<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 March 26, 2000 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)
<TABLE>
<S> <C>
DELAWARE 94-2766571
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
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)
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 May 9, 2000 there were 5,771,346 shares outstanding of the Registrant's
Common Stock ($.001 par value).
<PAGE> 2
IL FORNAIO (AMERICA) CORPORATION
QUARTERLY REPORT ON FORM 10-Q
INDEX
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<CAPTION>
PAGE
NUMBER
------
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Balance Sheets - March 26, 2000 and
December 26, 1999.............................................. 3
Condensed Statements of Income- Three months ended
March 26, 2000 and March 28, 1999.............................. 4
Condensed Statements of Cash Flow- Three months ended
March 26, 2000 and March 28, 1999 ............................. 5
Notes to Condensed Financial Statements.......................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ......................... 7
Item 3. Quantitative and Qualitative Disclosures about Market Risk..... 10
Part II. OTHER INFORMATION
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
CONDENSED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
MARCH 26, DECEMBER 26,
2000 1999
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .................................... $ 5,295 $ 5,118
Restricted cash .............................................. 510 314
Accounts receivable, net ..................................... 1,832 1,785
Inventories .................................................. 2,674 2,559
Prepaid expenses and other assets ............................ 766 1,184
Deferred tax assets, net ..................................... 245 218
-------- --------
Total current assets ................................. 11,322 11,178
Property and equipment, net .................................... 53,455 52,433
Deferred tax assets, net ....................................... 973 1,000
Other assets ................................................... 584 547
-------- --------
Total assets ......................................... $ 66,334 $ 65,158
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................. $ 5,017 $ 6,982
Accrued expenses ............................................. 8,414 7,587
-------- --------
Total current liabilities ............................ 13,431 14,569
Reserve for store closures ..................................... 155 159
Deferred lease incentives ...................................... 9,149 7,852
-------- --------
Total liabilities .................................... 22,735 22,580
-------- --------
Stockholders' equity:
Preferred stock, $.001 par value; 5,000,000 shares
authorized; no shares issued ................................ -- --
Common stock, $.001 par value; 20,000,000 shares
authorized; 6,224,609 shares issued and 5,725,209 shares
outstanding at March 26, 2000 and 6,193,119
shares issued and 5,693,719 shares outstanding at
December 26, 1999 ........................................... 6 6
Additional paid-in-capital ................................... 38,900 38,751
Retained earnings ............................................ 7,710 6,838
-------- --------
46,616 45,595
Treasury stock, 499,400 shares, at cost ...................... (3,017) (3,017)
-------- --------
Total stockholders' equity ................................ 43,599 42,578
-------- --------
Total liabilities and stockholders' equity ........... $ 66,334 $ 65,158
======== ========
</TABLE>
See notes to condensed financial statements
3
<PAGE> 4
IL FORNAIO (AMERICA) CORPORATION
CONDENSED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
MARCH 26, MARCH 28,
2000 1999
-------- --------
<S> <C> <C>
Revenues:
Restaurants .................................... $ 27,477 $ 21,547
Bakeries ....................................... 2,172 1,986
-------- --------
Total revenues ........................... 29,649 23,533
-------- --------
Costs and expenses:
Cost of sales .................................. 7,107 5,538
Operating expenses ............................. 17,174 13,621
Depreciation and amortization .................. 1,476 1,134
-------- --------
Total restaurant and bakery costs ........ 25,757 20,293
-------- --------
Income from restaurant and bakery operations ..... 3,892 3,240
Pre-opening expenses ........................... 238 7
General and administrative expenses ............ 2,311 1,853
-------- --------
Operating income ................................. 1,343 1,380
Other income (expenses):
Interest income ................................ 81 151
