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 QUARTERLY PERIOD ENDED
JUNE 30, 1995
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
_______________ to _______________
Commission file number 0-14837
ELMER'S RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
OREGON 93-0836824
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11802 S.E. Stark St.
P.O. Box 16595
Portland, Oregon 97216
(Address of principal (Zip Code)
executive offices)
(503) 252-1485
(Registrant's telephone number, including area code)
(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. Yes X No
--- ---
Number of shares of Common Stock outstanding at August 4, 1995:
1,546,716.
<PAGE>
ELMER'S RESTAURANTS, INC.
-------------------------
INDEX
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Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets, 1
June 30, 1995 (Unaudited) and
March 31, 1995
Condensed Consolidated Statements of Income, 2
three months ended June 30, 1995 and 1994
(Unaudited)
Condensed Consolidated Statements of Cash Flows, 3
three months ended June 30, 1995 and 1994
(Unaudited)
Note to Condensed Consolidated Financial 4
Statements (Unaudited)
Item 2. Management's Discussion and Analysis of 5
Financial Condition and Results of Operations
PART II. OTHER INFORMATION AND SIGNATURE
Item 4. Submission of Matters to a Vote of 7
Security Holders
Item 6. Exhibits and Reports on Form 8-K 7
Signatures 8
<PAGE>(1)
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1995 MARCH 31, 1995
ASSETS (UNAUDITED) (NOTE)
<S> <C> <C>
Cash and cash equivalents $1,191,474 $1,269,267
Accounts receivable 131,073 108,401
Inventories 216,448 212,037
Prepaid expenses and deposits 118,827 113,686
--------- ---------
Total current assets 1,657,822 1,703,391
Property, buildings and
equipment - net 5,076,482 5,101,679
Other assets 82,704 62,606
Intangible assets - net 1,241,717 1,269,332
--------- ---------
Total assets $8,058,725 $8,137,008
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable - current portion $ 413,629 $ 696,355
Accounts payable 593,777 593,779
Other current liabilities 228,615 232,765
--------- ---------
Total current liabilities 1,236,021 1,522,899
Long-term liabilities 4,049,468 3,657,113
--------- ---------
Total liabilities 5,285,489 5,180,012
--------- ---------
Common stock 1,671,489 1,866,676
Retained earnings 1,101,747 1,090,320
--------- ---------
Total shareholders' equity 2,773,236 2,956,996
--------- ---------
Total liabilities and
shareholders' equity $8,058,725 $8,137,008
========= =========
NOTE: The balance sheet at March 31, 1995 has been taken from the
audited financial statements at that date and condensed.
</TABLE>
<PAGE>(2)
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
JUNE 30,
1995 1994
<S> <C> <C>
REVENUES:
Restaurant sales $3,723,923 $3,561,802
Franchise operations 164,393 138,405
Initial license fees 12,500
--------- ---------
3,888,316 3,712,707
--------- ---------
COSTS AND EXPENSES:
Cost of restaurant sales 2,292,618 2,185,651
Occupancy costs 230,953 227,972
Depreciation and
amortization 175,315 180,568
General and administrative
expenses 931,207 877,211
--------- ---------
3,630,093 3,471,402
INCOME FROM OPERATIONS
BEFORE OTHER INCOME
(EXPENSE) 258,223 241,305
OTHER INCOME (EXPENSE):
Other income 15,820 9,911
Interest expense <100,068> <89,771>
--------- ---------
Income before income taxes 173,975 161,445
Provision for income taxes <59,150> <61,000>
--------- ---------
NET INCOME $ 114,825 $ 100,445
========= =========
PER SHARE DATA:
Net Income $ .07 $ .05
========= =========
Weighted average number of
common shares outstanding 1,585,188 1,844,580
========= =========
</TABLE>
<PAGE>(3)
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 114,825 $ 100,445
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 147,700 152,950
Amortization 27,615 27,618
Changes in assets and liabilities:
Accounts receivable <22,672> 1,793
Inventories <4,411> <5,372>
Prepaid expenses and deposits <5,141> <19,328>
Accounts payable <2> <157,254>
Deferred initial license fees 0 12,500
Other current liabilities <4,150> 177,114
--------- ---------
Net cash provided by operating
activities 253,764 290,466
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, buildings
and equipment <122,503> <181,002>
--------- ---------
Net cash used by investing
activities <122,503> <181,002>
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 1,202,500 89,417
Payments on notes payable <1,092,871> <224,870>
Repurchase of common stock <298,585> <10,000>
Other assets <20,098> 27,956
--------- ---------
Net cash used by financing
activities <209,054> <117,497>
--------- ---------
Net decrease in cash and
cash equivalents <77,793> <8,033>
Cash and cash equivalents,
beginning of period 1,269,267 1,314,090
--------- ---------
Cash and cash equivalents,
end of period $1,191,474 $1,306,057
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 111,345 $ 89,771
========= =========
Income taxes $ 26,200 $ 3,500
========= =========
</TABLE>
<PAGE>(4)
ELMER'S RESTAURANTS, INC.
-------------------------
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
The accompanying financial statements are unaudited. However, in the
opinion of management, such financial statements reflect all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the results of operations for the periods being reported. These
condensed unaudited financial statements should be read in conjunction with the
Company's latest audited financial statements and notes thereto.
<PAGE>(5)
ELMER'S RESTAURANTS, INC.
