Texas
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76-0493269
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(State
or other jurisdiction of
incorporation
or organization)
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(IRS
Employer Identification Number)
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1135
Edgebrook, Houston, Texas
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77034-1899
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Page
No.
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2
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3
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4
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5
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7
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11
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11
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12
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12
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12
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Signatures
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13
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14
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15
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16
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17
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Item
1. Financial Statements
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|||||||||
Mexican
Restaurants, Inc. and
Subsidiaries
|
||||||||||
Consolidated
Balance Sheets
|
||||||||||
(unaudited)
|
||||||||||
ASSETS
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4/2/2006
|
1/1/2006
|
||||||||
Current
assets:
|
||||||||||
Cash
and cash equivalents
|
$
|
716,064
|
$
|
788,109
|
||||||
Royalties
receivable
|
136,862
|
176,649
|
||||||||
Other
receivables
|
1,355,913
|
2,088,035
|
||||||||
Inventory
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693,426
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744,397
|
||||||||
Prepaid
expenses and other current assets
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957,481
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833,678
|
||||||||
Total
current assets
|
3,859,746
|
4,630,868
|
||||||||
Property,
plant and equipment
|
32,338,627
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31,511,205
|
||||||||
Less
accumulated depreciation
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(15,855,871
|
)
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(15,315,864
|
)
|
||||||
Net
property, plant and equipment
|
16,482,756
|
16,195,341
|
||||||||
Goodwill
|
10,902,664
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10,902,664
|
||||||||
Deferred
tax assets
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168,085
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256,274
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||||||||
Property
held for sale, net
|
626,228
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625,318
|
||||||||
Other
assets
|
487,893
|
526,804
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||||||||
Total
Assets
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$
|
32,527,372
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$
|
33,137,269
|
||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||||
Current
liabilities:
|
||||||||||
Current
installments of long-term debt
|
$
|
1,250,000
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$
|
1,000,000
|
||||||
Accounts
payable
|
1,516,991
|
1,710,068
|
||||||||
Income
taxes payable
|
269,693
|
203,116
|
||||||||
Accrued
sales and liquor taxes
|
192,348
|
127,283
|
||||||||
Accrued
payroll and taxes
|
1,308,690
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1,685,235
|
||||||||
Accrued
expenses - other
|
1,144,296
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1,536,895
|
||||||||
Total
current liabilities
|
5,682,018
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6,262,597
|
||||||||
Long-term
debt, net of current portion
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3,750,000
|
4,500,000
|
||||||||
Other
liabilities
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1,923,762
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1,930,056
|
||||||||
Deferred
gain
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1,509,034
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1,561,070
|
||||||||
Commitments
and Contingencies
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-
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-
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||||||||
Stockholders'
equity:
|
||||||||||
Preferred
stock, $.01 par value, 1,000,000 shares
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||||||||||
authorized, none issued
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-
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-
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||||||||
Common
stock, $0.01 par value, 20,000,000 shares
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||||||||||
authorized, 4,732,705 shares issued
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47,327
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47,327
|
||||||||
Additional
paid-in capital
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19,419,205
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19,406,139
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||||||||
Retained
earnings
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12,386,734
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11,620,788
|
||||||||
Treasury
stock of 1,375,728 common shares
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(12,190,708
|
)
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(12,190,708
|
)
|
||||||
Total
stockholders' equity
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19,662,558
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18,883,546
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||||||||
Total
Liabilities and Stockholders' Equity
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$
|
32,527,372
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$
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33,137,269
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||||||
Consolidated
Statements of Income
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||||||||||
