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 April 18, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR l5(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 0-19253
Au Bon Pain Co., Inc.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2723701
--------------------------------- ------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
19 Fid Kennedy Avenue, Boston, MA 02210
--------------------------------------- ----------
(Address of principal executive offices) (Zip code)
(617) 423-2100
----------------------------------------------------
(Registrant's telephone number, including area code)
--------------------------------------
(Former name, former address and former fiscal year,
if changed from last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 and 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.
Yes X No
------ ------
As of May 28, 1998, 10,290,459 shares and 1,605,575 shares of the
registrant's Class A and Class B Common Stock, respectively, $.0001 par value,
were outstanding.
<PAGE>
AU BON PAIN CO., INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
- ------- --------------------- ----
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS.................................... 3
Consolidated Balance Sheets as of April 18, 1998
and December 27, 1997................................... 3
Consolidated Statements of Operations
for the sixteen weeks ended April 18, 1998
and April 19, 1997...................................... 4
Consolidated Statements of Cash Flows
for the sixteen weeks ended April 18, 1998
and April 19, 1997...................................... 5
Notes to Consolidated Financial Statements.............. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.............................................. 8
PART II. OTHER INFORMATION
- -------- -----------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................ 13
</TABLE>
2
<PAGE>
Item 1. Financial Statements
AU BON PAIN CO., INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
April 18, December 27,
1998 1997
--------- ------------
ASSETS (unaudited)
- ------
<S> <C> <C>
Current assets:
Cash and cash equivalents.................... $ 786,417 $ 853,025
Accounts receivable, net..................... 6,342,923 9,427,190
Inventories.................................. 6,191,181 9,116,794
Prepaid expenses............................. 2,724,780 775,036
Refundable income taxes...................... 595,916 595,916
Deferred income taxes........................ 600,040 600,040
------------ ------------
Total current assets..................... 17,241,257 21,368,001
------------ ------------
Property and equipment, less
accumulated depreciation and amortization.... 101,673,803 112,231,916
------------ ------------
Other assets:
Notes receivable............................. 4,664,227 4,742,994
Intangible assets, net of accumulated
amortization............................... 30,983,224 31,360,459
Deferred financing costs..................... 1,124,029 952,591
Deposits and other........................... 11,178,713 9,097,477
Deferred income taxes........................ 6,761,983 6,761,983
------------ ------------
Total other assets....................... 54,712,176 52,915,504
------------ ------------
Total assets............................. $173,627,236 $186,515,421
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable............................. $ 7,035,472 $ 7,070,881
Accrued expenses............................. 11,910,051 13,917,058
Current maturities of long term debt......... 40,800 438,100
------------ ------------
Total current liabilities................ 18,986,323 21,426,039
Long term debt, less current maturities........ 33,572,147 42,526,752
Convertible Subordinated Notes................. 30,000,000 30,000,000
------------ ------------
Total liabilities........................ 82,558,470 93,952,791
------------ ------------
Minority interest.............................. 221,233 287,847
Stockholders' equity:
Common stock, $.0001 par value:
Class A, shares authorized 50,000,000;
issued and outstanding 10,269,628 and
10,187,042 in 1998 and 1997, respectively... 1,027 1,019
Class B, shares authorized 2,000,000;
issued and outstanding 1,605,741 and
1,610,038 in 1998 and 1997, respectively.... 161 161
Additional paid-in capital.................... 69,008,204 68,485,661
Retained earnings............................. 21,838,141 23,787,942
------------ ------------
Total stockholders' equity.............. 90,847,533 92,274,783
------------ ------------
Total liabilities and stockholders'
equity................................ $173,627,236 $186,515,421
============ ============
</TABLE>
3
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
AU BON PAIN CO., INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
for the sixteen weeks ended
----------------------------
April 18, April 19,
1998 1997
------------ --------
<S> <C> <C>
Revenues:
Restaurant sales....................... $69,719,739 $67,655,615
Franchise sales and other revenues..... 5,243,544 3,854,202
----------- -----------
74,963,283 71,509,817
Costs and expenses:
Cost of food and paper products........ 28,066,774 25,742,750
