conditions or using different assumptions. Our critical accounting policies include: property and equipment, leases, impairment of long-lived assets, self-insurance, income taxes, estimated liability
for closing restaurants, loss contingencies and share-based compensation. A more in-depth description of all other policies can be found in our Annual Report on Form 10-K for the fiscal year ended December 30, 2007.
Recent Accounting Pronouncements
See Note 6 to our Condensed
Consolidated Financial Statements for discussion on new accounting standards.
Inflation
The primary inflationary factors affecting our operations are food and labor costs. A large number of our restaurant personnel are paid at rates based on the applicable
minimum wage, and increases in the minimum wage directly affect our labor costs. To date, inflation has not had a material impact on our operating results.
Disclosure Regarding Forward-Looking Statements
This Form 10-Q for the thirteen weeks ended March 30, 2008 contains forward-looking
statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on the beliefs of our management as well as on assumptions made by and information
currently available to us at the time the statements were made. When used in this Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate
to us, are intended to identify the forward-looking statements. Although we believe that these statements are reasonable, you should be aware that actual results could differ materially from those projected by the forward-looking statements. Because
actual results may differ, readers are cautioned not to place undue reliance on forward-looking statements.
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•
|
|
Our comparable restaurant sales percentage and average weekly sales could fluctuate as a result of the success of our menu initiatives, “to go” efforts,
catering services, lunch initiatives, general economic conditions, consumer confidence in the economy, changes in consumer preferences, competitive factors, weather conditions, or changes in our historical sales pattern.
|
|
•
|
|
Product costs could be adversely affected by increased distribution prices or financing terms by DMA, our principal food supplier, or a failure to perform by DMA,
as well as the availability of food and supplies from other sources, changes in our menu items, adverse weather conditions, governmental regulation, inflation and general economic conditions.
|
|
•
|
|
Labor costs could increase due to increases in the minimum wage as well as competition for qualified employees and the need to pay higher wages to attract a
sufficient number of employees.
|
|
•
|
|
Direct and occupancy costs could be adversely affected by an inability to negotiate favorable lease terms, an inability to negotiate favorable lease termination
terms, increasing supply costs or usage, marketing expenses, property taxes, common area maintenance expenses, utility costs or usage, repairs and maintenance expenses, or general economic conditions.
|
|
•
|
|
General and administrative expenses could increase due to competition for qualified employees, the need to pay higher wages to attract sufficient employees, legal
and accounting costs, Sarbanes-Oxley compliance costs as well as general economic conditions.
|
|
•
|
|
Interest expense could be adversely affected by our need for additional borrowings on our credit facilities, additional amendment fees under our credit facility,
and an increase in interest rates.
|
|
•
|
|
Our ability to generate cash from operating activities could be adversely affected by increases in expenses as well as decreases in our average check and guest
counts.
|
18
|
•
|
|
The covenants and restrictions under our current line of credit and term loan facility could have a significant impact on us based upon our ability to meet and
maintain the covenants, our capital requirements, our financial performance, our business plan and general economic conditions.
|
|
•
|
|
The borrowing availability under our current credit facility could be higher or lower due to increases or decreases in our financial performance, ability to
maintain debt covenants, and other debt-related issues.
|
|
•
|
|
Our capital requirements could be higher or lower due to increases or decreases in the amount of new restaurants we build or acquire, if any, and general economic
conditions.
|
|
•
|
|
Additional factors that could cause actual results to differ include: an adverse outcome of pending legal proceedings; risks associated with restaurants not
generating sufficient cash flows to support the carrying value of the restaurants’ assets; risks of incurring additional lease termination expenses; risks associated with terrorism; risks associated with actual or alleged food-borne illness;
risks associated with future growth; inability to achieve and manage planned expansion; fluctuations in operating results; the need for additional capital; risks associated with discretionary consumer spending; inability to compete with larger, more
established competitors; potential labor shortages; our dependence on governmental licenses; weather and natural disasters; and legal actions arising in the normal course of business, including complaints or litigation from guests.
|
Our restaurants feature Italian cuisine served both in individual and family-style portions. Our continued success depends, in part,
upon the popularity of this type of Italian cuisine and this style of informal dining. Shifts in consumer preferences away from our cuisine or dining style could materially adversely affect our future profitability. Also, our success depends to a
significant extent on numerous factors affecting discretionary consumer spending, including economic conditions, disposable consumer income and consumer confidence. Adverse changes in these factors could reduce guest traffic or impose practical
limits on pricing, either of which could materially adversely affect our business, financial condition, operating results or cash flows.
