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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarterly period ended June 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
for the transition period from to
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Commission File Number: 1-6192
GROUND ROUND RESTAURANTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
New York 13-5637682
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
35 Braintree Hill Office Park, Braintree, Massachusetts 02184
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (617) 380-3100
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 [ ]
Number of shares of Common Stock, $ .16 2/3 par value outstanding as of August
12, 1996: 11,173,421
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PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GROUND ROUND RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1996 AND OCTOBER 1, 1995
(Dollars in thousands, except per share amounts)
1996 1995
---- ----
(Unaudited)
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 1,814 $ 2,425
Receivables, net of allowances for uncollectible
accounts of $1,059 and $797 in 1996 and 1995, respectively 1,375 1,147
Income tax refunds receivable 1,541
Inventories 2,061 2,511
Prepaid expenses and other current assets 1,591 2,115
-------- --------
Total current assets 6,841 9,739
Property and equipment:
Land 9,832 10,240
Buildings and leasehold improvements 118,093 119,749
Machinery and equipment 39,970 40,399
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167,895 170,388
Accumulated depreciation and amortization 60,619 53,484
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Property and equipment, net 107,276 116,904
Other assets 18,060 18,713
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Total Assets $132,177 $145,356
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LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 7,545 $ 5,933
Accrued expenses 13,087 11,190
Current portion of long-term debt and capital lease obligations 813 8,277
-------- --------
Total current liabilities 21,445 25,400
Long-term debt and capital lease obligations 52,445 50,303
Deferred income taxes 1,120
Other long-term liabilities 8,283 8,849
STOCKHOLDERS' EQUITY:
Preferred Stock, undesignated, par value $100 per share;
authorized 30,000 shares; none issued
Common Stock, par value $.16 2/3 per share: authorized 35,000,000
shares in 1996 and 1995; issued 11,174,000 in 1996 and 1995 1,862 1,862
Additional paid-in capital 57,883 57,883
Accumulated deficit (9,741) (61)
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Total stockholders' equity 50,004 59,684
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Total Liabilities and Stockholders' Equity $132,177 $145,356
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See notes to consolidated financial statements.
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GROUND ROUND RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
13 WEEKS ENDED 39 WEEKS ENDED
June 30, July 2, June 30, July 2,
1996 1995 1996 1995
---- ---- ---- ----
REVENUE $55,779 $56,145 $165,462 $175,480
------- ------- -------- --------
COSTS AND EXPENSES:
Cost of products sold 51,148 48,914 152,556 149,792
Selling, general and administrative 4,336 3,412 12,619 12,099
Depreciation and amortization 2,893 3,652 9,064 11,098
Interest expense, net 1,183 1,284 3,633 3,762
Other (income) expense 373 (32) 498 1,597
------- ------- -------- --------
59,933 57,230 178,370 178,348
------- ------- -------- --------
Loss before taxes (4,154) (1,085) (12,908) (2,868)
Income tax benefit (1,038) (347) (3,227) (918)
------- ------- -------- --------
NET LOSS $(3,116) $ (738) $ (9,681) $ (1,950)
======= ======= ======== ========
Weighted average common shares 11,174 11,159 11,174 11,129
outstanding
PER SHARE DATA:
Net loss per common share $ (.28) $ (.07) $ (.87) $ (.18)
======= ======= ======== ========
See notes to consolidated financial statements.
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GROUND ROUND RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
39 Weeks Ended 39 Weeks Ended
June 30, 1996 July 2, 1995
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(9,680) (1,950)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 9,378 11,370
Deferred taxes (3,015) (1,734)
Other, net 96
Change in operating assets and liabilities:
Accounts receivable (228) 397
Income tax refunds receivable 1,541
Inventories and prepaid expenses 1,280 47
Accounts payable and other liabilities 4,039 (1,895)
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Net cash provided by operating activities 3,315 6,331
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,471) (9,259)
Proceeds on sale of property & equipment 3,034 4,053
Sale of liquor license 293 176
Deposits received 176
Pre-opening costs (386)
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Net cash provided by (used in) investing activities 1,856 (5,240)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 44,800
Payments of long-term borrowings (5,322) (46,033)
Proceeds from issuance of common stock 216
Payments of deferred debt costs (460) (241)
------- --------
Net cash used in financing activities (5,782) (1,258)
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NET DECREASE IN CASH (611) (167)
Cash and cash equivalents at beginning of period 2,425 1,457
------- --------
Cash and cash equivalents at end of period $ 1,814 $ 1,290
======= ========
See notes to consolidated financial statements.
