<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarterly period ended June 28, 1998 or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-29410
IL FORNAIO (AMERICA) CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-2766571
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
770 TAMALPAIS DRIVE, SUITE 400
CORTE MADERA, CALIFORNIA 94925
(Address of principal executive offices) (Zip Code)
(415) 945-0500
(Registrant's telephone number, including area code)
1000 Sansome Street, Suite 200, San Francisco, California 94111
(Former Name, Former Address and Former Fiscal Year,
if Changed, Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of August 4, 1998, there were 5,948,242 shares outstanding of the
Registrant's Common Stock ($.001 par value).
<PAGE> 2
IL FORNAIO (AMERICA) CORPORATION
QUARTERLY REPORT ON FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets - June 28, 1998 and December 28, 1997.................................................... 3
Statements of Income-Three months and Six months ended June 28, 1998 and June 29, 1997.................. 4
Statements of Cash Flows-Six months ended June 28, 1998 and June 29, 1997............................... 5
Notes to Financial Statements........................................................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............. 7
Part II. OTHER INFORMATION
Item 2. Changes in Securities ............................................................................ 10
Item 4. Submission of Matters to a Vote of Security Holders............................................... 11
Item 5. Other Information................................................................................. 11
Item 6. Exhibits and Reports on Form 8-K.................................................................. 11
</TABLE>
2
<PAGE> 3
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IL FORNAIO (AMERICA) CORPORATION
BALANCE SHEETS
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
June 28, December 28,
1998 1997
------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 890 $ 557
Cash equivalents 14,116 14,714
Restricted cash 506 518
Accounts receivable, net 1,650 1,291
Note receivable 68 121
Inventories 1,848 1,720
Prepaid expenses and other assets 968 1,420
Deferred tax assets, net 195 125
------- -------
Total current assets 20,241 20,466
------- -------
Property and equipment, net 31,265 29,255
Deferred tax assets, net 1,769 1,879
Other assets 498 491
------- -------
Total assets $53,773 $52,091
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,933 $ 3,085
Accrued expenses 4,558 6,287
------- -------
Total current liabilities 8,491 9,372
------- -------
Reserve for store closures 310 374
Deferred lease incentives 5,208 5,219
Commitments
Stockholders' equity:
Preferred stock, $.001 par value; 5,000,000 shares
authorized; no shares issued and outstanding, respectively
Common stock, $.001 par value;
20,000,000 shares authorized;
5,940,294 and 5,851,775 shares issued and Outstanding, respectively 6 6
Additional paid-in-capital 37,250 36,466
Retained earnings 2,508 654
------- -------
Total stockholders' equity 39,764 37,126
------- -------
Total liabilities and stockholders' equity $53,773 $52,091
======= =======
</TABLE>
See notes to financial statements
3
<PAGE> 4
IL FORNAIO (AMERICA) CORPORATION
STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
--------------------------- ------------------------------
June 28, June 29, June 28, June 29,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Restaurants $ 18,606 $ 16,309 $ 36,556 $ 32,116
Wholesale bakeries 1,893 1,586 3,639 3,150
Retail bakeries -- -- -- 311
-------- -------- -------- --------
Total revenues 20,499 17,895 40,195 35,577
-------- -------- -------- --------
Costs and expenses:
Cost of sales 4,812 4,182 9,412 8,350
Operating expenses 11,492 10,458 22,784 20,703
Depreciation and amortization 1,185 935 2,350 1,927
General and administrative expenses 1,564 1,531 3,068 2,956
Provision for store closures -- (470) -- (470)
-------- -------- -------- --------
Total costs and expenses 19,053 16,636 37,614 33,466
-------- -------- -------- --------
Income from operations 1,446 1,259 2,581 2,111
Other (income) expenses:
Interest income (215) (59) (486) (111)
Interest expense -- -- 14 2
-------- -------- -------- --------
Total other (income) expenses, net (215) (59) (472) (109)
-------- -------- -------- --------
Income before provision for income taxes 1,661 1,318 3,053 2,220
Provision for income taxes 656 540 1,199 915
-------- -------- -------- --------
Net income $ 1,005 $ 778 $ 1,854 $ 1,305
======== ======== ======== ========
Net income per share:
Basic $ 0.17 $ 0.17 $ 0.32 $ 0.29
Diluted $ 0.16 $ 0.16 $ 0.29 $ 0.28
Weighted average shares and common
share equivalents outstanding
Basic
