Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Mar. 28, 2020 | Jun. 26, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | FLANIGANS ENTERPRISES INC | |
Entity Central Index Key | 0000012040 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 28, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --10-03 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 1,858,647 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Interactive Data Current | Yes | |
Entity Current Reporting Status | Yes | |
Entity Incorporation State Country Code | FL | |
Entity File Number | 1-6836 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 28, 2020 | Mar. 30, 2019 | Mar. 28, 2020 | Mar. 30, 2019 | |
REVENUES: | ||||
Restaurant food sales | $ 18,213 | $ 18,219 | $ 36,955 | $ 35,047 |
Restaurant bar sales | 5,315 | 5,745 | 11,206 | 11,068 |
Package store sales | 6,027 | 5,092 | 11,734 | 10,227 |
Franchise related revenues | 307 | 429 | 667 | 796 |
Rental income | 209 | 192 | 403 | 390 |
Other operating income | 57 | 59 | 104 | 102 |
Total | 30,128 | 29,736 | 61,069 | 57,630 |
Cost of merchandise sold: | ||||
Restaurant and lounges | 7,900 | 8,318 | 16,324 | 16,042 |
Package goods | 4,326 | 3,719 | 8,465 | 7,487 |
Payroll and related costs | 9,152 | 9,067 | 18,669 | 17,665 |
Occupancy costs | 1,853 | 1,504 | 3,710 | 3,014 |
Selling, general and administrative expenses | 5,380 | 5,238 | 11,153 | 10,877 |
Total | 28,611 | 27,846 | 58,321 | 55,085 |
Income from Operations | 1,517 | 1,890 | 2,748 | 2,545 |
OTHER INCOME (EXPENSE): | ||||
Interest expense | (198) | (181) | (402) | (366) |
Interest and other income | 13 | 13 | 25 | 26 |
Insurance recovery, net of casualty loss | 602 | |||
Total other income (expense) | (185) | (168) | (377) | 262 |
Income before Provision for Income Taxes | 1,332 | 1,722 | 2,371 | 2,807 |
Provision for (Benefit From) Income Taxes | 88 | (257) | (30) | (344) |
Net Income | 1,420 | 1,465 | 2,341 | 2,463 |
Less: Net income attributable to noncontrolling interests | (772) | (444) | (1,199) | (699) |
Net Income attributable to stockholders | $ 648 | $ 1,021 | $ 1,142 | $ 1,764 |
Net Income Per Common Share: | ||||
Basic and Diluted | $ 0.35 | $ 0.55 | $ 0.61 | $ 0.95 |
Weighted Average Shares and Equivalent Shares Outstanding | ||||
Basic and Diluted | 1,858,647 | 1,858,647 | 1,858,647 | 1,858,647 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Mar. 28, 2020 | Sep. 28, 2019 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 18,061 | $ 13,672 |
Prepaid income taxes | 55 | |
Other receivables | 762 | 870 |
Inventories | 3,946 | 3,292 |
Prepaid expenses | 2,555 | 1,704 |
Total Current Assets | 25,324 | 19,593 |
Property and Equipment, Net | 46,754 | 46,187 |
Construction in Progress | 749 | 1,292 |
Total Property, Equipment and Construction in Progress | 47,503 | 47,479 |
Right-of-use assets, operating leases | 26,309 | |
Investment in Limited Partnership | 240 | 231 |
OTHER ASSETS: | ||
Liquor licenses | 630 | 630 |
Deferred tax asset | 283 | 249 |
Leasehold purchases, net | 244 | 296 |
Other | 241 | 277 |
Total Other Assets | 1,398 | 1,452 |
Total Assets | 100,774 | 68,755 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 8,149 | 8,532 |
Income taxes payable | 9 | |
Due to franchisees | 2,202 | 2,553 |
Current portion of long term debt | 2,488 | 1,983 |
Current portion of operating lease liabilities | 3,109 | |
Current portion of deferred rent | 61 | |
Total Current Liabilities | 15,957 | 13,129 |
Long Term Debt, Net of Current Maturities | 14,960 | 11,097 |
Operating lease liabilities, non current | 23,902 | |
Total Liabilities | 54,819 | 24,226 |
Flanigan's Enterprises, Inc. Stockholders' Equity | ||
Common stock, $.10 par value, 5,000,000 shares authorized; 4,197,642 shares issued | 420 | 420 |
Capital in excess of par value | 6,240 | 6,240 |
Retained earnings | 38,880 | 37,738 |
Treasury stock, at cost, 2,338,995 shares at March 28, 2020 and 2,338,995 shares at September 28, 2019 | (6,077) | (6,077) |
Total Flanigan's Enterprises, Inc. stockholders' equity | 39,463 | 38,321 |
Noncontrolling interest | 6,492 | 6,208 |
Total equity | 45,955 | 44,529 |
Total liabilities and equity | $ 100,774 | $ 68,755 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Mar. 28, 2020 | Sep. 28, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 5,000,000 | 5,000,000 |
Common stock, shares issued | 4,197,642 | 4,197,642 |
Treasury stock, shares, at cost | 2,338,995 | 2,338,995 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock [Member] | Capital in Excess of Par Value [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Noncontrolling Interests [Member] | Total |
Balance, beginning at Sep. 29, 2018 | $ 420 | $ 6,240 | $ 34,610 | $ (6,077) | $ 6,149 | $ 41,342 |
Balance, shares, beginning at Sep. 29, 2018 | 4,198 | 2,339 | ||||
Net income | 743 | 255 | 998 | |||
Distributions to noncontrolling interests | (437) | (437) | ||||
Balance, ending at Dec. 29, 2018 | $ 420 | 6,240 | 35,353 | $ (6,077) | 5,967 | 41,903 |
Balance, shares, ending at Dec. 29, 2018 | 4,198 | 2,339 | ||||
Balance, beginning at Sep. 29, 2018 | $ 420 | 6,240 | 34,610 | $ (6,077) | 6,149 | 41,342 |
Balance, shares, beginning at Sep. 29, 2018 | 4,198 | 2,339 | ||||
Net income | 2,463 | |||||
Balance, ending at Mar. 30, 2019 | $ 420 | 6,240 | 35,853 | $ (6,077) | 5,947 | 42,383 |
Balance, shares, ending at Mar. 30, 2019 | 4,198 | 2,339 | ||||
Balance, beginning at Dec. 29, 2018 | $ 420 | 6,240 | 35,353 | $ (6,077) | 5,967 | 41,903 |
Balance, shares, beginning at Dec. 29, 2018 | 4,198 | 2,339 | ||||
Net income | 1,021 | 444 | 1,465 | |||