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GROUND ROUND RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED JUNE 30, 1996 AND JULY 2, 1995
(Unaudited)
1. BASIS OF PRESENTATION
In the opinion of Management, the accompanying unaudited consolidated
financial statements contain all adjustments, which are of a normal
recurring nature, necessary to present fairly Ground Round Restaurants,
Inc.'s (the "Company") financial position as of June 30, 1996 and the
results of operations for the 13-week and 39-week periods ended June 30,
1996 and July 2, 1995. These financial statements have been prepared by the
Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such regulations, although the Company believes the disclosures provided
are adequate to prevent the information presented from being misleading. It
is suggested that these financial statements be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's annual report on Form 10-K for the year ended October 1, 1995 and
Form 10-Q for the quarterly period ended March 31, 1996.
Certain items in specific captions in the accompanying consolidated
financial statements have been reclassified for comparative purposes.
2. COST OF PRODUCTS SOLD
Cost of products sold comprises the following:
Three Months Ended Nine Months Ended
June 30, July 2, June 30, July 2,
1996 1995 1996 1995
---- ---- ---- ----
Food and beverage costs $19,525 $18,164 $57,694 $ 55,760
Labor Costs 19,482 18,586 58,175 57,601
Other Costs 12,141 12,164 36,687 36,431
------- ------- ------- --------
$51,148 $48,914 $52,556 $149,792
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3. LITIGATION
The Company has been named in a number of separate claims brought by former
employees alleging that the Company engaged in discriminatory practices
including those based on age or sex. Plaintiffs bringing claims of
employment discrimination, such as those being brought against the Company,
generally are entitled to have their claims tried by a jury and such claims
may result in punitive damage awards. Most of the proceedings against the
Company are still in the discovery phase. Management believes that the
discrimination claims against the Company are without merit and the Company
is actively defending the claims. Management does not expect that the
resolution of these matters will have a material adverse effect on the
consolidated financial position of the Company.
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4. SUBSEQUENT EVENTS
As of June 28, 1996, the Company agreed to sell up to 16 restaurants to
Lone Star Steakhouse & Saloon, Inc. ("Purchaser") for up to $16 million in
cash. Closing of the sale of the restaurants is subject to the satisfaction
of certain conditions, including the issuance or regulatory approval of the
assignment of liquor licenses to the Purchaser, obtaining of consent of
lessors to the assignment of leases where required, the right of the
Purchaser to renegotiate leases with the lessors with respect to seven
restaurants, and the conveyance of good title to each restaurant by the
Company. Any restaurant as to which the closing conditions cannot be timely
satisfied may be rejected by the Purchaser, in which case the purchase
price shall be reduced by a specified amount agreed by the parties;
provided, however, in no event shall the Purchaser purchase less than
eleven restaurants.
The closing of the transaction shall occur five business days after the
issuance of regulatory approval of the assignment of the liquor licenses to
the Purchaser, but in no event later than November 30, 1996. In the event
not all of the liquor licenses or regulatory approvals of the assignments
is obtained prior to the scheduled closing date, the parties may close with
respect to a minimum of eleven restaurants for which such closing
conditions have been satisfied, with the closing on the balance of the
restaurants within five business days after all closing conditions have
been satisfied.
