FLANIGANS ENTERPRISES INC — Proxy Solicitation & Information Statement 2003

Feb 3, 2003

FLANIGAN'S ENTERPRISES, INC. 5059 N.E.18th Avenue Fort Lauderdale, Florida 33334 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 28, 2003 Fort Lauderdale, Florida January 23, 2003 To the Stockholders of Flanigan's Enterprises, Inc., Please take notice that the Annual Meeting of Stockholders of Flanigan's Enterprises. Inc. (the "Company") will be held on Friday. February 28, 2003, at 10:00 A.M., at its corporate headquarters, 5059 N.E. 18th Avenue, Fort Lauderdale, Florida 33334 to consider and act upon the following matters: (1) To elect three directors of the Company to hold office until the year 2006 Annual Meeting; (2) To transact such other business as may properly come before the meeting. Details relating to these matters are set forth in the attached proxy statement. Stockholders of record at the close of business on January 20, 2003, will be entitled to vote at the meeting. The Company invites each stockholder to attend the meeting in person. However, whether or not you expect to be present, your cooperation in promptly signing and returning the enclosed proxy in the envelope provided will be appreciated. Regardless of the number of shares you own, your vote is important. If you are present and vote in person at the meeting, the proxy will not be used. The Board recommends and requests a vote "FOR" the three nominees to the Board of Directors. FLANIGAN'S ENTERPRISES, INC. Edward A. Doxey, Secretary FLANIGAN'S ENTERPRISES, INC. 5059 N.E.18th Avenue Fort Lauderdale, Florida 33334 PROXY STATEMENT January 23, 2003 ANNUAL MEETING OF STOCKHOLDERS This proxy statement is furnished in connection with the solicitation by the management of Flanigan's Enterprises, Inc. (the "Company") of proxies for use at the Annual Meeting of Stockholders of the Company to be held on Friday, February 28, 2003, at 10:00 A.M. at its corporate headquarters, 5059 N.E. 18th Avenue, Fort Lauderdale, Florida, 33334 or at any adjournment of such meeting. Stockholders of record as of the close of business on January 20, 2003 are entitled to vote at the meeting. On that date there were outstanding 1,926,470 shares of Common Stock ($.10 par value) of the Company, with each entitled to one vote. The Company's Annual Report (including the Form 10-K filed with the Securities and Exchange Commission) for the fiscal year ended September 28, 2002 is enclosed. The accompanying proxy is revocable by the stockholders at any time before it is exercised. Any stockholder attending the meeting may vote in person whether or not a proxy was previously signed. Unless revoked, properly executed proxies will be voted in accordance with specifications therein. Proxies with no specifications will be voted in favor of all proposals. There are no rights of appraisal or similar rights of dissenters with respect to any matter to be acted upon at the meeting. Solicitation of proxies is to be made by use of the mails, and in addition, may be made by directors, officers and regular employees of the Company, either personally or by telephone. The cost of the solicitation will be borne by the Company, including reimbursement of brokerage firms and other custodian or nominees for reasonable expenses incurred in distributing these proxy materials to their beneficiaries. 1 PROPOSAL ONE: ELECTION OF DIRECTORS The By-Laws of the Company provide for a Board of Directors which shall consist of three classes of directors of three directors each. Three directors are to be elected to replace those of the class whose terms expire this year. The three directors to be elected at the annual meeting shall serve for a three-year term expiring in 2006 and until their respective successors are elected and qualified. Shares of stock represented by valid proxies received in time for the meeting will be voted for the election of the nominees listed below. It is not anticipated that any of the nominees will be unavailable for election as a director, but in case any of the nominees should become unavailable, the proxies will be voted for such substitute as shall be designated by the Board of Directors. Charles E. McManus has been a director since 1982, James G. Flanigan has been a director since 1991 and Edward A. Doxey has been a director since 1998. DIRECTORS ELECT

