SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 4, 2001 __
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number 1-10711
SIZZLER INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as specified in its Charter)
Delaware 95-4307254
- --------------------------------------------------------------------------------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6101 West Centinela Avenue, Suite 200, Culver City, California 90230
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices, including zip code)
(310) 568-0135
-----------------------------------------------------------
(Registrant's telephone number, including area code)
___________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 20, 2001
- ----------------------------- -------------------------------
Common Stock $0.01 Par Value 27,637,186 shares
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
----------------------------
SIZZLER INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
February 4, April 30,
ASSETS 2001 2000
- ------------------------------------------------------- ----------- ---------
(Unaudited) (Audited)
Current Assets:
Cash and cash equivalents $ 18,131 $ 38,789
Receivables, net of reserves of $737 at
February 4, 2001 and $847 at April 30, 2000 2,528 4,173
Inventories 4,235 4,333
Prepaid expenses and other current assets 5,134 3,676
- ------------------------------------------------------- ----------- ---------
Total current assets 30,028 50,971
- ------------------------------------------------------- ----------- ---------
Property and equipment, net 59,952 46,316
Property held for sale, net 7,438 8,931
Long-term notes receivable, net of reserves of $133
at February 4, 2001 and $73 at April 30, 2000 740 1,224
Deferred income taxes 3,367 3,405
Intangible assets, net of accumulated amortization of
$1,261 at February 4, 2001 and $889 at April 30, 2000 20,047 1,876
Other assets 4,777 3,157
- ------------------------------------------------------- ----------- ---------
Total assets $ 126,349 $ 115,880
======================================================= =========== =========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
SIZZLER INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
February 4, April 30,
LIABILITIES AND STOCKHOLDERS' INVESTMENT 2001 2000
- -------------------------------------------------------------- ----------- -----------
(Unaudited) (Audited)
Current Liabilities:
Current portion of long-term debt $ 5,968 $ 5,206
Accounts payable 8,182 8,196
Other current liabilities 13,703 10,209
Income taxes payable 926 2,530
- -------------------------------------------------------------- ----------- -----------
Total current liabilities 28,779 26,141
- -------------------------------------------------------------- ----------- -----------
Long-term Liabilities:
Long-term debt, net of current portion 27,784 21,198
Deferred gain 7,664 8,269
Pension liability 9,337 9,637
- -------------------------------------------------------------- ----------- -----------
Total long-term liabilities 44,785 39,104
- -------------------------------------------------------------- ----------- -----------
Stockholders' Investment:
Capital stock -
Preferred, authorized 1,000,000 shares, $5 par value;
no shares issued -- --
Common, authorized 50,000,000 shares, $0.01 par value;
issued and outstanding 27,637,186 shares at February 4,
2001 and 28,067,539 at April 30, 2000 288 288
Additional paid-in capital 279,491 278,408
Accumulated deficit (217,970) (219,769)
Treasury stock, at cost, 1,129,400 shares at February 4,
2001 and 706,700 shares at April 30, 2000 (2,894) (1,948)
Accumulated other comprehensive loss (6,130) (6,344)
- -------------------------------------------------------------- ----------- -----------
Total stockholders' investment 52,785 50,635
- -------------------------------------------------------------- ----------- -----------
Total liabilities and stockholders' investment $ 126,349 $ 115,880
============================================================== =========== ===========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
SIZZLER INTERNATIONAL, AND SUBSIDIARIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Forty Weeks Ended
-----------------
February 4, February 6,
2001 2000
- -------------------------------------------- ----------- -----------
(Unaudited)
Revenues
Restaurants $ 179,703 $ 177,878
Franchise operations 6,515 6,295
- -------------------------------------------- ----------- -----------
Total revenues 186,218 184,173
- -------------------------------------------- ----------- -----------
Costs and Expenses
Cost of sales 63,729 65,376
Labor and related expenses 50,955 48,554
Other operating expenses 43,292 38,846
Depreciation and amortization 7,045 6,884
Non-recurring items -- 12,087
General and administrative expenses 16,983 15,465
- -------------------------------------------- ----------- -----------
Total operating costs 182,004 187,212
- -------------------------------------------- ----------- -----------
Interest expense 2,797 2,778
Investment income (1,327) (896)
Other income (347) (791)
- -------------------------------------------- ----------- -----------
Total costs and expenses 183,127 188,303
- -------------------------------------------- ----------- -----------
Income (loss) before income taxes 3,091 (4,130)
- -------------------------------------------- ----------- -----------
Provision (benefit) for income taxes 1,292 (3,848)
- -------------------------------------------- ----------- -----------
Net income (loss) $ 1,799 $ (282)
============================================ =========== ===========
Basic and diluted earnings (loss) per share $ 0.06 $ (0.01)
============================================ =========== ===========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
SIZZLER INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED OF OPERATIONS STATEMENTS
(In thousands, except per share data)
Sixteen Weeks Ended
-------------------
February 4, February 6,
2001 2000
- -------------------------------------------- ----------- -----------
(Unaudited)
Revenues
Restaurants $ 74,937 $ 69,828
Franchise operations 1,986 2,077
- -------------------------------------------- ----------- -----------
Total revenues 76,923 71,905
- -------------------------------------------- ----------- -----------
Costs and Expenses
Cost of sales 26,053 25,666
Labor and related expenses 21,692 19,177
Other operating expenses 18,603 15,574
Depreciation and amortization 3,131 2,652
Non-recurring items -- 12,087
General and administrative expenses 7,754 6,713
- -------------------------------------------- ----------- -----------
Total operating costs 77,233 81,869
- -------------------------------------------- ----------- -----------
Interest expense 1,117 1,090
Investment income (315) (516)
Other income (350) (791)
- -------------------------------------------- ----------- -----------
Total costs and expenses 77,685 81,652
- -------------------------------------------- ----------- -----------
Loss before income taxes (762) (9,747)
- -------------------------------------------- ----------- -----------
Provision (benefit) for income taxes 614 (4,896)
- -------------------------------------------- ----------- -----------
Net loss $ (1,376) $ (4,851)
============================================ =========== ===========
Basic and diluted loss per share $ (0.05) $ (0.17)
============================================ =========== ===========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