Restaurant operating expenses:
Labor............................ 19,437,842 18,466,866
Occupancy........................ 7,065,071 7,225,966
Other............................ 7,716,556 7,561,351
----------- -----------
34,219,469 33,254,183
Depreciation and amortization.......... 5,267,800 5,079,077
General and administrative expenses.... 5,474,491 4,913,963
Non-recurring charge................... 1,210,000 -
----------- -----------
74,238,534 68,989,973
Operating income............................. 724,749 2,519,844
Interest expense, net........................ 2,126,741 2,135,164
Other expense, net........................... 137,565 271,111
Loss on sale of assets....................... 734,823 -
Minority interest............................ 17,422 52,268
----------- -----------
Income (loss) before benefit from income
taxes...................................... (2,291,802) 61,301
Income tax expense (benefit)................. (342,000) 49,378
----------- -----------
Net income (loss)............................ $(1,949,802) $ 11,923
=========== ===========
Net income (loss) per common share - basic... $ (0.16) $ 0.00
=========== ===========
Net income (loss) per common share - diluted. $ (0.16) $ 0.00
=========== ===========
Weighted average number of common and common
equivalent shares outstanding - basic...... 11,839,546 11,746,410
=========== ===========
Weighted average number of common and common
equivalent shares outstanding - diluted.... 11,839,546 11,865,082
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
AU BON PAIN CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
for the sixteen weeks ended
---------------------------
April 18, April 19,
1998 1997
------------ --------
<S> <C> <C>
Cash flows from operations:
Net income................................... $(1,949,802) $ 11,923
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............... 5,267,800 5,079,077
Amortization of deferred financing costs.... 242,408 202,208
Provision for losses on accounts receivable. 17,935 14,329
Minority interest........................... 17,422 52,268
Loss on disposal of assets.................. 1,210,000 -
Non-recurring charge ....................... 734,823
Changes in operating assets and liabilities:
Accounts receivable.......................... 1,157,805 232,532
Inventories.................................. 723,344 (15,854)
Prepaid expenses............................. (2,139,959) (240,509)
Refundable income taxes...................... - 19,123
Accounts payable............................. (35,409) (2,506,648)
Accrued expenses............................. (2,100,414) (2,111,729)
----------- -----------
Net cash provided by operating activities.. 3,145,953 736,720
----------- -----------
Cash flows from investing activities:
Additions to property and equipment.......... (4,351,295) (4,317,461)
Proceeds from sale of assets................. 12,693,917 -
Payments received on notes receivable........ 78,767 20,999
Decrease (increase) in intangible assets..... (59,197) (23,084)
Decrease (Increase) in deposits and other.... (2,240,253) 2,296,560
----------- -----------
Net cash provided by (used in) investing
Activities................................ 6,121,939 (2,022,986)
----------- -----------
Cash flows from financing activities:
Exercise of employee stock options........... 388,208 10,491
Proceeds from draw down of revolving line
of credit................................... 29,536,195 23,637,195
Principal payments on revolver and other
long term debt.............................. (38,888,100) (21,770,907)
Proceeds from issuance of common stock....... 134,343 -
Deferred financing costs..................... (421,110) (82,287)
Decrease in minority interest................ (84,036) (123,267)
----------- -----------
Net cash provided by (used in) financing
activities................................ (9,334,500) 1,671,225
----------- -----------
Net (decrease) increase in cash and cash
equivalents.................................. (66,608) 384,959
----------- -----------
Cash and cash equivalents, at beginning of
period....................................... 853,025 2,578,830
----------- -----------
Cash and cash equivalents, at end of period.... $ 786,417 $ 2,963,789
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
Notes to Consolidated Financial Statements
Note A - Basis of Presentation
The accompanying unaudited, consolidated financial statements of Au Bon
Pain Co., Inc. and Subsidiaries (the "Company") have been prepared in accordance
with instructions to Form 10-Q and, therefore, do not include all information
and footnotes normally included in financial statements prepared in conformity
with generally accepted accounting principles. They should be read in
conjunction with the financial statements of the Company for the fiscal year
ended December 27, 1997.
The accompanying financial statements are unaudited and include all
adjustments (consisting of normal recurring adjustments and accruals) that
management considers necessary for a fair presentation of its financial position
and results of operations for the interim periods, and are not necessarily
indicative of the results that may be expected for the entire year.
