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 DECEMBER 31, 1995 OR _______________
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION
PERIOD FROM TO _______________ 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 February 5, 1996:
1,507,666.
<PAGE>
ELMER'S RESTAURANTS, INC.
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets, 1
December 31, 1995 (Unaudited) and
March 31, 1995
Condensed Consolidated Statements of Income, 2
nine months and three months ended
December 31, 1995 and 1994 (Unaudited)
Condensed Consolidated Statements of Cash Flows, 3
nine months ended December 31, 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 5-8
PART II. OTHER INFORMATION AND SIGNATURE
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 9
<PAGE>(1)
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 1995 March 31, 1995
ASSETS (Unaudited) (Note)
Cash and cash equivalents $1,439,479 $1,269,267
Accounts receivable 161,268 108,401
Inventories 209,127 212,037
Prepaid expenses and deposits 173,613 113,686
--------- ---------
Total current assets 1,983,487 1,703,391
Property, buildings and
equipment - net 5,013,646 5,101,679
Other assets 106,104 62,606
Intangible assets - net 1,186,487 1,269,332
--------- ---------
Total assets $8,289,724 $8,137,008
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable - current portion $ 457,671 $ 696,355
Accounts payable 820,439 593,779
Other current liabilities 299,676 232,765
--------- ---------
Total current liabilities 1,577,786 1,522,899
Long-term liabilities 3,773,336 3,657,113
--------- ---------
Total liabilities 5,351,122 5,180,012
--------- ---------
Common stock 1,649,565 1,866,676
Retained earnings 1,289,037 1,090,320
--------- ---------
Total shareholders' equity 2,938,602 2,956,996
--------- ---------
Total liabilities and
shareholders' equity $8,289,724 $8,137,008
========= =========
NOTE: The balance sheet at March 31, 1995 has been taken from the
audited financial statements at that date and condensed.
<PAGE>(2)
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine Months Three Months
Ended Ended
December 31, December 31,
1995 1994 1995 1994
REVENUES:
Restaurant sales $11,357,980 $11,015,388 $ 3,805,648 $3,783,143
Franchise operations 529,660 443,253 193,416 151,210
Initial license fees 25,000 12,500
---------- ---------- ---------- ----------
11,887,640 11,483,641 3,999,064 3,946,853
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Cost of restaurant sales 7,035,376 6,767,302 2,381,211 2,311,596
Occupancy costs 711,686 687,112 238,908 229,283
Depreciation and
amortization 533,667 558,604 180,765 196,368
General and administrative
expenses 2,880,784 2,750,041 993,747 957,521
---------- ---------- ---------- ----------
11,161,513 10,763,059 3,794,631 3,694,768
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS
BEFORE OTHER INCOME
(EXPENSE) 726,127 720,582 204,433 252,085
OTHER INCOME (EXPENSE):
Other income 46,284 34,460 14,933 13,006
Interest expense <292,189> <278,007> <94,300> <98,306>
---------- ---------- ---------- ----------
Income before income taxes 480,222 477,035 125,066 166,785
Provision for income taxes <163,275> <183,500> <42,525> <64,500>
---------- ---------- ---------- ----------
NET INCOME $ 316,947 $ 293,535 $ 82,541 $ 102,285
========== ========== ========== ==========
PER SHARE DATA:
Net income $ .20 $ .16 $ .05 $ .05
========== ========== ========== ==========
Weighted average number
of common shares
outstanding 1,550,168 1,795,325 1,526,426 1,757,133
========== ========== ========== ==========
<PAGE>(3)
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
December 31,
-------------------
1995 1994
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 316,947 $ 293,535
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 450,822 475,750
Amortization 82,845 82,854
Changes in assets and liabilities:
Accounts receivable <52,867> 40,737
Inventories 2,910 <26,792>
Prepaid expenses and deposits <59,927> <54,158>
Accounts payable 226,660 4,749
Other current liabilities 66,911 185,768
---------- ----------
Net cash provided by operating activities 1,034,301 1,002,443
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, buildings
and equipment <362,789> <568,330>
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 2,848,684 397,950
Payments on notes payable <2,971,145> <688,502>
Repurchase of common stock <335,341> <155,082>
Other assets <43,498> 30,736
---------- ----------
Net cash used in financing activities <501,300> <414,898>
---------- ----------
Net increase in cash and cash
equivalents 170,212 19,215
Cash and cash equivalents, beginning of period 1,269,267 1,314,090
---------- ----------
Cash and cash equivalents, end of period $1,439,479 $1,333,305
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 318,263 $ 278,007
========== ==========
Income taxes $ 148,766 $ 101,616
========== ==========
<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 December 31, 1995 totaled
$405,701, compared to 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 and cash generated
from operations.