Distributions to noncontrolling interests | (464) | (464) | ||||
Dividends paid | (521) | (521) | ||||
Balance, ending at Mar. 30, 2019 | $ 420 | 6,240 | 35,853 | $ (6,077) | 5,947 | 42,383 |
Balance, shares, ending at Mar. 30, 2019 | 4,198 | 2,339 | ||||
Balance, beginning at Sep. 28, 2019 | $ 420 | 6,240 | 37,738 | $ (6,077) | 6,208 | 44,529 |
Balance, shares, beginning at Sep. 28, 2019 | 4,198 | 2,339 | ||||
Net income | 494 | 427 | 921 | |||
Distributions to noncontrolling interests | (432) | (432) | ||||
Balance, ending at Dec. 28, 2019 | $ 420 | 6,240 | 38,232 | $ (6,077) | 6,203 | 45,018 |
Balance, shares, ending at Dec. 28, 2019 | 4,198 | 2,339 | ||||
Balance, beginning at Sep. 28, 2019 | $ 420 | 6,240 | 37,738 | $ (6,077) | 6,208 | 44,529 |
Balance, shares, beginning at Sep. 28, 2019 | 4,198 | 2,339 | ||||
Net income | 2,341 | |||||
Balance, ending at Mar. 28, 2020 | $ 420 | 6,240 | 38,880 | $ (6,077) | 6,492 | 45,955 |
Balance, shares, ending at Mar. 28, 2020 | 4,198 | 2,339 | ||||
Balance, beginning at Dec. 28, 2019 | $ 420 | 6,240 | 38,232 | $ (6,077) | 6,203 | 45,018 |
Balance, shares, beginning at Dec. 28, 2019 | 4,198 | 2,339 | ||||
Net income | 648 | 772 | 1,420 | |||
Distributions to noncontrolling interests | (483) | (483) | ||||
Balance, ending at Mar. 28, 2020 | $ 420 | $ 6,240 | $ 38,880 | $ (6,077) | $ 6,492 | $ 45,955 |
Balance, shares, ending at Mar. 28, 2020 | 4,198 | 2,339 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 28, 2020 | Mar. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 2,341 | $ 2,463 |
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: | ||
Depreciation and amortization | 1,580 | 1,403 |
Amortization of leasehold interests | 52 | 61 |
Amortization of operating lease right-of-use asset | 1,506 | |
Loss on sale or abandonment of property and equipment | 13 | 49 |
Insurance recovery, net of casualty loss | 118 | |
Amortization of deferred loan costs | 14 | 15 |
Deferred income tax | (34) | 303 |
Deferred rent | (6) | |
Income from unconsolidated limited partnership | (27) | (8) |
Changes in operating assets and liabilities: (increase) decrease in | ||
Other receivables | 108 | 111 |
Prepaid income taxes | 55 | (15) |
Inventories | (654) | (291) |
Prepaid expenses | 546 | 830 |
Other assets | 419 | (63) |
Increase (decrease) in: | ||
Accounts payable and accrued expenses | (499) | (472) |
Operating lease liabilities | (865) | |
Income taxes payable | 9 | |
Due to franchisees | (351) | 571 |
Net cash and cash equivalents provided by operating activities | 4,213 | 5,069 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (1,422) | (2,916) |
Purchase of construction in process | (155) | (584) |
Deposits on property and equipment | (446) | (140) |
Proceeds from sale of property and equipment | 23 | 22 |
Insurance recovery | 1,068 | |
Distributions from unconsolidated limited partnership | 18 | 20 |
Net cash and cash equivalents used in investing activities | (1,982) | (2,530) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payment of long term debt | (1,325) | (1,308) |
Proceeds from long-term debt | 4,398 | 250 |
Dividends paid | (521) | |
Distributions to limited partnerships' noncontrolling interests | (915) | (901) |
Net cash and cash equivalents provided by (used in) financing activities | 2,158 | (2,480) |
Net Increase in Cash and Cash Equivalents | 4,389 | 59 |
Beginning of Period | 13,672 | 13,414 |
End of Period | 18,061 | 13,473 |
Cash paid during period for: | ||
Interest | 402 | 366 |
Income taxes | 55 | |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Financing of insurance contracts | 1,281 | 1,041 |
Purchase deposits transferred to property and equipment | 61 | 486 |
Purchase deposits transferred to CIP | 2 | 213 |
CIP transferred to PP&E | 700 | 3,165 |
Insurance recovery receivable | 132 | |
Right-of-use assets and associated liabilities Arising from adoption of ASC 842 | $ 27,822 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Mar. 28, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | (1) BASIS OF PRESENTATION: The accompanying condensed consolidated financial information for the periods ended March 28, 2020 and March 30, 2019 are unaudited. Financial information as of September 28, 2019 has been derived from the audited financial statements of the Company, but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods indicated have been included. For further information regarding the Company’s accounting policies, refer to the Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended September 28, 2019. Operating results for interim periods are not necessarily indicative of results to be expected for a full year. The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and the accounts of the eight limited partnerships in which we act as general partner and have controlling interests. All intercompany balances and transactions have been eliminated. Non-controlling interest represents the limited partners’ proportionate share of the net assets and results of operations of the eight limited partnerships. These condensed consolidated financial statements include estimates relating to performance based officers’ bonuses. The estimates are reviewed periodically and the effects of any revisions are reflected in the financial statements in the period they are determined to be necessary. Although these estimates are based on management’s knowledge of current events and actions it may take in the future, they may ultimately differ from actual results. The condensed consolidated financial statements include estimates relating to the calculation of incremental borrowing rates and length of leases associated with right-of-use assets and corresponding liabilities. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Mar. 28, 2020 | |
