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, 1997 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 16938
Portland, Oregon 97292-0938
(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 August 4, 1997: 1,404,686
<PAGE>
ELMER'S RESTAURANTS, INC.
INDEX
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets, 1
June 30, 1997 (Unaudited) and
March 31, 1997
Condensed Consolidated Statements of Income, 2
three months ended June 30, 1997 and 1996
(Unaudited)
Condensed Consolidated Statements of Cash Flows, 3
three months ended June 30, 1997 and 1996
(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 SIGNATURES
Item 4. Submission of Matters to a Vote of Security Holders 7
Item 6. Exhibits and Reports on Form 8-K 7
Signatures 8
<PAGE>
<TABLE>
<CAPTION>
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1997 March 31, 1997
------------- --------------
ASSETS (Unaudited) (Note)
<S> <C> <C>
Cash and cash equivalents $1,831,813 $1,678,876
Accounts receivable 203,511 159,904
Note receivable-related party 69,880 69,880
Inventories 198,627 203,115
Prepaid expenses and deposits 143,853 126,099
---------- ----------
Total current assets 2,447,684 2,237,874
Property, buildings and equipment-net 4,704,981 4,738,012
Intangible assets - net 1,040,225 1,062,419
Other assets 74,340 70,660
---------- ----------
Total assets $8,267,230 $8,108,965
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable - current portion $ 478,188 $ 495,581
Accounts payable 723,136 631,639
Other current liabilities 367,178 323,080
---------- ----------
Total current liabilities 1,568,502 1,450,300
Long-term liabilities 3,325,974 3,449,255
---------- ----------
Total liabilities 4,894,476 4,899,555
---------- ----------
Common stock 1,518,098 1,518,098
Retained earnings 1,854,656 1,691,312
---------- ----------
Total shareholders' equity 3,372,754 3,209,410
---------- ----------
Total liabilities and shareholders' equity $8,267,230 $8,108,965
========== ==========
NOTE: The balance sheet at March 31, 1997 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)
Three Months
Ended
June 30,
----------------------------------
1997 1996
------ -----
<S> <C> <C>
REVENUES:
Restaurant sales $3,918,382 $3,770,800
Franchise operations 153,327 161,584
Lottery 31,698 ---
---------- ----------
4,103,407 3,932,384
---------- ----------
COSTS AND EXPENSES:
Cost of restaurant sales 2,416,224 2,330,460
Occupancy costs 244,792 246,212
Depreciation and amortization 163,569 171,462
General and administrative expenses 961,894 957,000
---------- ----------
3,786,479 3,705,134
---------- ----------
INCOME FROM OPERATIONS
BEFORE OTHER INCOME (EXPENSE) 316,928 227,250
OTHER INCOME (EXPENSE):
Other income 15,760 14,027
Interest expense (85,199) (89,071)
Income before income taxes 247,489 152,206
Provision for income taxes (84,145) (51,750)
NET INCOME $ 163,344 $ 100,456
========== ==========
PER SHARE DATA:
Net income $ .12 $ .07
========== ==========
Weighted average number of
common shares outstanding 1,404,686 1,499,263
========== ==========
</TABLE>
(2)
<PAGE>
<TABLE>
<CAPTION>
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
June 30,
-------------------------------
1997 1996
------ -----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 163,344 $ 100,456
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 141,375 147,180
Amortization
Changes in assets and liabilities: 22,194 24,282
Accounts receivable (43,607) (64,061)
Inventories 4,488 (5,901)
Prepaid expenses and deposits (17,754) (20,378)
Accounts payable 91,497 (62,323)
Other current liabilities 44,098 34,216
---------- ----------
Net cash provided by operating activities 405,635 153,471
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property buildings and equipment
(108,344) (43,970)
Net cash used by investing activities (108,344) (43,970)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (140,674) (111,491)
Other assets (3,680) (2,554)
Net cash used in financing activities (144,354) (114,045)
Net increase (decrease) in cash and cash
equivalents 152,937 (4,544)
Cash and cash equivalents, beginning of period 1,678,876 1,370,829
---------- ----------
Cash and cash equivalents, end of period $1,831,813 $1,366,285
========== ==========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 85,199 $ 89,071
========== ==========
Income taxes $ 67,500 $ 2,000
========== ==========
</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 latest 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 June 30, 1997 totaled $879,182, which is
an increase of $91,608 from working capital of $787,574 at March 31, 1997.
Cash provided by operations totaled $405,635 for the three months ended
June 30, 1997, compared to $153,471 for the three months ended June 30, 1996.