Note B - Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share.
<TABLE>
<CAPTION>
for the sixteen weeks ended
-----------------------------
April 18, April 19,
1998 1997
------------ -----------
<S> <C> <C>
Net income (loss) used in net income
(loss) per common share - basic.... $(1,949,802) $ 11,923
Net income (loss) used in net income
(loss) per common share - diluted.. $(1,949,802) $ 11,923
Weighted average number of shares
outstanding - basic................ 11,839,546 11,746,410
Effect of dilutive securities:
Employee stock options......... - 36,186
Stock warrants................. - 82,486
----------- -----------
Weighted average number of shares
outstanding - diluted.............. 11,839,546 11,865,082
Net income (loss) per common share -
basic.............................. $ (0.16) $ 0.00
Net income (loss) per common share -
diluted............................. $ (0.16) $ 0.00
</TABLE>
Note C
In June 1997, the FASB issued SFAS No. 131 "Disclosure about Segments of an
Enterprise and Related Information", which changes the manner in which public
companies report information about their operating segments. SFAS No. 131, which
is based on the management approach to segment reporting, establishes
requirements to report selected segment information quarterly and to report
entity-wide disclosures about products and services, major customers, and the
geographic locations in which the entity holds assets and reports revenue.
Management is currently evaluating the effects of this change on its reporting
of segment information. The Company will adopt SFAS No. 131 for its fiscal year
ending December 26, 1998.
Note D - Non-recurring charge
During the first quarter of 1998, the company recorded a $1.2 million
non-cash charge to write-down the net book value of eight underperforming stores
whose leases expire in 1998 and will not be renewed. The charge is included as a
separate component of operating expenses. For the sixteen weeks ended April 18,
1998 and April 19, 1997, the stores included in the reserve had sales of
$869,000 and $1,238,000, respectively, and pre-tax losses of $175,000 and
$73,000 respectively.
6
<PAGE>
Note E - Loss on sales of assets
On March 23, 1998 the Company sold the Mexico, MO production facility and
its wholesale frozen dough business to Bunge Foods Corporation ("Bunge") for
approximately $13 million in cash, and recognized a loss of $735,000. In
conjunction with the sale, Au Bon Pain and Saint Louis Bread entered into five
year supply agreements with Bunge for the supply of substantially all their
frozen dough needs, excluding bagels, in their domestic bakery cafes. The
Company expects the supply agreements will result in an improved operating
margin of approximately .5% of total revenues, along with reduced interest
expense. The net proceeds of the sale were used to reduce the $7.9 million
outstanding for the Industrial Revenue Bond and $4.9 million for a permanent
reduction to the revolving credit line. There were no gains or losses associated
with the early retirement of the Industrial Revenue Bond or the partial
repayment of the revolving credit line.
Certain Factors Affecting Future Operating Results
Statements made or incorporated in this Form 10-Q include a number of
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements include, without limitation, statements containing
the words "estimates", "projects", "anticipates", "believes", "expects",
"intends", "future", and words of similar import which express management's
belief, expectations or intentions regarding the Company's future performance.
The forward-looking statements involve known or unknown risks and uncertainties.
The Company's actual results could differ materially from those set forth in the
forward-looking statements. The amount of cost to the Company under the Supply
Agreements is dependent on market fluctuations in commodities prices,
particularly flour and butter. Additionally, the Company's operating results may
be affected by many factors, including but not limited to, variations in the
number and timing of bakery cafe openings and public acceptance of new bakery
cafes, competition and other factors that may affect retailers in general.
The Company has not completed its assessment of the impact of the Year
2000 issue. It is management's belief that the primary financial systems are
Year 2000 compatible. Testing of those systems for compliance is expected to
occur during 1998. Many secondary systems associated with the Company's retail
operations will require modifications. It is the Company's belief that existing
internal Company resources will be adequate to reprogram these Year 2000
modifications. It is expected that the most significant Year 2000 system issue
for the Company is with POS systems used by the Au Bon Pain concept. The Company
is in negotiation with several vendors to replace the exiting POS systems with
new state-of-the-art systems. The new systems are expected to be leased at a net
incremental cost of approximately $400,000 annually. The incremental cost of the
new system is expected to be substantially offset by labor efficiency savings
associated with the new POS system.