5,904 4,554 5,868 4,565
Diluted
6,407 4,739 6,392 4,749
</TABLE>
See notes to financial statements
4
<PAGE> 5
IL FORNAIO (AMERICA) CORPORATION
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six months Six months
ended ended
June 28, June 29,
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,854 $ 1,305
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,350 1,927
Amortization of deferred lease incentives (190) (393)
Provision for store closures
-- (470)
Gain on sale of property and equipment
-- (60)
Retirement of fixed assets
-- 266
Deferred income taxes
40
Changes in:
Restricted cash
12 9
Accounts receivable (359) 149
Inventories (128) (1)
Prepaid expenses 139 477
Other assets (7) (363)
Accounts payable 848 (265)
Accrued expenses (1,729) 1,450
Reserve for store closures (64) --
-------- --------
Net cash provided by operating activities 2,766 4,031
-------- --------
Cash flows from investing activities:
Capital expenditures (4,050) (3,026)
Construction allowances received 182 --
Proceeds from sale of property and equipment -- 611
Collection of note receivable 53 34
-------- --------
Net cash used in investing activities (3,815) (2,381)
-------- --------
Cash flows from financing activities:
Payments on debt
-- (150)
Proceeds from the issuance of common stock, net
562 224
Exercise of stock options 222 24
-------- --------
Net cash provided by financing activities 784 98
-------- --------
Increase (decrease) in cash and equivalents (265) 1,748
Cash and equivalents, beginning of period 15,271 1,701
-------- --------
Cash and equivalents, end of period $ 15,006 $ 3,449
======== ========
</TABLE>
See notes to financial statements
5
<PAGE> 6
IL FORNAIO (AMERICA) CORPORATION
Notes to Condensed Financial Statements
(Unaudited)
1. Organization and Basis of Presentation
Il Fornaio (America) Corporation (the "Company") is engaged in restaurant
operations and the production and sale of Italian bakery products for the
wholesale and retail market. As of June 28, 1998, the Company owned and operated
15 Italian white tablecloth restaurants and five wholesale bakeries in
California, Portland, Oregon, Las Vegas, Nevada, and Denver, Colorado.
The accompanying condensed unaudited financial statements of the Company
for the three months and six months ended June 28, 1998 and June 29, 1997,
respectively, have been prepared in accordance with generally accepted
accounting principles and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Certain information and footnote disclosures, normally included
in financial statements prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these interim condensed financial statements
be read in conjunction with the Company's most recent audited financial
statements and notes thereto included in the Company's Form 10-K for the fiscal
year ended December 28, 1997, filed with the Securities and Exchange Commission.
The balance sheet data presented herein for December 28, 1997 was derived from
the Company's audited financial statements for the fiscal year then ended. In
the opinion of management, all adjustments (which include only normal recurring
adjustments) necessary for a fair presentation of the financial position,
results of operations and cash flows for the interim periods presented have been
made. The interim financial information herein is not necessarily indicative of
results for any future interim periods or for the full fiscal year ending
December 27, 1998.
2. Cash and cash equivalents
Cash-The Company reports all demand deposits and cash on hand as cash.
Cash equivalents-Consist primarily of commercial paper with maturities of
three months or less. Cash equivalents are carried at cost which
approximates market value.
3. Earnings Per Share
Net income per share is computed using the weighted average number of
common shares and dilutive common equivalent shares attributable to stock
options outstanding during the period.
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share." The Company adopted SFAS 128 in the fourth quarter of 1997. As a
result, the earnings per share (EPS) data for prior periods have been
restated to conform with SFAS 128's requirement of dual presentation of
basic EPS and diluted EPS for all entities with complex capital structures.
Basic EPS is computed as net income divided by the weighted average number
of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur from common shares issuable through
stock options, warrants and other convertible securities.
4. Preferred Stock
On September 24, 1997, each outstanding share of Series B, C, E and F
preferred stock was converted into 1.262 shares of common stock upon the
completion of the Company's initial public offering. As of June 28, 1998 and
December 28, 1997 there were 5,000,000 shares authorized and no shares were
issued and outstanding.