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(1) James G. and Patrick J. Flanigan are the sons of the Chairman of the Board (2) Includes 79,600 shares owned by a trust of which Patrick J. Flanigan is one of three trustees and a beneficiary, 2,000 shares owned by his spouse, 400 shares owned by his spouse as custodian for his children and 7,000 shares owned by a trust for his children and of which he is the trustee. (3) Includes 79,600 shares owned by a trust of which James G. Flanigan is one of three trustees and a beneficiary, 400 shares owned as custodian for his children, 5,600 shares owned by his spouse and 7,000 shares owned by a trust for his children and of which he is the trustee (4) Includes 150,000 shares owned by the spouse of the Chairman of the Board, 79,600 shares owned by a trust of which the spouse of the Chairman of the Board is one of the three trustees and 2,400 shares owned by grandchildren of the Chairman of the Board. (5) Includes 398,000 shares owned equally by five trusts of which Jeffrey D. Kastner is one of three trustees. The five trusts include the trusts of Patrick J. Flanigan (See Note (2) above), James G. Flanigan (See Note (3) above), and the trust of which the spouse of the Chairman of the Board is one of three trustees (See Note (4) above) and the 79,600 shares owned by each trust. (6) Includes 238,800 shares owned equally by the three trusts of which Jeffrey D. Kastner is one of the three trustees. The 79,600 shares owned by each of the trusts of Patrick J. Flanigan (See Note (2) above) and James G. Flanigan (See Note(3) above) are included in the calculation of beneficial stock ownership of those individuals only. The 79,600 shares of stock owned by a trust of which the spouse of the Chairman of the Board is one of three trustees is not included, as that stock is already included in the calculation of beneficial ownership of Jeffrey D. Kastner. The 400 shares owned by Patrick J. Flanigan, as custodian for his children, and the 400 shares owned by James G. Flanigan, as custodian for his children, are not included, as that stock is already included in the calculation of beneficial ownership of the Chairman of the Board. (7) Includes 120 shares owned by his daughter, and 100 by his grandchild. The Board of Directors met four times during the past fiscal year and each director attended at least three of those meetings of the Board and its committees. Each director who is not a full time employee of the Company receives an annual director's fee of $7,500 plus $250 for attendance at each Directors Meeting and Audit Committee Meeting. 3 BOARD OF DIRECTORS, COMMITTEES AND NOMINATIONS The principal committee of the Board of Directors is the Audit Committee. The functions of this committee include recommending the engaging and discharging of the Company's independent auditors, reviewing with the independent auditors the plan and results of the audit engagement, approving professional services provided by the independent auditors prior to the performance of such services, reviewing the range of audit and non-audit fees and reviewing the adequacy of the Company's system of internal accounting controls. The Audit Committee held two meetings during the past fiscal year. The members of the Audit Committee for fiscal year 2002 were Charles McManus, Germaine Bell and Mike Roberts. While there is no nominating committee, the entire Board selects nominees for election as directors and considers the performance of directors in determining whether to nominate them for re-election. In performing these functions, the Board considers any stockholder recommendations with respect to the composition of the Board. Any recommendation by a stockholder of a proposed candidate must be in writing, accompanied by a description of the proposed nominee's qualification and other relevant biographical information together with the consent of the proposed nominee to serve. The recommendation should be directed to the Board of Directors, Attention: Secretary, Flanigan's Enterprises, Inc., 5059 N.E. 18th Avenue. Fort Lauderdale, Florida 33334. 4 THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES SET FORTH HEREIN. EXECUTIVE COMPENSATION The following table sets forth the compensation paid by the Company during the fiscal year ended September 28, 2002 to all of the Company's executive officers whose aggregate direct re-numeration exceeded $60,000, and to all executive officers as a group. COMPENSATION TABLE Other Name and Principal Position Annual Compensation Compensation (1)(2) - ----------------------------- ------------------- ------------------- Joseph G. Flanigan, (3)(4)(5) $ 283,836 $38,000 Chairman of the Board, Chief Executive Officer Jeffrey D. Kastner, (6) 151,276 Assistant Secretary and General Counsel Edward A. Doxey (6) 137,076 Chief Financial Officer and Secretary August Bucci (6) 208,976 Vice President of Restaurant Operations James G. Flanigan (6) 196,801 President