SIZZLER INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Forty Weeks Ended
-----------------
February 4, February 6,
2001 2000
- ---------------------------------------------------------- ----------- -----------
(Unaudited)
OPERATING ACTIVITIES
Net income (loss) $ 1,799 $ (282)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 7,045 6,884
Deferred income taxes 38 (5,629)
Provision for bad debts -- 176
Non-recurring items -- 12,087
Other -- 807
Changes in operating assets and liabilities:
Receivables 2,882 1,423
Inventories 265 287
Prepaid expenses and other current assets (1,020) (36)
Accounts payable (2,510) (877)
Accrued liabilities 541 3,453
Income taxes payable (1,605) 608
- ---------------------------------------------------------- ----------- -----------
Net cash provided by operating activities 7,435 18,901
- ---------------------------------------------------------- ----------- -----------
INVESTING ACTIVITIES
Additions to property and equipment (16,324) (4,826)
Disposal of property and equipment 4,211 23,100
Acquisition of Oscar's, net of cash acquired (16,383)
Other, net (766) (23)
- ---------------------------------------------------------- ----------- -----------
Net cash provided by (used in) investing activities (29,262) 18,251
- ---------------------------------------------------------- ----------- -----------
FINANCING ACTIVITIES
Issuance of long-term debt 5,000
Reduction of long-term debt (2,950) (1,711)
Payment of allowed claims pursuant to
the reorganization plan -- (4,047)
Repurchase of common stock (946) (1,948)
Other, net 65 20
- ---------------------------------------------------------- ----------- -----------
Net cash provided by (used in) financing activities 1,169 (7,686)
- ---------------------------------------------------------- ----------- -----------
Net increase (decrease) in cash and cash equivalents (20,658) 29,466
- ---------------------------------------------------------- ----------- -----------
Cash and cash equivalents at beginning of period 38,789 14,691
- ---------------------------------------------------------- ----------- -----------
Cash and cash equivalents at end of period $ 18,131 $ 44,157
========================================================== =========== ===========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
SIZZLER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
AS OF FEBRUARY 4, 2001
1. General:
The condensed consolidated financial statements include Sizzler
International, Inc. ("Sizzler(R)" or the "Company") and its wholly owned
subsidiaries. The financial statements include the Company's worldwide
operation of the Sizzler(R) family steak house concept, including
Company-owned outlets, activity related to the development and operation of
Sizzler(R) franchises, the operation of Kentucky Fried Chicken(R)
("KFC(R)") franchises in Queensland, Australia and the operation of Oscar's
Company-owned outlets in the United States. References to the Company
throughout these notes to Financial Statements may be made using the first
person notations of "we" or "us."
The condensed consolidated financial statements have been prepared without
audit in accordance with generally accepted accounting principles. Pursuant
to the rules and regulations of the Securities and Exchange Commission,
certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with accounting
principles generally accepted in the USA have been omitted or condensed. In
our opinion, the condensed interim consolidated financial statements
include all adjustments necessary for a fair presentation of financial
position and results of operations for the periods presented. The results
of operations for the periods presented should not necessarily be
considered indicative of operations for the full year. Certain
reclassifications have been made to prior period financial statements in
order to conform to the current period presentation. It is recommended that
these condensed consolidated financial statements are read in conjunction
with the financial statements and the notes thereto included in the
Company's 2000 annual report filed on Form 10-K.
2. The 1996 Restructuring:
In June 1996, the Company and four subsidiaries filed for protection from
creditors under Chapter 11 of the federal Bankruptcy Code. The trust
established for the benefit of creditors maintains sufficient cash to pay
all remaining claims. Accordingly, on July 11, 2000 the Bankruptcy Court
entered an order directing the creditor trust to release the liens on the
stock of the Company's U.S. subsidiaries and their operating assets.
7
3. Earnings Per Share:
The following table sets forth the computation of basic and diluted EPS:
Sixteen weeks ended Forty weeks ended
---------------------------- ----------------------------
February 4, February 6, February 4, February 6,
In thousands, except EPS 2001 2000 2001 2000
---------------------------- ----------------------------
Numerator for basic and diluted EPS-
Net income (loss) $ (1,376) $ (4,851) $ 1,799 $ (282)
========================== ===========================
Denominator:
Denominator for basic EPS - weighted average
shares of common stock outstanding 27,637 28,598 27,817 28,723
Effect of dilutive stock options - - 196 -
Denominator for diluted EPS - adjusted -------------------------- ---------------------------
weighted average shares outstanding 27,637 28,598 28,013 28,723
========================== ===========================
Basic and diluted earnings (loss) per share $ (0.05) $ (0.17) $ 0.06 $ (0.01)
========================== ===========================
4. Comprehensive Income:
In fiscal year 1999, the Company adopted Statement of Financial Accounting
Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income." Other
comprehensive income may include foreign currency translation adjustments,
minimum pension liability adjustments, and unrealized gains and losses on
investments in equity securities. Comprehensive income, for the quarters
ended February 4, 2001, and February 6, 2000, are as follows (in
thousands):
Sixteen weeks ended Forty weeks ended
--------------------------- -----------------------------
February 4, February 6, February 4, February 6,
2001 2000 2001 2000
--------------------------- -----------------------------
Net income (loss) $ (1,376) $ (4,851) $ 1,799 $ (282)
Foreign currency translation
adjustments (no tax effect) 704 254 214 830
--------------------------- -----------------------------
Total comprehensive income (loss) $ (672) $ (4,597) $ 2,013 $ 548
=========================== =============================
8
5. Segment Information:
Substantially all of the Company's revenue results from the sale of menu
items at restaurants operated by the Company or by franchisees. The
Company's reportable segments are based on geographic area and product
type. Sizzler USA consists of all United States and Latin America
Sizzler(R) restaurants and franchise operations. Oscar's consists of ten
Oscar's restaurants in Southern California and Arizona. Sizzler
International consists of all foreign Company and franchise operated
Sizzler(R) restaurants. KFC consists of KFC(R) franchise restaurants in
Australia. Corporate and other includes any items not included in the
reportable segments listed above. Intercompany transactions are eliminated
when computing revenues, earnings before interest, taxes, and corporate
overhead, and identifiable assets.