5. Recent Accounting Pronouncement
On April 3, 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants approved Statement of
Position 98-5 ("SOP") entitled "Reporting on the Costs of Start-Up
Activities." The SOP requires entities to expense as incurred all start-up
and preopening costs that are not otherwise capitalizable as long-lived
assets. The SOP will be effective for fiscal years beginning after December
15, 1998. The Company's adoption of the new accounting standard will involve
the recognition of the cumulative effect of the change in accounting
principle required by the SOP as a one-time charge
6
<PAGE> 7
against earnings, net of any related income tax effect, retroactive to the
beginning of the fiscal year of adoption. At this time, the Company is
reviewing the new pronouncement and plans to adopt it in the first quarter
of fiscal 1999. This one-time charge against earnings will be the
unamortized balance of such cost as of December 27, 1998.
6. Reclassifications-Certain fiscal 1997 amounts have been reclassified to
conform with fiscal 1998 presentations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements that involve risks
and uncertainties. Such forward looking statements may be deemed to include the
timing of and plans for anticipated restaurant openings, the projected
investment and costs required for future restaurants and the adequacy of
anticipated sources of cash to fund the Company's future capital requirements
through 1999. Words such as "believes," "anticipates," "expects," "intends" and
similar expressions are intended to identify forward-looking statements, but are
not the exclusive means of identifying such statements. Actual events or results
may differ materially from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those risks and uncertainties discussed below, as well as other
risks set forth under the caption "Risk Factors" in the Company's Annual Report
on Form 10-K for the fiscal year ended December 28, 1997. The following
discussion should be read in conjunction with the Financial Statements and the
Notes thereto included in Item 1 of this Quarterly Report on Form 10-Q and in
the Company's Form 10-K for the fiscal year ended December 28, 1997.
OVERVIEW
The Company's revenues consist of restaurant sales and wholesale bakery
sales and, prior to February 1997, free-standing retail bakery sales. Comparable
restaurant sales are calculated to include a new restaurant only after their
first full month following the eighteenth month of its operation. Comparable
restaurant revenues may fluctuate significantly as a result of a variety of
factors. See "Factors Affecting Operating Results" below.
Cost of sales is composed primarily of the cost of food and beverages.
Operating expenses include payroll and fringe benefit costs, occupancy costs,
marketing costs and other store-level costs. The majority of these costs are
variable and are expected to increase with sales volume. Occupancy costs include
both a fixed and percentage portion of rent. Depreciation and amortization
includes the amortization of pre-opening costs associated with the opening of
new locations. The Company capitalizes pre-opening expenses for each of its new
units and amortizes such costs over the 12-month period following the opening of
the unit. Pre-opening costs consist of direct costs related to hiring and
training the initial workforce and certain other direct costs related to opening
new restaurants. See Note 5 of Notes to Financial Statements.
General and administrative expenses are composed of expenses associated
with all corporate and administrative functions that support existing operations
and provide an infrastructure to support future growth, including management and
staff salaries, employee benefits, travel, information systems and training and
market research. Certain expenses of recruiting and training unit management
personnel are also included as general and administrative expenses.
7
<PAGE> 8
The following table sets forth unaudited operating results for the three
and six-month periods ended June 28, 1998 and June 29, 1997, respectively, as a
percentage of sales in each of these periods. This data has been derived from
the unaudited financial statements.