Certain of these
risk factors are more fully discussed in our Annual Report on Form 10-K for the period ended December 30, 2007. We caution you, however, that the list of factors above may not be exhaustive and that those or other factors, many of which are
outside of our control, could have a material adverse effect on us and our results of operations. All forward-looking statements attributable to persons acting on our behalf or us are expressly qualified in their entirety by the cautionary
statements set forth here. We assume no obligation to publicly release the results of any revision or updates to these forward-looking statements to reflect future events or unanticipated occurrences.
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
We are
exposed to market risk from changes in interest rates on borrowings under our credit agreement. The credit agreement provides for a revolving credit facility in an aggregate amount equal to the lesser of a borrowing base determined in accordance
with the terms of the credit agreement and $25.0 million (including a letter of credit sub-facility of up to an aggregate of $5.5 million). The interest rate on the revolving credit facility is Wells Fargo’s reference rate plus a margin. The
specific margin corresponds to a range (0.5 to 2.0 percentage points) as determined by our leverage ratio. We also have the option of utilizing a LIBOR rate plus a specific margin as determined by our leverage ratio. As of May 9, 2008, we had
approximately $3.6 million outstanding in debt borrowings under our credit facility. Thus, a 1% change in interest rates would cause annual interest expense to increase by $36,000.
We have no derivative financial instruments or derivative commodity instruments.
Many of the food products purchased by us
are affected by commodity pricing and are, therefore, subject to price volatility caused by weather, production problems, delivery difficulties and other factors that are outside our control. To control this risk in part, we have fixed price
purchase commitments for food and supplies from vendors who supply our national food distributor. In addition, we believe that substantially all of our food and supplies are available from several sources, which helps to control food commodity
risks. We believe we have the ability to increase menu prices, or vary the menu items offered, if needed, in response to a food product price increase. To compensate for a hypothetical price increase of 10% for food and beverages, we would need to
increase menu prices by an average of 2.5%. During fiscal 2007, we implemented price increases of approximately 2.0% on select food items during each of the first, second and fourth quarters. In fiscal 2006, we implemented a price increase of
approximately 3%. Accordingly, we believe that a hypothetical 10% increase in food product costs would not have a material effect on our operating results.
19
|
Item 4.
|
Controls and Procedures
|
Conclusions Regarding the Effectiveness
of Disclosure Controls and Procedures
As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with
the participation of our principal executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the “Exchange Act”)).
Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is
accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosures.
Changes in Internal Control Over Financial Reporting
There have been
no changes to our internal control over financial reporting during the first quarter of fiscal 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
|
Item 1.
|
Legal Proceedings
|
Litigation
– Three virtually
identical civil actions were commenced against our company and three former officers in the United States District Court for the District of Minnesota between August 7, 2005 and September 7, 2005. The three actions have been consolidated.
The four lead plaintiffs filed and served a Consolidated Amended Complaint (the “Complaint”) on January 11, 2006. The Complaint was brought on behalf of a class consisting of all persons who purchased our common stock in the market
during the time period from February 6, 2001 through March 11, 2005 (the “class period”). We filed a motion to dismiss the Complaint, which was granted on October 16, 2006. On December 18, 2006, the lead plaintiffs
filed a Second Amended Consolidated Complaint (“Second Complaint”). The Second Complaint alleged that in press releases and SEC filings issued during the class period, defendants made materially false and misleading statements about our
company’s income, revenues, and internal controls, which allegedly had the result of artificially inflating the market price for our stock. The lead plaintiffs asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of
1934, and sought compensatory damages in an unspecified amount, plus an award of attorneys’ fees and costs of litigation. We filed a motion to dismiss the Second Complaint, which was granted on August 30, 2007. Judgment was entered against
the plaintiffs. Plaintiffs filed an appeal to the United States Court of Appeals for the Eighth Circuit. As of March 20, 2008, the parties entered into a Stipulation of Settlement to settle the securities litigation on a classwide basis for the
total amount of $1.6 million. The $1.6 million will be paid by National Union Fire Insurance Company of Pittsburgh, PA, our director’s and officer’s liability insurance carrier. The settlement is contingent upon approval by the
Court, after giving notice to class members. The process of getting the settlement approved, and a final judgment entered dismissing the securities litigation with prejudice, likely will take until fall 2008. If the settlement is not approved
and a final judgment is not entered, then we will continue to defend this action. Such continued defense may be costly and disruptive and we are not able to predict the ultimate outcome. Federal securities litigation can result in substantial costs
and divert our management’s attention and resources, which may have a material adverse effect on our business and results of operations, including cash flows.