Earnings before interest and tax includes operating results before
investment income, interest expense, income taxes, non-recurring charges,
and allocated corporate overhead. The corporate and other component of
earnings before interest, taxes, and corporate overhead represents
corporate selling, and general and administrative expenses prior to being
allocated to the operating segments.
Sixteen weeks ended Forty weeks ended
---------------------------- ----------------------------
February 4, February 6, February 4, February 6,
2001 2000 2001 2000
---------------------------- ----------------------------
Revenues (in thousands):
Sizzler-USA 30,147 29,248 78,429 79,131
Oscar's 9,407 - 13,188 -
Sizzler-International 11,417 13,561 28,590 33,190
KFC 25,952 29,096 66,011 71,852
-------------------------- ---------------------------
Total Revenues 76,923 71,905 186,218 184,173
========================== ===========================
Earnings (loss) before Interest and Taxes (in thousands):
Sizzler-USA 940 2,426 4,903 7,713
Oscar's (1,006) - (1,369) -
Sizzler-International 596 869 1,212 1,804
KFC 2,980 3,509 7,561 8,051
Corporate and other (3,470) (15,977) (7,746) (19,816)
-------------------------- ---------------------------
Total earnings (loss) before interest and tax 40 (9,173) 4,561 (2,248)
========================== ===========================
6. E. coli Incident:
On July 26, 2000, the Company was informed of an incident of E. coli at two
of its franchised Sizzler(R) restaurants in Milwaukee, Wisconsin. Since
that time the Company has been working closely with Milwaukee health
officials in the investigation of the origin and cause of the E. coli
incident. It has been
9
determined the E. coli bacteria originated in meat supplied by one of the
Company's suppliers. The two Milwaukee, Wisconsin Sizzler(R) restaurants
closed shortly after the incident and will not reopen.
Several years ago, the Company adopted a very stringent set of procedures
to protect and assure the quality of the food that is served to guests. In
light of the recent incident, the Company has completed the re-
certification and retraining of personnel at both Company and franchise
locations to ensure strict compliance with safety procedures.
To date, there have been nine lawsuits filed (See Item 1: Legal
Proceedings), seven of which name one or more subsidiaries of the Company
as a defendant.
Both the Company and its franchisees have insurance policies to cover this
type of event. The Company believes it has adequate insurance coverage to
address any liability or business interruption costs that the Company is
likely to experience. The franchisee involved in the E. coli incident has
ceased operations. At present, the Company does not expect a more
material or prolonged impact on its financial positions or results of
operation as a result of the incident.
Expenses incurred to date that are related to investigating and minimizing
the impact of the E. coli problem are reflected in the Company's Statement
of Operations. The Company filed a preliminary insurance claim in
mid-December and in late February received an advance of $130,000 as
reimbursement for out-of-pocket expenses.
7. Oscar's:
On August 30, 2000, the Company completed the acquisition of 82 percent of
the outstanding membership interests of FFPE, LLC, a newly organized entity
that owns the assets used in the operation of restaurants doing business
under the name "Oscar's." The Oscar's concept represents 10 restaurants in
Southern California and Arizona. The terms of the acquisition include the
Company's payment of approximately $16.0 million in cash and issuance of
warrants to purchase up to 1,250,000 shares of Sizzler(R) common stock at
$4.00 per share. Also, the Company has agreed to pay an earn-out amount in
two and one-half years, which may amount to as much as $8.1 million if
certain targets are achieved.
The Company has accounted for the acquisition under the purchase method,
accordingly the statements of operations include the results of Oscar's
since the date of acquisition. The acquisition resulted in goodwill of
approximately $17.4 million before adjustment for final working capital and
debt levels and potential earn-outs, which will be amortized over 20 years.
Presented below is unaudited selected pro forma financial information,
which
10
includes the results of operations of the Company as if the acquisition had
taken place May 1, 2000 and 1999 (in thousands, except per share amounts):
Sixteen weeks ended Forty weeks ended
--------------------------- ---------------------------
February 4, February 6, February 4, February 6,
2001 2000 2001 2000
--------------------------- ---------------------------
Revenues 76,923 78,188 196,062 203,346
Net Income (loss) (1,376) 676 1,650 4,619
Basic and diluted net income (loss) per share (0.05) 0.02 0.06 0.16
Shares used in per share calculation 27,637 28,598 28,013 28,723
8. Financing:
On December 20, 2000 the Company entered into a $10.0 million, seven-year
term loan with Heller Financial Leasing ("Heller"). The loan bears interest
at 9.65 percent and is repaid based on a 15-year amortization with a
balloon payment due on January 1, 2008. On December 20, 2000, the Company
drew down $5.0 million of the principal and, under certain conditions, may
draw up to an additional $5.0 million between May 1, 2001 and November 15,
2001. Approximately $250,000 in transaction costs was deducted from the
loan proceeds and will be amortized over the seven-year term of the note.
The loan is collateralized by real and personal property interests in the
USA.
11
SIZZLER INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE QUARTER
- -------------------------------------
SIXTEEN WEEKS ENDED FEBRUARY 4, 2001 VERSUS SIXTEEN WEEKS ENDED
- ---------------------------------------------------------------
FEBRUARY 6, 2000
- ----------------
CONSOLIDATED OPERATIONS
- -----------------------
Company-operated restaurant sales and franchised restaurant revenues (including
franchise fees, royalties and rental income) represent the Company's primary
sources of revenue. Consolidated revenues for the quarter ended February 4,
2001, were $76,923,000 compared to $71,905,000 for the quarter ended February 6,
2000, an increase of $5,018,000 or 7.0 percent. The increase is attributed to
the acquisition of Oscar's and same store sales increases from Sizzler USA and
KFC. These increases were partially offset by a 16.4 percent decrease in the
Australian dollar exchange rate and a decrease in same store sales from Sizzler
Australia. The Australian goods and services tax ("GST") implemented in
Australia on July 1, 2000 and the E. coli incident continued to impact the
Company's operations.
The following table shows the change in Company-operated same store sales versus
the prior year.
