**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 
| **ý** | ** ** | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                  |
|------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | ** **                                                                                                                                                                                                                                                                                              |
| ** ** | ** ** | **For the  quarterly period ended    March 28, 2005**                                                                                                                                                                                                                               |
|       |       |                                                                                                                                                                                                                                                                                                    |
| **o**      | ** ** | **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 1-9684**

 

**AM-CH, INC.**

(Exact name of registrant as specified in its charter)

 
| **Delaware**                                                    | ** ** | **33-0147725**                        |
|-----------------------------------------------------------------|------------|---------------------------------------|
| (State or other jurisdiction of  Incorporation or organization) |       | (I.R.S. Employer  Identification No.) |
|                                                            |       |                                  |
| **2 North Riverside, Seventh Floor, Chicago, IL  60606**        |
| (Address of principal executive offices, including  zip code)   |

 

**(312) 466-3966**

(Registrant’s telephone number, including area code)

 

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter periods that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.

 

Yes    ý  No    o

 

Indicateby check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2of the Exchange Act).

 

Yes    o  No    ý

 

Indicatethe number of shares outstanding of each of the issuer’s classes of commonstock, as of May 12, 2005:

 

Common Stock ($.01 par value) 2,005,131

 

 

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**PART I- FINANCIAL INFORMATION**

 

**ITEM1.   FINANCIAL STATEMENTS.**

 

**AM-CH, INC. AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

**(In thousands, except share data)**

 
| ** **                                                                                                                                                             | ** **   | **March 28, 2005** | ** **   | **December 27, 2004** | ** **   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|-------------------------|--------------|----------------------------|--------------|
| ** **                                                                                                                                                             | ** **   | **(Unaudited)**         | ** **   | ** **                 | ** **   |
| **ASSETS**                                                                                                                                                             | *** *** | *** ***            | *** *** | *** ***               | *** *** |
| Current assets:                                                                                                                                                        |         |                    |         |                       |         |
| Cash and cash equivalents                                                                                                                                              |         | $                       | 10,099       |                       | $            | 10,996 |   |
| Restricted cash                                                                                                                                                        |         | 2,029                   |         | —                     |         |
| Accounts receivable, net                                                                                                                                               |         | 160                     |         | 222                        |         |
| Total current assets                                                                                                                                                   |         | 12,288                  |         | 11,218                     |         |
| Other non-current assets:                                                                                                                                              |         |                    |         |                       |         |
| Restricted cash                                                                                                                                                        |         | —                  |         | 2,029                      |         |
| Leased property under capital leases, net                                                                                                                              |         | —                  |         | 1,017                      |         |
| Total other non-current assets                                                                                                                                         |         | —                  |         | 3,046                      |         |
| Total assets                                                                                                                                                           |         | 12,288                  |         | 14,264                     |         |
|                                                                                                                                                                   |         |                    |         |                       |         |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                          |         |                    |         |                       |         |
| Current liabilities:                                                                                                                                                   |         |                    |         |                       |         |
| Current portion of capital lease obligations                                                                                                                           |         | 1,836                   |         | 33                         |         |
| Accounts payable                                                                                                                                                       |         | 173                     |         | 496                        |         |
| Accrued liabilities                                                                                                                                                    |         | 2,384                   |         | 2,603                      |         |
| Total current liabilities                                                                                                                                              |         | 4,393                   |         | 3,132                      |         |
| Non-current liabilities (excluding current portion):                                                                                                                   |         |                    |         |                       |         |
| Long-term portion of capital lease obligation                                                                                                                          |         | —                  |         | 1,812                      |         |
| Other long-term obligations                                                                                                                                            |         | —                  |         | 110                        |         |
| Total non-current liabilities (excluding current  portion)                                                                                                             |         | —                  |         | 1,922                      |         |
| Stockholders’ equity:                                                                                                                                             |         |                    |         |                       |         |
| Preferred stock, $1.00 par value, 10,000,000 shares  authorized; 4,134,736 shares issued and outstanding at March 28, 2005  and December 27, 2004            |         | 4,135                   |         | 4,135                      |         |
| Common stock, $0.01 par value, 30,000,000 shares  authorized; 2,005,131 shares issued and outstanding at March 28, 2005  and December 27, 2004, respectively |         | 20                      |         | 20                         |         |
| Additional paid-in capital                                                                                                                                             |         | 65,460                  |         | 65,460                     |         |
| Retained deficit                                                                                                                                                       |         | 61,720                  |         | (60,405                    | )            |
| Total stockholders’ equity                                                                                                                                        |         | 7,895                   |         | 9,210                      |         |
| Total liabilities and stockholders’ equity                                                                                                                        |         | $                       | 12,288       |                       | $            | 14,264 |   |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

