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, 1996 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, 1996: 1,480,762.
<PAGE>
ELMER'S RESTAURANTS, INC.
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets, 1
September 30, 1996 (Unaudited) and
March 31, 1996
Condensed Consolidated Statements of Income, 2
six months and three months ended
September 30, 1996 and 1995 (Unaudited)
Condensed Consolidated Statements of Cash Flows, 3
six months ended September 30, 1996 and 1995
(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 4. Submission of Matters to a Vote of Security Holders 8
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 9
<PAGE>
<TABLE>
<CAPTION>
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 1996 March 31, 1996
ASSETS (Unaudited) (Note)
<S> <C> <C>
Cash and cash equivalents $1,519,194 $1,370,829
Accounts receivable 187,191 115,857
Inventories 212,072 192,028
Prepaid expenses and deposits 134,744 149,573
---------- ----------
Total current assets 2,053,201 1,828,287
Property, buildings and equipment - net 4,835,114 4,941,410
Other assets 80,868 99,291
Intangible assets - net 1,110,969 1,159,533
---------- ----------
Total assets $8,080,152 $8,028,521
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable - current portion $ 492,184 $ 412,831
Accounts payable 631,920 643,905
Other current liabilities 265,317 250,145
---------- ----------
Total current liabilities 1,389,421 1,306,881
Long-term liabilities 3,576,748 3,792,808
---------- ----------
Total liabilities 4,966,169 5,099,689
Common stock 1,600,260 1,620,240
Retained earnings 1,513,723 1,308,592
---------- ----------
Total shareholders' equity 3,113,983 2,928,832
---------- ----------
Total liabilities and shareholders' equity $8,080,152 $8,028,521
========== ==========
NOTE: The balance sheet at March 31, 1996 has been taken from the audited
financial statements at that date and condensed.
</TABLE>
(1)
<PAGE>
<TABLE>
<CAPTION>
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
SIX MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Restaurant sales $7,675,981 $7,552,332 $3,905,181 $3,828,409
Franchise operations 331,469 336,244 169,885 171,851
------------ ------------ ------------ ------------
8,007,450 7,888,576 4,075,066 4,000,260
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Cost of restaurants sales 4,763,812 4,654,165 2,433,352 2,361,547
Occupancy costs 497,817 472,778 251,605 241,825
Depreciation and amortization 342,924 352,902 171,462 177,587
General and administrative expenses 1,919,825 1,887,037 962,825 955,830
7,524,378 7,366,882 3,819,244 3,736,789
INCOME FROM OPERATIONS 483,072 521,694 255,822 263,471
OTHER INCOME (EXPENSE):
Other income 29,696 31,351 15,669 15,531
Interest expense
(179,617) (197,889) (90,546) 97,821)
Income before income taxes 333,151 355,156 180,945 181,181
Provision for income taxes (113,300) (120,750) (61,550) (61,600)
NET INCOME $ 219,851 $ 234,406 $ 119,395 $ 119,581
============ ============ ============= ============
PER SHARE DATA
Net Income $ .15 $ .15 $ .08 $ .08
============ ============ ============= ============
Weighted average number of common
shares outstanding 1,493,585 1,562,104 1,487,969 1,539,270
============ ============ ============= ============
</TABLE>
(2)
<PAGE>
<TABLE>
<CAPTION>
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
SEPTEMBER 30,
---------------------------
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 219,851 $ 234,406
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 294,360 297,672
Amortization 48,564 55,230
Changes in assets and liabilities:
Accounts receivable (71,334) (28,311)
Inventories (20,044) 6,995
Prepaid expenses and deposits 14,829 13,841
Accounts payable (11,985) 791
Other current liabilities 15,172 13,092
---------- ----------
Net cash provided by operating activities 489,413 593,716
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, buildings and equipment (188,064) (177,655)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 100,000 1,237,500
Payments on notes payable (236,707) (1,202,479)
Repurchase of common stock (34,700) (334,292)
Other assets 18,423 51,076
---------- ----------
Net cash used in financing activities (152,984) (350,347)
---------- ----------
Net increase in cash and cash equivalents 148,365 65,714
Cash and cash equivalents, beginning of period 1,370,829 1,269,267
---------- ----------
Cash and cash equivalents, end of period $1,519,194 $1,334,981
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 179,617 $ 209,166
========== ==========
Income taxes $ 80,900 $ 108,756
========== ==========
</TABLE>
(3)
<PAGE>
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.
(4)
<PAGE>
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, 1996 totaled $663,780,
which is an increase of $142,374 from working capital of $521,406 at March
31, 1996. Cash provided by operations totaled $489,413 for the six months
ended September 30, 1996, compared to $593,716 for the six months ended
September 30, 1995. The primary reasons for the decrease were a decrease in
net income of approximately $14,500, an increase in accounts receivable and
inventories and the timing of payment of certain liabilities. Cash used to
repay indebtedness and acquire assets amounted to $324,771, net of proceeds
from notes payable of $100,000.
The Company believes that the cash and cash equivalents on hand at
September 30, 1996, together with funds provided by operations, will be
sufficient to fund the Company's existing operations.