<TABLE>
<CAPTION>
Three months ended Six months ended
-------------------------- -------------------------
June 28, June 29, June 28, June 29,
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Restaurants 90.8% 91.1% 90.9% 90.3%
Wholesale bakeries 9.2% 8.9% 9.1% 8.9%
Retail bakeries -- -- -- 0.8%
------- ------- ------- -------
Total revenues 100.0% 100.0% 100.0% 100.0%
------- ------- ------- -------
Costs and expenses:
Cost of sales 23.5% 23.4% 23.4% 23.5%
Operating expenses 56.0% 58.4% 56.7% 58.2%
Depreciation and amortization 5.8% 5.2% 5.9% 5.4%
General and administrative expenses 7.6% 8.6% 7.6% 8.3%
Provision for store closures -- (2.6)% -- (1.3)%
------- ------- ------- -------
Total costs and expenses 92.9% 93.0% 93.6% 94.1%
------- ------- ------- -------
Income from operations 7.1% 7.0% 6.4% 5.9%
Other (income) expenses:
Interest income (1.0)% (0.3)% (1.2)% (0.3)%
Interest expense -- -- -- --
------- ------- ------- -------
Total other (income) expenses, net (1.0)% (0.3)% (1.2)% (0.3)%
------- ------- ------- -------
Income before provision for income taxes 8.1% 7.3% 7.6% 6.2%
Provision for income taxes 3.2% 3.0% 3.0% 2.5%
------- ------- ------- -------
Net income 4.9% 4.3% 4.6% 3.7%
======= ======= ======= =======
</TABLE>
Revenues increased by 14.6% to $20.5 million for the second quarter of 1998 from
$17.9 million for the second quarter of 1997 and by 13.0% to $40.2 million for
the first six months of 1998 from $35.6 for the first six months of 1997. The
increases primarily reflected a 4.4% increase in comparable restaurant sales for
the second quarter of 1998 and a 4.3% increase in comparable restaurant sales
for the first six months of 1998. Additionally, comparable wholesale bakery
sales increased by 19.4% for the second quarter of 1998 and by 15.6% for the
first six months of 1998. In addition, three noncomparable restaurants, opened
in 1997, contributed $1.3 million to the increase for the second quarter of 1998
and $2.9 million to the increase for the first six months of 1998. The increase
in restaurant revenues reflects the benefit of a moderate menu price increase
implemented in the beginning of 1998. These factors more than offset the
$311,000 decrease in revenues for the first six months of 1998 attributable to
the disposition of the four remaining free-standing retail bakeries in February
1997.
Cost of sales increased slightly as a percentage of revenues to 23.5% for the
second quarter of 1998 compared to 23.4% for the second quarter of 1997
primarily as a result of increase in dairy prices and a slight increase in
produce prices. Cost of sales for the first six months of 1998 was 23.4%
compared to 23.5% for the same period in 1997. This slight decrease reflects
dairy price increases in the second quarter of 1998, partially offset by
improved purchasing capabilities during the 1998 period.
8
<PAGE> 9
Operating expenses as a percentage of revenues decreased to 56.0% for the second
quarter of 1998 and 56.7% for the first six months of 1998 compared to 58.4% and
58.2% for the respective comparable periods in 1997. These decreases are the
result of a decrease in total occupancy costs as a percentage of revenues
partially offset by higher labor costs resulting from minimum wage increases and
expenses related to the remodel of one restaurant in the second quarter of 1997.
Depreciation and amortization increased as a percentage of revenues to 5.8% and
5.9% for both the second quarter of 1998 and first six months of 1998,
respectively; compared to 5.2% and 5.4% for the respective comparable periods in
1997, primarily reflecting increased pre-opening expenses related to the opening
of two new restaurants in the fourth quarter of 1997.
General and administrative expenses decreased as a percentage of revenues to
7.6% for both the second quarter of 1998 and first six months of 1998 compared
to 8.6% and 8.3% for the respective comparable periods in 1997, reflecting
primarily stable administrative staffing expense levels.
As a result of the disposition of the Costa Mesa restaurant in June 1997, the
Company recorded in the six months ended June 29, 1997, a $470,000 pre-tax
reversal of the provision for store closures originally recorded in 1993.
Interest income increased in both the second quarter of 1998 and first six
months of 1998 compared to the corresponding respective periods in 1997,
reflecting interest on higher average cash balances as a result of both cash
generated from operations and the proceeds of the Company's initial public
offering in September 1997.
The provisions for income taxes for the six months ended June 28, 1998 and June
29, 1997 reflected expected income taxes due at federal statutory rates and
state income tax rates, net of the tax benefits. The effective income tax rates
were 39.5% for the second quarter of 1998 and 39.3% for the first six months of
1998 compared to the 40.9% and 41.2% for the respective comparable periods in
1997.
Net income for the second quarter of 1998 increased by $227,000, or 29.2%, to
$1,005,000 from $778,000 for the second quarter of 1997. Net income per share
(diluted) for the second quarter of 1998 was $0.16 per share, which was
consistent with net income of $0.16 per share recorded for the second quarter of
1997.