The increase in cash provided from operations in the three months ended June 30,
1997 was primarily the result of increased profitability over the same period in
the prior year and an increase in accounts payable and other current liabilities
due to differences in the timing of payments. Cash used to repay indebtedness
was $140,674 for the three months ended June 30, 1997. Cash used to acquire
assets was $108,344 for the three months ended June 30, 1997, primarily for the
acquisition of equipment for and improvements to the Company's existing
restaurants.
The Company believes that the cash and cash equivalents on hand at June 30,
1997, together with funds provided by operations, will be sufficient to fund the
Company's continuing operations.
RESULTS OF OPERATIONS
Revenues
Revenues increased $171,023 (4.3%) for the three months ended June 30, 1997
(the first quarter of the Company's fiscal year), compared to the corresponding
period for fiscal 1996. This increase resulted from a $147,582 (3.9%) increase
in revenue from restaurant sales and $31,698 net revenues from video poker,
which was first offered to customers in late 1996. Revenues from the franchise
operations decreased $8,257 (5.1%) due to decreased revenues by franchisees.
There were eleven Company-owned restaurants at June 30, 1997.
Costs and Expenses
Costs and expenses increased $81,345 (2.2%) for the three months ended June
30, 1997, compared to the three months ended June 30, 1996, primarily due to the
operations of the company-owned restaurants. Cost of restaurant sales as a
percentage of restaurant sales was 61.7% for the three months ended June 30,
1997 and 61.8% for the three months ended June 30, 1996. Occupancy costs
decreased $1,420 (.6%) for the three months June 30, 1997, compared to the three
months ended June 30, 1996. Depreciation and amortization decreased $7,893
(4.6%) for the three months ended
(5)
<PAGE>
June 30, 1997, compared to the same period of fiscal 1997 as a result of certain
assets becoming fully depreciated. General and administrative expenses as a
percentage of revenues were 23.4% for the three months ended June 30, 1997,
compared to 24.3% for the same period of fiscal 1997.
Income From Operations
Income from operations for the three months ended June 30, 1997 increased
$89,678 (39.5%), compared to the three months ended June 30, 1996, due to
increased revenues from restaurant sales and net revenue from video poker, which
was introduced in late 1996.
Other Income and Expenses
Other income increased $1,733 (12.4%) for the three months ended June 30,
1997, compared to the three months ended June 30, 1996, due primarily to the
increase in cash and cash equivalents of $152,937 available for investments.
Interest expense decreased $3,872 (4.3%) for the three months ended June
30, 1997, compared to the three months ended June 30, 1996, due primarily to the
reduction of principle balance of outstanding debt.
Income Taxes
The Company's income tax rate was 34% of income before income taxes for the
three months ended June 30, 1997 and 1996.
(6)
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On July 16, 1997, at the Company's Annual Meeting, the holders of the
Company's outstanding Common Stock took the action described below. At July 16,
1997, 1,404,686 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, Zadoc
(Zed) Merrill and Rudolph (Rudy) Mazurosky to the Company's Board of Directors,
by the votes indicated below, to serve for the ensuing year.
Anita Goldberg
--------------
1,109,898 shares in favor
6,400 shares against or withheld
Paul Welch
----------
1,109,548 shares in favor
6,750 shares against or withheld
Zadoc (Zed) Merrill
-------------------
1,110,548 shares in favor
5,750 shares against or withheld
Rudolph (Rudy) Mazurosky
------------------------
1,111,248 shares in favor
5,050 shares against or withheld
Item 6. Exhibits and Reports of Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports of Form 8-K
None
(7)
<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: August, 13, 1997 ELMER'S RESTAURANTS, INC.
By /s/ ANITA GOLDBERG
--------------------------------------
President
By /s/ JUANITA NELSON
--------------------------------------
Juanita Nelson, Controller
(Principal Accounting Officer)
(8)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<PERIOD-START> APR-01-1997
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,831,813
<SECURITIES> 0
<RECEIVABLES> 278,391
<ALLOWANCES> (5,000)
<INVENTORY> 198,627
<CURRENT-ASSETS> 2,447,684
<PP&E> 11,575,922
<DEPRECIATION> 6,870,941
<TOTAL-ASSETS> 8,267,230
<CURRENT-LIABILITIES> 1,568,502
<BONDS> 3,214,974
0
0
<COMMON> 1,518,098
<OTHER-SE> 1,854,656
<TOTAL-LIABILITY-AND-EQUITY> 8,267,230
<SALES> 3,918,382
<TOTAL-REVENUES> 4,103,407
<CGS> 2,416,224
<TOTAL-COSTS> 3,786,479
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85,199
<INCOME-PRETAX> 247,489
<INCOME-TAX> 84,145
<INCOME-CONTINUING> 163,344
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 163,344
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.12
</TABLE>