In January 2008, one of our former hourly employees filed a purported class action suit against us in the Los Angeles County Superior Court, State of California, where it is currently pending. The complaint alleges causes of action for
failure to pay wages/overtime, failure to provide meal breaks, failure to provide accurate wage statements, failure to ensure that paychecks can be cashed without discount, failure to pay wages at termination, negligent misrepresentation, and unfair
business practices. On April 23, 2008, we agreed to settle the matter for a cash payment by us of $650,000 to be paid upon the earliest to occur of (1) March 31, 2009, (2) 30 days following a sale, merger or other business
combination of us with another company or (3) us filing a petition for bankruptcy. The settlement received preliminary approval from the court on May 7, 2008. If the settlement does not receive final approval and a final judgment is not
entered, then we will continue to defend this action. Such continued defense may be costly and disruptive and we are not able to predict the ultimate outcome. Lawsuits such as this can result in substantial costs and divert our management’s
attention and resources, which may have a material adverse effect on our business and results of operations, including cash flows.
From time to time, we
are involved in various legal actions arising in the ordinary course of business. In the opinion of our management, the ultimate dispositions of these current matters will not have a material adverse effect on our consolidated financial statements.
20
Not applicable due to our status as a “Smaller
Reporting Company.”
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Historically, our Paisano Partner program has required our Paisano Partners to purchase either $10,000 or $20,000 of our common stock at fair market value. We also added a Chef Partner program in 2006 allowing chefs who wish to become Chef
Partners to purchase $5,000 of our common stock at fair market value. We suspended these programs in late 2007. Under the programs, we provided the Paisano and Chef Partners the option to finance the purchase of the common stock with a full recourse
loan payable over five years at a fixed interest rate of 8%. We have the option, but not the obligation, to repurchase all of the shares purchased and paid for by a Partner under the program at the purchase price of the shares paid by the Partner
either (1) upon the initial bankruptcy proceedings by or against the Partner within five years after the purchase date of the equity interest or (2) if the Partner’s employment with us is terminated for any reason within five years
after the purchase date of the equity interest. The following table represents the repurchase of Paisano Partner and Chef Partner equity shares issued in accordance with this program during the first quarter of fiscal 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
(a) Total Number
of Shares (or
Units) Purchased
|
|
(b)
Average Price Paid
per Share (or Unit)
|
|
(c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or
Programs
|
|
(d) Maximum Number (or
Approximate Dollar Value) of
Shares (or Units) that May Yet
Be
Purchased Under the Plans
or Programs)*
|
|
Four-week period ended January 27, 2008
|
|
—
|
|
$
|
—
|
|
—
|
|
$
|
1,484,727
|
|
Four-week period ended February 24, 2008
|
|
9,335
|
|
|
5.61
|
|
—
|
|
|
1,394,736
|
|
Five-week period ended March 30, 2008
|
|
2,393
|
|
|
5.57
|
|
—
|
|
|
1,324,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
11,728
|
|
$
|
5.60
|
|
—
|
|
|
|
|
*
|
The dollar figure indicates the total amount of shares that we have the option, but not the obligation, to purchase under the program.
|
|
Item 3.
|
Defaults upon Senior Securities
|
None.
|
Item 4.
|
Submission of Matters to a Vote of Security Holders
|
None
|
Item 5.
|
Other Information
|
None.