On July 23, 1996, the Company announced that it had agreed to the terms of
a restructured credit facility subject to entering into a definitive
amended credit agreement. The restructured credit facility provides for
continuation of the total amount of the credit facility available to the
Company through May 31, 1997, subject to automatic extension to December
31, 1997 if the principal amount of the facility is reduced by $12 million
prior to May 30, 1997. The restructured credit facility also permits the
Company to retain $5 million out of the first $11 million in asset sale
proceeds received by the Company subsequent to April 30, 1996.In addition,
the restructured credit facility reschedules payment of a prior amendment
fee to commence on September 1, 1996.
Interest on the restructured facility is LIBOR plus 2.625% on the Company's
LIBOR loans and Alternate Base Rate ("ABR") plus .75% on the Company's ABR-
based loans.. The Company has agreed to a restructuring fee equal to 5% of
the amount of the restructured facility, subject to reduction to 2.5% upon
payment of approximately $12.5 million of the principal amount of the
restructured facility prior to March 16, 1997. At the option of the banks,
the amount of such restructuring fee, initially due on May 30, 1997, is
convertible into common stock of the Company after May 1, 1997 at the price
of $2.71 per share.
Pursuant to the terms of the restructured credit facility, if the
transaction with the Purchaser is consummated, the Company will use
approximately 75% of the sale proceeds to reduce bank debt and retain the
remainder for general corporate purposes.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL
The Company operated 146 and franchised 45 family-oriented, full service casual
dining restaurants at June 30, 1996.
For purposes of this discussion and analysis, the 39-week periods ended June 30,
1996 and July 2, 1995 are referred to as the nine months ended 1996 and 1995,
respectively. The 13-week periods ended June 30, 1996 and July 2, 1995 are
referred to as the third quarter of 1996 and 1995, respectively.
COMPARATIVE RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED
JUNE 30, 1996 AND JULY 2, 1995
The following table sets forth the percentages which the items in the Company's
Consolidated Statements of Operations bear to total revenue or restaurant
revenue, as indicated:
THREE MONTHS ENDED NINE MONTHS ENDED
June 30, July 2, June 30, July 2,
1996 1995 1996 1995
---- ---- ---- ----
Restaurant revenue 99.2% 98.8% 99.2% 99.0%
Franchise revenue .8 1.2 .8 1.0
----- ----- ----- -----
Total Revenue 100.0 100.0 100.0 100.0
Cost of products sold (1) 92.5 88.2 93.0 86.2
Selling, general & administrative 7.8 6.1 7.6 6.9
Depreciation and amortization 5.2 6.5 5.5 6.3
Interest expense, net 2.1 2.3 2.2 2.1
Other (income) expense .7 (.1) .3 .9
Loss before taxes (7.4)% (1.9)% (7.8)% (1.6)%
Income tax benefit (1.9) (.6) (1.9) (.5)
Net loss (5.5)% (1.3)% (5.9)% (1.1)%
<FN>
(1) As a percentage of restaurant revenue.
RESTAURANT REVENUE: Restaurant revenue totaled $55.3 million for the third
quarter and $164.1 million for the nine months ended June 30, 1996, versus $55.5
million and $173.8 million for the third quarter and nine months ended July 2,
1995, respectively. Restaurant revenue is comprised of comparable restaurant
revenue (revenue generated from restaurants open during all of both fiscal
years) and non-comparable restaurant revenue.
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Comparable restaurant revenue increased 3.7% and decreased by 1.8% for the third
quarter and nine months of 1996, respectively. Management believes that the
decline in comparable store sales of 8.3% during the first quarter of fiscal
1996 was largely attributable to the menu introduced by the Company in November
1994, which reduced the number of menu items offered to approximately 50. In
December 1995, the Company introduced an expanded, newly designed menu featuring
more than 150 items. Management believes that largely as a consequence of the
new menu, comparable restaurant revenue increased over the respective prior
periods during the months of February, March and the third quarter of 1996,
after a decline in January as a result of severe winter weather in markets where
the Company operates.