Net Income Per Common Share: | |
EARNINGS PER SHARE | (2) EARNINGS PER SHARE: We follow Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Section 260 - “ Earnings per Share |
RECENTLY ADOPTED AND RECENTLY I
RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Mar. 28, 2020 | |
Recent Adopted And Recent Issued Accounting Pronouncements | |
RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | (3) RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS: Adopted Effective September 29, 2019, we adopted Accounting Standards Codification 842, Leases (“ASC 842”). The new guidance requires that lease arrangements be presented on the lessee’s balance sheet by recording a right-of-use asset and a lease liability equal to the present value of the related future minimum lease payments. We adopted the standard in the first quarter of fiscal 2020, using the modified retrospective approach. Upon adoption, the Company recorded a right-of-use asset of $27.8 million and a lease liability of $27.8 million. We elected the transition package of practical expedients, under which the Company does not have to reassess (1) whether any expired or existing contracts are leases, or contain leases, (2) the lease classification for any expired or existing leases, and (3) initial direct costs for any existing leases. In addition, we made an accounting policy election to exclude leases with an initial term of 12 months or less from the balance sheet. This standard had a material impact on the Condensed Consolidated Statements of Income due to the escalations of rent in the extensions but did not have a material impact on the Condensed Consolidated Statement of Cash Flows. See Note 6 for further disclosures resulting from the adoption of this new standard. Recently Issued There are no recently issued accounting pronouncements that we have not yet adopted that we believe will have a material effect on our financial statements. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Mar. 28, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | (4) INCOME TAXES: We account for our income taxes using FASB ASC Topic 740, “ Income Taxes |
DEBT
DEBT | 6 Months Ended |
Mar. 28, 2020 | |
Debt Disclosure [Abstract] | |
DEBT | (5) DEBT: (a) Mortgage on Real Property On November 27, 2019, our wholly owned subsidiary, Flanigan’s Calusa Center, LLC, re-financed its mortgage loan with an unrelated third party lender, increasing the principal amount borrowed from $2.72 million to $7.21 million. The principal balance and all accrued interest of the mortgage loan that had been outstanding matured November 30, 2019. The re-financed mortgage loan earns interest at the fixed annual rate of 3.86%, is amortized over twenty (20) years, requires us to pay monthly payments of principal and interest in the amount of $43,373 with the entire principal balance and all accrued interest due in November 2026. We intend to use the excess funds we received from the re-financing of this mortgage loan (approximately $4.4 million) for working capital. The interest rate swap agreement entered into in November, 2011 by our wholly owned subsidiary, Flanigan’s Calusa Center, LLC, relating to the prior mortgage loan also matured November 30, 2019 and was not renewed as a part of the re-financing. (b) Financed Insurance Premiums During the twenty-six weeks ended March 28, 2020, we bound and financed through an unrelated third party lender the premiums on the following property, general liability, excess liability and terrorism insurance policies: (i) For the policy year beginning December 30, 2019, our general liability insurance, excluding limited partnerships, is a one (1) year policy, including automobile and excess liability coverage. The annual premium for this insurance coverage is $418,000; (ii) For the policy year beginning December 30, 2019, our general liability insurance for our limited partnerships is a one (1) year policy, including excess liability coverage. The annual premium for this insurance coverage is $459,000; (iii) For the policy year beginning December 30, 2019, our property insurance is a one (1) year policy and the annual premium for this insurance coverage is $561,000; and (iv) For the policy year beginning December 30, 2019, our excess liability insurance is a one (1) year policy and the annual premium for this insurance coverage is $360,000. (v) For the policy year beginning December 30, 2019, our terrorism insurance is a one (1) year policy and the annual premium for this insurance coverage is $12,000. Of the $1,810,000 annual premium amounts, which includes coverage for our franchises which are not included in our consolidated financial statements, we financed $1,656,000 through an unaffiliated third party lender. The finance agreement obligates us to repay the amounts financed together with interest at the rate of 2.55% per annum, over 11 months, with monthly payments of principal and interest, each in the amount of $153,000. The finance agreement is secured by a first priority security interest in all insurance policies, all unearned premium, return premiums, dividend payments and loss payments thereof. As of March 28, 2020, the aggregate principal balance owed from the financing of our insurance policies is $1,048,000, excluding amounts which are reimbursed by our franchises for insurances covering their operations. