x |
Quarterly
report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
|
o |
Transition
report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from
________ to _________.
|
Florida
No.
|
59-2597349
|
State
of Incorporation
|
Employer
Identification
No.
|
Large
Accelerated Filer
Accelerated
Filer
Non-accelerated
Filer
|
o
o
x
|
Title
of each class
|
Number
of shares
outstanding
|
|
Common
Stock $.01 par value
|
|
3,910,264
As
of November 15,
2006
|
(Unaudited)
|
Quarters
Ended
|
Nine
Months Ended
|
|||||||||||
|
Sept
27,
2006
|
Sept
28,
2005
|
Sept
27,
2006
|
Sept
28,
2005
|
|||||||||
Revenues:
|
|||||||||||||
Rental
revenue
|
$
|
157,500
|
$
|
46,800
|
$
|
571,700
|
$
|
112,300
|
|||||
Total
revenues
|
157,500
|
46,800
|
571,700
|
112,300
|
|||||||||
Cost
and expenses:
|
|||||||||||||
Depreciation
and amortization
|
70,800
|
61,900
|
218,500
|
145,100
|
|||||||||
General
and administrative expenses
|
446,600
|
310,000
|
1,169,600
|
769,000
|
|||||||||
Provision
for loss on note receivable and bad debt expense
|
3,107,900
|
—
|
3,103,200
|
—
|
|||||||||
Loss
on disposition of equipment
|
8,400
|
—
|
26,300
|
—
|
|||||||||
Total
costs and expenses
|
3,633,700
|
371,900
|
4,517,500
|
914,100
|
|||||||||
Loss
from operations
|
(3,476,000
|
)
|
(325,100
|
)
|
(3,945,800
|
)
|
(801,800
|
)
|
|||||
|
|||||||||||||
Investment
gain (loss)
|
137,800
|
56,000
|
25,200
|
58,100
|
|||||||||
Net
interest and other income
|
73,700
|
225,900
|
525,500
|
275,500
|
|||||||||
Interest
expense
|
(143,900
|
)
|
(34,900
|
)
|
(343,000
|
)
|
(104,500
|
)
|
|||||
Loss
from continuing operations before income taxes
|
(3,408,400
|
)
|
(78,100
|
)
|
(3,738,100
|
)
|
(572,700
|
)
|
|||||
Benefit
for income taxes
|
1,031,000
|
29,400
|
1,143,500
|
215,700
|
|||||||||
Loss
from continuing operations
|
(2,377,400
|
)
|
(48,700
|
)
|
(2,594,600
|
)
|
(357,000
|
)
|
|||||
Discontinued
operations:
|
|||||||||||||
|
|||||||||||||
Income
from (loss) discontinued operations,
net of income tax
|
—
|
(151,500
|
) |
—
|
132,300
|
||||||||
Income
(loss) on sale of discontinued
operations, net of income
tax
|
—
|
7,567,700
|
|
(116,600
|
)
|
10,393,300
|
|||||||
Net
income (loss)
|
(2,377,400
|
)
|
7,416,200
|
(2,711,200
|
)
|
10,168,600
|
|||||||
Undeclared
cumulative preferred stock
dividend
|
(19,100
|
)
|
(19,100
|
)
|
(57,300
|
)
|
(57,400
|
)
|
|||||
Gain (loss) from discontinued operations | — | 7,416,200 | (116,600 | ) | 10,525,600 | ||||||||
Net
income (loss) available (attributable)
to common shareholders
|
$
|
(2,396,500
|
)
|
$
|
7,348,400
|
$
|
(2,768,500
|
)
|
$
|
10,111,200
|
|||
Basic
income (loss) per share:
|
|||||||||||||
Continuing
operations
|
(0.61
|
)
|
$
|
(0.01
|
)
|
$
|
(0.68
|
)
|
$
|
(0.09
|
)
|
||
Discontinued
operations
|
(0.00
|
)
|
1.90
|
(0.03
|
)
|
2.71
|
|||||||
Net
Income (loss)
|
$
|
(0.61
|
)
|
$
|
1.89
|
$
|
(0.71
|
)
|
$
|
2.62
|
|||
Basic
weighted average common shares
outstanding
|
3,906,800
|
3,889,000
|
3,906,800
