SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
__ _
/ X / Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange
Act of 1934
For the quarter ended October 4, 1998 Commission File
Number 1-8881
SBARRO, INC.
(Exact Name of Registrant as Specified in its Charter)
NEW YORK 11-
2501939
(State or other jurisdiction of
incorporation or organization) (I.R.S.
Employer
Identification No.)
401 Broad Hollow Road, Melville, New York
11747
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (516)
715-4100
763 Larkfield Road, Commack, New York 11725
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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of
the issuer's classes of common stock as of the latest
practicable date.<PAGE>
Class Outstanding at November
8, 1998
Common Stock, $.01 par value
20,528,309
____________________________________________________________
____________________________________________________________
____________________
SBARRO, INC.
FORM 10-Q INDEX
PART I. FINANCIAL INFORMATION
PAGES
Consolidated Financial Statements:
Balance Sheets - October 4, 1998 (unaudited)
and December 28, 1997. . . . . . . . . . . . . . . . . .
3-4
Statements of Income (unaudited) - Forty Weeks
ended October 4, 1998 and October 5, 1997 and Twelve
Weeks ended October 4, 1998 and October 5, 1997 . . . . .
5-7
Statements of Cash Flows (unaudited) - Forty
Weeks ended October 4, 1998 and October 5, 1997. . . . . .
8-9
Notes to Unaudited Consolidated Financial
Statements - October 4, 1998. . . . . . . . . . . . . . . .
10
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . .12-16
PART II. OTHER INFORMATION . . . . . . . . . . . . . . .
17<PAGE>
Pg. 2
SBARRO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)
October 4, December 28,
1998 1997
(unaudited)
Current assets:
Cash and cash equivalents $120,805 $119,810
Marketable securities 5,000 7,500
Receivables:
Franchisees 1,132 810
Other 2,755 1,565
3,887 2,375
Inventories 2,572 2,962
Prepaid expenses 6,025 1,768
Total current assets 138,289 134,415
Property and equipment, net 138,691 136,798
Other assets 6,129 7,436
$283,109 $278,649 <PAGE>
(continued)
Pg. 3
SBARRO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
LIABILITIES AND SHAREHOLDERS' EQUITY
(In thousands)
October 4, December 28,
1998 1997
(unaudited)
Current liabilities:
Accounts payable $ 6,560 $ 10,086
Accrued expenses 23,998 26,025
Dividend payable - 5,521
Income taxes 32 4,777
Total current liabilities 30,590
46,409
Deferred income taxes 10,681 11,801
Shareholders' equity:
Preferred stock, $1 par value;
Authorized 100,000,000 shares;
none issued - -
Common stock, $.01 par value;
Authorized 40,000,000 shares;
issued and outstanding 20,528,309
shares at October 4, 1998 and
20,446,654 shares at
December 28, 1997 205 204<PAGE>
Additional paid-in capital 34,516
32,444
Retained earnings 207,117 187,791
241,838 220,439
$283,109 $278,649
See notes to unaudited consolidated financial statements
Pg. 4
SBARRO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share
data)
For the forty weeks ended:
October 4, October 5,
1998 1997
Revenues:
Restaurant sales $256,708 $244,903
Franchise related income 6,192 5,152
Interest income 3,734 3,288
Total revenues 266,634 253,343
Costs and expenses:
Cost of food and paper products 54,068
50,289
Restaurant operating expenses:
Payroll and other employee
benefits 68,161 63,045
Occupancy and other 76,301
71,554
Depreciation and amortization 16,986
17,999
General and administrative 14,808
13,354
Provision for unit closings 1,525 -<PAGE>
Terminated transaction costs 986 -
Litigation settlement and
related costs 3,544 -
Other income ( 2,242) (1,324)
Total costs and expenses 234,137 214,917
Income before income taxes and
Cumulative effect of change in
method of accounting
for start-up costs 32,497 38,426
Income taxes 12,349 14,602
Income before cumulative effect
of accounting change 20,148
23,824
Cumulative effect of change in
Method of accounting for
start-up costs, net of income
taxes of $504 (822) -
Net income $19,326 $23,824
See notes to unaudited consolidated financial statements
Pg. 5
SBARRO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per
share data)
For the forty weeks
ended:
October 4, October 5,
1998 1997