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Mar. 28, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | (6) COMMITMENTS AND CONTINGENCIES: Construction Contracts a. 2505 N. University Drive, Hollywood, Florida (Store #19) During our fiscal year 2018 and prior to it being closed in the first quarter of our fiscal year 2019 due to damages caused by a fire, we entered into an agreement with a third party unaffiliated general contractor for design and development services for the construction of a new building (the “New Building”) on a parcel of real property which we own and which is adjacent to the real property where our combination package liquor store and restaurant located at 2505 N. University Drive, Hollywood, Florida, (Store #19) operated until it was closed in October, 2018 due to damages caused by a fire for a total contract price of $127,000 (the “$127,000 Contract”). We plan to re-locate our package liquor store at the property to the New Building. During the term of the $127,000 Contract, we agreed to change orders which had the effect of increasing the total contract price of the same to $138,000, and during the second quarter of our fiscal year 2019, we paid the balance of the total contract price of the $127,000 Contract, in the amount of $25,000. During the first quarter of our fiscal year 2020, we agreed upon changes to the $127,000 Contract for additional design and development services for the construction of the New Building which had the effect of increasing the total contract price of the same by $10,000 to $148,000, of which $6,000 has been paid through March 28, 2020. During the third quarter of our fiscal year 2019, we entered into an agreement with a third party unaffiliated architect for design and development services totaling $77,000 for the re-build of our restaurant located at 2505 N. University Drive, Hollywood, Florida (Store #19) which has been closed since October 2018 due to damages caused by a fire, of which $62,000 has been paid. Additionally, during the third quarter of our fiscal year 2019, we entered into an agreement with a third party unaffiliated general contractor for site work at this location totaling $1,618,000, (i) to connect the real property where this restaurant operated (Store #19) to city sewer and (ii) to construct a new building on the adjacent parcel of real property for the operation of a package liquor store, of which $-0- has been paid through March 28, 2020. b. 14301 W. Sunrise Boulevard, Sunrise, Florida (Store #85) During the third quarter of our fiscal year 2019, we also entered into an agreement with a third party unaffiliated design group for design and development services of our new location at 14301 W. Sunrise Boulevard, Sunrise, Florida 33323 (Store #85) for a total contract price of $122,000. During the first quarter of our fiscal year 2020, we agreed upon amendments to the $122,000 Contract for additional design and development services which had the effect of increasing the total contract price by $18,000 to $140,000, of which $97,000 has been paid through March 28, 2020. Leases To conduct certain of our operations, we lease restaurant and package liquor store space in South Florida from unrelated third parties. Our leases have remaining lease terms of up to 10 years and, some of which include options to renew and extend the lease terms for up to an additional 30 years. We presently intend to renew some of the extension options available to us and for purposes of computing the right-of-use assets and lease liabilities required by ASC 842, we have incorporated into all lease terms which may be extended, an additional term of the lesser of (i) the amount of years the lease may be extended; or (ii) 15 years. Following adoption of ASC 842, common area maintenance and property taxes are not considered to be lease components. The components of lease expense are as follows: 13 Weeks 26 Weeks Ended Mar. 28, 2020 Ended Mar. 28, 2020 Operating Lease Expense, which is included in occupancy costs $ 1,131,000 $ 2,261,000 Supplemental balance sheet information related to leases as follows: Classification on the Mar. 28, 2020 Assets Operating lease assets Other non-current assets $ 26,309,000 Liabilities Other current liabilities Current liabilities $ 3,109,000 Operating lease liabilities Other non-current liabilities $ 23,902,000 Weighted Average Remaining Lease Term: Operating leases 8.84 Years Weighted Average Discount: Operating leases 5.5 % The following table outlines the minimum future lease payments for the next five years and thereafter: For fiscal year 2020 (Six months) $ 1,642,000 2021 4,506,000 2022 3,172,000 2023 3,193,000 2024 3,234,000 Thereafter 19,942,000 Total lease payments (Undiscounted cash flows) 35,689,000 Less imputed interest (8,678,000 ) Total $ 27,011,000 Litigation Our sale of alcoholic beverages subjects us to “dram shop” statutes, which allow an injured person to recover damages from an establishment that served alcoholic beverages to an intoxicated person. If we receive a judgment substantially in excess of our insurance coverage or if we fail to maintain our insurance coverage, our business, financial condition, operating results or cash flows could be materially and adversely affected. We currently have no “dram shop” claims. We are a party to various other claims, legal actions and complaints arising in the ordinary course of our business. It is our opinion, after consulting with legal counsel, that all such matters are without merit or involve such amounts that an unfavorable disposition would not have a material adverse effect on our financial position or results of operations. |