FY 2000 FY 2001
--------------------------------- ---------------------------
QTR 1 QTR 2 QTR 3 QTR 4 QTR 1 QTR 2 QTR 3
--------------------------------- ---------------------------
SIZZLER
-------
USA 2.9% (0.2%) 2.9% 5.7% 1.9% 0.7% 0.1%
AUSTRALIA
(based on A$) 4.3% 2.0% (0.6%) 0.8% 0.6% (4.1%) (0.5%)
KFC
---
(based on A$) 2.8% 6.4% 6.5% 3.7% 6.1% 4.0% 2.6%
OSCAR'S
-------
USA - - - - - 4.9% 5.5%
Consolidated operating expenses for the quarter ended February 4, 2001,
were $77,233,000 compared to $81,869,000 for the quarter ended February 6,
2000, a
12
decrease of $4,636,000 or 6.0 percent. The decrease is primarily due to
$12,087,000 in non-recurring items in the prior year. Without the non-
recurring items, operating expenses increased $7,451,000 or 10.7 percent.
This increase is primarily due to the addition of Oscar's, increased labor
costs and increased rent expense. Rent expense increased approximately
$871,000 due to the sale and leaseback of certain properties in Australia,
offset by a $416,000 reduction in depreciation expense and income of
$246,000 from amortization of the deferred gain associated with the
transaction. Operating expense increases were partially offset by lower
food costs associated with lower commodity prices, improvements in food
cost controls and a 16.4 percent decrease in the Australian dollar exchange
rate.
Interest expense was $1,117,000 in the current quarter compared to
$1,090,000 in the same period of the prior year, an increase of $27,000 or
2.5 percent. The increase is primarily due to higher debt with Westpac, the
addition of Oscar's and to new debt with Heller (See Note 8 -Financing to
Consolidated Financial Statements). These increases are partially offset by
lower exchange rates that reduced reported interest expense on the Westpac
debt. Investment income was $315,000 in the current quarter compared to
$516,000 in the same period of the prior year, a decrease of $201,000 or
39.0 percent. Investment income has decreased as a result of lower cash
balances following the acquisition of Oscar's and the USA remodels.
Other income was $350,000 in the current quarter compared to $791,000 in
the same period of the prior year, a decrease of $441,000 or 55.8 percent.
Both periods reflect the sale of one property which may or may not occur
from time to time.
The provision for income taxes has been computed based on management's
estimate of the annual effective income tax rate applied to income before
taxes and was $614,000 in the current quarter compared to a benefit of
$4,896,000 in the same period of the prior year. This increase is due to a
$5,890,000 income tax benefit recorded in the prior year. Without this
benefit, the prior year income tax provision would have been $994,000, a
decrease of $380,000 or 38.2 percent. The decrease is primarily due to a
decrease in the Australian income tax rate to 34 percent from 36 percent
effective July 1, 2000, and to lower exchange rates.
SIZZLER USA OPERATIONS
----------------------
Total revenues for the quarter ended February 4, 2001 were $30,147,000
compared to $29,248,000 for the quarter ended February 6, 2000, an increase
of 3.1 percent. Restaurant sales for the current quarter were $28,630,000
compared to $27,596,000 in the same period of the prior year. The sales
increase is primarily due to an increase in Company-owned stores to 68
compared to 65 last year. During the quarter, the Company acquired four
locations from a franchisee in Sacramento, California and opened one new
Sizzler(R) in Cathedral City, California on an excess property site. The
Company may, from time to time, acquire locations from its franchisees as
part of its overall growth strategy. At present the Company has no
immediate plans to open additional new locations. There was also a slight
increase in same store sales driven by higher check averages, however the
Company continued to be impacted by negative publicity associated with the
E. coli incident in July 2000 (See Note 6 - E. coli Incident, to
Consolidated Financial Statements)
13
Franchise revenue was $1,517,000 in the current quarter compared to
$1,652,000 in the same period of the prior year, a decrease of $135,000 or
8.2 percent. Franchise revenues were produced by 189 franchised Sizzler(R)
locations, including 13 in Latin America, in the current quarter compared
to 201 franchised Sizzler(R) locations, including 13 in Latin America, in
the same period of the prior year. The reduction in franchise locations
resulted from four that were acquired by the Company and ten others that
either lost their lease or closed for operational reasons. There have been
two franchise restaurants openings since last year.
Prime costs were $18,875,000 in the current quarter compared to $18,429,000
in the same period of the prior year. Prime costs, which include food,
paper and labor, decreased to 65.9 percent of sales for the current quarter
compared to 66.8 percent in the same period of the prior year. This
decrease is due to lower food cost associated with lower poultry and pork
prices that may or may not continue, tighter food cost controls and lower
levels of sales discounting following the completion of re-introducing
re-imaged locations. These decreases were partially offset by higher labor
costs due to additional managers put in place to improve guest service and
workers compensation insurance.
Other operating expenses amounted to $7,482,000 for the current quarter
compared to $6,766,000 for the same period of the prior year. The increase
is primarily due to three additional locations, marketing activities
designed to increase customer traffic following E. coli and to higher
utility costs.
Management is continuing its plan to reposition the Sizzler(R) concept back
to a mid-scale family steakhouse by upgrading the quality of the food,
improving cooking methods, upgrading equipment and educating all restaurant
employees with updated training programs. The quality of the Sizzler(R)
customer experience has also been improved by remodeling existing
restaurants with a new design and supporting these initiatives with
appropriate marketing programs. As of the end of the quarter, the Company
had completed the remaining remodels of 56 locations representing all of
those originally scheduled. Those that were not remodeled include the four
locations recently acquired from a franchisee and others that are under
short leases that we do not plan to remodel. Same store sales for remodeled
locations have remained flat in comparison with the same period of the
prior year. This in management's opinion is due to the E. coli incident and
adverse weather conditions. As of the end of the quarter, 34 of the
Sizzler(R) franchise locations had been remodeled. We anticipate the
remaining franchise locations will be completed within two years.
OSCAR'S OPERATIONS
------------------
Total revenues for the quarter ended February 4, 2001 were $9,407,000
compared to zero in the prior year and were produced by ten locations,
including one new location opened in Lake Forest, California, during the
quarter.