For the first six months of 1998, net income increased by $549,000, or 42%, to
$1.9 million from $1.3 million for the same period of 1997. Net income per share
(diluted) for the first six months of 1998 was $0.29 per share versus $0.28 per
share for the comparable period in 1997.
FACTORS AFFECTING OPERATING RESULTS
The Company's business is subject to a number of challenges and risks
including, among other things, the risks associated with the Company's pursuit
of a more aggressive growth strategy, risks related to the Company's relatively
small operations base and the geographic concentration of the Company's
restaurants, uncertainties associated with possible changes in food and labor
costs, potentially adverse weather conditions, and the impact of potential
governmental regulation, risks related to the Company's dependence on its key
personnel, uncertainties related to the intensely competitive nature of the
restaurant business, as well as potential liabilities associated with long-term
leases.
The Company's quarterly operating results may fluctuate significantly as a
result of a variety of factors, including general economic conditions, consumer
confidence in the economy, changes in consumer preferences, competitive factors,
weather conditions, the timing of new restaurant openings and related expenses,
net sales contributed by new restaurants, the Company's ability to execute its
business strategy, and increases or decreases in comparable restaurant revenues.
Due to the foregoing factors, results for any one quarter are not necessarily
indicative of results to be expected for any other quarter or for any year and,
from time to time in the future, the Company's results of operations may be
below the expectations of public market analysts and investors. Comparable
restaurant sales results may also vary from period to period as a result of
similar factors. These and other risk factors are discussed in more detail in
the Company's Form 10-K for the fiscal year ended December 28, 1997 under the
caption "Risk Factors."
9
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
At June 28, 1998, the Company had $15.5 million in cash, restricted cash and
cash equivalents, including approximately $10.8 million remaining in net
proceeds from the Company's initial public offering.
For the periods presented, the Company has funded its capital requirements
primarily with cash flow generated from new and existing restaurant operations.
The cash flow from operations decreased to $2.8 million for the first six months
of 1998 from $4.1 million during the same period in 1997, due primarily to the
net effect of an increase in net income offset by timing differences in the
collection and disbursement of working capital components.
Net cash provided by financing activities was $784,000 for the first six months
of 1998 as compared with the $98,000 for the same period in 1997. The difference
related to the receipt of $222,000 in cash from the issuance of common stock
upon exercise of stock options and $562,000 from the issuance of common stock
under the Company's employee stock purchase plan.
The Company has a credit agreement, which provides for a $5.0 million revolving
line of credit and which expires on March 31, 2000. At June 28, 1998, there were
no amounts outstanding under the credit line.
Capital expenditures were $4.0 million for the first six months of 1998 as
compared to $3.0 million for the first six months of 1997. The Company is
currently in the process of constructing two additional restaurants which it
intends to open in 1998. A portion of the proceeds from the Company's initial
public offering have been used to fund these investments. Total capital
expenditures are expected to be approximately $7.0 million in 1998. The Company
expects that its planned future restaurants will require, on average, a total
investment by the Company per restaurant, net of anticipated landlord
contributions, of approximately $1.8 million, with additional average
pre-opening costs per restaurant of approximately $250,000. The Company also
anticipates incurring additional expenditures to enhance certain of its existing
restaurants.
The Company's future capital requirements and the adequacy of its available
funds will depend on many factors, including the pace of expansion, the size of
restaurants developed and the nature of the arrangements negotiated with
landlords. Although no assurance can be given, the Company believes that
anticipated cash flow from operations, existing cash balances and borrowings
under the credit agreement will be sufficient to fund its capital requirements,
including planned expansion and ongoing maintenance and renovation of existing
restaurants, at least through 1999. In the event that additional capital is
required, the Company may seek to raise that capital through public or private
equity or debt financings. There can be no assurance that such capital will be
available on favorable terms, if at all.
INFLATION
The primary inflationary factors affecting the Company's operations are food and
labor costs. Many of the Company's restaurant personnel are paid at rates based
on the applicable minimum wage, and increases in the minimum wage directly
affect the Company's labor costs. In addition, increases in the minimum wage
have resulted in indirect pressure on other wage levels. To date, inflation
(except for the impact of minimum wage increases) has not had a material impact
on the Company's operations. The minimum wage increased under federal
legislation to $5.15 an hour in September 1997 and increased in California to
$5.75 an hour in March 1998. Additional minimum wage increases have recently
been proposed.