Interest expense ............................... (23) --
-------- --------
Total other income (expenses), net ....... 58 151
-------- --------
Income before income taxes ....................... 1,401 1,531
Provision for income taxes ....................... 529 589
-------- --------
Net income ....................................... $ 872 $ 942
======== ========
BASIC EARNINGS PER SHARE
Basic earnings per share ......................... $ 0.15 $ 0.17
======== ========
Basic weighted average shares outstanding ........ 5,702 5,659
======== ========
DILUTED EARNINGS PER SHARE
Diluted earnings per share ....................... $ 0.15 $ 0.16
======== ========
Diluted weighted average shares outstanding ...... 5,995 6,021
======== ========
</TABLE>
See notes to condensed financial statements
4
<PAGE> 5
IL FORNAIO (AMERICA) CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------
MARCH 26, MARCH 28,
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................... $ 872 $ 942
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization .................... 1,558 1,216
Amortization of deferred lease incentives ........ (148) (122)
Provision for store closures ..................... (4) (20)
Retirement of fixed assets ....................... -- 13
Changes in:
Restricted cash .................................. (196) (162)
Accounts receivable .............................. (47) 299
Inventories ...................................... (115) (166)
Prepaid expenses ................................. 418 288
Other assets ..................................... (37) 7
Accounts payable ................................. (1,965) (712)
Accrued expenses ................................. 827 (631)
-------- --------
Net cash provided by operating activities ..... 1,163 952
-------- --------
Cash flows from investing activities:
Capital expenditures ................................. (2,580) (2,311)
Construction allowance received ...................... 1,445 --
Collection of note receivable ........................ -- 19
-------- --------
Net cash used in investing activities ......... (1,135) (2,292)
-------- --------
Cash flows from financing activities:
Exercise of stock options ............................ 149 1
-------- --------
Net cash provided by financing activities ..... 149 1
-------- --------
Increase/(Decrease) in cash and cash equivalents ........ 177 (1,339)
Cash and cash equivalents, beginning of period .......... 5,118 12,296
-------- --------
Cash and cash equivalents, end of period ................ $ 5,295 $ 10,957
======== ========
</TABLE>
See notes to condensed 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 March 26, 2000, the Company owned and
operated 22 Italian white tablecloth restaurants and three bakeries in
California; Portland, Oregon; Las Vegas, Nevada; Denver, Colorado; Seattle
Washington, Atlanta, Georgia, and Scottsdale, Arizona.
The accompanying condensed unaudited financial statements of the Company for
the three months ended March 26, 2000 and March 28, 1999, 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 26, 1999,
filed with the Securities and Exchange Commission. The balance sheet data
presented herein for December 26, 1999 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 31,
2000.
Certain of the prior period amounts have been reclassified to conform to the
current period presentation.
2. Earnings Per Share
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.
The following is a summary of the calculation of the number of shares used in
calculating basic and diluted EPS:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------
MARCH 26, MARCH 28,
2000 1999
--------- ---------
<S> <C> <C>
Shares used to compute basic EPS ...... 5,701,535 5,658,675
Add: effect of dilutive securities .... 293,437 362,093
--------- ---------
Shares used to compute diluted EPS .... 5,994,972 6,020,768
========= =========
</TABLE>
3. Segment Information
The Company classifies its business interests into two reportable segments:
restaurants and wholesale bakeries. The accounting policies of the segments are
the same as those described in the summary of significant accounting policies in
Note 1 of the Company's audited financial statements included within the
Company's Form 10-K for the fiscal year ended December 26, 1999. The Company
evaluates performance and allocates resources based on revenues and operating
contribution (income before income taxes), which excludes unallocated corporate
general and administrative costs and income tax expense or benefit. Unallocated
assets include corporate cash and equivalents, the net book value of corporate
facilities and related information systems, deferred tax amounts and other
corporate long-lived assets.