7
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following table sets forth the percentage relationship to total
revenues of certain items included in the Company's consolidated statements of
operations for the periods indicated:
<TABLE>
<CAPTION>
for the sixteen weeks ended
---------------------------
April 18, April 19,
1998 1997
--------- ---------
<S> <C> <C>
Revenues:
Restaurant sales.................... 93.0% 94.6%
Franchise sales and other revenues.. 7.0 5.4
----- -----
100.0% 100.0%
Costs and expenses:
Cost of food and paper products..... 37.4% 36.0%
Restaurant operating expenses....... 45.7 46.5
Depreciation and amortization....... 7.0 7.1
General and administrative.......... 7.3 6.9
Non-recurring charge................ 1.6 --
----- -----
99.0 96.5
----- -----
Operating margin...................... 1.0 3.5
Interest expense, net................. 2.9 3.0
Other expense, net.................... 0.2 0.3
Loss on sale of assets................ 1.0 --
Minority interest..................... 0.0 0.1
----- ----
Income (loss) before provision for
Income taxes........................ (3.1) 0.1
Provision for income taxes............ 0.5 0.1
----- -----
Net income (loss)..................... (2.6)% 0.0%
===== =====
</TABLE>
General
The Company's revenues are derived from restaurant sales and franchise
sales and other revenues. Franchise sales and other revenues include sales of
frozen dough products to franchisees and others, royalty income and franchise
fees. Certain expenses (cost of food and paper products, restaurant operating
expenses, and depreciation and amortization) relate primarily to restaurant
sales, while general and administrative expenses relate to all areas of revenue
generation.
The Company's fiscal year ends on the last Saturday in December. The
Company's fiscal year normally consists of 13 four-week periods, with the first,
second and third quarters ending 16 weeks, 28 weeks and 40 weeks, respectively,
into the fiscal year.
8
<PAGE>
Results of Operations
Total revenues for the sixteen weeks ended April 18, 1998 increased 3%
to $75.0 million from $71.5 million for the comparable period of 1997. The
increase reflects a 22% increase in total revenues to $23.1 million in the first
quarter of 1998 in the Saint Louis Bread Co./Panera Bread business unit driven
principally by increased comparable restaurant sales and the opening of seven
and two company owned stores 1997 and 1998, respectively. Comparable restaurant
sales at Saint Louis Bread Co./Panera Bread continued at a strong pace
increasing 6.5% in the first quarter of 1998 versus the comparable period of
1997. In the Au Bon Pain business unit, total revenues decreased slightly to
$51.8 million for the first quarter of 1998, reflecting the closing of certain
restaurants in 1997 and the franchising of eleven stores in the Philadelphia
market in the third quarter of 1997. Comparable restaurant sales for the Au Bon
Pain business unit in the first quarter of 1998 increased by 2.8%, the fifth
consecutive quarter of positive same store sales, fueled by the ABP 2000 concept
realignment program which has produced sales gains on average of over 20% in the
first year after conversion.
Operating income in the first quarter of 1998 decreased 23% to
$1,935,000 (before the $1.2 million non-recurring charge), versus $2,520,000 in
the first quarter of 1997, as operating margin was 2.6% in the first quarter of
1998 versus 3.5% in the comparable period of 1997. The 0.9 point year-over-year
decline in margin was a result of weakened margins in the Manufacturing Business
during the months prior to the sale of the Mexico, Missouri facility affecting
food costs in both business units.
At the Saint Louis Bread Co./Panera Bread business unit, operating
income increased 13%. These improved results were achieved despite increased
food cost from the manufacturing transition and a significant increase in
general and administrative expenses in the quarter to support the Business
Unit's projected 63% unit growth in 1998 over 1997. During the first quarter of
1998, two Saint Louis Bread Co./Panera Bread franchise area development
agreements were signed, representing commitments for the development of 45
bakery cafes and increasing the number of franchise commitments to a total of
401 bakery cafes to be developed.