CORONAVIRUS PANDEMIC
CORONAVIRUS PANDEMIC | 6 Months Ended |
Mar. 28, 2020 | |
Coronavirus Pandemic | |
CORONAVIRUS PANDEMIC | (7) CORONAVIRUS PANDEMIC The novel coronavirus pandemic and related “shelter-in-place” orders and other governmental mandates (“COVID 19”) has adversely affected and will, in all likelihood continue to adversely affect our restaurant operations and financial results for the foreseeable future. Due to COVID-19, from mid-March 2020 through mid-May 2020, we ceased dine-in service at all of our restaurants, limiting service to take-out and delivery only, ceased the sale of alcoholic beverages at our restaurants and implemented reduced hours at our retail package liquor stores. Since mid-May 2020, there has been a gradual elimination of restrictions on our restaurant operations, permitting us to, among other things, operate at up to 50% capacity (depending on the location of the restaurant), but with no bar service and increased operating hours at our package liquor stores. Due to COVID 19, we implemented (i) certain cost cutting measures including material layoffs at our restaurants and reduced corporate personnel salaries; and (ii) a number of changes to our operations such as the establishment of an in-house delivery service and an adjustment to our traditional staffing model to meet customer demand. As of March 28, 2020, 525 restaurant personnel were laid off, representing total annualized salary savings of approximately $1.04 million. In addition, the salaries of all our non-executive corporate office personnel were reduced by 20%, the base salaries of our Chief Operating Officer and Chief Financial Officer were each reduced by 50% and our Chief Executive Officer has waived his base salary. Since mid-May, 2020 and due to our receipt of loans from an unrelated third party lender pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) enacted March 27, 2020, we have reversed most cost cutting measures, including reinstating employees laid off at our restaurants in anticipation of resuming dine-in service and restoring corporate personnel salaries. As of March 28, 2020, we are in compliance with the debt covenants of our loans with our lender, but have no line of credit or other availability for borrowing. We do not believe COVID-19 has had a material adverse effect on our access to supplies or labor, although there can be no assurance that there will not be a significant adverse impact on our supply chain or access to labor in the future. We are actively monitoring our food suppliers to determine how they are managing their operations to mitigate supply flow and food safety risks. To ensure we mitigate potential supply availability risk, we are building additional inventory backstock levels when appropriate and we have also identified alternative supply sources in key product categories including but not limited to food, sanitation and safety supplies. Subsequent to the end of the second quarter of our fiscal year 2020, we, certain of the entities owning the limited partnership stores (the “LP’s”), franchised stores (the “Franchisees”) as well as the store we manage but do not own (the “Managed Store”), (collectively, the “Borrowers”), (collectively, the “Borrowers”), applied for and received PPP loans, in the aggregate principal amount of approximately $13.1 million (the “PPP Loans”), of which approximately: (i) $5.9 million was loaned to us ; (ii) $4.1 million was loaned to 8 of the LP’s ; (iii) $2.6 million was loaned to 5 of the Franchisees; and (iv) $0.5 million was loaned to the Managed Store. The PPP Loans, which are in the form of Notes issued by each of the Borrowers, mature two years from the date of funding (dates ranging from May 5, 2022 to May 11, 2022) and bear interest at a rate of 1.00% per annum, payable monthly commencing approximately six months from the date of issuance of the Notes (dates ranging from April 30, 2020 to May 6, 2020). The Notes may be prepaid by the applicable Borrower at any time prior to maturity with no prepayment penalties. Proceeds from the PPP Loans will be available to the respective Borrower to fund designated expenses, including certain payroll costs, group health care benefits and other permitted expenses, including rent and interest on mortgages and other debt obligations incurred before February 15, 2020. Under the terms of the PPP, up to the entire amount of principal and accrued interest may be forgiven to the extent the proceeds of the PPP Loans are used for qualifying expenses as described in the CARES Act and applicable implementing guidance issued by the U.S. Small Business Administration under the PPP. No assurance can be given that the Borrowers will obtain forgiveness of the PPP Loan in whole or in part. With respect to any portion of any of the PPP Loans that is not forgiven under the terms of the PPP, such amounts will be subject to customary provisions for a loan of this type, including customary events of default relating to, among other things, payment defaults, breaches of the provisions of the applicable PPP Note and cross-defaults on any other loan with the Lender or other creditors. |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 6 Months Ended |
