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
SEPTEMBER 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 executive offices) (Zip Code)
(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 November 4,
1995: 1,526,416.
<PAGE>
ELMER'S RESTAURANTS, INC.
-------------------------
INDEX
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Page
Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets, 1
September 30, 1995 (Unaudited) and
March 31, 1995
Condensed Consolidated Statements of Income, 2
six months and three months ended
September 30, 1995 and 1994 (Unaudited)
Condensed Consolidated Statements of Cash Flows, 3
six months ended September 30, 1995 and 1994
(Unaudited)
Note to Condensed Consolidated Financial 4
Statements (Unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 5-7
PART II. OTHER INFORMATION AND SIGNATURE
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 8
<PAGE>(1)
<TABLE>
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30, 1995 March 31, 1995
(Unaudited) (Note)
------------------ --------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $1,334,981 $1,269,267
Accounts receivable 136,712 108,401
Inventories 205,042 212,037
Prepaid expenses and deposits 99,845 113,686
---------- ----------
Total current assets 1,776,580 1,703,391
Property, buildings and
equipment - net 4,981,662 5,101,679
Other assets 113,682 62,606
Intangible assets - net 1,214,102 1,269,332
---------- ----------
Total assets $8,086,026 $8,137,008
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable - current portion $ 424,833 $ 696,355
Accounts payable 594,570 593,779
Other current liabilities 245,857 232,765
---------- ----------
Total current liabilities 1,265,260 1,522,899
Long-term liabilities 3,963,656 3,657,113
---------- ----------
Total liabilities 5,228,916 5,180,012
---------- ----------
Common stock 1,649,889 1,866,676
Retained earnings 1,207,221 1,090,320
---------- ----------
Total shareholders' equity 2,857,110 2,956,996
---------- ----------
Total liabilities and
shareholders' equity $8,086,026 $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)
<TABLE>
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Six Months Three Months
Ended Ended
September 30, September 30,
---------------- ----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Restaurant sales $7,552,332 $7,232,245 $3,828,409 $3,670,443
Franchise operations 336,244 292,043 171,851 153,638
Initial license fees -- 12,500 -- --
---------- ---------- ---------- ----------
7,888,576 7,536,788 4,000,260 3,824,081
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Cost of restaurant sales 4,654,165 4,455,706 2,361,547 2,270,055
Occupancy costs 472,778 457,829 241,825 229,857
Depreciation and
amortization 352,902 362,236 177,587 181,668
General and administrative
expenses 1,887,037 1,792,520 955,830 915,309
---------- ---------- ---------- ----------
7,366,882 7,068,291 3,736,789 3,596,889
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS
BEFORE OTHER INCOME
(EXPENSE) 521,694 468,497 263,471 227,192
OTHER INCOME (EXPENSE):
Other income 31,351 21,454 15,531 11,543
Interest expense (197,889) (179,701) ( 97,821) ( 89,930)
---------- ---------- ---------- ----------
Income before income
taxes 355,156 310,250 181,181 148,805
Provision for income taxes (120,750) (119,000) ( 61,600) ( 58,000)
---------- ---------- ---------- ----------
NET INCOME $ 234,406 $ 191,250 $ 119,581 $ 90,805
========== ========== ========== ==========
PER SHARE DATA:
Net Income $ .15 $ .11 $ .08 $ .05
========== ========== ========== ==========
Weighted average number
of common shares
outstanding 1,562,104 1,814,525 1,539,270 1,784,797
========== ========== ========== ==========
</TABLE>
<PAGE>(3)
<TABLE>
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended
September 30,
------------------
1995 1994
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 234,406 $ 191,250
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 297,672 307,000
Amortization 55,230 55,236
Changes in assets and liabilities:
Accounts receivable (28,311) 9,507
Inventories 6,995 (19,579)
Prepaid expenses and deposits 13,841 53,723
Accounts payable 791 (110,103)
Deferred initial license fees --- 12,500
Other current liabilities 13,092 95,918
---------- ----------
Net cash provided by operating activities 593,716 595,452
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, buildings
and equipment (177,655) (401,822)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 1,237,500 357,950
Payments on notes payable (1,202,479) (452,683)
Repurchase of common stock (334,292) (126,004)
Other assets ( 51,076) 29,226
---------- ----------
Net cash used in financing activities (350,347) (191,511)
---------- ----------
Net increase in cash and cash
equivalents 65,714 2,119
Cash and cash equivalents, beginning of period 1,269,267 1,314,090
---------- ----------
Cash and cash equivalents, end of period $1,334,981 $1,316,209
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 209,166 $ 179,701
========== ==========
Income taxes $ 108,756 $ 65,136
========== ==========
</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 most recent 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 September 30, 1995 totaled
$511,320, which is an increase of $330,828 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 $593,716 for the six months
ended September 30, 1995, compared to $595,452 for the corresponding period
of fiscal 1995. The primary reason for the decrease was the timing of
payment of certain liabilities. Cash used to repay indebtedness and acquire
assets amounted to $142,634, net of proceeds from notes payable of
$1,237,500.