Non-comparable restaurant revenue declined $2.1 million in the third quarter and
decreased $6.8 million for the nine months ended June 30, 1996, respectively,
over the same periods ended July 2, 1995. The decline for the third quarter was
the result of the sale or closing of four restaurants during the last three
months of fiscal 1995 and the sale or closing of six restaurants during the nine
months ended June 30, 1996, offset by the opening of four new restaurants during
fiscal 1995 which are currently classified as non-comparable. The decrease for
the nine months ended June 30, 1996 is attributable to the sale or closing of 16
restaurants during fiscal 1995 and the sale or closing of six restaurants during
the nine months ended June 30, 1996, offset by the opening of four new
restaurants during fiscal 1995 which are currently classified as non-comparable.
FRANCHISE REVENUE: The Company's franchise base consisted of 45 restaurants
during the third quarter of 1996 and 47 restaurants in the third quarter of
1995. Net revenue from franchise restaurants (consisting of royalties and
initial franchise fees) was approximately $472,000 for the third quarter and
$1,374,000 for the nine months ended June 30, 1996, respectively, versus
approximately $663,000 and $1,690,000 for the third quarter and nine months
ended July 2, 1995, respectively. One initial franchise fee of $10,000 was
recognized in the third quarter and nine months ended June 30, 1996. Initial
franchise fees totaling $115,000 and $150,000 were recognized in the third
quarter and nine months ended July 2, 1995, respectively.
COST OF PRODUCTS SOLD: Cost of products sold consists of both food and beverage
costs and restaurant operating expenses. Food and beverage costs totaled 35.3%
and 35.2% of Company-operated restaurant revenue in the third quarter and nine
months ended June 30, 1996, respectively, versus 32.7% and 32.1% for the third
quarter and nine months ended July 2, 1995, respectively. Restaurant operating
expenses were 57.2% and 57.8% of Company-operated restaurant revenue in the
third quarter and nine months ended June 30, 1996, respectively, versus 55.5%
and 54.1% for the third quarter and nine months ended July 2, 1995.
Food and beverage costs as a percentage of Company-operated restaurant revenue
increased by 2.6% and 3.1% for the third quarter and nine months ended June 30,
1996, respectively, as the Company implemented a substantially re-designed menu
during the first week of December 1995. The increase can be attributed to higher
product costs associated with new menu items, including increases in portion
sizes on various menu items.
Restaurant operating expenses as a percentage of Company-operated restaurant
revenue increased 1.7% and 3.7% for the third quarter and nine months ended June
30, 1996, respectively. The increases have primarily resulted from increases in
labor costs of 1.7% for the third quarter and 2.4% for the nine months ended
June 30, 1996. This increase was directly attributable to increased kitchen
staffing during the implementation of the new menu, as the number of menu items
increased from approximately 50 items to over 150 items. Moreover, increases in
management labor base pay have been enacted in order to remain competitive
within the industry. Other costs increased .1% for the third quarter and 1.3%
for the nine months ended June 30, 1996, mainly as a result of costs associated
with the implementation of the new menu, including increases in menu design and
printing, plateware and supplies. These increases were partially offset by
decreases in local
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promotion expenses and in percentage (contingent) rent expense. Most other costs
remained at a constant dollar level due to the fixed nature of certain costs
associated with operating a restaurant.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and
administrative expenses were 7.8% and 7.6% of total revenue for the third
quarter and nine months ended June 30, 1996 as compared with 6.1% and 6.9% for
the same periods in 1995. Selling expenses, comprised of advertising and
development and production costs for point of purchase materials were .5% and
.6% of total revenue in the third quarter and nine months ended June 30, 1996,
respectively, versus .4% and 1.0% for the third quarter and nine months ended
July 2, 1995. The decrease in selling expense is primarily due to the Company's
suspension of radio and media-based advertising. Radio and media-based
advertising totaled approximately $1.7 million during the nine months ended July
2, 1995.
General and administrative costs, comprised of restaurant manager training
expenses, regional overhead and corporate administrative costs were 7.5% and
7.3% of total revenue in the third quarter and nine months ended June 30, 1996,
respectively, versus 5.7% and 5.9% for the same periods in 1995. The increase
represents additional training expenses incurred in order to properly staff the
restaurants at the management level, coupled with the addition of three regional
directors and two divisional vice presidents in order to reduce spans of control
(by reducing the number of locations that each regional director is responsible
for).