Prime costs, which include food and labor, were $6,063,000 representing
64.5 percent
14
of sales, which is slightly higher than historical levels. This is due to
lower food cost associated with new produce and grocery contracts offset by
higher labor costs connected with the recent opening of two locations and a
third opening scheduled for late April, 2001. Other operating expenses were
$2,476,000.
Management is continuing its plan to open three to five locations per year
in Southern California. We expect continued losses to be generated from
Oscar's due to expansion efforts this year and anticipate the acquisition
will become accretive to earnings during fiscal year 2002.
SIZZLER INTERNATIONAL OPERATIONS
--------------------------------
Total revenues for the quarter ended February 4, 2001 were $11,417,000
compared to $13,561,000 for the quarter ended February 6, 2000, a decrease
of $2,144,000 or 15.8 percent. The decrease is primarily due to a 16.4
percent decrease in the Australian dollar exchange rate for the period,
partially offset by the addition of 8 Asian franchise locations.
Restaurant sales for the current quarter were $10,948,000 compared to
$13,136,000 in the same period of the prior year and were produced by 31
restaurants operating during the current quarter and the same period of the
prior year. The decrease is due to a reduction in the Australian dollar
exchange rate and to a lesser extent, the impact of GST implemented July 1,
2000. In addition, same store sales were down 0.5 percent for the quarter
primarily due to the GST which added a 10.0 percent tax on restaurant
meals. Through the implementation of brand advertising that began during
the quarter, we expect the impact of GST to lessen.
Franchise revenue was $469,000 in the current quarter compared to $425,000
in the same period of the prior year, an increase of $44,000 or 10.4
percent due to the addition of 8 locations including two during the
quarter. Franchise revenues were produced by three joint ventures and 56
franchised Sizzlers in the current quarter compared to three joint ventures
and 48 franchised Sizzlers in the same period of the prior year.
International franchise restaurants are located in Japan, Taiwan, Thailand,
South Korea, Singapore and Indonesia.
Prime costs were $7,258,000 in the current quarter compared to $8,727,000
in the same period of the prior year. Prime costs, which include food,
paper and labor, decreased to 66.3 percent of sales compared to 66.4
percent in the same period of the prior year due to food cost savings
associated with lower commodity prices partially offset with higher labor
costs from training that may or may not continue.
Other operating expenses amounted to $2,644,000 for the current quarter
compared to $2,942,000 for the same period of the prior year primarily due
to the decrease in foreign currency exchange rates partially offset by
higher rent from the sale and leaseback, and marketing costs associated
with brand advertising.
Management is continuing its plan to reposition the Sizzler concept in
Australia by
15
implementing the upgraded food quality and cooking methods adopted in the
Company's domestic operations. Additionally, more emphasis will be placed
on providing customers with better service. There are currently two units
being tested with the US remodel format. Based on preliminary results
certain modifications to the layout are being made. Once these changes are
made, the results will be evaluated and if positive, the Company plans to
implement the remodel program in Australia beginning in fiscal year 2002.
KFC(R) OPERATIONS
-----------------
Revenues for the quarter ended February 4, 2001 were $25,952,000 compared
to $29,096,000 for the quarter ended February 6, 2000, a decrease of 10.8
percent. The decrease is primarily due to a 16.4 percent decrease in the
Australian dollar exchange rate during the period partially offset by a 2.6
percent increase in same store sales and sales from three additional
locations. Sales for the current quarter reflect 104 restaurants operating
during the current quarter compared to 101 restaurants in the same period
of the prior year.
Prime costs were $15,549,000 in the current quarter compared to $17,513,000
in the same period of the prior year. Prime costs, which include food,
paper and labor, decreased to 59.9 percent of sales compared to 60.2
percent in the same period of the prior year. The decrease is primarily due
to lower commodity prices partially offset with higher labor costs
associated with training that may or may not continue.
Other operating expenses amounted to $6,284,000 for the current quarter
compared to $6,890,000 for the same period of the prior year primarily due
to a 16.4 percent decrease in the Australian dollar exchange rate,
partially offset by higher repair expense that may or may not continue and
higher rent from the sale and leaseback.
The Company reached an agreement with Tricon Global Restaurants, Inc. to
test co-branding KFC(R) locations with Pizza Hut(R). However, testing is
currently on hold pending the evaluation of co-branding Taco Bell(R) with
the Company's KFC's(R). The Company also expects to open 2 to 4 additional
KFC(R) locations, during fiscal year 2002.
RESULTS OF OPERATIONS FOR THE YEAR-TO-DATE
------------------------------------------
FORTY WEEKS ENDED FEBRUARY 4, 2001 VERSUS FORTY WEEKS ENDED
-----------------------------------------------------------
FEBRUARY 6, 2000
----------------
CONSOLIDATED OPERATIONS
-----------------------
Company-operated restaurant sales and franchised restaurant revenues
(including franchise fees, royalties and rental income) represent the
Company's primary sources
16
of revenue. Consolidated revenues for the forty weeks ended February 4,
2001 were $186,218,000 compared to $184,173,000 for the forty weeks ended
February 6, 2000, an increase of $2,045,000 or 1.1 percent. The increase is
primarily attributed to the acquisitions of Oscar's, same store sales
increases from Sizzler USA and KFC and higher guest check averages from all
domestic and international operations. The overall increase however, was
partially offset by a 13.7 percent decrease in the Australian dollar
exchange rate during the period, the Australian GST implemented July 1,
2000 and the E. coli incident in the USA.
Consolidated operating expenses for the quarter were $182,004,000 compared
to $187,212,000 in the prior year, a decrease of $5,208,000 or 2.8 percent.
The decrease is primarily due to $12,087,000 in non-recurring items in the
prior year. Without the non-recurring items, operating expenses increased
$6,879,000 or 3.9 percent. The increase is primarily due to the addition of
Oscar's, increased labor costs and increased rent expense. Rent expense
increased approximately $2,265,000 due to the sale and leaseback of certain
properties in Australia and was partially offset by a $1,082,000 reduction
in depreciation expense and recognition of $632,000 of the deferred gain
related to the sale and leaseback. Operating expense increases were
partially offset by lower food costs associated with lower commodity
prices, improvements in food cost controls and a 13.7 percent decrease in
the Australian dollar exchange rate for the comparative periods.