Operating margin in the Au Bon Pain business unit in the first quarter
of 1998 was 1.6 points below that of the first quarter of 1997, as the Au Bon
Pain business unit results were significantly impacted by the higher food costs
stemming from inefficiencies in the Manufacturing Facility prior to the sale.
Increased same store sales of 2.8% and lower restaurant operating costs of .8%
partially offset the higher food costs.
In the first quarter of 1998, the Au Bon Pain International and Trade
Channels business unit increased earnings $546,000 versus the comparable quarter
of 1997, despite some sales softness in the Asian markets. Also contributing to
a strong first quarter were the opening of seven new bakery cafes and the
signing of a development agreement for the future development of nine cafes over
five years in Eastern Canada.
9
<PAGE>
During the first quarter of 1998, the Company recorded a $1.2 million
non-cash charge to write-down the net book value of eight underperforming Au Bon
Pain stores whose leases expire in 1998 and will not be renewed. The charge is
included as a separate component of operating expenses. The closing of eight
underperforming stores is expected to improve operating profits going forward by
approximately $400,000 pre-tax on an annualized basis.
Net Income
A one-time $735,000 pre-tax charge related to the previously announced
sale of the Mexico, Missouri Manufacturing facility contributed to a net loss in
the first quarter of 1998 of $1,950,000 versus net income of $12,000 in the
comparable 1997 period. Interest expense was essentially flat at $2,127,000 in
the first quarter of 1998 versus $2,135,000 in the comparable period in 1997
with other expense of $138,000 at April 18, 1998 compared to $271,000 at April
19, 1997.
Liquidity and Capital Resources
The Company's principal requirements for cash are capital expenditures
for constructing and equipping new bakery cafes, maintaining or remodeling
existing bakery cafes and working capital. To date, the Company has met its
requirements for capital with cash from operations, proceeds from the sale of
equity and debt securities and bank borrowings.
A total of $3,146,000 in the first quarter of 1998 was provided by
operating activities versus $737,000 for the comparable period in 1997. Funds
provided by operating activities were primarily the result of the sale of assets
and decreases in accounts receivable and inventories, offset by increases in
prepaid expenses, deposits and accrued expenses. In the first quarter of 1997
cash was generated by an increase in accounts payable offset by a decrease in
accrued expenses.
Total capital expenditures for the sixteen weeks ended April 18, 1998
of $4.4 million were related primarily to the construction of new Saint Louis
Bread bakery cafes and the remodeling of existing Au Bon Pain bakery cafes. The
expenditures were funded principally by net cash from operating activities and
by use of the Company's revolving line of credit. Total capital expenditures for
the sixteen weeks ended April 19, 1997 were $4.3 million.
On July 24, 1996, the Company issued $15 million senior subordinated
debentures maturing in July, 2000. The debentures accrue interest at varying
fixed rates over the four year term, ranging between 11.25% and 14.0%. In
connection with the private placement,
10
<PAGE>
warrants with an exercise price of $5.62 per share were issued to purchase
between 400,000 and 500,000 shares of the Company's Class A common stock,
depending on the term which the debentures remain outstanding and certain future
events. The net proceeds of the financing were used to reduce the amount
outstanding under the Company's bank revolving line of credit. With the senior
subordinated financing and the Company's revolving line of credit, the Company's
management believes it has the capital resources necessary to meet its growth
goals through 1998.
On March 23, 1998 the Company sold its Mexico, MO production facility
and its wholesale frozen dough business to Bunge Foods Corporation ("Bunge") for
approximately $13 million in cash, and recognized a loss of $735,000 as a
component of "Other Expense (Income), net". In conjunction with the sale, Au Bon
Pain and Saint Louis Bread entered into five year supply agreements with Bunge
for the supply of substantially all their frozen dough needs, excluding bagels,
in their domestic bakery cafes. The Company expects the supply agreements will
result in an improved operating margin of approximately .5% of total revenues,
along with reduced interest expense. The net proceeds of the sale were used to
repay the $7.9 million outstanding for the Industrial Revenue Bond and a
permanent $4.9 million reduction to the revolving credit line. There were no
gains or losses associated with the early retirement of the Industrial Revenue
Bond or the partial repayment of the revolving credit line.