|
3,884,300
|
|||||||||
Diluted income (loss) per share: | |||||||||||||
Continuing
operations
|
(0.61 | ) |
$
|
(0.01 | ) |
$
|
(0.68 | ) |
$
|
(0.08 | ) | ||
Discontinued
operations
|
(0.00 | ) | 1.69 | (0.03 | ) | 2.52 | |||||||
Net income (loss) |
$
|
(0.61 | ) | $ | 1.68 |
$
|
(0.69 | ) | $ | 2.44 | |||
Diluted
weighted average common shares
outstanding
|
3,906,800 | 4,379,900 | 3,906,800 | 4,172,800 |
September
27,
2006
(Unaudited)
|
December
28,
2005
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
1,064,700
|
$
|
3,044,700
|
|||
Restricted
cash - short-term
|
928,000
|
3,212,200
|
|||||
Receivables,
net
|
143,900
|
117,400
|
|||||
Inventories
|
—
|
300
|
|||||
Prepaid
and other current assets
|
46,400
|
52,600
|
|||||
Assets
held for sale
|
2,641,100
|
1,146,100
|
|||||
Total
current assets
|
4,824,100
|
7,573,300
|
|||||
Restricted
cash
|
400,000
|
400,000
|
|||||
Investments,
trading
|
903,200
|
318,500
|
|||||
Certificate
of deposit
|
369,500
|
369,500
|
|||||
Note
receivable, net
|
573,200
|
3,738,300
|
|||||
Property
and equipment:
|
|||||||
Land
|
4,800,300
|
5,209,400
|
|||||
Buildings
and improvements
|
5,558,100
|
6,769,700
|
|||||
Equipment
|
1,589,300
|
3,025,700
|
|||||
|
11,947,700
|
15,004,800
|
|||||
Accumulated
depreciation
|
(2,801,400
|
)
|
(4,801,400
|
||||
Net
property and equipment
|
9,146,300
|
10,203,400
|
|||||
Deferred
tax asset, net
|
2,978,000
|
1,766,700
|
|||||
Other
assets, principally deferred charges, net of accumulated
amortization
|
552,000
|
357,100
|
|||||
|
$
|
19,746,300
|
$
|
24,726,800
|
|||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
104,000
|
$
|
10,000
|
|||
Securities
sold, not yet purchased
|
928,000
|
3,212,200
|
|||||
Accrued
liabilities
|
230,900
|
281,500
|
|||||
Current
portion of workers compensation benefit liability
|
400,000
|
400,000
|
|||||
Current
portion of long-term debt
|
78,100
|
136,900
|
|||||
Liabilities
associated with assets held for sale
|
2,545,600
|
1,057,100
|
|||||
Total
current liabilities
|
4,286,600
|
5,097,700
|
|||||
Deferred
rent
|
275,000
|
329,700
|
|||||
Deposit
liability
|
89,500
|
29,300
|
|||||
Workers
compensation benefit liability
|
256,900
|
773,600
|
|||||
Long-term
debt
|
2,570,600
|
3,466,400
|
|||||
Deferred
tax liability
|
2,978,000
|
2,978,000
|
|||||
Total
liabilities
|
10,456,600
|
12,674,700
|
|||||
Shareholders'
equity:
|
|||||||
Preferred
stock of $.01 par; authorized 10,000,000 shares; outstanding 36,000
shares
at September 27, 2006 and December 28, 2005 (liquidation value
$900,000)
|
400
|
400
|
|||||
Common
stock of $.01 par;authorized 8,000,000 shares; outstanding 3,906,801
shares at September 27, 2006 and December 28, 2005
|
39,000
|
39,000
|
|||||
Additional
paid-in capital
|
10,932,600
|
10,932,300
|
|||||
Retained
earnings (deficit)
|
(1,682,300
|
)
|
1,086,200
|
||||
Accumulated
other comprehensive income
|
—
|
(6,100
|
)
|
||||
Total
shareholders' equity
|
9,289,700
|
12,052,100
|
|||||
|