Interest expense was $2,797,000 for forty weeks ended February 4, 2001
compared to $2,778,000 in the same period of the prior year, an increase of
$19,000 or 0.7 percent. The increase in interest expense is primarily due
to higher balances on the Company's debt with Westpac, the acquisition of
Oscar's and the term loan with Heller Financial Leasing (See Note 8 -
Financing, to Consolidated Financial Statements). The increase in
consolidated interest expense is also attributable to the Company's
executive supplemental retirement plan covering ten former and one active
employee. These increases are partially offset by lower exchange rates that
reduce reported interest expense on the Westpac debt. Investment income was
$1,327,000 compared to $896,000 in the same period of the prior year, an
increase of $431,000 or 48.1 percent. Investment income increased primarily
due to higher cash balances associated with the sale and leaseback
transaction.
Other income was $347,000 in the current year compared to $791,000 in the
same period of the prior year, a decrease of $444,000 or 56.1 percent. Both
periods reflect the sale of one property which may or may not occur from
time to time.
The provision for income taxes has been computed based on management's
estimate of the annual effective income tax rate applied to income before
taxes. The provision amounted to $1,292,000 in the forty weeks of fiscal
year 2001 compared to a benefit of $3,848,000 in the same period of the
prior year. This increase is due to a $5,890,000 income tax benefit
recorded in the prior year. Without the benefit, the prior year income tax
provision would have been $2,042,000. The $750,000 decrease in the current
year is primarily due to a decrease in the Australian income tax rate to 34
percent from 36 percent effective July 1, 2000 and to lower exchange rates.
17
SIZZLER USA OPERATIONS
----------------------
Revenues for the forty weeks ended February 4, 2001 were $78,429,000
compared to $79,131,000 for the forty weeks ended February 6, 2000, a
decrease of $702,000 or 0.9 percent. Restaurant sales were $73,242,000
compared to $73,900,000 in the same period of the prior year. The decrease
is primarily due to the E. coli incident (See Note 6 - E. coli Incident, to
Consolidated Financial Statements). In addition, during the year the
Company completed the remodels of 56 locations representing all of those
originally scheduled for remodel. In the remodel phase, sales declined due
to guest reaction to the inconvenience from construction (the restaurants
remained open during the construction period) and menu changes such as the
paring back of hot food items on the food bar. It has been the Company's
experience that during the month following the initial transition, new
customers who prefer grilled entries and a fresher salad bar patronize the
restaurants. The total number of Sizzler(R) stores increased from 65 stores
in the same period of the prior year, to 68 stores by February 4, 2001 with
the addition of four Sizzler(R) stores in Sacramento, California and one
in Cathedral City.
Franchise revenue was $5,187,000 for the forty weeks of this year compared
to $5,231,000 in the same period of the prior year, a decrease of $44,000
or 0.8 percent. Franchise revenues were produced by 189 franchised
Sizzler(R) locations, including 13 in Latin America, in the current period
compared to 201 franchised Sizzler(R) locations, including 13 in Latin
America, in the same period of the prior year. Franchise revenue was also
impacted by the E. coli incident.
Prime costs were $48,089,000 for the forty weeks ended February 7, 2001
compared to $48,186,000 in the same period of the prior year. Prime costs,
which include food, paper and labor, increased to 65.7 percent of sales
compared to 65.2 percent in the same period of the prior year due to higher
labor costs associated with training following the E. coli incident and
workers compensation insurance expense partially offset by lower food costs
that may or may not continue.
Other operating expenses amounted to $18,245,000 for the current year
compared to $17,258,000 for the same period of the prior year. The increase
is due to cost of promotional materials related to the E. coli incident,
direct mail expenses incurred to introduce guests to remodeled Sizzler(R)
restaurant locations and higher utility costs that may or may not continue.
In addition, depreciation expense increased due to the remodels.
Management is continuing its plan to reposition the Sizzler(R) concept back
to a mid-scale family steakhouse by upgrading the quality of the food,
improving cooking methods, upgrading equipment and educating all restaurant
employees with updated training programs. The quality of the Sizzler(R)
customer experience is also being improved by remodeling existing Company
operated restaurants with a new design that is currently being rolled-out,
and supporting these initiatives with appropriate marketing programs. As of
the end of the quarter 34 of the Sizzler(R) franchise locations had
18
been remodeled. We anticipate the remaining franchise locations will be
completed within two years.
OSCAR'S OPERATIONS
------------------
The Oscar's acquisition resulted in 23 weeks of operation in the 40 week
period ended February 4, 2001. Total revenues for the twenty-three weeks of
operation were $13,188,000 compared to zero in the same period of the prior
year. Sales were generated by ten locations.
Prime costs, which include food and labor, were $8,509,000 representing
64.5 percent of sales, which is slightly higher than historical levels.
This is due to lower food cost associated with new produce and grocery
contracts offset by higher labor costs associated with the recent opening
of two locations and a third scheduled for late April 2001.
Operating expenses amounted to $3,373,000 in the current period compared to
zero in the same period of the prior year.
Management expects continued losses to be generated from Oscar's this year
due to expansion efforts and anticipates the acquisition will become
accretive to earnings sometime during fiscal year 2002. The Company plans
to open three to five additional Oscar's locations during fiscal year 2002.
SIZZLER INTERNATIONAL OPERATIONS
--------------------------------
Total revenues for the forty weeks ended February 4, 2001 were $28,590,000
compared to $33,190,000 for the forty weeks ended February 6, 2000, a
decrease of $4,600,000 or 13.9 percent. The decrease is primarily due to a
13.7 percent decrease in the Australian dollar exchange rate, the
Australian GST and higher franchise revenues from additional locations.
Restaurant sales for the forty weeks ended February 4, 2001 were
$27,262,000 compared to $32,126,000 in the same period of the prior year
and were produced by 31 restaurants operating during the current year and
the same period of the prior year.