Mar. 28, 2020 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | (8) BUSINESS SEGMENTS: We operate principally in two reportable segments – package stores and restaurants. The operation of package stores consists of retail liquor sales and related items. Information concerning the revenues and operating income for the thirteen weeks and twenty-six weeks ended March 28, 2020 and March 30, 2019, and identifiable assets for the two reportable segments in which we operate, are shown in the following table. Operating income is total revenue less cost of merchandise sold and operating expenses relative to each segment. In computing operating income, none of the following items have been included: interest expense, other non-operating income and expenses and income taxes. Identifiable assets by segment are those assets that are used in our operations in each segment. Corporate assets are principally cash and real property, improvements, furniture, equipment and vehicles used at our corporate headquarters. We do not have any operations outside of the United States and transactions between restaurants and package liquor stores are not material. (in thousands) Thirteen Weeks Thirteen Weeks Operating Revenues: Restaurants $ 23,528 $ 23,964 Package stores 6,027 5,092 Other revenues 573 680 Total operating revenues $ 30,128 $ 29,736 Income from Operations Reconciled to Income After Income Taxes and Net Income Attributable to Noncontrolling Interests Restaurants $ 1,962 $ 2,435 Package stores 590 283 2,552 2,718 Corporate expenses, net of other revenues (1,035 ) (828 ) Income from operations 1,517 1,890 Interest expense (198 ) (181 ) Interest and other income 13 13 Insurance recovery, net of casualty loss — — Income Before Provision for Income Taxes $ 1,332 $ 1,722 Provision for (Benefit From) Income Taxes 88 (257 ) Net Income 1,420 1,465 Net Income Attributable to Noncontrolling Interests (772 ) (444 ) Net Income Attributable to Flanigan’s Enterprises, Inc. Stockholders $ 648 $ 1,021 Depreciation and Amortization: Restaurants $ 629 $ 578 Package stores 90 69 719 647 Corporate 96 97 Total Depreciation and Amortization $ 815 $ 744 Capital Expenditures: Restaurants $ 433 $ 1,010 Package stores 54 87 487 1,097 Corporate 220 1,461 Total Capital Expenditures $ 707 $ 2,558 Twenty Six Weeks Twenty Six Weeks Operating Revenues: Restaurants $ 48,161 $ 46,115 Package stores 11,734 10,227 Other revenues 1,174 1,288 Total operating revenues $ 61,069 $ 57,630 Income from Operations Reconciled to Income After Income Taxes and Net Income Attributable to Noncontrolling Interests Restaurants $ 3,697 $ 3,822 Package stores 973 450 4,670 4,272 Corporate expenses, net of other revenues (1,922 ) (1,727 ) Income from Operations 2,748 2,545 Interest expense (402 ) (366 ) Interest and Other Income 25 26 Insurance recovery, net of casualty loss — 602 Income Before Provision for Income Taxes $ 2,371 $ 2,807 Provision for Income Taxes (30 ) (344 ) Net Income 2,341 2,463 Net Income Attributable to Noncontrolling Interests (1,199 ) (699 ) Net Income Attributable to Flanigan’s Enterprises, Inc. Stockholders $ 1,142 $ 1,764 Depreciation and Amortization: Restaurants 1,264 1,135 Package stores 174 135 1,438 1,270 Corporate 194 194 Total Depreciation and Amortization $ 1,632 $ 1,464 Capital Expenditures: Restaurants $ 1,134 $ 2,351 Package stores 157 165 1,291 2,516 Corporate 349 1,683 Total Capital Expenditures $ 1,640 $ 4,199 March 28, September 28, 2020 2019 Identifiable Assets: Restaurants $ 54,365 $ 31,077 Package store 14,369 10,540 68,734 41,617 Corporate 32,040 27,138 Consolidated Totals $ 100,774 $ 68,755 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Mar. 28, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | (9) SUBSEQUENT EVENTS: Subsequent events have been evaluated through the date these condensed consolidated financial statements were issued and except as disclosed herein, no further events required disclosure. |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Mar. 28, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Components of Lease Expense | The components of lease expense are as follows: 13 Weeks 26 Weeks Ended Mar. 28, 2020 Ended Mar. 28, 2020 Operating Lease Expense, which is included in occupancy costs $ 1,131,000 $ 2,261,000 |
Schedule of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases as follows: Classification on the Mar. 28, 2020 Assets Operating lease assets Other non-current assets $ 26,309,000 Liabilities Other current liabilities Current liabilities $ 3,109,000 Operating lease liabilities Other non-current liabilities $ 23,902,000 Weighted Average Remaining Lease Term: Operating leases 8.84 Years Weighted Average Discount: Operating leases 5.5 % |
Schedule of Minimum Future Lease Payments | The following table outlines the minimum future lease payments for the next five years and thereafter: For fiscal year 2020 (Six months) $ 1,642,000 2021 4,506,000 2022 3,172,000 2023 3,193,000 2024 3,234,000 Thereafter 19,942,000 Total lease payments (Undiscounted cash flows) 35,689,000 Less imputed interest (8,678,000 ) Total $ 27,011,000 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 6 Months Ended |