Exhibits
|
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
Method of Filing
|
|
3.1
|
|
Amended and Restated Articles of Incorporation of the Registrant (1)
|
|
Incorporated By Reference
|
|
|
|
|
|
3.2
|
|
Amended and Restated Bylaws of the Registrant (2)
|
|
Incorporated By Reference
|
|
|
|
|
|
3.3
|
|
Articles of Amendment of Amended and Restated Articles of Incorporation of the Registrant (3)
|
|
Incorporated By Reference
|
|
|
|
|
|
4.1
|
|
Specimen of Common Stock Certificate (4)
|
|
Incorporated By Reference
|
|
|
|
|
|
10.1
|
|
Consent, dated as of April 28, 2008, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are signatories thereto, and Wells Fargo Foothill,
Inc., as the Arranger and the Administrative Agent
|
|
Filed Electronically
|
|
|
|
|
|
10.2
|
|
Amendment Number Thirteen to Credit Agreement and Waiver, dated as of May 13, 2008, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are
signatories thereto, and Wells Fargo Foothill, Inc., as the Arranger and the Administrative Agent
|
|
Filed Electronically
|
21
|
|
|
|
|
|
|
10.3
|
|
Contract of Sale Buca di Beppo Summerlin, by and between BUCA Restaurants 2, Inc. and Barton Creek Capital, LLC.
|
|
Filed Electronically
|
|
|
|
|
|
31.1
|
|
Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed Electronically
|
|
|
|
|
|
31.2
|
|
Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed Electronically
|
|
|
|
|
|
32.1
|
|
Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Filed Electronically
|
|
(1)
|
Incorporated by reference to Exhibit 3.4 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-72593), filed with the
Commission on March 24, 1999.
|
|
(2)
|
Incorporated by reference to Exhibit 3.5 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-72593), filed with the
Commission on March 24, 1999.
|
|
(3)
|
Incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-3 (Registration No. 113737), filed with the Commission on March 19,
2004.
|
|
(4)
|
Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-72593), filed with the
Commission on March 24, 1999.
|
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
|
|
|
BUCA, Inc.
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date: May 14, 2008
|
|
by:
|
|
/s/ John T. Bettin
|
|
|
|
|
|
John T. Bettin
|
|
|
|
|
|
Chief Executive Officer and President
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
by:
|
|
/s/ Dennis J. Goetz
|
|
|
|
|
|
Dennis J. Goetz
|
|
|
|
|
|
Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
|
23
EXHIBIT INDEX
|
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
Method of Filing
|
|
3.1
|
|
Amended and Restated Articles of Incorporation of the Registrant (1)
|
|
Incorporated By Reference
|
|
|
|
|
|
3.2
|
|
Amended and Restated Bylaws of the Registrant (2)
|
|
Incorporated By Reference
|
|
|
|
|
|
3.3
|
|
Articles of Amendment of Amended and Restated Articles of Incorporation of the Registrant (3)
|
|
Incorporated By Reference
|
|
|
|
|
|
4.1
|
|
Specimen of Common Stock Certificate (4)
|
|
Incorporated By Reference
|
|
|
|
|
|
10.1
|
|
Consent, dated as of April 28, 2008, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are signatories thereto, and Wells Fargo Foothill,
Inc., as the Arranger and the Administrative Agent
|
|
Filed Electronically
|
|
|
|
|
|
10.2
|
|
Amendment Number Thirteen to Credit Agreement and Waiver, dated as of May 13, 2008, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are
signatories thereto, and Wells Fargo Foothill, Inc., as the Arranger and the Administrative Agent
|
|
Filed Electronically
|
|
|
|
|
|
10.3
|
|
Contract of Sale Buca di Beppo Summerlin, by and between BUCA Restaurants 2, Inc. and Barton Creek Capital, LLC.
|
|
Filed Electronically
|
|
|
|
|
|
31.1
|
|
Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed Electronically
|
|
|
|
|
|
31.2
|
|
Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed Electronically
|
|
|
|
|
|
32.1
|
|
Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Filed Electronically
|
|
(1)
|
Incorporated by reference to Exhibit 3.4 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-72593), filed with the
Commission on March 24, 1999.
|
|
(2)
|
Incorporated by reference to Exhibit 3.5 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-72593), filed with the
Commission on March 24, 1999.
|
|
(3)
|
Incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-3 (Registration No. 113737), filed with the Commission on March 19,
2004.
|
|
(4)
|
Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-72593), filed with the
Commission on March 24, 1999.
|
24
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