<PAGE> 1
SECURITY AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended April 1, 1995.
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[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from to \
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Commission file number 0 - 15942
Steve's Homemade Ice Cream, Inc.
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(Exact name of registrant as specified in its charter)
New Jersey
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(State or other jurisdiction of incorporation or organization)
11-2778439
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(I.R.S. Employer Identification No.)
4175 Veterans Highway, Ronkonkoma, NY 11779
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(Address of principal executive offices - Zip code)
Registrant's telephone number, including area code: 516-737-9700
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Former name, former address and former fiscal year, if changes since last
report.
Indicate by check whether the registrant (1) has filed all reports required
to be filed be 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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12,13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date May 12, 1995.
Common Stock Par Value $.01 Per Share. Shares Outstanding 9,953,288
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STEVE'S HOMEMADE ICE CREAM, INC.
Form 10-Q
April 1, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Part I. - Financial Information
Item 1. Financial statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of
Operations 5
Condensed Consolidated Statement of
Stockholders' Equity 6
Condensed Consolidated Statements of
Cash Flows 7
Notes to Condensed Consolidated
Financial Statements 9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11
Part II. - Other Information
Item 6. Exhibits and Reports on Form 8-K 12
Signature 13
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STEVE'S HOMEMADE ICE CREAM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
April 1, December 31,
1995 1994
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(Unaudited)
(In thousands)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $2,268 $ 3,860
Receivables 3,890 3,258
Receivables - affiliates 783 515
Inventories 970 987
Prepaid expenses 1,145 446
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Total Current Assets 9,056 9,066
Improvements and equipment,
at cost, - net of accumulated
depreciation and amortization 1,051 1,102
Other assets:
Intangible assets, at
cost - net of accumulated
amortization of $3,588,000
and $3,419,000 9,078 9,247
Investment in Heidi's 1,356 1,356
Other 413 449
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Total assets $20,954 $21,220
=====================================================================================================================
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
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STEVE'S HOMEMADE ICE CREAM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Continued)
<TABLE>
<CAPTION>
April 1, December 31,
1995 1994
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(Unaudited)
(In thousands)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities of long-term debt $ 152 $ 253
Trade accounts payable 3,644 4,026
Income taxes payable 357 527
Payable - affiliates 580 307
Other accrued liabilities 1,812 1,688
Liability for lease terminations 110 110
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Total Current Liabilities 6,655 6,911
Long-term debt, net of current maturities 1,352 1,339
Liability for lease terminations,
net of current portion 270 318
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Total liabilities 8,277 8,568
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Minority interest 206 198
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Commitments and contingent liabilities
Stockholders' equity:
Class A common stock, $.01 par
value 20,000,000 shares authorized;
12,107,903 shares issued 121 121
Paid-in capital 8,169 8,168
Retained earnings 5,846 5,830
Treasury stock, at cost 2,154,615 shares (1,665) (1,665)
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Total stockholders' equity 12,471 12,454
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Total liabilities and stockholders' equity $20,954 $21,220
===================================================================================================================
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
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STEVE'S HOMEMADE ICE CREAM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Thirteen Weeks Ended
(Unaudited)
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April 1, April 2,
1995 1994
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(In thousands, except
per share amount)
<S> <C> <C>
Revenues:
Net sales $4,631 $4,429
Store operations 950 1,186
Franchise revenue 385 604
Other 55 72
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6,021 6,291
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Operating costs and expenses:
Cost of goods sold 2,839 2,823
Store operations 905 1,004
Selling, general and administrative expenses 2,205 1,961
Interest 39 30
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5,988 5,818
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Income before taxes on income 33 473
Taxes on income 17 243
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Net income $16 $230
===================================================================================================================
Earnings per common share nil $.02
===================================================================================================================
Weighted average number of common
and common equivalent shares
outstanding 10,235 12,161
===================================================================================================================
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
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STEVE'S HOMEMADE ICE CREAM, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THIRTEEN WEEKS ENDED APRIL 1, 1995
<TABLE>
<CAPTION>
Common Stock
Par Paid-in Retained Treasury