Franchise revenue was $1,328,000 in the current year compared to $1,064,000
in the same period of the prior year, an increase of $264,000 or 24.8
percent. Franchise revenues were produced by three joint ventures and 56
franchised Sizzlers in the current year compared to three joint venture and
48 franchised Sizzlers in the same period of the prior year. International
franchise restaurants are located in Japan, Taiwan, Thailand, South Korea,
Singapore and Indonesia.
Prime costs were $18,391,000 for the forty weeks ended February 4, 2001
compared to $21,674,000 in the same period of the prior year. Prime costs,
which include food, paper and labor, remained unchanged at 67.5 percent of
sales in the current period and the same period of the prior year. This is
the result of lower food cost offset with higher labor costs associated
with training that may or may not continue.
19
Other operating expenses amounted to $6,640,000 for the current fiscal
period compared to $7,180,000 for the same period of the prior year,
primarily due to lower in foreign currency exchange rates.
Management is continuing its plan to reposition the Sizzler(R) concept in
Australia by implementing the upgraded food quality and cooking methods
adopted in the Company's domestic operations. Additionally, more emphasis
will be placed on providing customers with better service by increasing the
number of restaurant personnel. There are currently two units being tested
with the US remodel format. Based on preliminary results certain
modifications to the layout are being made. Once these changes are made,
the results will be evaluated and if positive, the Company plans to
implement the remodel program in Australia beginning in fiscal year 2002.
KFC(R) OPERATIONS
-----------------
Revenues for the forty weeks ended February 4, 2001 were $66,011,000
compared to $71,852,000 for the forty weeks ended February 6, 2000, a
decrease of $5,841,000 or 8.1 percent. The decrease is primarily due to a
13.7 percent decrease in the Australian dollar exchange rate and the
Australian GST. This decrease is partially offset by same-store sales
increases due to successful marketing promotions that resulted in higher
customer traffic and an increase in the average guest check. Sales for the
current year reflect 104 restaurants operating during the current year
compared to 101 restaurants in the same period of the prior year.
Prime costs were $39,695,000 in the current year compared to $43,533,000 in
the same period of the prior year. Prime costs, which include food, paper
and labor, decreased to 60.1 percent of sales compared to 60.6 percent in
the same period of the prior year due to promotions of higher margin
products, lower commodity prices that may or may not continue, partially
offset by increases in labor costs.
Other operating expenses amounted to $15,877,000 for the current year
compared to $17,172,000 for the same period of the prior year primarily due
to a decrease in the Australian dollar exchange rate.
The Company reached an agreement with Tricon Global Restaurants, Inc. to
test co-branding KFC(R) locations with Pizza Hut(R). However, testing is
currently on hold pending the evaluation of co-branding Taco Bell(R) with
the Company's KFC's(R). The Company also expects to open 2 to 4 additional
KFC(R) locations during fiscal year 2002.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Working Capital
---------------
The Company's principal source of liquidity is cash flows from operations,
which was
20
$7,435,000 for the first forty weeks of fiscal year 2001 compared to
$18,901,000 for the same period of the prior year. This decrease is the
result of fluctuations in the Company's operating account balances, lease
payments associated with the sale and leaseback, lower exchange rates and
lower operating income in the United States.
The Company's working capital at February 4, 2001 was $1,249,000 including
cash and cash equivalents of $18,131,000. At April 30, 2000 the Company had
a working capital surplus of $24,830,000. This decrease is primarily due to
cash payments for the acquisition of Oscar's and funds used to remodel the
Sizzler USA restaurants. The current ratio was 1.0 at February 4, 2001 and
1.9 at April 30, 2000.
Total Assets / Capital Expenditures
-----------------------------------
At February 4, 2001, total assets were $126,349,000, an increase of
$10,469,000 or 9.0 percent from April 30, 2000 primarily due to the
acquisition of Oscar's (See Note 7 - Oscar's, to Consolidated Financial
Statements). Property and equipment, excluding property held for sale,
represented approximately 47.4 percent of total assets at February 4, 2001
and 40.0 percent at April 30, 2000.
Capital expenditures were $16,324,000 for the forty weeks ended February 4,
2001 and $4,826,000 for the same period last year. Current year capital
expenditures include remodels and one new restaurant in the United States,
three new KFC(R) restaurants in Australia, the construction of new Oscar's
and maintenance of existing restaurants. The Company anticipates additional
investment in its international operations through its Company-operated
restaurants, joint ventures and the development of the franchise system.
The Company's domestic operations will primarily be increased through
additional investment in Oscar's.
Debt
----
The Company's debt includes a credit facility with Westpac Banking
Corporation in Australia ("Westpac"). The credit facility is collateralized
by the Australian division's assets and intellectual property. The loan
provides for a three-year term at an interest rate equal to the Australian
interbank borrowing rate, plus a 2.25 percent margin. The agreement is
subject to certain financial covenants and restrictions which management
believes are customary for a loan of this type. As of February 4, 2001, the
Company's unpaid principal balance on the Westpac facility was
approximately AUD $41,665,000, or US $23,016,000. On December 20, 2000 the
Company entered into a $10.0 million, seven year term loan with Heller that
is amortized based on 15 years, with an interest rate of 9.65 percent.
Under the terms of the agreement, the Company has borrowed $5,000,000 to
date and has the right to borrow the remaining balance under certain
conditions, on or before November 1, 2001. The loan is collateralized by
the Company's real estate and personal property in the U.S. (See Note 8 -
Financing, to Consolidated Financial Statements).
21
Based on current operations and anticipated sales growth, management
believes that cash flow from operations will be sufficient to meet all of
its debt service requirements and working capital needs. The sale and
leaseback of the 13 remaining properties in Australia will also be utilized
to fund the Company's capital expenditure requirements.
Share Repurchase
----------------
There was no share repurchase activity during the quarter ended February 4,
2001. The total number of shares repurchased to date is 1,129,400 out of
1.5 million authorized. The Company may purchase additional shares in the
fourth quarter subject to SEC and NYSE rules.