Per share information:
Net income per share:
Basic:
Income before accounting change $.98
$1.17
Accounting change (.04) -
Net income $.94 $1.17
Diluted:<PAGE>
Income before accounting change $.98
$1.16
Accounting change (.04) -
Net income $.94 $1.16
Shares used in computing net income
per share:
Basic 20,512,956 20,421,266
Diluted 20,598,098 20,524,767
See notes to unaudited consolidated financial statements
Pg. 6
SBARRO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per
share data)
For the twelve weeks
ended:
October 4, October 5,
1998 1997
Revenues:
Restaurant sales $ 82,680 $79,805
Franchise related income 2,038 1,856
Interest income 1,189 1,017
Total revenues 85,907 82,678
Costs and expenses:
Cost of food and paper products 17,645
16,491
Restaurant operating expenses:
Payroll and other employee<PAGE>
benefits 21,262 19,946
Occupancy and other 23,316
22,207
Depreciation and amortization 5,261 5,581
General and administrative 4,441 4,093
Litigation settlement and
related costs 3,544 -
Other income (983) (489)
Total costs and expenses 74,486 67,829
Income before income taxes 11,421
14,849
Income taxes 4,340 5,643
Net income $ 7,081 $ 9,206
Per share information:
Net income per share:
Basic:
Net income: $.34 $.45
Diluted:
Net income $.34 $.45
Shares used in computing net
income per share:
Basic 20,528,309 20,440,596
Diluted 20,530,983 20,526,757
See notes to unaudited consolidated financial statements
Pg. 7
SBARRO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
For the forty
weeks ended:
October 4, October 5,
1998 1997
Operating activities:
Net income $ 19,326 $23,824
Adjustments to reconcile net
income to net cash provided by<PAGE>
operating activities:
Cumulative effect of change
in method of accounting for
start-up costs 822 -
Depreciation and amortization 17,056
17,999
Deferred income taxes (616) (184)
Provision for unit closings 1,525
-
Changes in operating assets
and liabilities:
Increase in receivables (1,512)
(463)
Decrease in inventories 390
176
Increase in prepaid expenses
(4,257) (4,589)
Increase in other assets (253)
(1,491)
Decrease in accounts payable
and accrued expenses (4,704)
(2,261)
Decrease in income taxes
payable (4,745) (4,646)
Net cash provided by operating
activities 23,032 28,365
Investing activities:
Proceeds from maturity of
marketable securities 2,500 2,500
Purchases of property and
equipment (21,089) (20,709)
Net cash used in investing
activities (18,589) (18,209)
(continued)
Pg. 8
SBARRO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
(In thousands)<PAGE>
For the forty weeks ended:
October 4, October 5,
1998 1997
Financing activities:
Proceeds from exercise of
stock options 2,073 1,129
Cash dividends paid (5,521) (21,238)
Net cash used in
financing activities (3,448) (20,109)
Increase (decrease) in cash
and cash equivalents 995 (9,953)
Cash and cash equivalents at
beginning of period 119,810 104,818
Cash and cash equivalents at
end of period $120,805 $94,865
Supplemental disclosure of cash
flow information:
Cash paid during the period
for income taxes $20,157 $19,354
See notes to unaudited consolidated financial statements
Pg. 9
SBARRO, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
1. The accompanying unaudited consolidated financial
statements have been prepared in accordance with the
instructions for Form 10-Q and Regulation S-X related to
interim period financial statements and, therefore, do not<PAGE>
include all information and footnotes required by generally
accepted accounting principles. However, in the opinion of
management, all adjustments (consisting of normal recurring
adjustments and accruals) considered necessary for a fair
presentation of the consolidated financial position of the
Company and its subsidiaries at October 4, 1998 and their
consolidated results of operations for the forty and twelve
weeks ended October 4, 1998 and October 5, 1997 have been
included. The results of operations for the interim periods
are not necessarily indicative of the results that may be
expected for the entire year. Reference should be made to
the annual financial statements, including footnotes
thereto, included in the Company's Annual Report on Form 10-
K for the fiscal year ended December 28, 1997.