Jean Picard (6) 116,192 Vice President of Package Operations Others (one in number) 42,000 ------------------- ------------------- All Executive Officers - ----------------------------- As a group (seven number) (7) $1,136,157 $38,000 - ----------------------------- (1) This table does not include incidental personal benefits of a limited nature. Although the amount of such benefits and extent to which they are related to job performance cannot be ascertained specifically, the Company has concluded that the aggregate amount does not exceed the lesser of $25,000 or 10% of the cash compensation disclosed above for any one person or all executive officers as a group. (2) Represents value of premium paid by the Company for life insurance. (3) One June 3, 1987, the Company entered into an Employment Agreement, ("Agreement"), with Joseph G. Flanigan effective January 1, through December 31, 1988 and subject to one year extensions unless either the Company or such executive shall have delivered a notice that the term will not be extended. This Agreement was approved by the Bankruptcy Court in the Company's reorganization proceedings and was ratified by stockholders at the Company's 1988 annual meeting (83% of the stockholders voting ratified the Agreement). Mr. Flanigan receives a base salary of $150,000. From 1988 until September 28, 1996 Mr. Flanigan participated in a profit sharing program based on the Company exceeding certain financial projections. Through the fiscal year ended September 28, 1996 no bonus was earned under the Agreement. At the Company's 1997 annual meeting, the stockholders approved a modification to the Agreement to provide that during the period of Mr. Flanigan's employment, the Company will pay Mr. Flanigan in addition to his base salary an amount equal to fifteen percent of the annual income of the Company, before income taxes, in excess of $650,000, excluding extraordinary items. For the fiscal year ended October 3, 1998 a bonus of $116,000 was earned, of which the sum of $30,000 was refused by Mr. Flanigan to offset the compensation paid to other executive officers. For fiscal year ended October 2, 1999, a bonus of $165,000 was earned. For fiscal year ended September 30, 2000, a bonus of $150,000 was earned and for fiscal year ended September 29, 2001 a bonus of $205,000 was earned. At the annual meeting of the Board of Directors on February 22, 2002 and at the request of Mr. Flanigan, the Agreement was further modified to provide that during the period of Mr. Flanigan's employment, the Company will pay Mr. Flanigan in addition to his base salary an amount equal to ten percent of the annual income of the Company before 5 income taxes, in excess of $650,000, excluding extraordinary items. For fiscal year ended September 28, 2002, a bonus of $133,836 was earned. The Agreement further provides that in the event of termination, the Chairman of the Board would be entitled to a maximum payment of $450,000. During fiscal year 1996, (prior to December 30, 1995), Mr, Flanigan exercised the option to purchase 93,092 shares of the Company's common stock, pursuant to the Agreement, at $0.875 per share. The option price in the Agreement had been reduced to $ 0.875 per share in December, 1989 and approved at the Company's 1990 Annual Meeting. The Agreement further provides that in the event of a "change in control" of the Company, the term of the Agreement will continue for a period of three years thereafter, In the event of termination, Mr. Flanigan would be entitled to a maximum of $450,000. (4) During the quarter ended March 28, 1992, the Board of Directors approved issuance of additional options to Joseph G. Flanigan to purchase up to 46,450 shares of the Company's common stock. The exercise price of $2.25 equualed the fair market value on the date of issuance. By written Resolution, dated January 12, 1994, the Board of Directors approved an amendment to the stock option granted Joseph G. Flanigan increasing the amount of the option price to $6.50 per share, which reflected in excess of 110% of the per share price of the Company's stock as of the close of business on January 12, 1994. The expiration date of the stock option was also extended through February 27, 2002. This action was approved by the stockholders at the Company's 1994 Annual Meeting. During fiscal year 1999, Mr. Flanigan exercised the option to purchase 19,838 of the Company's common stock at the option price of $3.25 (adjusted for stock split on April 1, 1999). During the first quarter of fiscal year 2002, Mr. Flanigan exercised the option to purchase 72,395 of the Company's common stock at the option price