$
|
19,746,300
|
$
|
24,726,800
|
(Unaudited)
|
Nine
Months
Ended
|
||||||
|
September
27,
|
September
28,
|
|||||
|
2006
|
2005
|
|||||
Operating
activities:
|
|||||||
Net
income (loss)
|
$
|
(2,711,200
|
)
|
$
|
10,168,600
|
||
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
|||||||
Depreciation
and amortization
|
165,800
|
1,053,700
|
|||||
Net
gains on investments
|
(19,200
|
)
|
(58,100
|
)
|
|||
Loss
on disposition of equipment
|
(6,400
|
)
|
(3,800
|
)
|
|||
Loss
on disposition of property held for sale
|
116,600
|
—
|
|||||
Amortization
of loan fees
|
52,800
|
48,600
|
|||||
Amortization
of deferred gain
|
(54,700
|
)
|
(40,300
|
)
|
|||
Amortization
of deferred rent
|
17,100 |
—
|
|||||
Amortization
of below market leases
|
(24,000 | ) |
—
|
||||
Loss
from closing restaurants
|
(26,300 | ) |
—
|
||||
Note
receivable discount
|
—
|
299,100
|
|||||
Amortization
of note receivable discount
|
(56,100
|
)
|
(18,700
|
)
|
|||
Provision
for loss on note receivable and bad debt expense
|
3,103,200
|
—
|
|||||
Decrease
(increase) in:
|
|||||||
Receivables
|
(26,500
|
)
|
(74,600
|
)
|
|||
Deferred
tax assets
|
(1,143,500
|
)
|
—
|
||||
Inventories
|
300
|
232,200
|
|||||
|
— | (400,000 | ) | ||||
Note
receivable
|
— | (4,000,000 | ) | ||||
Prepaids
and other current assets
|
6,200
|
394,200
|
|||||
Investments
|
(523,200
|
)
|
—
|
||||
Other
assets
|
(284,900
|
)
|
(2,500
|
)
|
|||
Increase
(decrease) in:
|
|||||||
Accounts
payable
|
94,000
|
(1,026,700
|
)
|
||||
Securities
sold, not yet purchased
|
(2,340,400
|
)
|
—
|
||||
Accrued
liabilities
|
(50,600
|
)
|
(1,335,400
|
)
|
|||
Deferred
gain
|
—
|
66,000
|
|||||
Deferred
rent
|
—
|
(79,200
|
)
|
||||
Deposit
liability
|
60,200
|
24,000
|
|||||
Liabilities
associated with assets held for
sale
|
(17,400
|
)
|
—
|
||||
Workers
compensation benefit liability
|
(516,700
|
)
|
(290,100
|
)
|
Deferred
income tax liability
|
—
|
1,199,200
|
Net
cash provided by (used in) operating activities
|
(4,123,800
|
)
|
6,156,200
|
||||
Investing
activities:
|
|||||||
Net
purchases of investments
|
—
|
(129,500
|
)
|
||||
Restricted
cash
|
2,284,200
|
—
|
|||||
Proceeds
from securities sold, not yet purchased
|
—
|
2,753,200
|
|||||
Capital
expenditures
|
—
|
(2,352,400
|
)
|
||||
Principal
receipts on note receivable
|
187,000
|
—
|
|||||
Proceeds
from sale of property held for sale
|
750,000
|
16,876,300
|
|||||
Proceeds
from sale of property and equipment
|
—
|
1,326,200
|
|||||
Net
cash provided by investing activities
|
3,183,500
|
18,473,800
|
|||||
Financing
activities:
|
|||||||
Proceeds
from sale-leaseback
|
(18,900
|
)
|
2,600,000
|
||||
Payments
on long-term debt
|
(954,600
|
)
|
(13,859,800
|
)
|
|||
Payment
of sale-leaseback costs
|
—
|
(160,000
|
)
|
||||
Preferred
stock dividend
|
(57,300
|
)
|
(57,400
|
)
|
|||
Payment
on capital lease
|
(8,900
|
)
|
(29,200
|
)
|
|||
Stock
options exercised
|
—
|
29,300
|
|||||
Net
cash used in financing activities
|
(1,039,700