2. The Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants has
issued Statement of Position (SOP) 98-5 which requires
companies that capitalize pre-opening and similar costs to
write off all existing such costs, net of tax benefit, as a
cumulative effect of accounting change and to expense all
such costs as incurred in the future. In accordance with
its early application provisions, the Company has
implemented the SOP as of the beginning of its 1998 fiscal
year.
3. The provisions of Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings Per Share", became
effective as to the Company for the quarter and year ended
December 28, 1997. SFAS No. 128 requires the presentation
of both basic and diluted earnings per share on the face of
the income statement. The number of shares of common stock
subject to stock options included in diluted earnings per
share were 85,142 and 2,674 for the forty and twelve weeks
ended October 4, 1998, respectively, and 103,501 and 86,161
for the forty and twelve weeks ended October 5, 1997,
respectively. As required by SFAS 128, all prior period
amounts have been restated to conform to the new
presentation.
Pg. 10
SBARRO, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
(continued)
4. In the first quarter of 1998, the Company adopted SFAS
130, "Reporting Comprehensive Income", which establishes new
rules for the reporting of comprehensive income and its<PAGE>
components. The adoption of this statement had no impact on
the Company's net income or shareholders' equity. For the
forty weeks and twelve weeks ended October 4, 1998 and
October 5, 1997, the Company's operations did not give rise
to items includible in comprehensive income which were not
already included in net income. Therefore, the Company's
comprehensive income is the same as its net income for all
periods presented.
5. Following the Company's announcement of a proposal for
the merger of the Company with a company to be owned by
members of the Sbarro Family, seven lawsuits were instituted
against the Company, certain directors and/or members of the
Sbarro Family. In June 1998, the Sbarro Family withdrew its
proposal and, in September 1998, the actions were
discontinued.
6. As previously reported, in June 1997, under the
provisions of the Fair Labor Standards Act, an action
entitled Kenneth Hoffman and Gloria Curtis, on behalf of
themselves and all others similarly situated v. Sbarro,
Inc., was filed in the United States District Court for the
Southern District of New York. In November 1998, a
settlement was agreed upon, subject to court approval, which
resulted in a one-time charge of $3,544,000 before tax or
$2,197,000 after tax ($.11 basic and diluted earnings per
share) reflected in the operating income of both the twelve
and forty weeks ended October 4, 1998.
Pg. 11
SBARRO, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations<PAGE>
The Company's business is subject to seasonal
fluctuations, the effects of weather and economic
conditions. Earnings have been highest in its fourth
quarter due primarily to increased traffic in shopping malls
during the holiday shopping season. Normally, the fourth
fiscal quarter accounts for approximately 40% of net income
for the year. In 1997, the fourth fiscal quarter accounted
for 38% of net income for the year before a provision for
unit closings. The length of the holiday shopping period
between Thanksgiving and Christmas and the number of weeks
in the fourth quarter and other factors can produce changes
in the fourth quarter earnings relationship from year to
year. The fourth quarter of fiscal 1998 will consist of
thirteen weeks.
The following table provides information
concerning the number of Company-owned and franchised
restaurants in operation during each indicated period:
40 Weeks 40 Weeks 12 Weeks 12 Weeks
Ended Ended Ended Ended Fiscal Year
10/04/98 10/05/97 10/04/98 10/05/97 1997 1996
Company-owned restaurants:
Opened during period 19 19 4 5 30
29
Acquired from (sold to)
franchisees during
period-net 1 2 - 1 4 1
Closed during period (18) (5) (5) - (8)
(4)
Open at end of period * 625 613 625 613
623 597
Franchised restaurants:
Opened during period 26 31 11 14 47
36
Purchased from (sold to)
Company during period-net (1) (2) - (1)
(4) (1)
Closed or terminated
during period (8) (22) (2) (3) (23) (16)
Open at end of period 256 226 256 226 239
219
All restaurants:
Opened during period 45 50 15 19 77
65
Closed or terminated
during period (26) (27) (7) (3) (31) (20)
Open at end of period * 881 839 881 839
862 816
Kiosks (all franchised)<PAGE>
open at end of period 9 6 9 6 7
7
______________________
* Included are joint venture mall
locations which operate as Umberto
of New Hyde Park 6 5 6 5 5 3
Pg. 12
Restaurant sales from Company-owned units increased 4.8% to
$256,708,000 for the forty weeks ended October 4, 1998 from
$244,903,000 for the comparable period in 1997 and 3.6% to
$82,680,000 for the twelve weeks ended October 4, 1998 from
$79,805,000 for the comparable period in 1997. These
increases resulted primarily from a higher number of units
in operation during both periods of the current fiscal year
and selective menu price increases of approximately 1.4% and
.7% which became effective in September 1998 and mid
February 1998, respectively. An increase of .9% in
comparable restaurant sales also contributed to the increase
in restaurant sales for the forty week period. Comparable
restaurant sales for the twelve-week period were relatively
unchanged. Comparable unit
sales for the forty week period were $235,659,000 and for
the twelve week period were $75,244,000. Comparable unit
sales are made up of sales at locations that were open
during the entire current and prior fiscal year.