Cash amounting to $334,292 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 September 30, 1995, together with funds provided by
operations, will be sufficent to fund the Company's existing operations.
RESULTS OF OPERATIONS
- ---------------------
Revenues
--------
Revenues increased $176,179 (4.6%) and $351,788 (4.7%) for the
three months and six months ended September 30, 1995, respectively,
<PAGE>(6)
compared to the corresponding periods of fiscal 1995. These increases
resulted primarily from a $157,966 (4.3%) and a $320,087 (4.4%)
increase in revenues from restaurant sales for the three months and
six months ended September 30, 1995, respectively, compared to the
corresponding periods of fiscal 1995 and from increases in franchise
operations. There were eleven Company-owned restaurants at September
30, 1995.
Revenues from franchise operations increased $18,213 (11.9%) and
$31,701 (10.4%) for the three months and six months ended September 30,
1995, respectively, compared to the corresponding periods of fiscal 1995,
due primarily to the full period of operations of two new franchised
restaurants opened during 1994.
Costs and Expenses
------------------
Costs and expenses increased $139,900 (3.9%) and $298,591 (4.2%)
for the three months and six months ended September 30, 1995, respectively,
compared to the corresponding periods of fiscal 1995, primarily due to the
operations of the Company-owned restaurants. Cost of restaurant sales as a
percentage of restaurant sales was approximately 61.7% for the three months
and 61.6% for the six months ended September 30, 1995, respectively, and
61.8% and 61.6% for the corresponding periods of fiscal 1995. Occupancy
costs increased $11,968 and $14,949 for the three months and six months
ended September 30, 1995, respectively, compared to the corresponding
periods of fiscal 1995, primarily due to increases in rent, which is based
on a percentage of restaurant sales, of Company-owned restaurants.
Depreciation and amortization decreased $4,081 (2.2%) and $9,334 (2.6%) for
the three months and six months ended September
<PAGE>(7)
30, 1995, respectively, compared to the corresponding periods of
fiscal 1994. General and administrative expenses as a percentage of
revenues were 23.9% for the three months and six months ended
September 30, 1995, respectively, and 23.9% and 23.8% for the
corresponding periods of fiscal 1995.
Income From Operations
----------------------
Income from operations increased $36,279 (16.0%) and $53,197
(11.4%) for the three months and six months ended September 30, 1995,
respectively, compared to the corresponding periods of fiscal 1995, due
primarily to the increased revenues from restaurant sales and franchise
operations.
Other Income and Expense
------------------------
Other income increased $3,988 (34.5%) and $9,897 (46.1%) for the
three months and six months ended September 30, 1995, respectively,
compared to the corresponding periods of fiscal 1995, due primarily to the
slight increase in interest rates on the investments held by the Company.
Interest expense increased $7,891 (8.8%) and $18,188 (10.1%) for
the three months and six months ended September 30, 1995, respectively,
compared to the corresponding periods of fiscal 1995, 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.
<PAGE>(8)
Income Taxes
------------
The Company's income tax rate was 34% of income before income
taxes for the three months and six months ended September 30, 1995,
compared to 39.0% and 38.4% in the corresponding period of fiscal 1995, due
primarily to the effect of graduated federal rates and alternative minimum
tax credits.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(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.
Date: November 10, 1995 ELMER'S RESTAURANTS, INC.
-----------------
By /s/ HERMAN GOLDBERG
-------------------------------------
Herman Goldberg, President
and Chief Executive Officer
By /s/ JUANITA NELSON
-------------------------------------
Juanita Nelson, Asst. Sec./Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<CASH> 1,334,981
<SECURITIES> 0
<RECEIVABLES> 141,712
<ALLOWANCES> (5,000)
<INVENTORY> 205,042
<CURRENT-ASSETS> 1,776,580
<PP&E> 10,817,174
<DEPRECIATION> 5,835,512
<TOTAL-ASSETS> 8,086,026
<CURRENT-LIABILITIES> 1,265,260
<BONDS> 3,880,156
<COMMON> 1,649,889
0
0
<OTHER-SE> 1,207,221
<TOTAL-LIABILITY-AND-EQUITY> 8,086,026
<SALES> 7,552,332
<TOTAL-REVENUES> 7,888,576
<CGS> 4,654,165
<TOTAL-COSTS> 7,366,882
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 197,889
<INCOME-PRETAX> 355,156
<INCOME-TAX> 120,750
<INCOME-CONTINUING> 234,406
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 234,406
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
