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, 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 16938
Portland, Oregon 97292-0938
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(503) 252-1485
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
P.O. Box 16595, Portland, Oregon 97216
(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, 1997: 1,480,762.
<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
December 31, 1996 (Unaudited) and
March 31, 1996
Condensed Consolidated Statements of Income, 2
nine months and three months ended
December 31, 1996 and 1995 (Unaudited)
Condensed Consolidated Statements of Cash Flows, 3
nine months ended December 31, 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 SIGNATURES
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 8
<PAGE>
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 MARCH 31, 1996
ASSETS (UNAUDITED) (NOTE)
Cash and cash equivalents $1,612,412 $1,370,829
Accounts receivable 253,818 115,857
Inventories 212,072 192,028
Prepaid expenses and deposits 192,398 149,573
--------- ---------
Total current assets 2,270,700 1,828,287
Property, buildings and equipm 4,798,867 4,941,410
Other assets 77,119 99,291
Intangible assets - net 1,086,687 1,159,533
---------- ----------
Total assets $8,233,373 $8,028,521
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable - current portion $ 475,266 $ 412,831
Accounts payable 753,413 643,905
Other current liab 319,207 250,145
----------- -----------
Total current liabilitie 1,547,886 1,306,881
Long-term liabilities 3,463,327 3,792,808
----------- -----------
Total liabilities 5,011,213 5,099,689
----------- -----------
Common stock 1,600,260 1,620,240
Retained earnings 1,621,900 1,308,592
---------- ---------
Total shareholders' equi 3,222,160 2,928,832
---------- ----------
Total liabilities and shareholders' $8,233,373 $8,028,521
========== ==========
NOTE: The balance sheet at March 31, 1996 has been taken from the audited
financial statements at that date and condensed.
1
<PAGE>
<TABLE>
<CAPTION>
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
NINE MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
REVENUES:
<S> <C> <C> <C> <C>
Restaurant sales $11,563,363 $11,357,980 $ 3,887,382 $ 3,805,648
Franchise operations 496,258 529,660 164,789 193,416
----------- ----------- ----------- ----------
12,059,621 11,887,640 4,052,171 3,999,064
----------- ----------- ----------- ----------
COSTS AND EXPENSES:
Cost of restaurant sales 7,177,224 7,035,376 2,413,412 2,381,211
Occupancy costs 745,852 711,686 248,035 238,908
Depreciation and amortization 523,401 533,667 180,477 180,765
General and administrative expense 2,893,455 2,880,784 973,630 993,747
----------- ----------- ----------- ----------
11,339,932 11,161,513 3,815,554 3,794,631
----------- ----------- ----------- ----------
INCOME FROM OPERATIONS
BEFORE OTHER INCOME
(EXPENSE) 719,689 726,127 236,617 204,433
OTHER INCOME (EXPENSE):
Other income 45,283 46,284 15,587 14,933
Interest expense (267,944) (292,189) (88,327) (94,300)
----------- ----------- ----------- ----------
Income before income taxes 497,028 480,222 163,877 125,066
Provision for income taxes (169,000) (163,275) (55,700) (42,525)
----------- ----------- ----------- ----------
NET INCOME $ 328,028 $ 316,947 $ 108,177 $ 82,541
=========== =========== ========== ===========
PER SHARE DATA:
Net income $ .22 $ .20 $ .07 $ .05
=========== =========== ========== ===========
Weighted average number of
common shares outstanding 1,489,295 1,550,168 1,480,762 1,526,426
</TABLE>
2
<PAGE>
ELMER'S RESTAURANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
NINE MONTHS ENDED
DECEMBER 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 328,028 $ 316,947
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 450,555 450,822
Amortization 72,846 82,845
Changes in assets and liabilities:
Accounts receivable (137,961) (52,867)
Inventories (20,044) 2,910
Prepaid expenses and deposits (42,825) (59,927)
Accounts payable 109,508 226,660
Other current liabilities 69,062 66,911
----------- -----------
Net cash provided by operating activities 829,169 1,034,301
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, buildings and equipment (308,012) (362,789)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 100,000 2,848,684
Payments on notes payable (367,046) (2,971,145)
Repurchase of common stock (34,700) (335,341)
Other assets 22,172 (43,498)
----------- -----------
Net cash used in financing activities (279,574) (501,300)
----------- -----------
Net increase in cash and cash equivalents 241,583 170,212
Cash and cash equivalents, beginning of pe 1,370,829 1,269,267
----------- -----------
Cash and cash equivalents, end of period $ 1,612,412 $ 1,439,479
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the periodfor:
Interest $ 267,944 $ 318,263
=========== ===========
Income taxes $ 88,150 $ 148,766
=========== ===========
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 December 31, 1996 totaled $722,814, which
is an increase of $201,408 from working capital of $521,406 at March 31, 1996.