Franchise related income increased 20.2% to $6,192,000 for
the forty weeks ended October 4, 1998 from $5,152,000 for
the comparable period in 1997. Franchise related income
increased 9.8% to $2,038,000 for the twelve weeks ended
October 4, 1998 from $1,856,000 for the comparable period in
1997. These increases resulted from greater continuing
royalties due to a larger number of franchise units in
operation in 1998 and an increase in initial franchise and
development fees due to opening more international franchise
units in 1998 than in the comparable periods in 1997.
Comparable sales at franchise locations decreased .8% for
the forty week period ended October 4, 1998 and decreased
2.3% for the twelve weeks ended October 4, 1998 compared to
the similar periods in 1997.
Interest income increased to $3,734,000 for the forty weeks
ended October 4, 1998 from $3,288,000 for the comparable
period in 1997 and to $1,189,000 for the twelve weeks ended
October 4, 1998 from $1,017,000 for the comparable period in
1997. These increases were due to larger amounts of cash
being invested in the current periods over the comparable
periods in 1997. Interests rates were comparable in the
periods reported.
Cost of food and paper products as a percentage of
restaurant sales increased to 21.1% for the forty weeks<PAGE>
ended October 4, 1998 from 20.5% for the comparable period
in 1997 and to 21.3% for the twelve weeks ended October 4,
1998 from 20.7% for the comparable period in 1997. The
increased cost was principally due to higher cheese prices
during 1998, which increased food costs by approximately
$1,400,000 and $750,000 for the forty and twelve weeks ended
October 4, 1998, respectively. Cheese prices increased in
the middle of the fourth quarter of fiscal 1997, decreased
toward the end of the first quarter of 1998 but
Pg. 13
increased significantly during the second and third quarters
of 1998. Current cheese prices have continued to increase
and remain significantly higher than in the fourth quarter
of fiscal 1997.
Restaurant operating expenses - payroll and other employee
benefits increased to 26.6% of restaurant sales for the
forty weeks ended October 4, 1998 from 25.7% for the
comparable period in 1997 and to 25.7% for the twelve weeks
ended October 4, 1998 from 25.0% for the comparable period
in 1997. These percentage increases were attributable to the
$693,000 and $154,000 payroll and benefit component of
start-up costs incurred and expensed during the forty and
twelve weeks ended October 4, 1998, respectively, under
Statement of Position 98-5 of the American Institute of
Certified Public Accountants (the "SOP") implemented by the
Company in the first quarter of fiscal 1998 (which expenses
in prior years' quarters would have been capitalized and
charged to amortization expense over a two year period). In
addition, the effects of the increase in the Federal minimum
wage which became effective in September 1997, a strong
labor market and an increase in unemployment and other
payroll taxes contributed to the increase. Restaurant
operating expenses - occupancy and other expenses increased
to 29.7% for the forty weeks ended October 4, 1998 from
29.2% for the comparable period in 1997 and to 28.2% for the
twelve weeks ended October 4, 1998 from 27.8% for the
comparable period in 1997. These increases are attributable
principally to rent and other landlord charges increasing at
a higher rate than the increase in sales in the comparable
periods of 1997.