of $3.25 (adjusted for stock split on April 1, 1999). (5) At the Company's 1997 Annual Meeting, the stockholders approved a modification to the Agreement which granted Mr. Flanigan the option to acquire 4.99% of the amount of common stock of the Company outstanding as of the date of exercise, but not less than 45,250 shares at the option price of $4.95 per share. The expiration date of the stock option was December 31, 2001. During fiscal year 1999, Mr. Flanigan exercised the option to purchase 27,840 shares of the Company's common stock at the option price of $4.95 per share. (6) At the annual meeting of the Board of Directors on February 22, 2002, the Board of Directors approved a bonus plan whereby executive officers receive the following percentages of the annual income of the Company, before income taxes, in excess of $650,000, excluding extraordinary items: James G. Flanigan 4% August Bucci 1.5% Jeffrey D. Kastner 1.5% Edward A. Doxey 1.5% Jean Picard 1.5% For fiscal year ended September 28, 2002, a bonus of $53,532 was earned by James G. Flanigan and bonuses of $20,276 each, were earned by August Bucci, Jeffrey D. Kastner, Edward A. Doxey and Jean Picard: (7) See "Related Party Transactions." RELATED PARTY TRANSACTIONS In fiscal year 2002, Walter L. McManus, Sr., former Vice Chairman (together with his children; Castlewood and Co., a family owned Maryland partnership; and Castlewood Realty Company, Inc., a family owned Maryland Corporation) received an aggregate of $275,469 from the Company in lease rentals for three locations where they leased to the Company the land or building. During fiscal year 2002, the Company paid the balance of agreed to lease rejection damages to companies controlled by the former Vice Chairman of the Board, pursuant to the Company's Plan of Reorganization. 6 Members of Mr. Flanigan's family purchased four units sold to them on a franchise basis in prior years. The terms of these sales were similar to one or more of the Company's other franchise sales. During fiscal 1990, Mr. Flanigan acquired a 33.33% interest in one unit sold to his family on a franchise basis in prior years. Mr. James G. Flanigan, President and a member of the Board of Directors of the Company, is also a 33.33% owner of this unit and is the manager of the day-to-day operation of the same. The Company assigned the Lease Agreement for this unit to the franchisee and vacated the sublease agreement which had been a part of the franchise purchase. With this transaction, the franchisee became responsible for all rent due under the Lease Agreement. Under the new Franchise Agreement the Company receives the royalty fees only. During fiscal 1990, Mr. Flanigan also became a 50% owner of a corporation which assumed management of the day-to-day operation of another unit sold to his family on a franchise basis in prior years. Mr. Flanigan became involved in the day-to-day operation of this unit during fiscal year 1995 on a limited basis. During fiscal year 1992, one unaffiliated franchisee expressed an interest in selling his unit or returning it to the Company pursuant to the terms of its Franchise Agreement and related documents. As a result of the substantial investment necessary to upgrade and renovate this unit, an affiliated group of investors formed a Subchapter S corporation and purchased this unit from the franchisee. The shareholder interest of all officers and directors represents 40% of the total invested capital. The shareholder interest of the Chairman's family represents an additional 50% of the total invested capital. The Company receives the increased royalties provided for in the new Franchise Agreement executed during fiscal year 1996. During the first quarter of fiscal year 1999, the Company purchased the right to manage the restaurant for this franchisee from an unrelated third party pursuant to an existing Management Agreement. The terms of the Management Agreement were not modified. During fiscal year 1995, three of the four franchises purchased by members of Mr. Flanigan's family in prior years, whose Franchise Agreements expired during fiscal year 1995 executed the Company's new Franchise Agreement for the continued operation of their restaurants under the "Flanigan's Seafood Bar and Grill" service mark or other service marks approved by the Company. During fiscal year 1996, the Company's Franchise Agreement with a member of Mr. Flanigan's family expired and the Company declined to offer the franchisee the option of executing its new franchise agreement. During the third quarter of fiscal year 1997, a related party who is a member of the Board of Directors of the Company