As of April 18, 1998, the Company had a $23.1 million unsecured
revolving line of credit which bore interest at either the commercial bank's
prime rate or LIBOR plus 3.0%, at the Company's option. As of April 18, 1998,
$16.9 million was outstanding under the line of credit and an additional $1.2
million of the remaining availability was utilized by outstanding letters of
credit issued by the bank on behalf of the Company.
In 1998, the Company currently anticipates spending approximately $21.0
million for capital expenditures, principally for the opening of new bakery
cafes and the remodeling of existing units. The Company expects to fund these
expenditures principally through internally generated cash flow.
In June 1997, the FASB issued SFAS No. 131 "Disclosure about Segments
of an Enterprise and Related Information", which changes the manner in which
public companies report information about their operating segments. SFAS No.
131, which is based on the management approach to segment reporting, establishes
requirements to report selected segment information quarterly and to report
entity-wide disclosures about products and services, major customers, and the
geographic locations in which the entity holds assets and reports revenue.
Management is currently evaluating the effects of this change on its reporting
of segment information. The Company will adopt SFAS No. 131 for its fiscal year
ending December 26, 1998.
11
<PAGE>
Statements made or incorporated in this Form 10-Q include a number of
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements include, without limitation, statements containing
the words "estimates", "projects", "anticipates", "believes", "expects",
"intends", "future", and words of similar import which express management's
belief, expectations or intentions regarding the Company's future performance.
The forward-looking statements involve known or unknown risks and uncertainties.
The Company's actual results could differ materially from those set forth in the
forward-looking statements. The amount of cost to the Company under the Supply
Agreements is dependent on market fluctuations in commodities prices,
particularly flour and butter. Additionally, the Company's operating results may
be affected by many factors, including but not limited to, variations in the
number and timing of bakery cafe openings and public acceptance of new bakery
cafes, competition and other factors that may affect retailers in general.
The Company has not completed its assessment of the impact of the Year
2000 issue. It is management's belief that the primary financial systems are
Year 2000 compatible. Testing of those systems for compliance is expected to
occur during 1998. Many secondary systems associated with the Company's retail
operations will require modifications. It is the Company's belief that existing
internal Company resources will be adequate to reprogram these Year 2000
modifications. It is expected that the most significant Year 2000 system issue
for the Company is with POS systems used by the Au Bon Pain concept. The Company
is in negotiation with several vendors to replace the exiting POS systems with
new state-of-the-art systems. The new systems are expected to be leased at a net
incremental cost of approximately $400,000 annually. The incremental cost of the
new system is expected to be substantially offset by labor efficiency savings
associated with the new POS system.
12
<PAGE>
PART II. OTHER INFORMATION
- --------------------------
Item 6. Exhibits and reports on Form 8-K.
(a) Exhibit 27 Financial Data Schedule.
(b) Au Bon Pain Co., Inc. did not file any reports on Form 8-K during the
quarter ended April 18, 1998.
13
<PAGE>
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.
AU BON PAIN CO., INC.
---------------------
(Registrant)
Dated: June 2, 1998 By: /S/ LOUIS I. KANE
------------------
Louis I. Kane
Co-Chairman
Dated: June 2, 1998 By: /S/ RONALD M. SHAICH
---------------------
Ronald M. Shaich
Co-Chairman and
Chief Executive Officer
Dated: June 2, 1998 By: /S/ ANTHONY J. CARROLL
-----------------------
Anthony J. Carroll
Senior Vice President and
Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-END> APR-18-1998
<CASH> 786,417
<SECURITIES> 0
<RECEIVABLES> 6,521,572
<ALLOWANCES> 178,649
<INVENTORY> 6,191,181
<CURRENT-ASSETS> 17,241,257
<PP&E> 179,852,672
<DEPRECIATION> 78,179,054
<TOTAL-ASSETS> 173,627,236
<CURRENT-LIABILITIES> 18,986,323
<BONDS> 0
0
0
<COMMON> 1,188
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 173,627,236
<SALES> 69,719,739
<TOTAL-REVENUES> 74,963,283
<CGS> 28,066,774
<TOTAL-COSTS> 74,238,534
<OTHER-EXPENSES> 137,565
<LOSS-PROVISION> 734,823
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