DEPRECIATION AND AMORTIZATION: Depreciation and amortization expenses were 5.2%
and 5.5% of total revenue in the third quarter and nine months ended June 30,
1996, respectively, versus 6.5% and 6.3% for the third quarter and nine months
ended July 2, 1995. The decrease is the direct result of the sale or closing of
16 restaurants during fiscal 1995 and six restaurants during the first nine
months of 1996.
OTHER EXPENSE: The third quarter and nine months ended June 30, 1996 reflects
charges of $374,000 and $499,000, respectively, as a result of consulting
expenses incurred by the Company in connection with the Company's bank
restructuring (see "Liquidity and Capital Resources" section below). The nine
months ended July 2, 1995 reflects $.8 million in expenses related to the
resignation of the Company's President, Chief Executive Officer and Chairman of
the Board, and $.8 million in expenses related to the termination of the Merger
Agreement among the Company, GRR Acquisition Corp. and GRR, Inc., which the
parties entered into on August 23, 1994 and was terminated on January 13, 1995.
INTEREST EXPENSE: Interest expense decreased by $101,000 and $129,000 for the
third quarter and nine months ended June 30, 1996 as a result of a reduction in
total debt outstanding (see "Liquidity and Capital Resources" section below).
The Company's weighted average borrowing rates were 8.1% and 8.0% for third
quarter and nine months ended June 30, 1996, respectively, versus 8.1% and 7.6%
for the same periods in 1995, respectively.
INCOME TAXES: The Company's effective income tax rates was 25% for the third
quarter and nine months ended June 30, 1996 and 32% for the third quarter and
nine months July 2, 1995.
NET LOSS: As a result of the above, the Company reported a net loss of $3.1
million and $9.7 million, or $.28 per share and $.87 per share in the third
quarter and nine months ended June 30, 1996, respectively, compared to a net
loss of $.7 million and $1.9 million, or $.07 per share and $.18 per share in
the third quarter and nine months ended July 2, 1995, respectively.
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LIQUIDITY AND CAPITAL RESOURCES
A significant amount of the Company's restaurant sales are for cash, with the
remainder made with credit cards that are generally realized in cash within a
few days. Because the Company does not have significant accounts receivable or
inventories and pays its expenses within normal terms, the Company operates with
working capital deficits as is typical in the restaurant industry. The Company
had working capital deficits of $14.6 million and $15.7 million as of June 30,
1996 and October 1, 1995, respectively.
Net cash provided by operating activities totaled $3.3 million in the first nine
months of 1996 as compared with $6.3 million in the first nine months of 1995.
The decrease is attributed to the Company's net loss of $9.7 million for the
nine months ended June 30, 1996 compared to the net loss of $1.9 million for the
nine months ended July 2, 1995. The decrease was partially offset by the receipt
of an income tax refund and by an increase in accounts payable as a result of
obtaining more favorable payment terms negotiated with the Company's vendors.
The Company incurred capital expenditures totaling $1.5 million for restaurant
capital maintenance during the first nine months of 1996, and $9.3 million for
restaurant capital maintenance, remodeling and new restaurant construction
during the first nine months of 1995. Available cash, net cash provided by
operations and proceeds from sales of restaurant locations of approximately $3.0
million funded 1996 capital expenditures and provided for the repayment of $5.3
million in borrowings under the Company's current credit facility with its banks
(the "Credit Facility"). On June 30, 1996 and October 1, 1995, the Company's
borrowings under its Credit Facility were $49.6 million and $54.1 million,
respectively. The Company currently has fully utilized the revolving portion of
its credit facility.