Part II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
USE OF PROCEEDS
(d) The Company's Registration Statement on Form S-1 covering the sale of
1,725,000 shares of Common Stock (No. 333-23605) (the "Registration
Statement") was declared effective by the Commission on September 18,
1997. The net proceeds to the Company of the offering (including the net
proceeds from the sale of shares issued upon exercise of the
underwriters' over-allotment option on October 1, 1997) were $11.3
million. From the effective date of the offering to June 28, 1998, the
Company has used approximately $530,000 to fund the construction of new
restaurants (architect fees, permits and a limited
10
<PAGE> 11
amount of building construction). None of such expenses were paid to
affiliates, directors or officers of the Company, associates or officers
or directors or persons or entities owning 10% or more of any class of
equity securities of the Company. The remainder of the net proceeds were
invested in short-term, investment-grade, interest-bearing securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on April 24, 1998
(the "Annual Meeting").
At the Annual Meeting, the Company's stockholders elected the three
directors nominated by the Board by the votes indicated:
<TABLE>
<CAPTION>
Nominee Votes in Favor Votes Withheld
------- -------------- --------------
<S> <C> <C>
Laurence B. Mindel 4,022,610 2,244
W. Scott Hedrick 4,022,610 2,244
W. Howard Lester 4,022,610 2,244
</TABLE>
The proposal to ratify the selection of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending December 27, 1998 was
approved with 4,022,310 affirmative votes, 2,443 negative votes, 101 abstentions
and no broker non-votes.
ITEM 5. OTHER INFORMATION
Proposals of stockholders that are intended to be presented at the
Company's 1999 Annual Meeting of Stockholders must be received by the Company
not later than November 27, 1998 in order to be included in the proxy statement
and proxy relating to that Annual Meeting. In addition, under the Company's
By-laws, a stockholder that desires to present a proposal at the Company's
Annual Meeting of Stockholders or to propose nominees for election to the Board
of Directors must submit that proposal or nomination to the Secretary of the
Company no later than 60 days nor earlier than 90 days prior to the anniversary
date of the previous year's annual meeting. Accordingly, to be properly brought
before the 1999 Annual Meeting of Stockholders, a stockholder proposal or
nomination (other than matters to be included in the Company's proxy statement,
as described above) must be received at the principal executive offices of the
Company no later than the close of business on February 23, 1999 nor earlier
than the close of business on January 24, 1999. Stockholders are advised to
review the Company's By-laws for additional information with respect to the
advance notice requirements for stockholder proposals and director nominations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11.1 Calculation of net income per share
27.1 Financial Data Schedule
(b) Reports on Form 8-K. None.
11
<PAGE> 12
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.
Il Fornaio (America) Corporation
Date: August 7, 1998 By: /s/ MICHAEL J. HISLOP
-------------------------------------------
Michael J. Hislop
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 7, 1998 By: /s/ PAUL J. KELLEY
-----------------------------------------
Paul J. Kelley
Vice President, Finance and Secretary
(Principal Financial and Accounting Officer)
12
<PAGE> 1
EXHIBIT 11.1
IL FORNAIO
CALCULATION OF NET INCOME PER SHARE
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------ ------------------------------
JUNE 28, JUNE 29, JUNE 28, JUNE 29,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income available to common stockholders $1,005,000 $ 778,000 $1,854,000 $1,305,000
Basic EPS
Weighted average shares outstanding 5,904,430 4,554,485 5,867,504 4,565,013
---------- ---------- ---------- ----------
Net income per share-Basic $ 0.17 $ 0.17 $ 0.32 $ 0.29
========== ========== ========== ==========
Diluted EPS
Weighted average shares outstanding 5,904,430 4,554,485 5,867,504 4,565,013
Add: dilutive stock options 502,813 184,029 524,804 184,029
---------- ---------- ---------- ----------
Total 6,407,243 4,738,514 6,392,308 4,749,042
---------- ---------- ---------- ----------
Net income per share-Diluted $ 0.16 $ 0.16 $ 0.29 $ 0.28
========== ========== ========== ==========
</TABLE>
13
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