QUANTITATIVE AND QUALITATIVE MARKET RISK DISCLOSURES
----------------------------------------------------
The Company's primary financial instrument subject to market risk is a bank
loan with an outstanding principal balance of $23,016,000 at February 4,
2001. The loan is payable in Australian dollars and is collateralized by
the principal operating assets of the Company's international division. The
line-of-credit bears variable interest at a rate equal to the Australian
interbank borrowing rate, plus a margin of 2.25 percent. The primary
exposures relating to this financial instrument result from both changes in
the interest rates and fluctuation in foreign exchange rates. As of the end
of this quarter the Australian interbank borrowing rate was approximately
6.0 percent.
To limit the Company's exposure to interest rate increases, the Company
entered into an interest rate cap contract which prevents the Company's
interest rate from exceeding 7.60 percent, in which case the subsidiary
would receive the difference between the contract rate and the actual
interest rate. The interest rate cap is in place and covers approximately
33 percent of the loan principal outstanding and expires August 31, 2003.
In addition, the Company has entered into an interest rate swap contract to
convert part of its variable interest exposure to a fixed rate of 7.60
percent. The interest rate swap contract in place as of the end of the
fiscal year covered approximately 33 percent of the loan principal
outstanding and expires August 31, 2003.
The Company's foreign exchange exposure related to its bank debt is hedged
since payments are made from operating cash flows generated from the
operations of the Company's Australian subsidiaries.
FORWARD-LOOKING STATEMENTS
--------------------------
With the exception of any historical information contained in this report,
the matters described herein contain forward-looking statements that are
made pursuant to the "safe harbor" provisions of the Private Securities
Litigation Act of 1995. These
22
statements may include but are not limited to, statements regarding: (1)
the expected continuation of the Company's growth in revenues and earnings;
(2) the anticipated continuation of the remodeling of U.S. franchised
Sizzler(R) locations; (3) the Company's plans to continue the re-
positioning of its Australian Sizzler(R) restaurants through remodeling,
menu changes and better service; (4) the addition of new KFC(R) and co-
branded units in fiscal 2001 and 2002; (5) the financial impact of the E.
coli incident and the adequacy of the Company's insurance; (6) the
continuing growth of Oscar's; (7) any increase in the Company's borrowing;
(8) the adequacy of cash flow from operations to meet debt service, capital
expenditure and working capital needs.
Sizzler(R) cautions that these statements are qualified by important
factors that could cause actual results to differ materially from those
reflected in the forward looking statements contained herein. Such factors
include, but are not limited to: (1) the overall economic conditions in the
U.S. and whether they will have any impact on restaurant operations in
general and affecting the Company in particular; (2) whether the Company's
franchisees will determine to complete the remodeling of all franchise
locations in the U.S. on schedule; (3) the Company's ability to complete
the remodeling of its existing Australian Sizzler(R) and KFC(R) locations;
(4) whether the repositioning of the U.S. and international Sizzler(R)
concepts will attract new customers and prove effective in retaining
existing customers; (5) the Company's ability to open additional KFC(R)
locations and commence its co-branding test at certain locations; (6) when
the Company can recover the sales and profits lost due to the E. coli
incident; (7) the valuation of net assets acquired from Oscar's; (8) the
Company's ability to open new Oscar's locations on schedule and achieve
sales growth at the new and existing Oscar's locations; (9) the Company's
future cash requirements; (10) the Company's ability to control cash flow
margins; (11) other risks as detailed from time to time in Sizzler(R)'s SEC
reports, including Quarterly Reports on Form 10Q, Current Reports on Form
8-K, and Annual Reports on Form 10-K.
23
SIZZLER INTERNATIONAL, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
a. Subsidiaries of the Company were named as defendants in seven of nine
lawsuits filed by individuals who were affected by the E. coli incident at
two franchised locations in the Milwaukee, Wisconsin area on July 26, 2000.
Out of nine lawsuits, two were filed as class actions. Defendant Excel
Corporation removed the cases in which it is a defendant to the United
State District Court for the Eastern District of Wisconsin. Plaintiffs have
filed motions to remand these cases back to the state court and these
motions are pending decision by the United States District Court. All
discovery has been stayed in all state cases. The state court has set a
trial date of May 6, 2002.
b. Secura Insurance v. Sizzler USA Franchise, Inc. and Sizzler Restaurants
International Inc., Case No. 00CV003314 (Circuit Court, Milwaukee,
Wisconsin). Lawsuit seeking declaratory relief whether our franchisee's
insurance company or the Company has unilateral right to select counsel in
the E. coli litigation in Milwaukee. Motions to resolve the selection of
counsel issue are pending.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a. Reports on Form 8-K
The Company filed a report on Form 8-K dated November 22, 2000 reporting
the following press releases.
On November 10, 2000, the Company issued a press release announcing
the date of its quarterly analyst call.
On November 16, 2000, the Company issued a press release announcing
earnings for the second quarter.
The Company filed a report on Form 8-K dated December 7, 2000 reporting
that on November 30, 2000, Sizzler International, Inc. issued press
releases announcing the opening of a new Company store in Cathedral City,
California. The new Cathedral City store, that holds a capacity of 250
people and integrates Sizzler's new menu, is a continuation of Sizzler's
repositioning program.
24
The Company filed a report on Form 8-K dated January 11, 2001 reporting
that on January 5, 2001 Sizzler International, Inc. issued a press release
to announce that the Company has entered into a new seven year, $10 million
term loan with Heller Financial, Inc. The facility is arranged to fund the
completion of the Sizzler USA remodel program and the expansion of Oscar's.
The Company filed a report on Form 8-K dated January 22, 2001 reporting
that on January 10, 2001 Sizzler International, Inc. issued a press release
to announce that the Board of Directors renewed the Company's shareholder
rights' plan similar to its initial rights' plan, which expired on January
22, 2001 after a term of 10 years.
25
SIGNATURES
Pursuant to the requirement 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.
SIZZLER INTERNATIONAL, INC.
Registrant
Date: March 21, 2001 /s/ Charles L. Boppell
----------------------------------
Charles L. Boppell
Chief Executive Officer
Date: March 21, 2001 /s/ Mary E. Arnold
----------------------------------
Mary E. Arnold
Vice President and Controller
(Principal Accounting Officer)
26