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**AM-CH, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(In thousands, except per share data)**

**(Unaudited)**

 
| ** **                                               | ** ** | **Quarterly periods ended** | ** ** |
|----------------------------------------------------------|------------|-----------------------------|------------|
| ** **                                               | ** ** | **March 28, 2005**     | ** ** | **March 29, 2004** | ** ** |
|                                                     |       |                        |       |   |   |
| Interest income (expense), net                           |       | 22                          |       | (23 | ) |
| Other income                                             |       | 51                          |       | 51 |   |
| Income before discontinued operations                    |       | 73                          |       | 28 |   |
| Discontinued operations:                                 |       |                        |       |   |   |
| Income (loss) from operations                            |       | (291                        | )          | 794 |   |
| Provision for impairment on capital lease property       |       | (1,002                      | )          | — |   |
| Loss on sale                                             |       | —                      |       | (253 | ) |
| Income (Loss) from discontinued operations               |       | (1,293                      | )          | 541 |   |
| Net Income (Loss)                                        |       | $                           | (1,220     | ) | $ | 569 |   |
| Preferred dividends                                      |       | 94                          |       | 232 |   |
| Net Income (Loss) applicable to common shares            |       | $                           | (1,314     | ) | $ | 337 |   |
| Net income (loss) per common share - basic and  diluted: |       |                        |       |   |   |
| Continuing operations                                    |       | $                           | (0.01      | ) | $ | (0.10 | ) |
| Discontinued operations                                  |       | (0.64                       | )          | 0.27 |   |
|                                                     |       | $                           | (0.66      | ) | $ | 0.17 |   |
| Weighted-average number of common shares outstanding     |       | 2,005                       |       | 2,004 |   |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

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**AM-CH, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(In thousands, unaudited)**

 
| ** **                                                                     | ** ** | **Three month periods ended** | ** ** |
|--------------------------------------------------------------------------------|------------|-------------------------------|------------|
| ** **                                                                     | ** ** | **March 28, 2005**       | ** ** | **March 29, 2004** | ** ** |
| Cash flows from operating activities:                                          | * *   | * *                      | * *   | * * | * * |
| Net income (loss)                                                              |       | $                             | (1,220     | ) | $ | 569 |   |
|                                                                           |       |                          |       |   |   |
| Adjustments to reconcile net loss to cash flows used  in operating activities: |       |                          |       |   |   |
| Depreciation and amortization                                                  |       | 15                            |       | 28 |   |
| Provision for impairment on capital lease property                             |       | 1,002                         |       | — |   |
| Provision for bad debt                                                         |       | 60                            |       | — |   |
| Common stock issued in lieu of compensation                                    |       | —                        |       | 9 |   |
| Recognition of deferred gain on sale                                           |       | —                        |       | (967 | ) |
| Changes in working capital:                                                    |       |                          |       |   |   |
| Decrease in accounts receivable                                                |       | 2                             |       | 104 |   |
| Decrease in inventories                                                        |       | —                        |       | 219 |   |
| Decrease in prepaid expenses and other current  assets                         |       | —                        |       | 241 |   |
| Decrease in other non-current assets                                           |       | —                        |       | 298 |   |
| Decrease in accounts payable                                                   |       | (324                          | )          | (322 | ) |
| Decrease in accrued liabilities                                                |       | (313                          | )          | (1,111 | ) |
| Decrease in other non-current obligations (excluding  current portion)         |       | (110                          | )          | (651 | ) |
| Cash used in operating activities                                              |       | (888                          | )          | (1,583 | ) |
| Cash flows from investing activities:                                          |       |                          |       |   |   |
| Proceeds from sale of restaurant assets                                        |       | —                        |       | 5,594 |   |
| Cash provided by investing activities                                          |       | —                        |       | 5,594 |   |
| Cash flows from financing activities:                                          |       |                          |       |   |   |
| Reduction of obligations under capital leases                                  |       | (9                            | )          | (10 | ) |
| Cash used in financing activities                                              |       | (9                            | )          | (10 | ) |
| Increase (Decrease) in cash                                                    |       | (897                          | )          | 4,001 |   |
| Cash and cash equivalents, beginning of period                                 |       | 10,996                        |       | 4,551 |   |
| Cash and cash equivalents, end of period                                       |       | $                             | 10,099     |   | $ | 8,552 |   |