Cash provided by operations totaled $829,169 for the nine months ended
December 31, 1996, compared to $1,034,301 for the corresponding period of fiscal
1996. The primary reason for the decrease was 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 $575,058, net of proceeds from
notes payable of $100,000.
The Company believes that the cash and cash equivalents on hand at December
31, 1996, together with funds provided by operations, will be sufficient to fund
the Company's existing operations.
RESULTS OF OPERATIONS
REVENUES
Revenues increased $53,107 (1.3%) and $171,981 (1.5%) for the three months
and nine months ended December 31, 1996, respectively, compared to the
corresponding periods for fiscal 1996. These increases resulted primarily from a
$81,734 (2.1%) and a $205,383 (1.8%) increase in revenues from restaurant sales
for the three months and nine months ended December 31, 1996, respectively,
compared to the corresponding periods of fiscal 1996. There were eleven
Company-owned restaurants at December 31, 1996.
5
<PAGE>
Revenues from franchise operations decreased $28,627 (14.8%) and $33,402
(6.3%) for the three months and nine months ended December 31, 1996,
respectively, compared to the corresponding periods of fiscal 1996.
COSTS AND EXPENSES
Costs and expenses increased $20,923 (.5%) and $178,419 (1.6%) for the
three months and nine months ended December 31, 1996, respectively, compared to
the same 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 62.1% for the three months and for the nine months ended
December 31, 1996, respectively, and 62.6% and 61.9% for the corresponding
periods of fiscal 1996. Occupancy costs increased $9,127 and $34,166 for the
three months and nine months ended December 31, 1996, respectively, compared to
the same periods of fiscal 1996. Depreciation and amortization decreased $288
and $10,266 for the three months and nine months ended December 31, 1996,
respectively, compared to the corresponding periods of fiscal 1996. General and
administrative expenses as a percentage of revenues were 24.0% for the three
months and nine months ended December 31, 1996, respectively, and 24.8% and
24.2% for the corresponding periods of fiscal 1996.
INCOME FROM OPERATIONS
Income from operations increased $32,184 (15.7%) and decreased $6,438 (.9%)
for the three months and nine months ended December 31, 1996, respectively,
compared to the corresponding periods of fiscal 1996, due primarily to the
increased costs of operations and occupancy costs.
6
<PAGE>
OTHER INCOME AND EXPENSE
Other income increased $654 (4.4%) and decreased $1,001 (2.2%) for the
three months and nine months ended December 31, 1996, respectively, compared to
the corresponding periods of fiscal 1996, due primarily to the fluctuation of
interest rates on the investments held by the Company.
Interest expense decreased $5,973 (6.3%) and $24,245 (8.3%) for the three
months and nine months ended December 31, 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% on income before income taxes for the
three months and nine months ended December 31, 1996, and for the three months
and nine months ended December 31, 1995.
7
<PAGE>
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 12, 1997 ELMER'S RESTAURANTS, INC.
By /s/Anita Goldberg
---------------------------------
President
By /s/Juanita Nelson
---------------------------------
Juanita Nelson, Asst. Sec./Controller
(Principal Accounting Officer)
8
<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
December 31, 1996, and March 31, 1996, and the related consolidated statements
of income changes in shareholder's equity and cash flows for each of the three
months in the period ended December 31, 1996 and 1995, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 1,612,412
<SECURITIES> 0
<RECEIVABLES> 258,818
<ALLOWANCES> (5,000)
<INVENTORY> 212,072
<CURRENT-ASSETS> 2,270,700
<PP&E> 11,377,289
<DEPRECIATION> (6,578,422)
<TOTAL-ASSETS> 8,233,373
<CURRENT-LIABILITIES> 1,547,886
<BONDS> 3,463,327
0
0
<COMMON> 1,600,260
<OTHER-SE> 1,621,900
<TOTAL-LIABILITY-AND-EQUITY> 8,233,373
<SALES> 11,563,353
<TOTAL-REVENUES> 12,059,621
<CGS> 7,177,224
<TOTAL-COSTS> 11,339,932
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 267,944
<INCOME-PRETAX> 497,028
<INCOME-TAX> 169,000
<INCOME-CONTINUING> 328,028
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 328,028
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