|
)
|
(11,477,100
|
)
|
|||
Net
increase (decrease) in cash and cash equivalents
|
(1,980,000
|
)
|
13,152,900
|
||||
Cash
and cash equivalents - beginning of period
|
3,044,700
|
151,100
|
|||||
Cash
and cash equivalents - end of period
|
$
|
1,064,700
|
$
|
13,304,000
|
|||
Building
acquired under capital lease
|
$
|
—
|
$
|
1,475,000
|
|||
Supplemental
disclosures of cash flow information:
|
|||||||
Cash
paid during the nine months for interest
|
$
|
205,500
|
$
|
1,022,200
|
Proceeds
from sale
|
$
|
29,950,000
|
||
Transaction
expenses:
|
||||
Legal
fees
|
294,400
|
|||
Investment
banker fees
|
21,200
|
|||
Other
divestment related costs
|
141,600
|
|||
Total
transaction expenses
|
457,200
|
|||
Net
proceeds
|
29,492,800
|
|||
Net
assets sold
|
(17,465,400
|
)
|
||
|
||||
Unamortized
discount on note receivable (See Note 5)
|
(299,100
|
)
|
||
Gain
on sale before income tax
|
11,728,300
|
|||
Estimated
income tax (*)
|
(1,335,000
|
)
|
||
Gain
on sale after income tax
|
$
|
10,393,300
|
|
Quarter
Ended
|
Nine
Months Ended
|
Nine
Months Ended
|
|||||||
|
September
28, 2005
|
September
28, 2005
|
September
27, 2006
|
|||||||
Revenues
|
$
|
400
|
$
|
19,161,800
|
— | |||||
Costs
and expenses
|
(252,100 | ) | (18,186,600 | ) | — | |||||
Interest
and other income
|
48,000 | 99,200 | — | |||||||
Interest
expense
|
(39,400 | ) | (862,200 | ) | — | |||||
Income
(loss) before income taxes
|
(243,100 | ) | 212,200 | — | ||||||
Income
tax benefit (expense)
|
91,600 | (79,900 | ) | — | ||||||
Income
(loss) from discontinued operations, net of income
taxes
|
$
|
(151,500
|
)
|
$
|
132,300
|
$ | — | |||
Gain
on sale of discontinued operations, net of income
taxes
|
||||||||||
Gain
(loss) before income taxes
|
11,949,700 | 11,728,300 | (186,500 | ) | ||||||
Income
taxes:
|
||||||||||
Transaction
taxes
|
(4,387,500 | ) | (4,304,400 | ) | — | |||||
Change
in deferred tax valuation allowance
|
5,500 | 2,969,400 | 69,900 | |||||||
Income
from discontinued operations
|
$
|
7,416,200
|
$
|
10,525,600
|
$ | (116,600 | ) |
|
September
27,
2006
|
December
28,
2005
|
|||||
(Uaudited)
|
|||||||
Assets
|
|
||||||
Current
assets
|
$
|
—
|
$
|
19,000
|
|||
Property
and equipment, net
|
2,641,100
|
1,127,100
|
|||||
Total
assets held for sale
|
$
|
2,641,100
|
$
|
1,146,100
|
|||
Liabilities
|
|||||||
Current
liabilities
|
$
|
1,300
|
$
|
20,300
|
|||
Deferred
rent
|
87,000
|
87,000
|
|||||
Obligations
under capital lease
|
2,535,600
|
949,800
|
|||||
Total
liabilities associated with
assets held for sale
|
$
|
2,545,600
|
$
|
1,057,100
|
|
September
27,
2006
|
|||
Deferred
tax assets:
|
||||
Net
operating loss
|
$
|
2,711,200
|
||
Federal
and state tax credits
|
694,200
|
|||
Accruals
not currently deductible
|
548,300
|
|||
Excess
of book over tax depreciation
|
214,700
|
|||
|
4,168,400
|
|||
Valuation
allowance
|
(1,190,400
|
)
|
||
Total
deferred tax assets
|
2,978,000
|
|||
Deferred
tax liabilities:
|
||||
Unrealized
gain (loss)on investment