 

The accompanying notes are an integral part of these consolidatedfinancial statement

 

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**AM-CH, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**March 28, 2005**

**(Unaudited)**

 

**(1)****                                 BASISOF PRESENTATION**

 

The accompanying consolidated financial statements ofAM-CH, Inc. and its wholly-owned subsidiaries (the “Company”) for thequarterly periods ended March 28, 2005 and March 29, 2004, have beenprepared in accordance with generally accepted accounting principles, and withthe instructions to Form 10-Q. These financial statements have not been audited by independent publicaccountants, but include all adjustments (consisting of a normal and recurringnature) that are, in the opinion of management, necessary for a fairpresentation of the financial condition, results of operations, and cash flowsfor such periods. However, these results are not necessarily indicative ofresults for any other interim period or for the full fiscal year.

 

TheCompany consummated the sale of its Chart House restaurants in July of2002 and completed the sale of all of its remaining Angelo & Maxie’srestaurants during 2004.  The Company hasno ongoing business operations.  It hasfiled a certificate of dissolution and is in the process of winding up itsaffairs.  Accordingly, the results of therestaurants operations are presented as discontinued.

 

Thepreparation of financial statements in conformity with generally acceptedaccounting principles in the United States of America requires management tomake estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities as of the dateof the financial statements and the reported amounts of revenues and expensesduring the reporting period.  Actualresults could differ from those estimates.

 

Certaininformation and footnote disclosures normally included in financial statementsin accordance with generally accepted accounting principles in the UnitedStates of America have been omitted pursuant to requirements of the Securitiesand Exchange Commission.  Managementbelieves that the disclosures included in the accompanying interim financialstatements and footnotes are adequate, but should be read in conjunction withthe consolidated financial statements and notes thereto included in the Company’sAnnual Report on Form 10-K for the year ended December 27, 2004.

 

Certainprior period balances have been reclassified to conform to the current periodpresentation.

 

**(2)****                                 RELATEDPARTY TRANSACTIONS**

 

Duringthe first quarter of 2004, the Company recognized $63,000 of fees for financialadvisory services provided to the Company by a related party.  This agreement was terminated at the end of2004 and no payments were made in the first quarter of 2005 related to thisagreement.

 

Payments to related parties for rent at one restaurant totaled $4,000in the first three months of 2004. Future rent liability with respect to this location was transferred to McCormick &Schmick Restaurant Corp. on January 7, 2004 in connection with the consummationof the sale of three of the Company’s then-existing five steakhouses as of thatdate.

 

On December 11,2003, the Company’s President and Chief Executive Officer became a full-timeemployee of Rewards Network, Inc. (“RNI”). In connection with this change, the Company entered into an agreementwith RNI whereby services provided to the Company by the Company’s Presidentand Chief Executive Officer are billed to the Company by RNI based on an agreedupon hourly rate.  The Company madepayments totaling $7,000 during the first quarter of 2004.  No such payments were made under thisagreement during the first quarter of 2005.

 

On June 26,2003, the Company entered into an operating lease for office space with a relatedparty.  This agreement provides, amongother things, that the landlord provide office space for the Company’scorporate employees and certain office services.  This agreement is terminable by either partywith a thirty day notice.  The Companymade payments totaling $7,000 and $18,000 pursuant to this agreement during thefirst quarter of 2005 and 2004, respectively.

 

Therelationships described above stem from one or more Company stockholders and/ormembers of the Company’s Board of Directors maintaining ownership interest inand influential management positions at or with these related parties’organizations.

 

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**(3)****                                 COMMITMENTSAND CONTINGENCIES**

 

TheCompany periodically is a defendant in litigation incidental to its businessactivities.  While any litigation orinvestigation has an element of uncertainty, the Company believes that theoutcome of any of these matters will not have a material adverse effect on itsfinancial condition or operations.