6
<PAGE> 7
Financial information for the Company's business segments is as follows:
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<CAPTION>
THREE MONTHS ENDED
---------------------------
MARCH 26, MARCH 28,
2000 1999
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<S> <C> <C>
Revenues:
Restaurants ............................ $ 27,477 $ 21,547
Wholesale bakeries ..................... 2,729 2,576
Intersegment revenues .................. (557) (590)
-------- --------
Total revenues ......................... $ 29,649 $ 23,533
======== ========
Operating contribution:
Restaurants ............................ $ 3,510 $ 2,969
Wholesale bakeries ..................... 381 270
Unallocated ............................ (2,490) (1,708)
-------- --------
Total operating contribution ........... $ 1,401 $ 1,531
======== ========
Depreciation and amortization:
Restaurants ............................ $ 1,343 $ 1,007
Wholesale bakeries ..................... 133 127
Corporate .............................. 82 82
-------- --------
Total depreciation & amortization ...... $ 1,558 $ 1,216
======== ========
Capital expenditures:
Restaurants ............................ $ 2,375 $ 2,071
Wholesale bakeries ..................... 188 212
Corporate .............................. 17 28
-------- --------
Total capital expenditures ............. $ 2,580 $ 2,311
======== ========
Property and equipment, net:
Restaurants ............................ $ 49,441 $ 36,155
Wholesale bakeries ..................... 3,381 2,804
Corporate .............................. 633 743
-------- --------
Total property and equipment, net ...... $ 53,455 $ 39,702
======== ========
</TABLE>
4. Line of Credit
The Company has a $5,000,000 revolving line of credit with a letter of credit
sub-facility, which expires on June 30, 2000 and bears interest at the bank's
reference rate. There were no amounts outstanding under the credit line at March
26, 2000. The Company intends to seek to renew the line of credit. The credit
agreement requires compliance with certain financial covenants. As of March 26,
2000, the Company was not in compliance with one of these covenants. The bank
has waived non-compliance with this covenant.
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
information that is not historical, including without limitation, 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 2000. 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. Readers are cautioned that the forward-looking
statements reflect management's analysis only as of the date hereof, and the
Company assumes no obligation to update these statements. Actual events or
results may differ materially from the results discussed in or implied by the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, those risks and uncertainties discussed below under
"Factors Affecting Operating Results" and elsewhere in this Quarterly Report on
Form 10-Q, 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 26,
1999. 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 26,
1999.
7
<PAGE> 8
OVERVIEW
The Company's revenues consist of restaurant sales and bakery sales.
Comparable restaurant sales are calculated to include a new restaurant only
after its 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.
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. Pre-opening costs in 1999 and 2000 reflect costs that were expensed
as incurred. This expense-as-incurred standard may continue to result in
increased variability in the amount of pre-opening costs recognized, depending
on the number and timing of restaurant openings. As a result, the Company's
operating results may fluctuate from quarter to quarter.
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.
The following table sets forth unaudited operating results for the
three-month periods ended March 26, 2000 and March 28, 1999, 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
------------------------
MARCH 26, MARCH 28,
2000 1999
------- ---------
<S> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Restaurants ................................... 92.7% 91.6%
Bakeries ...................................... 7.3% 8.4%
----- -----
Total revenues ............................. 100.0% 100.0%
----- -----
Costs and expenses:
Costs of sales ................................ 24.0% 23.5%
Operating expenses ............................ 57.9% 57.9%
Depreciation and amortization ................. 5.0% 4.8%
----- -----
Total restaurant and bakery costs ........... 86.9% 86.2%
----- -----
Income from restaurant and bakery operations .... 13.1% 13.8%
Pre-opening expenses .......................... 0.8% 0.0%
General and administrative expenses ........... 7.8% 7.9%
----- -----
Income from operations .......................... 4.5% 5.9%
Interest income (expense), net .................. 0.2% 0.6%
----- -----
Income before income taxes ...................... 4.7% 6.5%
Provision for income taxes ...................... 1.8% 2.5%
----- -----
Net income ...................................... 2.9% 4.0%
===== =====
</TABLE>
Total restaurant revenues increased by $5.9 million, or 27.5%, to $27.5
million for the first quarter of 2000 from $21.5 million for the first quarter
of 1999. The increase was primarily attributable to (i) the opening of one new
restaurant in 2000 as well as four new restaurants opened in the third and
fourth quarters of 1999 and (ii) a 4.2% increase in comparable restaurant sales.