|
2,978,000
|
|||
Net
deferred tax liability
|
$
|
2,978,000
|
|
Quarter
Ended
|
Nine
Months
Ended
|
|||||||||||
|
Sept
27,
2006
|
Sept
28,
2005
|
Sept
27, 2006 |
Sept
28,
2005
|
|||||||||
EPS
from continuing operations - basic:
|
|||||||||||||
Loss
from continuing operations
|
$
|
(2,377,400
|
)
|
$
|
(48,700
|
)
|
$ | (2,711,100 | ) | $ | (357,000 | ) | |
Less:
preferred stock dividends
|
(19,100
|
)
|
(19,100
|
)
|
(57,300
|
)
|
(57,400
|
)
|
|||||
Loss
from continuing operations for
basic EPS computation
|
$
|
(2,396,500
|
)
|
$
|
(67,800
|
)
|
$ | (2,768,400 | ) | $ | (414,400 | ) | |
Weighted
average shares outstanding for basic EPS computation
|
3,906,800
|
3,889,000
|
3,906,800
|
3,884,300
|
|||||||||
Earnings
(loss) per common share from Continuing operations -
basic
|
$
|
(0.61
|
)
|
$
|
(0.01
|
)
|
$
|
(0.64
|
)
|
$
|
(0.11
|
)
|
|
EPS
from continuing operations - diluted:
|
|||||||||||||
Loss
from continuing operations
|
$
|
(2,377,400
|
)
|
$
|
(48,700
|
)
|
$
|
(2,711,100
|
)
|
$ | (357,000 | ) | |
Less:
preferred stock dividends
|
(19,100
|
)
|
(19,100
|
)
|
(57,300
|
)
|
(57,400
|
)
|
|||||
Loss
from continuing operations for diluted EPS
computation
|
(2,396,500
|
)
|
(67,800
|
)
|
(2,768,400
|
)
|
(414,400
|
)
|
|||||
Weighted
average shares outstanding for diluted EPS
computation
|
3,906,800
|
4,379,900
|
3,906,800
|
4,172,800
|
|||||||||
Earnings
(loss) per common shares from continuing operations -
diluted
|
(0.61
|
)
|
(0.02
|
)
|
(0.64
|
)
|
(0.10
|
)
|
|
Quarter
Ended
September
28, 2005
|
Nine
Months Ended
September
28, 2005
|
|||||
Net
income (loss), as reported
|
$
|
7,367,500
|
$
|
10,168,600
|
|||
Add:
Stock based compensation expense included
in net income, net
of tax
|
—
|
—
|
|||||
Deduct:
Total stock-based compensation
expense determined
under fair value, net
of tax
|
—
|
—
|
|||||
Pro
forma net income (loss)
|
7,367,500
|
10,168,600
|
|||||
Undeclared
cumulative preferred stock
dividend
|
(19,100
|
)
|
(57,400
|
)
|
|||
Earnings
(loss) per share
|
|||||||
Basic
as reported
|
$
|
1.89
|
$
|
2.62
|
|||
Basic
pro forma
|
$
|
1.89
|
$
|
2.62
|
|||
Diluted
as reported
|
$
|
1.68
|
$
|
2.44
|
|||
Diluted
pro forma
|
$
|
1.68
|
$
|
2.44
|
Number
of Options
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Life
|
||||||||
Outstanding
at December 28, 2005
|
32,500
|
$
|
2.08
|
$
|
2.68
|
|||||
Granted
|
—
|
—
|
—
|
|||||||
Forfeited
|
7,500
|
2.33
|
2.30
|
|||||||
Exercised
|
—
|
—
|
—
|
|||||||
Outstanding
at September 27, 2006
|
25,000
|
2.00
|
3.80
|
|||||||
Options
exercisable at September 27, 2006
|
25,000
|
2.00
|
3.80
|
Year
Granted
|
Exercise
Price
|
Options
Outstanding
|
Options
Exercisable
|
Weighted
Average Remaining Life (in years)
|
1999
|
2.00
|
25,000
|
25,000
|
3.80
|
PART II. |
OTHER
INFORMATION
|
|
Item 1. |
Legal Proceedings
Banner
has filed for bankruptcy protection under Chapter 11. The Company is
vigorously defending its
position with regards to the bankruptcy
filing.