 

TheCompany maintains letters of credit primarily to cover self-insurance reservesand lease obligations.  In connectionwith the sale of the Chart House Business, and in order to minimize costsassociated with outstanding letters of credit, the Company established a cashcollateral account equal to the full balance of its obligations underoutstanding letters of credit, which totaled $2.0 million at March 28,2005.  As noted in the Subsequent Eventsfootnote (4), the Company was released from a $1.6 million letter of creditrelated to Workers Compensation.   Such funds are presented on the consolidatedbalance sheets as restricted cash.

 

**(4)****                                 SUBSEQUENTEVENTS**

 

On April 22, 2005 the Company entered into anagreement with the Continental Casualty Company (“CNA”) whereby, CNA agreed toassume all of the Company’s future workers compensation liability.  The agreement also was in settlement of allprior amounts due CNA related to claims paid by CNA on behalf of theCompany.  The total paid by the Companyto CNA related to this agreement amounted to $1.8 million.  In addition, the $1.6 million letter ofcredit maintained by the Company for the benefit of CNA related to outstandingworkers compensation claims was terminated in conjunction with the execution ofthe agreement.

 

On May 5, 2005, the Company executed atermination agreement with the landlord of a long term capital leaseagreement.  The lease was for arestaurant location the Company had subleased to a third party.  The termination agreement released the Companyfrom any future lease payment obligations and transferred the future leaseobligations to the third party.  TheCompany has recorded the effect of the early termination of this lease as aprovision for impairment on capital lease on the attached ConsolidatedStatement of Operations as of March 28, 2005.  The associated liability was recognized asincome upon the execution of the termination agreement.

 

On May 11,2005 the Company filed with the Chancery Court in Delaware a Petition forDisbursement of the remaining funds of the Company.  The Company is requesting the approval fordistribution of $9,303,156 plus accrued dividends of approximately $163,000 tothe holders of Preferred Stock. This distribution is in compliance with theterms of the Series A Preferred Stock, which states in part, that upondissolution the Preferred Stockholders will receive a payment equal to $2.25per share of Preferred Stock, plus all accrued but unpaid dividends todate.  These payments are subject toobtaining the approval of the Chancery Court in Delaware before anydistributions are made.  The Company doesnot know if or when the Chancery Court will approve these distributions.

 

Inaddition, the petition seeks approval for an estimated distribution of $0.12per share to Common Stockholders and a proposed, estimated distribution of$0.02 per share to the Preferred Stockholders. Again, these payments are subject first to obtaining courtapproval.  The Company does not know ifor when the Chancery Court will approve distributions of these amounts, or anyother amounts.  If Court approval isobtained, the distributions would be the final distributions made in respect ofthe Preferred and Common Stockholders of the Company.

 

TheCompany has accepted the resignation of its Chief Financial Officer, GregGrosvenor, effective May 31, 2005.

 

**ITEM2.  MANAGEMENT’S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.**

 

*ThisQuarterly Report on Form 10-Q and the documents incorporated herein byreference contain forward-looking statements that have been made pursuant toprovisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements represent theCompany’s expectations or beliefs concerning future events, including anystatements regarding: future sales and gross profit percentages, thecontinuation of historical trends, the sufficiency of the Company’s cashbalances, and cash generated from operating, financing and/or investingactivities for the Company’s future liquidity and capital resource needs.  Without limiting the foregoing, the words “believes,”“intends,” “projects,” “plans,” “expects,” “anticipates,” and similarexpressions are intended to identify forward-looking statements.  The Company cautions that these statementsare further qualified by important economic and competitive factors that couldcause actual results to differ materially from those in the forward-lookingstatements.  These factors include,without limitation, risks of the restaurant industry, an industry with manywell-established competitors with greater financial and other resources thanthe Company, and the impact of changes in consumer trends, employeeavailability, and cost increases. Accordingly, such forward-looking statements do not purport to be predictionsof future events or circumstances and may not be realized.*

 

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**OVERVIEW**

 

AM-CH, Inc. formerly known as Angelo and Maxie’s, Inc.and Chart House Enterprises, Inc. (the “Company”), has sold or closed all ofits restaurants and has no ongoing business operations.   In accordance with the stockholder approved “Planof Dissolution”, the Company has filed a certificate of dissolution with theState of Delaware on February 2, 2005 and is in the process of winding upits affairs. The Company was incorporated in Delaware in 1985.  The Company’s headquarters are located inChicago, Illinois.