The increase in restaurant revenues also reflects the benefit of a moderate menu
price increase implemented in the second quarter of 1999. Total wholesale bakery
revenues increased by $186,000, or 9.4%, to $2.2 million for the first quarter
of 2000 from $2.0 million in 1999. The increase was attributable to the
continued addition of new wholesale accounts as well as increased sales to
existing accounts.
8
<PAGE> 9
Cost of sales increased as a percentage of revenues to 24.0% for the first
quarter of 2000 compared to 23.5% for the first quarter of 1999. This increase
was primarily the result of higher initial cost of sales for the two new
restaurants opened during the fourth quarter of 1999 and the new restaurant
opened during the first quarter of 2000 along with a shift in menu mix.
Operating expenses as a percentage of revenues remained unchanged at 57.9%
for the first quarter of 2000 compared to the corresponding period in 1999.
Depreciation and amortization increased slightly as a percentage of revenues to
5.0% for the first quarter of 2000 compared to 4.8% for the same period in 1999.
This increase was primarily due to increased depreciation related to new unit
construction costs.
Pre-opening costs in 1999 and 2000 were expensed as incurred. Pre-opening
costs expensed in the first quarter of 2000 were $238,000. Pre-opening costs in
2000 were primarily incurred in connection with the opening of the Scottsdale,
Arizona restaurant, compared to $7,000 for the same period in 1999. No new
restaurants were opened in the first quarter of 1999.
General and administrative expenses increased 24.7% to $2.3 million for the
first quarter of 2000 from $1.9 million for the same period in 1999 but
decreased as a percentage of revenues to 7.8% for the first quarter of 2000
compared to 7.9% for the same period in 1999. The increase in general and
administrative expense was due to higher salary and related benefits expenses in
connection with the Company's continuing expansion efforts.
Interest income decreased to $81,000 in the first quarter of 2000 from
$151,000 in the corresponding period in 1999, reflecting interest on lower
average cash balances as a result of the use of cash to expand the Company's
operations. Interest expense increased to $23,000 in the first quarter of 2000
from $0 in the corresponding period in 1999, as a result of the increased
utilization of the Company's line of credit in connection with the expansion of
operations.
The provision for income taxes for the quarter ended March 26, 2000 reflected
expected income taxes due at federal statutory rates and state income tax rates,
net of tax benefits. The effective income tax rate was 37.5% for the first
quarter of 2000 compared to 38.5% for the respective comparable period in 1999.
This decrease in the effective income tax rate was due to the planned use of
various deductible tax assets and other tax credits available to the Company.
Net income for the first quarter of 2000 decreased by $70,000 or 7.4% to
$872,000 from $942,000 for the first quarter of 1999. The decrease in net income
was primarily the result of increased expenses from operations, particularly
from the pre-opening costs incurred as well as the increase in cost of sales
realized in the first quarter of 2000. Net income per share (diluted) for the
first quarter of 2000 was $0.15 versus $0.16 reported for the first quarter of
1999.
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 its 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 increases in food and labor costs,
potentially adverse weather conditions, 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 plans for new restaurant locations and timing of openings depend upon,
among other things, successful completion of lease negotiations, timely project
development and restaurant construction, obtaining appropriate regulatory
approvals, management of costs and recruitment of qualified operating personnel.
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, fluctuations in inventory and general and administrative
expenses, and increases or decreases in comparable restaurant
9
<PAGE> 10
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 26, 1999 under the caption "Risk Factors."
LIQUIDITY AND CAPITAL RESOURCES
At March 26, 2000, the Company had $5.3 million in cash and cash equivalents
compared to $5.1 million at December 26, 1999.