The credit facility obligates the Company to hedge its interest rate risk on
approximately 50% of its total term borrowings. The Company has entered into
interest rate cap agreements solely to hedge its interest rate risk as required
by the credit facility. In 1996 and 1995, the Company entered into interest rate
cap agreements under which the maximum base interest rate of its LIBOR-based
payments would have been 12.0% and 7.0%, respectively. The interest rate cap
agreements had an immaterial effect on the Company's interest expense during the
first nine months of 1996 and 1995.
The credit facility contains certain restrictions on the conduct of the
Company's business including a prohibition on the payment of dividends. In
addition, the Company is required to comply with certain financial covenants,
including maintenance of minimum net worth and earnings before interest, taxes,
depreciation and amortization, and limitations on capital expenditures.
As of July 23, 1996, the Company announced that it had agreed to the terms of a
restructured credit facility subject to entering into a definitive amended
credit agreement. The restructured credit facility provides for continuation of
the total amount of the credit facility available to the Company through May 31,
1997, subject to automatic extension to December 31, 1997 if the principal
amount of the facility is reduced by $12 million prior to May 30, 1997. The
restructured credit facility also permits the Company to retain $5 million out
of the first $11 million in asset sale proceeds received by the Company
subsequent to April 30, 1996. In addition, the restructured credit facility
reschedules payment of a prior amendment fee to commence on September 1, 1996,
and converts amount outstanding under the revolving portion of the credit
facility to a term loan.
Interest on the restructured facility is LIBOR plus 2.625% on the Company's
LIBOR loans and ABR plus .75% on the Company's ABR- based loans. The Company has
agreed to a restructuring fee equal to 5% of the amount of the restructured
facility, subject to reduction to 2.5% upon payment of approximately $12.5
million of the principal amount of the restructured facility prior to March 16,
1997. At the option of the banks, the amount of such restructuring fee,
initially due on May 30, 1997, is convertible into common stock
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of the Company after May 1, 1997 at the price of $2.71 per share.
On June 28, 1996, the Company agreed to sell up to 16 restaurants to Lone Star
Steakhouse & Saloon, Inc. ("Purchaser") for up to $16 million in cash (see Note
4, "Subsequent Events").
Pursuant to the terms of the restructured credit facility, if the transaction
with the Purchaser is consummated, the Company will use approximately 75% of the
sale proceeds to reduce bank debt and retain the remainder for general corporate
purposes.
The Company expects to incur approximately $2.5 million in capital expenditures
during fiscal 1996. Management believes that existing cash, net cash provided by
operating activities, and proceeds from the sale of restaurant locations will be
sufficient to meet operating needs, fund anticipated capital expenditures and
service debt requirements, assuming that the Credit Facility is restructured,
during fiscal 1996.
The effect of inflation has not been a factor upon either the operations or
financial condition of the Company. The Company's business is not significantly
seasonal in nature.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Title
-------- -----
10.22 Seventh Amendment, Waiver and Deferral, dated as of May 30,
1996, to the Credit Agreement.
10.23 Eighth Amendment, Waiver and Deferral, dated as of June 27,
1996, to the Credit Agreement.
10.24 Contract of Sale, dated as of June 28, 1996, between Lone Star
Steakhouse & Saloon, Inc. and the Ground Round, Inc.
10.25 Ninth Amendment and Deferral, dated as of July 29, 1996, to the
Credit Agreement.
(b) The Company filed a report on Form 8-K dated July 11, 1996 to
report under Item 2, "Disposition of Assets", an agreement
with Lone Star Steakhouse & Saloon, Inc. to sell up to 16
restaurants for up to $16 million in cash. The Company also
filed under Item 5, "Other Events", an amended Credit Facility
which deferred certain principal payments and a restructuring
fee, and permitted the Company to retain a percentage of the
proceeds from the sale of restaurants subject to the Company
and its banks reaching final agreement on a definitive term
sheet restructuring its Credit Facility.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GROUND ROUND RESTAURANTS, INC.
Date: August 13, 1996 By: /s/ Michael R. Jorgensen
------------------------
Michael R. Jorgensen
Senior Vice President, Chief Financial
Officer and Treasurer
duly authorized
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