RESULTS OF OPERATIONS
REVENUES
Revenues increased $74,806 (1.9%) and $118,874 (1.5%) for the three
months and six months ended September 30, 1996, respectively, compared to
the corresponding periods of fiscal 1996. These increases resulted
primarily from a $76,772 (2.0%) and a $123,649 (1.6%) increase in revenues
from restaurant sales for the three months and six months ended September
30, 1996, respectively, compared to the corresponding periods of fiscal
1996. There were eleven Company-owned restaurants at September 30, 1996.
(5)
<PAGE>
Revenues from franchise operations decreased $1,966 (1.1%) and $4,775
(1.4%) for the three months and six months ended September 30, 1996,
respectively, compared to the corresponding periods of fiscal 1996.
COSTS AND EXPENSES
------------------
Costs and expenses increased $82,455 (2.2%) and $157,496 (2.1%) for
the three months and six months ended September 30, 1996, respectively,
compared to the corresponding periods of fiscal 1996, primarily due to the
operations of the Company-owned restaurants. Cost of restaurant sales as a
percentage of restaurant sales was approximately 62.3% for the three months
and 62.1% for the six months ended September 30, 1996, respectively, and
61.7% and 61.6% for the corresponding periods of fiscal 1996. Occupancy
costs increased $9,780 and $25,039 for the three months and six months
ended September 30, 1996, respectively, compared to the corresponding
periods of fiscal 1996, primarily due to increases in property taxes,
insurance and rent, which is based on a percentage of restaurant sales, of
the Company-owned restaurants. Depreciation and amortization decreased
$6,125 (3.5%) and $9,978 (2.8%) for the three months and six months ended
September 30, 1996, respectively, compared to the corresponding periods of
fiscal 1996. General and administrative expenses as a percentage of
revenues were 23.6% for the three months and 23.9% for the six months ended
September 30, 1996, respectively, and 23.9% for the corresponding periods
of fiscal 1996.
INCOME FROM OPERATIONS
----------------------
Income from operations decreased $7,649 (2.9%) and $38,622 (7.4%) for
the three months and six months ended September 30, 1996, respectively,
compared to the corresponding periods of fiscal 1996, due primarily to the
increased costs of restaurant operations.
(6)
<PAGE>
OTHER INCOME AND EXPENSE
------------------------
Other income increased $138 (.9%) and decreased $1,655 (5.3%) for the
three months and six months ended September 30, 1996, respectively,
compared to the corresponding periods of fiscal 1996. The decrease for the
six month period was due primarily to the slight decrease in interest rates
on the investments held by the Company.
Interest expense decreased $7,275 (7.4%) and $18,272 (9.2 %) for the
three months and six months ended September 30, 1996, respectively,
compared to the corresponding periods of fiscal 1996, due primarily to the
decrease in principle balance of the notes payable.
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, 1996, and for the
three months and six months ended September 30, 1996.
(7)
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On September 26, 1996, at the Company's Annual Meeting, the
holders of the Company's outstanding Common Stock took the action described
below. At September 26, 1996, 1,480,762 shares of Common Stock were issued
and outstanding and eligible to vote at the Annual Meeting.
The shareholders elected each of Anita Goldberg, Paul Welch and
Zadoc (Zed) Merrill to the Company's Board of Directors, by the votes
indicated below, to serve for the ensuing year.
Anita Goldberg
--------------
1,079,402 shares in favor
13,166 shares against or withheld
Paul Welch
----------
1,078,902 shares in favor
13,666 shares against or withheld
Zadoc (Zed) Merrill
-------------------
1,078,902 shares in favor
13,666 shares against or withheld
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
(8)
<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.
Date: November 11, 1996 ELMER'S RESTAURANTS, INC.
-----------------
By ANITA GOLDBERG
--------------------------------
Anita Goldberg, President
By JUANITA NELSON
--------------------------------
Juanita Nelson, Asst. Sec./Controller
(Principal Accounting Officer)
(9)
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
No. Description Page No.
--- ----------- --------
27 Financial Data Schedule
(10)
<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 SEPTEMBER 30, 1996 AND MARCH 31, 1996, AND THE RELATED CONSOLIDATED
STATEMENTS OF INCOME CHANGES IN SHAREHOLDERS' EQUITY AND CASH FLOWS FOR
EACH OF THE THREE MONTHS IN THE PERIOD ENDED SEPTEMBER 30, 1996 AND 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANICIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,519,194
<SECURITIES> 0
<RECEIVABLES> 192,191
<ALLOWANCES> (5,000)
<INVENTORY> 212,072
<CURRENT-ASSETS> 2,053,201
<PP&E> 11,231,291
<DEPRECIATION> (6,422,227)
<TOTAL-ASSETS> 8,080,152
<CURRENT-LIABILITIES> 1,389,421
<BONDS> 3,471,748
1,600,260
0
<COMMON> 0
<OTHER-SE> 1,513,723
<TOTAL-LIABILITY-AND-EQUITY> 8,080,152
<SALES> 7,675,981
<TOTAL-REVENUES> 8,007,450
<CGS> 4,763,812
<TOTAL-COSTS> 7,524,378
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 179,617
<INCOME-PRETAX> 333,151
<INCOME-TAX> 113,300
<INCOME-CONTINUING> 219,851
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 219,851
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