 

***DISCONTINUED*****OPERATIONS**

* *

Asstated above, all of the Company’s restaurants have been sold or otherwisedisposed of and the Company no longer has any operations.  The Company has filed a Certificate ofDissolution with the office of the Secretary of State of Delaware on February 2,2005.    Therefore the Company is in theprocess of selling any remaining assets and settling any remainingliabilities.  Pursuant to the Plan ofDissolution, the Company will distribute any remaining cash to itsstockholders.   No assurances can beprovided as to whether any cash will be available for distribution or when adistribution may occur.

 

Interestexpense was less than interest income in the first quarter of 2005.  Interest income from cash investments is $22,000in the first quarter of 2005, compared to interest expense of $23,000 in thefirst quarter of 2004.  The decrease ininterest expense was due to the reduction of debt.  In addition, the change from net interestexpense in 2004, to interest income in 2005, was primarily due to a significantincrease in investment income.  Theincrease in investment income was a result of an increase in invested cash providedby the sale of the restaurants during fiscal 2004.

 

Otherincome remained the same in fiscal 2005 and 2004.  The Company was committed to a capital leaseat a location it has subleased to a third party.  This capital lease was reported on thebalance sheet in accordance with Statement of Financial Accounting Standards No. 13,“Accounting for Leases” (“FAS 13”), and non-cash reductions to the liability ofapproximately $51,000 per quarter are reflected in other income.   See Footnote (4) SUBSEQUENT EVENTS,which describes the execution of a termination agreement related to this lease.

 

TheCompany issued Series A convertible preferred stock, par value $1.00 pershare (“Series A Preferred Stock”), during June 2001.  The Series A Preferred Stock is entitledto dividends at the rate of 10.0% per annum, based on the original issue priceof $2.25 per share.  The Company paid thefirst two semi-annual dividend obligations through the issuance of additionalshares of Series A Preferred Stock.  Subsequent to the retirement of the CreditAgreement in August 2002, which restricted the payment of cash dividends,the Company began paying these dividends in cash.  For the quarter ended March 28, 2004,the Company accrued $94,000 for cash dividends. This amount, combined with the dividend accrual of $69,000 as of December 27,2004 equals a total dividend accrual of $163,000 for cash dividends.   Pursuant to the terms of the Series APreferred Stock Certificate of Designations, the Preferred dividends cease tobe accrued upon the dissolution of the Company. The Company filed a Certificate of Dissolution with the State ofDelaware on February 2, 2005. Therefore, the preferred dividends were accrued through February 2,2005.

 

**LIQUIDITYAND CAPITAL RESOURCES**

 
| ** **                              | ** ** | **Three month periods ended** | ** ** |
|-----------------------------------------|------------|-------------------------------|------------|
| **(Unaudited, dollars in thousands)**   | ** ** | **March 28, 2005**       | ** ** | **March 29, 2004** | ** ** |
| Net cash used in operating activities   |       | $                             | (888       | ) | $ | (1,583 | ) |
| Proceeds from sale of restaurant assets |       | —                        |       | 5,594 |   |
| Cash used in financing activities       |       | (9                            | )          | (10 | ) |
| Net increase (decrease) in cash         |       | $                             | (897       | ) | $ | 4,001 |   |

 

TheCompany had $10,099,000 in cash for general corporate purposes at March 28,2005. The Company believes that this remaining cash balance will be sufficientto fund expenses related to payment of any outstanding liabilities ordissolution expenses.  No assurances canbe given when and if the final dissolution of the Company will occur.  In addition, no assurances can be given thatany funds will be available or if available, when they will be distributed toshareholders.

 

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Netcash used in dissolution activities was $888,000 in the first three months of2005, compared to net cash used in operating activities of $1,583,000 in thefirst three months of 2004.  The net cashused in first quarter 2005 was primarily for settlement of outstandingseverance payments related to employees terminated in previous years andinsurance premiums for Director & Officers insurance.  In 2004, net cash used in operatingactivities includes an aggregate $1.0 million related to payment of 2003 performanceand stay bonuses and accrued vacation for the employees terminated in conjunctionwith the sale of three of the Company’s steakhouses, severance payments relatedto employees terminated in conjunction with the sale of the Chart HouseBusiness, and settlement of prior period insurance claims.

 

Netcash provided by investing activities in the first three months of 2005 was$0.  In 2004, net cash provided ininvesting activities included the receipt of $5,594,000 in net proceeds fromthe sale of three of the Company’s steakhouses.