(unaudited)
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||||||||||
13-Week
|
|
13-Week
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|
|||||||
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Period
Ended
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Period
Ended
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|||
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4/02/2006
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4/03/2005
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||||
Revenues:
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||||||||||
Restaurant
sales
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$
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21,490,234
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$
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19,902,501
|
||||||
Franchise
fees, royalties and other
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168,699
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175,690
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||||||||
21,658,933
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20,078,191
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|||||||||
Costs
and expenses:
|
||||||||||
Cost
of sales
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5,919,221
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5,372,291
|
||||||||
Labor
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6,874,744
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6,524,294
|
||||||||
Restaurant
operating expenses
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4,941,691
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4,590,533
|
||||||||
General
and administrative
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1,862,091
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1,789,735
|
||||||||
Depreciation
and amortization
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754,544
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649,906
|
||||||||
Pre-opening
costs
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49,737
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989
|
||||||||
Hurricane
Rita losses
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19,463
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-
|
||||||||
Loss
on sale of assets
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5,959
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2,192
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||||||||
20,427,450
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18,929,940
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|||||||||
Operating
income
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1,231,483
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1,148,251
|
||||||||
Other
income (expense):
|
||||||||||
Interest
income
|
630
|
630
|
||||||||
Interest
expense
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(110,199
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)
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(150,578
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)
|
||||||
Other,
net
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23,798
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42,190
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||||||||
(85,771
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)
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(107,758
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)
|
|||||||
Income
from continuing operations before income taxes
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1,145,712
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1,040,493
|
||||||||
Income
tax expense
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379,766
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342,300
|
||||||||
Income
from continuing operations
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765,946
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698,193
|
||||||||
Discontinued
Operations:
|
||||||||||
Loss
from discontinued operations
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-
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(36,627
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)
|
|||||||
Income
tax benefit
|
-
|
13,581
|
||||||||
Loss
from discontinued operations
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-
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(23,046
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)
|
|||||||
Net
income
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$
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765,946
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$
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675,147
|
||||||
Basic
income per share
|
||||||||||
Income
from continuing operations
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$
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0.23
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$
|
0.21
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||||||
Loss
from discontinued operations
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-
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(0.01
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)
|
|||||||
Net
income
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$
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0.23
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$
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0.20
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||||||
Treasury
stock of 1,375,728 common shares
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$
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0.21
|
$
|
0.19
|
||||||
Loss
from discontinued operations
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-
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(0.01
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)
|
|||||||
Net
income
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$
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0.21
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$
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0.18
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||||||
Weighted
average number of shares (basic)
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3,356,977
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3,414,805
