UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q/A#2
(Amendment #2)
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(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
___TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
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Commission file number: 0-11104
NOBLE ROMAN'S, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-1281154
(State or other (I.R.S. Employer
jurisdiction of organization) Identification No.)
One Virginia Avenue, Suite 800
Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip Code)
(317) 634-3377
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or l5(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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As of November 13, 1996, there were 4,131,324 shares of Common Stock, no par
value, outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The following condensed consolidated financial statements are included herein:
Condensed consolidated balance sheets as of December 31, 1995
and March 31, 1996 Page 3
Condensed consolidated statements of operations for the three
months ended March 31, 1995 and 1996 Page 4
Condensed consolidated statements of cash flows for the three
months ended March 31, 1995 and 1996 Page 5
The interim condensed consolidated financial statements included herein
reflect all adjustments which are, in the opinion of management, necessary
for a fair statement of the results for the interim periods presented, which
adjustments are of a normal recurring nature.
The Company provides for current and deferred income tax liabilities and
assets utilizing an asset and liability approach along with a valuation
allowance as appropriate. At December 31, 1995 the Company determined that
it needed to revise its financial reporting for deferred income tax liability
and, therefore, increased its accrual for income tax expense. The change
effected the entire 1995 year and when spread over the year had the effect
of lowering previously reported first quarter 1995 earnings by $17,331. This
change is reflected on the Condensed Consolidated Statement of Operations
for the three months ended March 31, 1995 included herein.
<PAGE>
Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
<TABLE>
(Unaudited)
December 31 March 31
1995 1996
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<S> <C> <C>
Assets
Current assets:
Cash $ 229,462 $ 223,079
Accounts receivable 950,622 951,108
Inventories 980,534 977,553
Prepaid expenses 412,949 641,303
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Total current assets 2,573,567 2,793,043
Property and equipment, less
accumulated depreciation and
amortization of $3,737,594
and $3,971,356 9,135,949 9,256,797
Costs in excess of assets
acquired, net 6,722,812 6,657,317
Other assets 1,471,387 1,681,070
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$ 19,903,715 $20,388,227
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,859,188 $ 2,119,224
Notes payable - current 761,128 761,128
Other current liabilities 1,019,247 685,907
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Total current liabilities 3,639,563 3,566,259
Long-term liabilities:
Revolving line of credit 2,914,919 3,510,286
Notes payable-less current portion 8,150,793 8,166,253
Capital leases 258,037 243,469
Deferred tax liability 351,568 281,316
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Total long-term liabilities 11,675,317 12,201,324
Stockholders' equity
Common stock, no par value,
authorized 9,000,000 shares,
issued 4,131,324 and 4,131,324 5,458,431 5,458,431
Retained earnings (869,596) (837,431)
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Total stockholder's equity 4,620,835 4,620,644
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$ 19,903,715 $20,388,227
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</TABLE>
<PAGE>
Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
Three Months Ended
March 31
1995 1996
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<S> <C> <C>
Restaurant revenue $8,044,248 $8,715,445
Royalties 57,253 58,719
Administrative fees and other 109,367 112,026
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Total revenue 8,210,868 8,886,190
Restaurant operating expenses:
Cost of revenue 1,438,421 1,625,209
Salaries and wages 2,480,174 2,721,127
Rent 666,407 715,860
Advertising 533,024 658,285
Other 1,844,211 2,035,329
Depreciation and amortization 319,112 297,122
General and administrative 498,377 425,804
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Operating income 431,142 407,454
Interest 284,674 358,517
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Income before income taxes 146,468 48,937
Income taxes 53,879 17,128
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Net income $92,589 $31,809
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Net income per share $ .02 $ .01
Weighted average number of
common shares outstanding 3,993,392 4,131,324
</TABLE>
<PAGE>
Noble Roman's and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
Three Months Ended
March 31
-------------------------------------------
1995 1996
-------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 92,589 31,809
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities:
Depreciation and amortization 354,670 297,122
Changes in operating assets
and liabilities (increase) decrease in:
Accounts receivable (183,808) (486)
Inventory (137,099) 2,981
Prepaid expenses (275,446) (228,354)
Other assets (52,003)
Increase (decrease) in:
Accounts payable 483,864 260,036
Accrued expenses (430,827) (403,592)
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NET CASH PROVIDED BY
OPERATING ACTIVITIES (127,884) (40,484)
INVESTING ACTIVITIES
Purchase of equipment (298,636) (314,610)
Payments received on
notes receivable 623 --
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NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (298,013) (314,610)
FINANCING ACTIVITIES
Proceeds from long-term debt -- 363,279
Proceeds from sale of common stock 10,630 --
Principal payments on long-term debt
and capital lease obligations (58,169) (14,568)
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NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (47,539) 348,711
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INCREASE (DECREASE) IN CASH (473,436) (6,383)
Cash at beginning of period 621,726 229,462
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Cash at end of period $ 148,290 $ 223,079
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</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Noble Roman's, Inc. and Subsidiaries
Results of Operations - Three month period ended March 31, 1995
and 1996
The following table sets forth the percentage relationship to total revenue
of the listed items included in Noble Roman's consolidated statement of
operations. Certain items are shown as a percentage of restaurant revenue.