Cash provided by operations totaled $1,034,301 for the nine
months ended December 31, 1995, compared to $1,002,443 for the
corresponding period of fiscal 1995. The primary reason for the increase
was a decrease in depreciation expense. Cash used to repay indebtedness and
acquire assets amounted to $485,250, net of proceeds from notes payable and
refinancing of two mortgages aggregating $2,848,684. Cash amounting to
$335,341 was used to repurchase common stock.
Management of the Company believes that the cash and cash
equivalents on hand at December 31, 1995, together with funds provided by
operations, will be sufficent to fund the Company's existing operations.
RESULTS OF OPERATIONS
- ---------------------
Revenues
--------
Revenues increased $52,211 (1.3%) and $403,999 (3.5%)
<PAGE>(6)
for the three months and nine months ended December 31, 1995, respectively,
compared to the corresponding periods for fiscal 1995. These increases
resulted primarily from a $22,505 (.6%) and a $342,592 (3.1%) increase in
revenues from restaurant sales for the three months and nine months ended
December 31, 1995, respectively, compared to the corresponding periods of
fiscal 1995. There were eleven Company-owned restaurants at December 31,
1995.
Revenues from franchise operations increased $42,206 (27.9%) and
$86,407 (19.5%) for the three months and nine months ended December 31,
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 $99,863 (2.7%) and $398,454 (3.7%)
for the three months and nine months ended December 31, 1995, respectively,
compared to the same 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 62.6% for the three months
and 61.9% for the nine months ended December 31, 1995, respectively, and
61.1% and 61.4% for the corresponding periods of fiscal 1995. Occupancy
costs increased $9,625 and $24,574 for the three months and nine months
ended December 31, 1995, respectively, compared to the same periods of
fiscal 1995. Depreciation and amortization decreased $15,603 (7.9%) and
$24,937 (4.5%) for the three months and nine months ended December 31,
1995, respectively, compared to the corresponding periods
<PAGE>(7)
of fiscal 1995, primarily as a result of certain assets becoming fully
depreciated and to fewer capital additions in the current period. General
and administrative expenses as a percentage of revenues were 24.8% and
24.2% for the three months and nine months ended December 31, 1995,
respectively, and 24.3% and 24.0% for the corresponding periods of fiscal
1995.
Income From Operations
----------------------
Income from operations decreased $47,652 (18.9%) and increased
$5,545 (.8%) for the three months and nine months ended December 31, 1995,
respectively, compared to the corresponding periods of fiscal 1995, due
primarily to the increased revenues from restaurant sales and costs of
operations and decreased depreciation.
Other Income and Expense
------------------------
Other income increased $1,927 (14.8%) and $11,824 (34.3%) for the
three months and nine months ended December 31, 1995, respectively,
compared to the corresponding periods of fiscal 1995, due primarily to the
fluctuation of interest rates on the investments held by the Company.
Interest expense decreased $4,006 (4.1%) and increased $14,182
(5.1%) for the three months and nine months ended December 31, 1995,
respectively, compared to the corresponding periods of fiscal 1995, due
primarily to the fluctuation in 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 effective income tax rate remained constant at 34%
of income before income taxes for the three months and nine months ended
December 31, 1995, compared to 38.6% and 38.5% in the corresponding periods
of fiscal 1995, due primarily to the effect of graduated federal rates and
alternative minimum tax credits.
<PAGE>(9)
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: February 9, 1996 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)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-31-1995
<CASH> 1,439,479
<SECURITIES> 0
<RECEIVABLES> 161,258
<ALLOWANCES> (5,000)
<INVENTORY> 209,127
<CURRENT-ASSETS> 1,983,487
<PP&E> 10,936,947
<DEPRECIATION> 5,988,662
<TOTAL-ASSETS> 8,289,724
<CURRENT-LIABILITIES> 1,577,786
<BONDS> 3,689,836
0
0
<COMMON> 1,649,565
<OTHER-SE> 1,289,037
<TOTAL-LIABILITY-AND-EQUITY> 8,289,724
<SALES> 11,357,980
<TOTAL-REVENUES> 11,887,640
<CGS> 7,035,376
<TOTAL-COSTS> 11,674,674
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 292,189
<INCOME-PRETAX> 480,222
<INCOME-TAX> 163,275
<INCOME-CONTINUING> 316,947
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 316,947
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