Depreciation and amortization expenses for the forty and
twelve week periods ended October 4, 1998 were approximately
$1,013,000 and $320,000 lower than the same periods in 1997
principally as the result of the absence of amortization of
previously capitalized start-up costs which, as discussed
below, were fully written off as of the beginning of the
year with the implementation of the SOP. Had the Company
not implemented the SOP, it would have incurred amortization
expenses of $767,000 and $236,000 for the forty and twelve<PAGE>
weeks ended October 4, 1998 related to previously
capitalized start-up costs. The balance of the decrease
relates to the absence of depreciation and amortization in
1998 on certain older units and also to the closing of
certain Company-owned units.
General and administrative expenses were $14,808,000 or 5.6%
of total revenues for the forty weeks ended October 4, 1998
compared to $13,354,000 or 5.3% of total revenues for the
forty weeks ended October 5, 1997. General and
administrative expenses were $4,441,000 or 5.2% of total
revenues for the twelve weeks ended October 4, 1998 compared
to $4,093,000 or 5.0% of total revenues for the comparable
period in 1997. The increases were due to higher costs
associated with the administration of additional Company-
owned restaurants, and additional supervisory,
Pg. 14
administrative and travel expenses related to increased
international franchising activities. In addition, $620,000
and $171,000 of the increase was attributable to the general
and administrative expense component of start-up costs
incurred and expensed during the forty and twelve weeks
ended October 4, 1998, respectively, under the SOP (which
expenses in prior years' quarters would have been
capitalized and charged to amortization expense over a two
year period).
Results for the twelve and forty weeks ended October 4, 1998
include a provision of $3,544,000 before tax or $2,197,000
after tax ($.11 basic and diluted earnings per share) for
costs associated with the settlement in November 1998 of a
previously reported lawsuit under the Fair Labor Standards
Act. The settlement is subject to court approval.
Results for the forty weeks ended October 4, 1998 also
include one-time charges to operating income incurred
earlier in 1998 of $1,525,000 before tax or $946,000 after
tax ($.05 basic and diluted earnings per share) for the
closing of certain Company-owned restaurants and $986,000
before tax or $611,000 after tax ($.03 basic and diluted
earnings per share) for costs associated with terminated
negotiations of a proposed acquisition by members of the
Sbarro family of all shares of the Company not owned by
them.
Other income increased $918,000 and $494,000 during the
forty weeks and twelve weeks ended October 4, 1998,
respectively, from the comparable periods in 1997 primarily
as a result of increased incentives from suppliers.
The effective income tax rate was 38% for both the forty and
twelve weeks ended October 4, 1998 and October 5, 1997.<PAGE>
The cumulative effect of the change in method of accounting
resulted from the Company's implementation of the SOP which
requires companies that have capitalized pre-opening and
similar costs to write off all existing such costs, net of
tax benefit, as a cumulative effect of accounting change and
to expense all such costs as incurred in the future. In
accordance with its early application provisions, the
Company implemented the SOP as of the beginning of its 1998
fiscal year. In addition to on-going start-up costs
incurred and expensed during 1998 with respect to restaurant
operating expenses - payroll and other employee benefits and
general and administrative expenses, the Company incurred a
one-time charge during the sixteen weeks ended April 19,
1998 of $822,000 (net of an income tax benefit of $504,000)
to write-off all start-up costs existing as of the beginning
of the year.
Pg. 15
Liquidity and Capital Resources
During the forty weeks ended October 4, 1998, operating
activities contributed $23,032,000 to cash flow. This
consisted primarily of net income of $19,326,000, non-cash
depreciation and amortization of $17,056,000, a one time
charge for a change in the method of accounting for start-up
costs pursuant to the SOP of $822,000 and a provision for
unit closings of $1,525,000, and was, offset in part,
principally by an increase in prepaid expenses of
$4,257,000, a decrease in accounts payable and accrued
expenses of $4,704,000 from their peak year-end balances and
a decrease in income taxes payable of $4,745,000. During
the forty weeks ended October 4, 1998, the Company expended
approximately $21,089,000 for the acquisition of property
and equipment related primarily to the opening of 19
Company-owned restaurants, the Company's share of
construction costs related to consolidated joint venture
operations and the renovation of the Company's new
headquarters building. In addition, $5,521,000 was used to
pay, in early 1998, the quarterly cash dividend declared in
late 1997 to the Company's shareholders (see "Dividends").