 

Netcash used in financing activities was $9,000 in the first three months of 2005.Net cash used in financing activities was $10,000 in the first three months of2004, the scheduled non-cash reductions to the capital lease on the subleasedrestaurant property. There were no pre-payment fees or penalties associatedwith the early retirement of the landlord note obligations

 

The Series APreferred Stock is entitled to dividends at the rate of 10.0% per annum, basedon the original price of $2.25 per share. Dividends are payable semiannually on June 1 and December 1.  As noted above, the Preferred Dividendsceased to be accrued after the filing of the certificate of dissolution.  The certificate of dissolution was filed on February 2,2005 with the State of Delaware.  TheCompany expects to satisfy future dividend obligations in cash.

 

TheCompany was liable under various capital and operating lease agreements,primarily related to restaurant locations.  The Company is also contingently liable under letters of credit,primarily related to leasing obligations and self-insurance reserves.  However, see Footnote (4) SUBSEQUENTEVENTS regarding the self insurance letter of credit. Other than described inFootnote (4) SUBSEQUENT EVENTS, no other material changes have occurredregarding these commitments and contingencies from the Company’s prior fiscalyear ended December 27, 2004.

 

**CRITICALACCOUNTING POLICIES**

 

A critical accounting policy is one that wouldmaterially affect the Company’s operations or financial condition, and requiresmanagement to make estimates or judgments in certain circumstances.  Set forth below is a description of thoseaccounting policies which the Company believes are most critical and could havethe greatest impact on its operations or financial condition.

 

**Valuationof Exit Costs and Restructure Reserves.**  On an as-needed basis and subject to approvalof the Company’s Board of Directors, the Company establishes reserves forunusual and non-recurring items associated with the activities of exitingrestaurant locations and reorganizing support staff to address changes in theCompany’s operations.  This requires thatmanagement make estimates for cash inflows and outflows based on judgment,market conditions, advice from counsel and consultants, and historicalexperience.  These estimates include, butare not limited to, future payments of rents, severance, legal and consultingcosts, consideration for contract modifications, and proceeds from the sale ofdisposed assets.  Because of factorsbeyond management’s control, actual results may be different from theestimates, which may cause the Company to record adjustments in future periods.  In June 2002, the Financial AccountingStandards Board issued Statement of Financial Accounting Standards No. 146,“Accounting for Costs from Exit or Disposal Activities” (“FAS 146”).  FAS 146 requires, among other things, that aliability for costs associated with an exit or disposal activity be recognizedwhen the liability is incurred rather than at the time of commitment to aformal shutdown plan.

 

**Impairmentof Assets.**  On January 1,2002, the Company adopted FAS 142, which requires, among other things, thateffective January 1, 2002, goodwill resulting from a business combinationaccounted for as a purchase no longer be amortized, but be subject to ongoingimpairment review.  On an ongoing basis,the Company reviewed its carrying value of restaurant assets and compared themwith fair market value.  In determiningthe fair market value of its assets, management considers several factorsrequiring the exercise of its business judgment.  Such business judgment included developingvaluation multiples, such as the ratio of total capitalized value to restaurantearnings before interest, taxes, depreciation, and amortization for an industrypeer group of publicly traded companies, and applying those multiples to theCompany’s historical and projected operating performance.   If management determines that the fairmarket value of its assets is materially below the current carrying cost of theassets, an impairment charge is recognized in operating income in the periodthe impairment is identified.

 

**Self-InsuranceLiability.**  The Companywas self-insured through October 2002 for its workers’ compensation andgeneral liability insurance programs. The Company maintained stop-loss coverage with third party insurers tolimit its total exposure.  The

 

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accrued liabilityassociated with these programs is based on management’s estimate of theultimate costs to be incurred to settle known claims and claims incurred, butnot reported, as of the balance sheet date. Our estimated liability is not discounted and is based on a number ofassumptions and factors, including historical trends, actuarial assumptions,and economic conditions.  If actualtrends differ from our estimates, our financial results could be impacted.

 

**ITEM3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**

 

TheCompany is exposed to market risk from changes in market rates earned on cashequivalents.   The impact on the Company’sresults of operations of a one-point market rate change on its cash equivalentbalance as of March 28, 2005, would not be material.  The Company does not use derivativeinstruments to manage borrowing costs, reduce exposure to adverse fluctuationsin the interest rate, nor for trading purposes.