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||||||||
Weighted
average number of shares (diluted)
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3,634,802
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3,732,401
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Consolidated
Statements of Cash Flows
|
|||||||
(unaudited)
|
|||||||
13-Weeks
Ended
|
13-Weeks
Ended
|
||||||
4/02/2006
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4/03/2005
|
||||||
Cash
flows from operating activities:
|
|||||||
Net income
|
$
|
765,946
|
$
|
675,147
|
|||
Adjustments to reconcile net income to net cash
|
|||||||
provided
by operating activities:
|
|||||||
Depreciation and amortization
|
754,544
|
649,906
|
|||||
Deferred gain amortization
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(52,036
|
)
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(52,045
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)
|
|||
Loss from discontinued operations
|
-
|
23,046
|
|||||
Loss on sale of property, plant & equipment
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5,959
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2,192
|
|||||
Stock option compensation expense
|
13,066
|
-
|
|||||
Deferred compensation
|
-
|
6,303
|
|||||
Deferred taxes
|
88,189
|
150,401
|
|||||
Changes in assets and liabilities:
|
|||||||
Royalties receivable
|
39,787
|
1,020
|
|||||
Other receivables
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(52,906
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)
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(93,124
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)
|
|||
Income tax receivable/payable
|
66,577
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251,525
|
|||||
Inventory
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50,971
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(12,050
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)
|
||||
Prepaid and other current assets
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(123,803
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)
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(24,044
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)
|
|||
Other assets
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9,546
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17,456
|
|||||
Accounts payable
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(193,077
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)
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(154,713
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)
|
|||
Accrued expenses and other liabilities
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(704,079
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)
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(500,213
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)
|
|||
Other liabilities
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(6,294
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)
|
60,422
|
||||
Total adjustments
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(103,556
|
)
|
326,082
|
||||
Net cash provided by continuing operations
|
662,390
|
1,001,229
|
|||||
Net cash used in discontinued operations
|
-
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(142,751
|
)
|
||||
Net cash provided by operating activities
|
662,390
|
858,478
|
|||||
Cash
flows from investing activities:
|
|||||||
Insurance proceeds from Hurricane Rita losses
|
785,028
|
-
|
|||||
Purchase of property, plant and equipment
|
(1,019,463
|
)
|
(619,695
|
)
|
|||
Net
cash used in continuing operations
|
(234,435
|
)
|
(619,695
|
)
|
|||
Net cash used in investing activities
|
(234,435
|
)
|
(619,695
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Net
borrowings (payments) under line of credit
|
2,000,000
|
(250,000
|
)
|
||||
Payments
of Long Term Notes Payable
|
(2,500,000
|
)
|
-
|
||||
Net cash used in continuing operations
|
(500,000
|
)
|
(250,000
|
)
|
|||
Net cash used in financing activities
|
(500,000
|
)
|
(250,000
|
)
|
|||
Decrease in cash and cash equivalents
|
(72,045
|
)
|
(11,217
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
788,109
|
1,293,836
|
|||||
Cash
and cash equivalents at end of period
|
$
|
716,064
|
$
|
1,282,619
|
|||
Supplemental
disclosure of cash flow information:
|
|||||||
Cash
paid during the period:
|
|||||||
Interest
|
$
|
122,098
|
$
|
145,478
|
|||
Income Taxes
|
$
|
225,335
|
$
|
5,645
|
2. |
Stock-Based
Compensation
|
13
Weeks Ended
|
||
4/3/05
|
4/2/06
|
|
Risk-free
interest rate
|
4.05%
|
N/A
|
Expected
life, in years
|
8.1
|
N/A
|
Expected
volatility
|
28.3%
|
N/A
|
Dividend
yield
|
0%
|
N/A
|
13
Weeks Ended
|
|
4/3/2005
|
|
Net
income - as reported
|
$675,147
|
Less:
Stock based compensation expense, determined under fair value
based
method for all awards, net of taxes
|
21,367
|
Pro
forma net income
|
$653,780
|
Net
income per share diluted - as reported
|
$0.18
|
Pro
forma net income per share diluted
|
$0.18
|
Period
|
Total
Number of
Shares
Purchased
|
Average
Price Paid Per Share
|
Total
Number of Shares
Purchased
as Part of
Publicly
Announced Plans or Programs
|
Maximum
Number of Shares that May yet be Purchased Under the Plans
or
Programs
|
1/2/2006-4/2/2006
|
0
|
0
|
0
|
(1)
|
(1) |
Under
a share repurchase program approved by the Board of Directors of
the
Company on May 2, 2005, and amended September 7, 2005, the Company
is
authorized to repurchase up to $2,000,000 in maximum aggregate
amount of
the Company’s Common Stock (not to exceed repurchases up to $500,000 in
any one quarter). The repurchase program is designed to comply
with Rules
10b-18 and Rule 10b5-1 under the Securities Exchange Act of 1934
under
which an agent appointed by the Company will determine the time,
amount,
and price at which purchases of common stock will be made, subject
to
certain parameters established in advance by the Company. As of
April 2,
2006, the Company has $261,733 of repurchase authority remaining.
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Exhibit
Number
|
Document
Description
|
Dated:
May 10, 2006
|
By:
/s/ Curt Glowacki
|
|
Curt
Glowacki
|
||
Chief
Executive Officer
|
||
(Principal
Executive Officer)
|
Dated:
May 10, 2006
|
By: /s/ Andrew J. Dennard
|
|
Andrew
J. Dennard
|
||
Executive
Vice President, Chief Financial Officer & Treasurer
|
||
(Principal
Financial Officer and
|
||
(Principal
Accounting Officer)
|