|
In connection with the sale to Banner, a broker has demanded a commission payment of $3.5 million. The Company filed suit against the broker on July 11, 2005 in Duval County Circuit Court in an effort to expedite a resolution of the claim. The Company agreed to place $400,000 in escrow in connection with the claim. In addition, in August 2005, the Company was sued in Miami-Dade County Circuit Court by another broker who claims that a commission of $749,000 is payable to him as a result of the sale to Banner. The Company is vigorously defending both of these claims. Due to the fact that management cannot predict the outcome or the possible payments awarded under these legal proceedings, no charge to earnings has been made in the quarterly financial statements. |
Item 1A |
Risk
Factors
No
material changes.
|
Item 2. |
Unregistered
Sales of Equity Securities and Use of Proceeds
None.
|
Item 3. |
Defaults
upon Senior Securities
None.
|
Item 4. |
Submission
of Matters to a Vote of Security Holders
None.
|
Item 5. |
Other
Information
None.
|
Item 6. |
Exhibits
(a) The following exhibits are filed as part
of the
report on Form 10-Q.
|
No. | Exhibit |
3.01 |
Articles
of Incorporation of Family Steak Houses of Florida,
Inc. (Exhibit 3.01 to the Company’s Registration
Statement on Form S-1, Registration No. 33-1887,
is incorporated herein by
reference.)
|
3.02 |
Bylaws
of Family Steak Houses of Florida, Inc. (Exhibit 3.02
to the Company’s Registration Statement on Form 2-1,
Registration No. 33-1887, is incorporated herein by reference.)
|
3.03 |
Articles
of Amendment to the Articles of Incorporation of
Family Steak Houses of Florida, Inc. (Exhibit 3.03 to the
Company’s Registration Statement on Form S-1, Registration
No. 33-1887, is incorporated herein by reference.)
|
3.04 |
Articles
of Amendment to the Articles of Incorporation of
Family Steak Houses of Florida, Inc. (Exhibit 3.04 to the
Company’s Registration Statement on Form S-1, Registration
No. 33-1887, is incorporated herein by reference.)
|
3.05 |
Amended
and Restated Bylaws of Family Steak Houses of Florida,
Inc. (Exhibit 4 to the Company’s Form 8-A, filed
with the Commission on March 19, 1997, is incorporated
herein by reference.)
|
3.06 |
Articles
of Amendment to the Articles of Incorporation of
Family Steak Houses of Florida, Inc. (Exhibit 3 to the
Company’s Form 8-A filed with the Commission on March
19, 1997, is incorporated herein by
reference.)
|
3.07 |
Articles
of Amendment to the Articles of Incorporation of Family Steak Houses
of
Florida, Inc. (Exhibit 3.08 to the Company’s Annual Report on Form 10-K
filed with the Commission on March 31, 1998, is incorporated herein
by
reference.)
|
3.08 |
Amendment
to Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 3.08 to
the
Company’s Annual Report on Form 10-K filed with the Commission on March
15, 2000 is incorporated herein by
reference.)
|
3.09 |
Articles
of Amendment to the Articles of Incorporation of Family Steak Houses
of
Florida, Inc. (Exhibit 3.09 to the Company’s Annual Report on Form 10-K
filed with the Commission on March 29, 2004 is incorporated herein
by
reference.)
|
3.10 |
Articles
of Amendment to the Articles of Incorporation of
Family Steak Houses of Florida, Inc., changing the name of the corporation
to EACO Corporation. (Exhibit 3.10 to the Company’s Quarterly Report on
Form 10-Q filed with the Commission on September 3, 2004, is incorporated
herein by reference.)
|
31.01 |
Chief
Executive Officer Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
32.01 |
Chief
Executive Officer Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
EACO
CORPORATION
(Registrant)
|
||
|
|
|
Date: November 20, 2006 | By: | /s/ Glen Ceiley |
Glen
Ceiley
Chief
Executive Officer
(Principal
Executive Officer & Principal
Financial Officer)
|
||