Mar. 28, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting | (in thousands) Thirteen Weeks Thirteen Weeks Operating Revenues: Restaurants $ 23,528 $ 23,964 Package stores 6,027 5,092 Other revenues 573 680 Total operating revenues $ 30,128 $ 29,736 Income from Operations Reconciled to Income After Income Taxes and Net Income Attributable to Noncontrolling Interests Restaurants $ 1,962 $ 2,435 Package stores 590 283 2,552 2,718 Corporate expenses, net of other revenues (1,035 ) (828 ) Income from operations 1,517 1,890 Interest expense (198 ) (181 ) Interest and other income 13 13 Insurance recovery, net of casualty loss — — Income Before Provision for Income Taxes $ 1,332 $ 1,722 Provision for (Benefit From) Income Taxes 88 (257 ) Net Income 1,420 1,465 Net Income Attributable to Noncontrolling Interests (772 ) (444 ) Net Income Attributable to Flanigan’s Enterprises, Inc. Stockholders $ 648 $ 1,021 Depreciation and Amortization: Restaurants $ 629 $ 578 Package stores 90 69 719 647 Corporate 96 97 Total Depreciation and Amortization $ 815 $ 744 Capital Expenditures: Restaurants $ 433 $ 1,010 Package stores 54 87 487 1,097 Corporate 220 1,461 Total Capital Expenditures $ 707 $ 2,558 Twenty Six Weeks Twenty Six Weeks Operating Revenues: Restaurants $ 48,161 $ 46,115 Package stores 11,734 10,227 Other revenues 1,174 1,288 Total operating revenues $ 61,069 $ 57,630 Income from Operations Reconciled to Income After Income Taxes and Net Income Attributable to Noncontrolling Interests Restaurants $ 3,697 $ 3,822 Package stores 973 450 4,670 4,272 Corporate expenses, net of other revenues (1,922 ) (1,727 ) Income from Operations 2,748 2,545 Interest expense (402 ) (366 ) Interest and Other Income 25 26 Insurance recovery, net of casualty loss — 602 Income Before Provision for Income Taxes $ 2,371 $ 2,807 Provision for Income Taxes (30 ) (344 ) Net Income 2,341 2,463 Net Income Attributable to Noncontrolling Interests (1,199 ) (699 ) Net Income Attributable to Flanigan’s Enterprises, Inc. Stockholders $ 1,142 $ 1,764 Depreciation and Amortization: Restaurants 1,264 1,135 Package stores 174 135 1,438 1,270 Corporate 194 194 Total Depreciation and Amortization $ 1,632 $ 1,464 Capital Expenditures: Restaurants $ 1,134 $ 2,351 Package stores 157 165 1,291 2,516 Corporate 349 1,683 Total Capital Expenditures $ 1,640 $ 4,199 March 28, September 28, 2020 2019 Identifiable Assets: Restaurants $ 54,365 $ 31,077 Package store 14,369 10,540 68,734 41,617 Corporate 32,040 27,138 Consolidated Totals $ 100,774 $ 68,755 |
RECENTLY ADOPTED AND RECENTLY_2
RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Narrative) (Details) - USD ($) $ in Thousands | Mar. 28, 2020 | Sep. 28, 2019 |
Recent Adopted And Recent Issued Accounting Pronouncements | ||
Right-of-use asset | $ 26,309 | |
Lease liability | $ 27,011 |
DEBT (Details)
DEBT (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Dec. 28, 2019 | Mar. 28, 2020 | |
Debt Instrument [Line Items] | ||
Amount of insurance premiums financed | $ 5,900,000 | |
Principal amount outstanding | $ 1,048,000 | |
Mortgage on Real Property [Member] | Unrelated Third Party [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate (per annum) | 3.86% | |
Term of financing agreement | 20 years | |
Monthly payment of principal and interest | $ 43,373 | |
Payment frequency | Monthly | |
Principal amount outstanding | $ 2,720,000 | |
Maturity date | Nov. 30, 2019 | |
Excess amount utilize for working capital | $ 4,400,000 | |
Revised Mortgage on Real Property [Member] | Unrelated Third Party [Member] | ||
Debt Instrument [Line Items] | ||
Principal amount outstanding | $ 7,210,000 | |
Financed Insurance Premiums [Member] | General Liability Insurance Excluding Limited Partnership Premium [Member] | ||
Debt Instrument [Line Items] | ||
Term of insurance premium | 1 year | |
Amount of premium payable | $ 418,000 | |
Financed Insurance Premiums [Member] | General Liability Insurance for Limited Partnership Premium [Member] | ||
Debt Instrument [Line Items] | ||
Term of insurance premium | 1 year | |
Amount of premium payable | $ 459,000 | |
Financed Insurance Premiums [Member] | Property Insurance Premium [Member] | ||
Debt Instrument [Line Items] | ||
Term of insurance premium | 1 year | |
Amount of premium payable | $ 561,000 | |
Financed Insurance Premiums [Member] | Excess Liability Insurance Premium [Member] | ||
Debt Instrument [Line Items] | ||
Term of insurance premium | 1 year | |
Amount of premium payable | $ 360,000 | |
Financed Insurance Premiums [Member] | Terrorist Insurance Premium [Member] | ||
Debt Instrument [Line Items] | ||
Term of insurance premium | 1 year | |
Amount of premium payable | $ 12,000 | |
Financed Insurance Premiums [Member] | Unaffiliated Third Party [Member] | ||
Debt Instrument [Line Items] | ||
Amount of premium payable financed from third party lender | $ 1,656,000 | |
Interest rate (per annum) | 2.55% | |
Term of financing agreement | 11 months | |
Monthly payment of principal and interest | $ 153,000 | |
Payment frequency | Monthly |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 28, 2020 | Sep. 29, 2018 | |
New Building [Member] | ||
Other Commitments [Line Items] | ||
Total contract price | $ 138 | $ 127 |
Amount for renovation of construction in process | 25 | |
Additional amount for renovation of construction in process | 10 | |
New Building - Revised Contract [Member] | ||
Other Commitments [Line Items] | ||
Total contract price | 148 | |
Amount for renovation of construction in process | 6 | |
Design and Development Services - 2505 N. University Drive, Hollywood, Florida [Member] | ||
Other Commitments [Line Items] | ||
Total contract price | 77 | |
Amount for renovation of construction in process | 62 | |
Third Party Agreement - Connection of Liquor Store and Restaurant [Member] | ||
Other Commitments [Line Items] | ||
Total contract price | 1,618 | |
Amount for renovation of construction in process | 0 | |
Design and Development Services - 14301 W. Sunrise Boulevard, Sunrise, Florida [Member] | ||
Other Commitments [Line Items] | ||
Total contract price | 122 | |
Amount for renovation of construction in process | 97 | |
Additional amount for renovation of construction in process | 18 | |