<TABLE>
Three Months Ended
March 31
1995 1996
-------- --------
<S> <C> <C>
Revenue:
Restaurant revenue 98.0% 98.0%
Royalties .7 .7
Administrative fees and other 1.3 1.3
-------- --------
100.0 100.0
Restaurant operating expenses (1):
Cost of revenue 17.9 18.6
Salaries and wages 30.8 31.2
Rent 8.3 8.2
Advertising 6.6 7.6
Other 22.9 23.4
Depreciation and amortization 3.9 3.3
General and administrative 6.1 4.8
-------- --------
Operating income 5.3 4.6
Interest 3.4 3.8
-------- --------
Income before federal income taxes 1.8% 0.8%
(1) As a percentage of restaurant revenue
</TABLE>
Total revenue increased 8.2% in the three months ended March 31, 1996, from
$8.2 million in 1995 to $8.9 million in the three months ended March 31, 1996.
The increase was attributable to revenue at the five new restaurants opened
after the first quarter in 1995 and the one new restaurant opened during the
first quarter of 1996 and to a 2.0% increase in comparable restaurant revenue
offset by a .4% increase in discounts as a percentage of revenue.
<PAGE>
Cost of revenue as percentage of restaurant revenue increased from 17.9% in
the first three months of 1995 to 18.6% in the same period in 1996.
The increase was primarily the result of increased cheese prices which were
unusually low during the first three months of 1995. Salaries and wages
increased as a percentage of restaurant revenue from 30.8% for the first
three month period in 1995 to 31.2% in the same period in 1996. The increase
was attributable to a higher average hourly wage, partially offset by more
efficient scheduling of hourly employees. Management believes that the
competition for labor in 1996 has declined to date due to decreased competition
from certain casual dining chains which opened in the region during 1995.
Other expenses increased as a percentage of revenue from 22.9% in the first
three month period in 1995 to 23.4% in the same period in 1996. The increase
was primarily attributable to increased utility costs which resulted from
colder than normal winter weather.
General and administrative expenses as a percentage of total revenue
decreased from 6.1% during the three months ended March 31, 1996 to 4.8% in
the same period in 1996. The decrease as a percentage of total revenue was
primarily attributable to the increase in total revenue due to new
restaurant openings in 1995 and to an overall reduction in general and
administrative expense.
Operating income decreased from $431 thousand in the three month period
ended March 31, 1995 to $407 thousand in the same period in 1996.
Operating income decreased as a percentage of revenue from 5.3% in the
first three months of 1995 to 4.6% in the same period in 1996.
Interest expense increased from $285 thousand for the first three month
period ended March 31, 1995 to $359 thousand in the same period in 1996.
This increase is the result of a higher interest rate on the Company's debt
as a result of the refinancing in December, 1995 in order to repay notes
which had a short term maturity.
Income before federal income taxes decreased from $146 thousand for the
three month period ended March 31, 1995 to $49 thousand in the same period
in 1996. The decrease was primarily attributable to the increase in
interest expense.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements arise from the costs associated
with the development and opening of new restaurants and refurbishment of
existing restaurants. The Company's primary sources of working capital are
cash flow from operations and borrowings under its credit facilities.
Capital expenditures were $298,636 for the first three month period in 1995
and $314,610 in the same period in 1996. The Company expands primarily through
the use of leased land and buildings. The capital requirement for new
restaurants in free-standing leased facilities is approximately $150,000 per
restaurant.
<PAGE>
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27. Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOBLE ROMAN'S, INC.
Date: November 15, 1996 By: /s/ Paul W. Mobley
-------------------------
Paul W. Mobley, President
(Principal Executive Officer
and Chief Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED
MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<CIK> 0000709005
<NAME> NOBLE ROMAN'S, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 223,079
<SECURITIES> 0
<RECEIVABLES> 1,051,108
<ALLOWANCES> (100,000)
<INVENTORY> 977,553
<CURRENT-ASSETS> 2,793,043
<PP&E> 13,228,153
<DEPRECIATION> (3,971,356)
<TOTAL-ASSETS> 20,388,227
<CURRENT-LIABILITIES> 3,566,259
<BONDS> 12,437,667
0
0
<COMMON> 5,458,431
<OTHER-SE> (837,431)
<TOTAL-LIABILITY-AND-EQUITY> 20,388,227
<SALES> 8,715,445
<TOTAL-REVENUES> 8,886,190
<CGS> 1,625,209
<TOTAL-COSTS> 6,130,601
<OTHER-EXPENSES> 722,926
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 358,517
<INCOME-PRETAX> 48,937
<INCOME-TAX> 17,128
<INCOME-CONTINUING> 31,809
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,809
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