At October 4, 1998, the Company had cash and cash
equivalents and marketable securities of approximately
$125,805,000 and its working capital was approximately
$107,699,000. The Company believes, based on current
projections, that its liquid assets presently on hand,
together with cash generated from operations, should be
sufficient for its presently contemplated operations, the<PAGE>
investment in property and equipment for the opening of
additional restaurant locations, and the completion of the
renovation and equipping the Company's new headquarters
building.
Dividends
The Company's Board of Directors deferred consideration of
the Company's 1998 quarterly cash dividends pending
consideration of the transaction that had been proposed by
members of the Sbarro Family. The proposal was conditioned
upon, among other things, the suspension of dividends by the
Company. Following the termination of the proposed
transaction, the Company and its investment bankers began
considering various strategic alternatives for the benefit
of all of its shareholders. Accordingly, the Company's
Board of Directors has continued to defer consideration of
cash dividends and will evaluate future dividends in light
of circumstances as they exist at the time.
Year 2000
The Company does not believe, based upon its internal
reviews and other factors, that future external and internal
costs to be incurred relating to the modification of
internal-use software for the Year 2000 will have a material
effect on the Company's
Pg. 16
results of operations or financial position. In addition,
the Company has addressed the Year 2000 issue with its
principal suppliers and has been assured that they will be
timely Year 2000 compliant.
Forward-Looking Statements
Certain statements contained in this Report are forward-
looking statements which are subject to a number of known
and unknown risks and uncertainties that could cause the
Company's actual results and performance to differ
materially from those described or implied in the forward-
looking statements. These risks and uncertainties, many of
which are not within the Company's control, include, but are
not limited to, general economic, weather and business
conditions; the availability of suitable restaurant sites in
appropriate regional shopping malls and other locations on
reasonable rental terms; changes in consumer tastes; changes
in population and traffic patterns; the Company's ability to
continue to attract franchisees; the success of its present,
and any future, joint ventures and other expansion
opportunities; the availability of food (particularly cheese
and tomatoes) and paper products at reasonable prices; no
material increase occurring in the Federal minimum wage; and<PAGE>
the Company's ability to continue to attract competent
restaurant and executive managerial personnel.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Following the Company's announcement of a proposal for the
merger of the Company with a company to be owned by members
of the Sbarro Family, seven lawsuits were instituted against
the Company, certain directors and/or members of the Sbarro
Family. In June 1998, the Sbarro Family withdrew its
proposal and, in September 1998, the actions were
discontinued.
As previously reported, in June 1997, under the provisions
of the Fair Labor Standards Act, an action entitled Kenneth
Hoffman and Gloria Curtis, on behalf of themselves and all
others similarly situated v. Sbarro, Inc., was filed in the
United States District Court for the Southern District of
New York. In November 1998, a settlement was agreed upon,
subject to court approval, which resulted in a one-time
charge of $3,544,000 before tax or $2,197,000 after tax
($.11 basic and diluted earnings per share) reflected in the
operating income of both the twelve and forty weeks ended
October 4, 1998.
Pg. 17
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
No. Description
27 Financial Data Schedule
(b) Reports on Form 8-K.<PAGE>
The only Report on Form 8-K filed by the Company during
the quarter for which this Report is filed was dated (date
of earliest event reported) September 14, 1998 reporting
under Item 5, Other Events. No financial statements were
filed with that Report.
Pg. 18
SIGNATURE
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.
SBARRO, INC.<PAGE>
Registrant
Date: November 17, 1998 By: /s/ MARIO SBARRO
Mario Sbarro
Chairman of the Board and
President
Date: November 17, 1998 By: /s/ ROBERT S. KOEBELE
Robert S. Koebele
Vice President-Finance
Pg. 19
EXHIBIT INDEX
Exhibit Number Description<PAGE>
27 Financial Data Schedule<PAGE>
EXHIBIT 27<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-03-1999
<PERIOD-END> OCT-04-1998
<CASH> 120805
<SECURITIES> 5000
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