Design and Development Services Revised Contract - 14301 W. Sunrise Boulevard, Sunrise, Florida [Member] | ||
Other Commitments [Line Items] | ||
Total contract price | $ 140 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Schedule of Components of Lease Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Mar. 28, 2020 | Mar. 28, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating Lease Expense, which is included in occupancy costs | $ 1,131 | $ 2,261 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Schedule of Supplemental Balance Sheet Information Related to Leases) (Details) - USD ($) $ in Thousands | Mar. 28, 2020 | Sep. 28, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease assets | $ 26,309 | |
Other current liabilities | 3,109 | |
Operating lease liabilities | $ 23,902 |
COMMITMENTS AND CONTINGENCIES_5
COMMITMENTS AND CONTINGENCIES (Schedule of Additional Information Related to Leases) (Details) | Mar. 28, 2020 |
Commitments and Contingencies Disclosure [Abstract] | |
Weighted Average Remaining Lease Term - Operating leases | 8 years 10 months 3 days |
Weighted Average Discount - Operating leases | 5.50% |
COMMITMENTS AND CONTINGENCIES_6
COMMITMENTS AND CONTINGENCIES (Schedule of Minimum Future Lease Payments) (Details) $ in Thousands | Mar. 28, 2020USD ($) |
Operating leases: | |
2020 | $ 1,642 |
2021 | 4,506 |
2022 | 3,172 |
2023 | 3,193 |
2024 | 3,234 |
Thereafter | 19,942 |
Total lease payments (Undiscounted cash flows) | 35,689 |
Less imputed interest | (8,678) |
Total | $ 27,011 |
CORONAVIRUS PANDEMIC (Details)
CORONAVIRUS PANDEMIC (Details) | May 11, 2020 | Mar. 28, 2020USD ($)restaurant |
Number of restaurant | restaurant | 525 | |
Annualized salary savings | $ 1,040,000 | |
Loan aggregate principal amount | 5,900,000 | |
Interest rate | 1.00% | |
LPs [Member] | ||
Loan aggregate principal amount | 4,100,000 | |
Franchisees [Member] | ||
Loan aggregate principal amount | 2,600,000 | |
Managed Store [Member] | ||
Loan aggregate principal amount | 500,000 | |
PPP Loans Member] | ||
Loan aggregate principal amount | $ 13,100,000 | |
Non Executive Officer [Member] | ||
Percentage of reduced salaries | 20.00% | |
Chief Operating Officer and Chief Financial Officer [Member] | ||
Percentage of reduced salaries | 50.00% |
BUSINESS SEGMENTS (Details)
BUSINESS SEGMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Mar. 28, 2020 | Dec. 28, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Mar. 28, 2020 | Mar. 30, 2019 | Sep. 28, 2019 | |
Operating Revenues: | |||||||
Operating revenues | $ 30,128 | $ 29,736 | $ 61,069 | $ 57,630 | |||
Income from Operations Reconciled to Income After Income Taxes and Net Income Attributable to Noncontrolling Interests | |||||||
Income before corporate expenses | 2,552 | 2,718 | 4,670 | 4,272 | |||
Corporate expenses, net of other revenues | (1,035) | (828) | (1,922) | (1,727) | |||
Income from Operations | 1,517 | 1,890 | 2,748 | 2,545 | |||
Interest expense | (198) | (181) | (402) | (366) | |||
Interest and other income | 13 | 13 | 25 | 26 | |||
Insurance recovery, net of casualty loss | 602 | ||||||
Income Before Provision for Income Taxes | 1,332 | 1,722 | 2,371 | 2,807 | |||
Provision for (Benefit From) Income Taxes | 88 | (257) | (30) | (344) | |||
Net Income | 1,420 | $ 921 | 1,465 | $ 998 | 2,341 | 2,463 | |
Net Income Attributable to Noncontrolling Interests | (772) | (444) | (1,199) | (699) | |||
Net Income Attributable to Flanigan's Enterprises, Inc. stockholders | 648 | 1,021 | 1,142 | 1,764 | |||
Depreciation and Amortization: | |||||||
Depreciation and amortization | 815 | 744 | 1,632 | 1,464 | |||
Capital Expenditures: | |||||||
Capital expenditures | 707 | 2,558 | 1,640 | 4,199 | |||
Identifiable Assets: | |||||||
Assets | 100,774 | 100,774 | $ 68,755 | ||||
Restaurants [Member] | |||||||
Operating Revenues: | |||||||
Operating revenues | 23,528 | 23,964 | 48,161 | 46,115 | |||
Income from Operations Reconciled to Income After Income Taxes and Net Income Attributable to Noncontrolling Interests | |||||||
Income before corporate expenses | 1,962 | 2,435 | 3,697 | 3,822 | |||
Depreciation and Amortization: | |||||||
Depreciation and amortization | 629 | 578 | 1,264 | 1,135 | |||
Capital Expenditures: | |||||||
Capital expenditures | 433 | 1,010 | 1,134 | 2,351 | |||
Identifiable Assets: | |||||||
Assets | 54,365 | 54,365 | 31,077 | ||||
Package stores [Member] | |||||||
Operating Revenues: | |||||||
Operating revenues | 6,027 | 5,092 | 11,734 | 10,227 | |||
Income from Operations Reconciled to Income After Income Taxes and Net Income Attributable to Noncontrolling Interests | |||||||
Income before corporate expenses | 590 | 283 | 973 | 450 | |||
Depreciation and Amortization: | |||||||
Depreciation and amortization | 90 | 69 | 174 | 135 | |||
Capital Expenditures: | |||||||
Capital expenditures | 54 | 87 | 157 | 165 | |||
Identifiable Assets: | |||||||
Assets | 14,369 | 14,369 | 10,540 | ||||
Other [Member] | |||||||
Operating Revenues: | |||||||
Operating revenues | 573 | 680 | 1,174 | 1,288 | |||
Corporate [Member] | |||||||
Depreciation and Amortization: | |||||||
Depreciation and amortization | 96 | 97 | 194 | 194 | |||
Capital Expenditures: | |||||||
Capital expenditures | 220 | 1,461 | 349 | 1,683 | |||
Identifiable Assets: | |||||||
Assets | 32,040 | 32,040 | 27,138 | ||||
Total segments [Member] | |||||||
Depreciation and Amortization: | |||||||
Depreciation and amortization | 719 | 647 | 1,438 | 1,270 | |||
Capital Expenditures: | |||||||
Capital expenditures | 487 | $ 1,097 | 1,291 | $ 2,516 | |||
Identifiable Assets: | |||||||
Assets | $ 68,734 | $ 68,734 | $ 41,617 |