 

**ITEM 4. CONTROLS AND PROCEDURES**

 

As of March 28,2005, the Company carried out an evaluation, under the supervision and with theparticipation of the Company’s President and Chief Executive Officer and theCompany’s Chief Financial Officer, of the effectiveness of the Company’sdisclosure controls and procedures pursuant to Rule 13a-15 of theSecurities Exchange Act of 1934, as amended. Based upon that evaluation, the Company’s President and Chief ExecutiveOfficer and Chief Financial Officer concluded that the Company’s disclosurecontrols and procedures are effective in timely alerting them to materialinformation relating to the Company (including its consolidated subsidiaries)required to be disclosed by the Company in its periodic Exchange Act reports.  There were no significant changes in theCompany’s internal controls or in other factors that could significantly affectthese controls subsequent to the date of the evaluation, including anycorrective actions with regard to significant deficiencies and materialweaknesses.

 

**PART II - OTHER INFORMATION**

 

**ITEM1.  LEGAL PROCEEDINGS.**

 

The Company periodically is a defendant inlitigation incidental to its business activities. While any litigation orinvestigation has an element of uncertainty, the Company believes that the outcomeof any of these matters will not have a material adverse effect on itsfinancial condition or operations.

 

**ITEM2.  CHANGES IN SECURITIES AND USE OFPROCEEDS.**

 

None.

 

**ITEM3.  DEFAULTS UPON SENIOR SECURITIES.**

 

None.

 

**ITEM4.****     SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS.**

 

None

 

**ITEM5.****     OTHERINFORMATION.**

 

None.

 

**ITEM 6.****    ****EXHIBITS.**

 

(a)                                  Exhibits:

 

3.1                                 (1) RestatedCertificate of Incorporation of the Company, as amended. (1)

 

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(2) Certificateof Amendment of Restated Certificate of Incorporation of the Company. (2)

(3) Certificateof Amendment of Restated Certificate of Incorporation of Chart HouseEnterprises, Inc. (4)

3.2                                 Amendedand Restated Bylaws of the Company. (1)

3.3                                 Certificateof Designations of the Series A Preferred Stock. (3)

4.1                                 SpecimenCommon Stock Certificate. (2)

4.2                                 SpecimenSeries A Preferred Stock Certificate. (3)

31.1                           Certificationof the Chief Executive Officer pursuant to Rule 13a-14(a) of theSecurities Exchange Act of 1934, as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002.

31.2                           Certificationof the Chief Financial Officer pursuant to Rule 13a-14(a) of theSecurities Exchange Act of 1934, as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002.

32.1                           Certificationof the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2                           Certificationof the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

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(1)               Filedas an exhibit to the Company’s Registration Statement on Form S-1 dated August 27,1987, or amendments thereto dated October 6, 1987 and October 14,1987 (Registration No. 33-16795) and incorporated herein by reference.

(2)               Filedas an exhibit to the Company’s Registration Statement on Form S-1 dated July 20,1989, or amendment thereto dated August 25, 1989 (Registration No. 33-30089)and incorporated herein by reference.

(3)               Filed as an exhibitto the Company’s Registration Statement on Form S-2 dated March 27,2001, or amendments thereto dated May 15, 2001, May 25, 2001, and May 31,2001 (Registration No. 333-57674) and incorporated herein by reference.

(4)               Filed as an exhibitto the Company’s Quarterly Report on Form 10-Q for the quarter ended July 1,2002, dated August 15, 2002 and incorporated herein by reference.

 

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**SIGNATURES**

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 

 
|                         | AM-CH, Inc. |
|------------------------------|------------------|
|                         |             |
|                         |             |
| Date: May  ,  2005 | By:              |  /s/ KENNETH R. POSNER |   |
|                         |             | Kenneth R.  Posner |
|                         |             | President and  Chief Executive Officer |
|                         |             | (principal  executive |
|                         |             |  officer) |
|                         |             |
|                         |             |
| Date: May  ,  2005 | By:              |  /s/ GREG GROSVENOR |   |
|                         |             | Greg Grosvenor |
|                         |             | Chief Financial  Officer |
|                         |             | (principal  financial and accounting |
|                         |             | officer) |
|                              |                  |  |  |  |  |

 

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