and a member of Mr. Flanigan's family formed a limited partnership to own a certain franchise in Fort Lauderdale, Florida, through which it raised the necessary funds to renovate the restaurant. The related party paid the Company $150,000 to approve his purchase of this franchise and for the Company to relinquish its right to act as manager of the franchise. As a result of this transaction, the Company received a promissory note in the original principal amount of $100,000 which was paid in full during fiscal year 1999. The Company is a twenty-five percent limited partner in the franchise, The limited partnership interest of all officers and directors represents 48.75% of the total invested capital. The limited partnership interest of the Chairman's family represents an additional 2.5% of the invested capital. During the fourth quarter of fiscal year 1997, the Company formed a limited partnership and raised funds through a private offering to purchase the assets of a restaurant in Surfside, Florida, and renovate the same for operation under the "Flanigan's Seafood Bar and Grill" servicemark. The restaurant opened for business on March 6, 1998. The Company acts as general partner of the limited partnership and is also a 42% limited partner. The limited partnership interest of all officers and directors represents 23.20% of the total of the invested capital. The limited partnership interest of the Chairman's family and the family of one director represents an additional 8.80% of the invested capital. During the fourth quarter of fiscal year 1998, the Company formed a limited partnership and raised funds through a private offering to purchase the assets of a restaurant in Kendall, Florida and renovate the same for operation under the "Flanigan's Seafood Bar and Grill" servicemark. The restaurant opened for business on April 4, 2000. The Company as general partner of the limited partnership is also a 40% limited partner. The limited partnership interest of 7 all officers and directors represents 13.8% of the total of the invested capital. The limited partnership interest of the Chairman's family represents an additional 16.9% of the invested capital. During the third quarter of fiscal year 2001, the Company formed a limited partnership and raised funds through a private offering to purchase the assets of a restaurant in West Miami, Florida and renovate the same for operation under the "Flanigan's Seafood Bar and Grill" servicemark. The restaurant opened for business on October 11, 2001. The Company acts as general partner of the limited partnership and is also a 25% limited partner. The limited partnership interest of all officers and directors represents 14% of the total of the invested capital. The limited partnership interest of the Chairman's family represents an additional 16.5% of the invested capital. During the fourth quarter of fiscal year 2001, the Company formed a limited partnership with the Company as general partner, and entered into a Sublease Agreement to own and operate an existing restaurant in Weston, Florida. During the fourth quarter of fiscal year 2002, after the sublessor resolved several zoning and related matters, the limited partnership raised funds through a private offering to renovate the restaurant for operation under the "Flanigan's Seafood Bar and Grill" servicemark. This restaurant opened for business on January 20, 2003. The Company continues to act as general partner of the limited partnership and is also a 28% limited partner. The limited partnership interest of all officers and directors represents 24.5% of the total of the invested capital. The limited partnership interest of the Chairman's family represents an additional 10% of the invested capital. See footnotes (3) and (5) to the Compensation Table for a discussion of an Employment Agreement between the Company and its Chairman of the Board. See footnote (6) to the Compensation Table for a discussion of bonuses paid by the Company to other of its executive officers. Each of the above transactions was reviewed by the Board of Directors at the time made and were, in the opinion of management and the Board, entered into on terms which were no less favorable to the Company than could be obtained in similar transactions with disinterested third parties. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth as of January 20, 2003, the names of persons who own of record, or are known by the Company to own beneficially, more than 5 percent of its common stock and the beneficial ownership of all such stock as of that date by all officers and directors as a group. See footnotes (3), (4) and (5) to the Compensation Table for a discussion of stock options granted to Mr. Flanigan. Number of Name of Beneficial Owner Shares Percentage - ----------------------------- --------- ---------- Fidelity Investments 181,400 9.4 Joseph G. Flanigan 429,169 22.3 Jeffrey D. Kastner 418,323 21.7 James G. Flanigan 146,700 7.6 All Officers and Directors As a Group (eleven in number) 930,488 48.3 8 AUDIT FEES In the fiscal year ended September 28, 2002, the Company paid Rachlin Cohen & Holtz LLP $48,225 in connection with the preparation of its annual audit and Form 10-K and $8,331 for the quarterly reviews of its filings on Form 10-Q. FINANCIAL DEFORMATION SYSTEM DESIGN AND IMPLEMENTATION FEES Rachlin Cohen & Holtz LLP did not perform any services or bill any fees for direct or indirect operation and/or supervision of the operation of the Company's information systems, management of our local area network, and/or designing or implementing a hardware or software system that aggregates source data underlying the financial statements or generates information that are significant to our financial statements taken as a whole for the fiscal year ended September 28, 2002. ALL OTHER FEES In the fiscal year ended September 28, 2002, the Company paid Rachlin Cohen & Holtz LLP an aggregate of $5,354 for review of its income tax returns. The Audit Committee has considered the provisions for services by Rachlin Cohen & Holtz LLP, other than services rendered in connection with auditing the Company's annual financial statements and reviewing our interim financial statements and determined that the provisions for these services are compatible with maintaining the inde-pendence of Rachlin Cohen & Holtz LLP. STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING The rules and regulations of the Securities and Exchange Commission afford stockholders the right to submit proposals to the Company which the Company must then include in its proxy materials and which will be voted on by stockholders at the Annual Meeting next ensuing. Under these regulations any stockholder desiring to submit a proposal to be voted on at the 2004 Annual Meeting of the Company must deliver the proposal to the Company no later than September 22, 2003. OTHER MATTERS As of the date of this proxy statement, management does not intend to present and has not been informed that any other person intends to present, any matters for action at the meeting other than those specifically referred to herein. If, however, any other matters are properly presented at the meeting it is the intention of the persons named in the proxies to vote the shares of stock represented thereby in accordance with their best judgment on such matters. BY ORDER OF THE BOARD OF DIRECTORS Edward A. Doxey Secretary January 23, 2003 9 REVOCABLE PROXY FLANIGAN'S ENTERPRISES, INC. X PLEASE MARK VOTES AS IN THIS EXAMPLE Proxy Solicited on Behalf of the Board of Directors of the Company for Annual Meeting February 28, 2003 The undersigned hereby constitutes and appoints Jeffrey D. Kastner and Edward A. Doxey, jointly and severely as his true and lawful agents and proxies full power of substitution in each, to represent the undersigned at the Annual Meeting of Stockholders of Flanigan's Enterprises, Inc, to be held at Company's executive offices, 5059 N.E. 18th Avenue, Ft. Lauderdale, FL 33334 on Friday, February 28, 2003 at 10:00 A.M. and at any adjournments thereof on all matters coming before said meeting. Please sign exactly as name appears below. With- For All For hold Except 1. ELECTION OF DIRECTORS. [ ] [ ] [ ] Nominees: Edward A.Doxey, Charles E. McManus, James G. Flanigan INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For All Except" and write that nominee's name in the space provided below. - -------------------------------------------------------------------------------- 2. In their discretion, upon other matters as may properly come before the meeting. This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted for Proposal one. When shares are held by joint tenants, both should sign. Executors, administrators, trustees, etc. should give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer. Please be sure to sign and date Date this Proxy in the box below. -------------------------- - ----------------------- ------------------------------- Stockholder sign above Co-holder (if any) sign above c Detach above card, sign, date and mail in postage paid envelope provided. c FLANIGAN'S ENTERPRISES, INC. PLEASE ACT PROMPTLY SIGN, DATE & MAIL YOUR PROXY CARD TODAY YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH PROXY IN THE ENVELOPE PROVIDED. _______ _______ __________ 10