Shares Value Capital Earnings Stock Total
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(Unaudited
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 12,106 $121 $8,168 $5,830 $(1,665) $12,454
Exercise of 1,800 shares employee
stock option for Class Common Stock 2 1 1
Net income for the
thirteen weeks ended
April 1, 1995 16 16
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Balance, April 1, 1995 12,108 $121 $8,169 $5,846 $(1,665) $12,471
===================================================================================================================
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
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STEVE'S HOMEMADE ICE CREAM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Thirteen Weeks Ended
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April 1, April 2,
1995 1994
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(Unaudited)
(In thousands)
<S> <C> <C>
Cash Flows from Operating Activities
Net income $16 $230
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 220 224
Provision for doubtful accounts 50 75
Minority interest in net income of subsidiary 8 7
Increase (decrease) in cash flows from changes in operating assets and
liabilities:
Receivables (682) (1,228)
Receivables - affiliates (268)
Inventories 17 4
Prepaid expenses and other (699) (84)
Other assets 36 (107)
Trade accounts payable and accrued liabilities (476) 283
Payables - affiliates 273 111
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Net cash used in operating activities (1,505) (485)
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</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
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STEVE'S HOMEMADE ICE CREAM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
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April 1, April 2,
1995 1994
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(Unaudited)
(In thousands)
<S> <C> <C>
Cash Flows from Investing Activities:
Capital expenditures $(133)
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Net cash used in investing activities (133)
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Cash Flows from Financing Activities:
Principal payments on long-term debt $ (88) (103)
Exercise of stock options by employee 1
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Net cash used in financing activities (87) (103)
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Net change in cash and cash equivalents (1,592) (721)
Cash and cash equivalents, beginning of period 3,860 2,708
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Cash and cash equivalents, end of period $2,268 $1,987
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</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
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STEVE'S HOMEMADE ICE CREAM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 ORGANIZATION BUSINESS AND BASIS OF PRESENTATION
The Company was incorporated in September 1985 and commenced
operations on December 23, 1985. In August 1988, the Company
completed the acquisition of Swensen's Inc. (Swensen's) and it's
wholly-owned subsidiaries. In August 1990, the Company acquired a
sixty percent interest in American Glace, Inc.
The Company markets, distributes and sells a variety of branded
frozen dessert products to supermarkets, grocery stores, gourmet
shops, delicatessens and convenience stores. The Company currently
franchises ice cream parlors, dip shoppes and family style
restaurants throughout the United States and certain foreign
countries.
The accompanying consolidated financial statements include the
accounts of the Company and its subsidiaries except Heidi's Frogen
Yozurt Shoppes, Inc. ("Heidi's"). All material intercompany
balances and transactions have been eliminated in consolidation.
The Company's investment in Heidi's is stated at cost. On April 9,
1993, Heidi's and its subsidiary filed voluntary petitions under
Chapter 11 of the Bankruptcy Code with the United States
Bankruptcy Court to reorganize Heidi's.
The Condensed Consolidated Financial Statements included herein
are unaudited and include all adjustments which are, in the
opinion of management, necessary for a fair presentation of the
results of operations of the interim period pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations,
although the Company believes that the disclosures in such
financial statements are adequate to make the information
presented not misleading. Certain 1994 balances were reclassified
to conform to 1995 presentation. These condensed consolidated
financial statements should be read in conjunction with the
Company's Consolidated Financial Statements filed with the
Securities and Exchange Commission on Form 10-K for the fiscal
year ended December 31, 1994.
The results of operations for the thirteen weeks ended April 1,
1995 are not necessarily indicative of the results to be expected
for the full year.
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STEVE'S HOMEMADE ICE CREAM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - LONG-TERM DEBT
Under a revolving credit facility entered into December 1994, the
Company can borrow up to $7,500,000 through December 31, 1997. As
of April 1, 1995 , the Company borrowed $325,000. Interest is
payable monthly on the unpaid principal balance of borrowings
under this facility at the bank's prime rate plus 1/2%, which
approximated 9.0% at April 1, 1995. The Company has agreed to pay
a fee of 1/8% per annum on the unused portion of the commitment.
NOTE 3 EARNINGS PER COMMON SHARE
Earnings per share of common stock for the thirteen weeks ended
April 1, 1995 and April 2, 1994 was computed by dividing net
income by the weighted average number of shares of Common Stock
outstanding during the period presented. 281,000 and 210,000
common equivalent shares were included in the weighted average
number shares for the thirteen weeks ended April 1, 1995 and April
2, 1994, respectively. The common stock equivalent shares result
from shares issuable upon the exercise of warrants or options
under the treasury stock method.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Thirteen weeks ended April 1, 1995 vs. thirteen weeks ended April
2, 1994.