Cash flow from operations increased by $211,000 to $1.2 million for the first
quarter of 2000 from $1.0 million during the same period in 1999, primarily due
to the net effect of timing differences in the collection and disbursement of
working capital components.
Net cash provided by financing activities was $149,000 for the first quarter
of 2000 as compared to $1,000 for the same period in 1999. This increase was
primarily due to the proceeds received upon the exercise of stock options.
The Company has a credit agreement, which provides for a $5.0 million
revolving line of credit. At March 26, 2000, there were no amounts outstanding
under the credit line. The existing credit line is scheduled to expire June 30,
2000. The Company intends to seek to renew the line of credit. The credit
agreement requires compliance with certain financial covenants. As of March 26,
2000, the Company was not in compliance with one of these covenants. The bank
waived non-compliance with this covenant.
Capital expenditures were $2.6 million for the first quarter of 2000 as
compared to $2.3 million for the first quarter of 1999. Construction allowances
received during the first quarter of 2000 were $1.4 million as compared to $0
for the same period in 1999. This increase primarily represented the
construction costs for the Company's Scottsdale, Arizona restaurant, opened
during the first quarter of 2000. The Company also anticipates incurring
additional expenditures to enhance some of its existing restaurants. 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 $2.2 million, with additional average
pre-opening costs per restaurant of approximately $250,000. The Company intends
to finance these capital expenditures through a combination of cash and cash
equivalents on hand, cash provided by operations, and landlord construction
contributions (when available).
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 2000. In the event that additional capital is
required, the Company may seek to raise that capital through public or private
equity or debt financing. 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. The Company from time to time has experienced significant
volatility in the cost of certain food-related commodities, such as butter and
manufacturing cream. 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 and labor law changes) has not
had a material impact on the Company's operations. The minimum wage increased in
Oregon to $6.50 an hour in January, 1999. In January 2000, the minimum wage
increased to $6.50 an hour in Washington. Effective January 1, 2000, California
law requires that overtime be paid to California hourly personnel who work
longer then eight hours per day. Prior to this change, the labor law in effect
mandated overtime pay to hourly personnel only to the extent they worked longer
than an average of 40 hours per calendar week.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's cash and cash equivalents are subject to interest rate risk.
The Company invests primarily on a short-term basis. The financial instrument
holdings at quarter-end were analyzed to determine their sensitivity to interest
rate changes. The fair values of these instruments were determined by net
present values. In our sensitivity analysis, the same change in interest rate
was used for all maturities. All other factors were held constant. If interest
rates increased by 10%, the expected effect on net income related to the
Company's financial instruments would be immaterial.
10
<PAGE> 11
Part II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedules
(b) Reports on Form 8-K. None.
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: May 9, 2000 By: /s/ MICHAEL J. HISLOP
--------------------------------------
Michael J. Hislop
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 9, 2000 By: /s/ PETER P. HAUSBACK
--------------------------------------
Peter P. Hausback
Chief Financial Officer and Secretary
(Principal Financial and
Accounting Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> DEC-27-1999
<PERIOD-END> MAR-26-2000
<CASH> 5,805
<SECURITIES> 0
<RECEIVABLES> 1,924
<ALLOWANCES> 92
<INVENTORY> 2,674
<CURRENT-ASSETS> 11,322
<PP&E> 78,834
<DEPRECIATION> 25,379
<TOTAL-ASSETS> 66,334
<CURRENT-LIABILITIES> 13,431
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 43,593
<TOTAL-LIABILITY-AND-EQUITY> 66,334
<SALES> 29,649
<TOTAL-REVENUES> 29,649
<CGS> 7,107
<TOTAL-COSTS> 28,306
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 18
<INTEREST-EXPENSE> 23
<INCOME-PRETAX> 1,401
<INCOME-TAX> 529
<INCOME-CONTINUING> 872
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 872
<EPS-BASIC> .15
<EPS-DILUTED> .15
</TABLE>