-------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
FINANCIAL CONDITION
The Company's working capital at June 30, 1995 totaled $421,801,
which is an increase of $241,309 from working capital of $180,492 at March 31,
1995. The increase in working capital resulted primarily from the refinancing of
certain short-term notes payable with long-term debt.
Cash provided by operations totaled $253,764 for the three months
ended June 30, 1995, compared to $290,466 for the three months ended June 30,
1994. The primary reason for the decrease was the timing of payment of certain
liabilities. Cash used to repay indebtedness and acquire assets amounted to
$12,874, net of proceeds from notes payable of $1,202,500. Cash amounting to
$298,585 was used to repurchase common stock. During May 1995, the Company
refinanced and consolidated certain loans in order to extend the terms and
obtain more favorable interest rates.
Management of the Company believes that the cash and cash
equivalents on hand at June 30, 1995, together with funds provided by
operations, will be sufficient to fund the Company's existing
operations.
RESULTS OF OPERATIONS
REVENUES
--------
Revenues increased $175,609 (4.7%) for the three months ended
June 30, 1995, compared to the three months ended June 30, 1994. This
increase resulted from a $162,121 (4.6%) increase in
<PAGE>(6)
revenue from restaurant sales, a $25,988 (18.8%) increase in revenue from
franchise operations and a non-recurring initial license fee of $12,500 received
in the prior year.
There were eleven Company-owned restaurants at June 30, 1995.
COSTS AND EXPENSES
------------------
Costs and expenses increased $158,691 (4.6%) for the three months ended
June 30, 1995, compared to the three months ended June 30, 1994, primarily due
to the operations of the Company-owned restaurants. Cost of restaurant sales as
a percentage of restaurant sales was approximately 61.6% for the three months
ended June 30, 1995 and 61.4% for the three months ended June 30, 1994.
Occupancy costs increased $2,981 (1.3%) for the three months ended June 30,
1995, compared to the three months ended June 30, 1994. Depreciation and
amortization decreased $5,253 (2.9%) for the three months ended June 30, 1995,
compared to the three months ended June 30, 1994, as a result of certain assets
becoming fully depreciated. General and administrative expenses as a percentage
of revenues were 23.9% for the three months ended June 30, 1995, and 23.6% for
the three months ended June 30, 1994.
INCOME FROM OPERATIONS
----------------------
Income from operations increased $16,918 (7.0%) for the three months
ended June 30, 1995, compared to the three months ended June 30, 1994, due
primarily to the increased revenue from restaurant sales and franchise
operations.
<PAGE>(7)
OTHER INCOME AND EXPENSE
------------------------
Other income increased $5,909 (59.6%) for the three months ended June 30,
1995, compared to the three months ended June 30, 1994, due primarily to the
increase in interest rates on the investments held by the Company.
Interest expense increased $10,297 (11.5%) for the three months ended
June 30, 1995, compared to the three months ended June 30, 1994, due primarily
to the increase of the prime interest rate and other index rates which are used
to determine the rate the Company pays on certain of its notes payable.
INCOME TAXES
------------
The Company's income tax rate was 34% of income before income taxes
for the three months ended June 30, 1995, compared to 38% for the three months
ended June 30, 1994, due primarily to the effect of graduated federal rates
and alternative minimum tax credits.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On July 12, 1995, the Company held its annual shareholders meeting.
At the meeting, each of the following persons was elected a director
by the respective vote described below for each and together these
persons constitute all of the directors of the Company:
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NON-VOTES
--- ------- ------- ---------
<S> <C> <C> <C> <C>
Herman Goldberg 1,333,377 3,750 0
Paul Welch 1,334,577 2,550 0
Zadoc "Zed" Merrill 1,328,027 9,100 0
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
<PAGE>(8)
(b) Reports on Form 8-K
None
<PAGE>(9)
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.
Date: August 11, 1995 ELMER'S RESTAURANTS, INC.
---------------
By HERMAN GOLDBERG
----------------------------------------
Herman Goldberg, President and
Chief Executive Officer
By JUANITA NELSON
----------------------------------------
Juanita Nelson, Asst. Sec./Controller
(Principal Accounting Officer)
<PAGE>(10)
EXHIBIT INDEX
Exhibit Sequential
No. Description Page No.
- ------- ----------- ----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF ELMER'S RESTAURANTS, INC. AND SUBSIDIARIES AS OF
JUNE 30, 1995 AND MARCH 31, 1995 AND THE RELATED CONSOLIDATED STATEMENTS OF
INCOME CHANGES IN SHAREHOLDERS' EQUITY AND CASH FLOWS FOR EACH OF THE THREE
MONTHS IN THE PERIOD ENDED JUNE 30, 1995 AND 1994, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,191,474
<SECURITIES> 0
<RECEIVABLES> 136,073
<ALLOWANCES> (5,000)
<INVENTORY> 216,448
<CURRENT-ASSETS> 1,657,822
<PP&E> 10,762,022
<DEPRECIATION> 5,685,540
<TOTAL-ASSETS> 8,058,725
<CURRENT-LIABILITIES> 1,236,021
<BONDS> 3,965,968
<COMMON> 1,671,489
0
0
<OTHER-SE> 1,101,747
<TOTAL-LIABILITY-AND-EQUITY> 8,058,725
<SALES> 3,723,923
<TOTAL-REVENUES> 3,888,316
<CGS> 2,292,618
<TOTAL-COSTS> 3,630,093
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 100,068
<INCOME-PRETAX> 173,975
<INCOME-TAX> 59,150
<INCOME-CONTINUING> 114,825
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 114,825
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