Total revenue for the thirteen weeks ended April 1, 1995 decreased
to $6,021,000 from $6,291,000 for the thirteen weeks ended April
2, 1994. The decrease in revenues was primarily due to the
decrease in revenue from store operations of $236,000 attributable
to the fact that two less company stores were operating during
most of the thirteen weeks ended April 1, 1995 as compared to the
thirteen weeks ended April 2, 1994, the decrease in franchise
revenue which reflects fewer new franchise stores opened and the
decline in the number of franchise stores operating during the
thirteen weeks ended April 1, 1995 as compared to the same period
in 1994, the decrease in revenues from bulk ice cream sales due to
the expiration in late 1994 of the agreement with D'Angelo's
regarding bulk products, partially offset by the increase in
prepackaged frozen dessert sales which increased to $3,232,000 for
the thirteen weeks ended April 1, 1995 from $2,651,000 for the
thirteen weeks ended April 2, 1994.
The following tables sets forth the sales of prepackaged frozen
desserts, bulk frozen dessert sales to franchised and licensed
stores, and other sales for the thirteen weeks ended April 1, 1995
and April 2, 1994, respectively.
Thirteen Weeks Ended
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April 1, April 2,
1995 1994
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Prepackaged Frozen Dessert Sales $3,232,000 $2,651,000
Bulk Frozen Dessert Sales 1,203,000 1,511,000
Other sales 196,000 267,000
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Total sales $4,631,000 $4,429,000
=================================================================
The Company's sales of bulk and prepackaged frozen desserts
comprised 74% of the total revenues for the thirteen weeks ended
April 1, 1995 as compared to 68% of the total revenues for the
thirteen weeks ended April 2, 1994.
The gross profit percentage increased to 38% for the thirteen
weeks ended April 1, 1995 as compared to 36% for the thirteen
weeks ended April 2, 1994. The increase is due primarily to the
increased sales of higher margin products in 1995 as compared to
1994.
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<PAGE> 12
Selling, general and administrative expenses increased to
$2,205,000 for the thirteen weeks ended April 1, 1995 as compared
to $1,961,000 for the thirteen weeks ended April 2, 1994. This
increase is primarily attributable to the increase product support
and selling expenses including product introductory expenses
incurred in the thirteen weeks ended April 1, 1995 in excess of
such expenses or the thirteen weeks ended April 2, 1994.
Net income for the thirteen weeks ended April 1, 1995 was $16,000
as compared to $230,000 for the thirteen weeks ended April 2,
1994. The decrease is attributable to the decrease in franchise
revenue and store profits plus the increase in product support and
selling expenses which were partially offset by the increase in
gross profit dollars for the thirteen weeks ended April 1, 1995 as
compared to the same period in 1994. The Company anticipates
increased spending in 1995 for product introductory expenses in an
effort to increase revenues and market share, which may have an
adverse short-term effect on net income.
Liquidity and Capital Resources
Net cash used in operations was $1,505,000 for the thirteen weeks
ended April 1, 1995 as compared to net cash used in operations of
$485,000 for the thirteen weeks ended April 2, 1994. This increase
is a result of the increase in product introductory expense in
1995.
Working capital on April 1, 1995 was $2,401,000. The Company
believes this working capital plus internally generated funds and
the funds available from its credit line will be sufficient to
meet its cash and working capital requirements for its established
operations and the additional funds to support the Company's
growth for the current fiscal year.
PART II. OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the registrant during the
thirteen weeks ended April 1, 1995.
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<PAGE> 13
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: May 19, 1995 STEVE'S HOMEMADE ICE CREAM, INC.
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By: /s/ Gary P. Stevens
----------------------------
Gary P. Stevens, President
and Chief Financial and
Accounting Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> APR-01-1995
<CASH> 2,268
<SECURITIES> 0
<RECEIVABLES> 5,087
<ALLOWANCES> 414
<INVENTORY> 970
<CURRENT-ASSETS> 9,056
<PP&E> 2,411
<DEPRECIATION> 1,360
<TOTAL-ASSETS> 20,954
<CURRENT-LIABILITIES> 6,655
<BONDS> 0
<COMMON> 121
0
0
<OTHER-SE> 12,350
<TOTAL-LIABILITY-AND-EQUITY> 20,954
<SALES> 4,631
<TOTAL-REVENUES> 6,021
<CGS> 2,839
<TOTAL-COSTS> 3,744
<OTHER-EXPENSES> 2,205
<LOSS-PROVISION> 50
<INTEREST-EXPENSE> 39
<INCOME-PRETAX> 33
<INCOME-TAX> 17
<INCOME-CONTINUING> 16
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
