|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous: HARMAN INTERNATIONAL INDUSTRIES INC /DE/, S-8, 1996-04-03 |
Next: MARKEL CORP, DEF 14A, 1996-04-03 |
<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: February 18, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
EXCHANGE ACT
For the transition period from:_______________ to __________.
Commission file number: 0-16368
Skyline Chili, Inc.
-----------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Ohio 31-0717287
-----------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
4180 Thunderbird Lane, Fairfield, Ohio 45014
-----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(513) 874-1188
-----------------------------------------------------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
[X] YES [ ] NO
There were 3,386,023 shares of the issuer's no par value common stock
outstanding as of March 29, 1996.
Transitional Small Business Disclosure Format (check one):
[ ] YES [X] NO
<PAGE> 2
SKYLINE CHILI, INC.
-------------------
INDEX
Form 10-QSB
February 18, 1996
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets . . . . . . . 3
Consolidated Statements of Income . . . . 4
Consolidated Statements of Cash Flows . . 5
Notes to Condensed Consolidated
Financial Statements. . . . . . . . . . . 6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on
Form 8-K . . . . . . . . . . . . . . . . . . . . 9
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
2
<PAGE> 3
SKYLINE CHILI, INC.
-------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
AS OF FEBRUARY 18, 1996 & OCTOBER 29, 1995
------------------------------------------
<TABLE>
<CAPTION>
1996 1995
(UNAUDITED) (AUDITED)
----------- --------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $804,000 $1,910,000
ACCOUNTS RECEIVABLE 853,000 1,074,000
INVENTORIES 1,212,000 1,224,000
PREPAID EXPENSES 85,000 121,000
DEFERRED INCOME TAXES 206,000 206,000
----------- -----------
TOTAL CURRENT ASSETS 3,160,000 4,535,000
PROPERTY AND EQUIPMENT, AT COST:
LAND 1,496,000 1,469,000
BUILDINGS AND IMPROVEMENTS 11,426,000 11,451,000
EQUIPMENT AND FIXTURES 7,807,000 7,409,000
CONSTRUCTION IN PROGRESS 762,000 61,000
----------- -----------
21,491,000 20,390,000
LESS ACCUMULATED DEPRECIATION 7,043,000 6,565,000
----------- -----------
NET PROPERTY AND EQUIPMENT 14,448,000 13,825,000
INTANGIBLE ASSETS 757,000 755,000
ACCUMULATED AMORTIZATION 274,000 254,000
----------- -----------
483,000 501,000
OTHER ASSETS 126,000 152,000
----------- -----------
$18,217,000 $19,013,000
=========== ===========
</TABLE>
<TABLE>
<Ca[tion>
1996 1995
(UNAUDITED) (AUDITED)
----------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $863,000 $1,505,000
INCOME TAXES 87,000 101,000
ACCRUED LIABILITIES:
SALARIES AND WAGES 437,000 664,000
INTEREST 6,000 65,000
OTHER 449,000 485,000
----------- -----------
892,000 1,214,000
LONG-TERM DEBT DUE WITHIN ONE YEAR 372,000 360,000
----------- -----------
TOTAL CURRENT LIABILITIES 2,214,000 3,180,000
DEFERRED INCOME TAXES 469,000 469,000
LONG-TERM DEBT DUE AFTER ONE YEAR 5,908,000 6,100,000
SHAREHOLDERS' EQUITY:
COMMON STOCK, NO PAR VALUE;
5,400,000 SHARES AUTHORIZED;
3,386,000 SHARES ISSUED AND
OUTSTANDING (3,345,000 IN 1995) 5,367,000 5,267,000
ADDITIONAL PAID-IN CAPITAL 19,000 19,000
RETAINED EARNINGS 4,240,000 3,978,000
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 9,626,000 9,264,000
----------- -----------
$18,217,000 $19,013,000
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES
3
<PAGE> 4
SKYLINE CHILI, INC.
-------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
SIXTEEN WEEKS ENDED
---------------------------------------------
February 18, February 19,
1996 1995
----------- ------------
<S> <C> <C>
REVENUES:
SALES:
COMMISSARY $3,571,000 $3,265,000
RESTAURANT 4,266,000 4,054,000
FRANCHISE FEES AND ROYALTIES 373,000 365,000
--------- ---------
8,210,000 7,684,000
COSTS AND EXPENSES:
COST OF SALES - COMMISSARY 2,641,000 2,364,000
RESTAURANT OPERATING COSTS:
COST OF FOOD AND PAPER PRODUCTS 1,209,000 1,145,000
PAYROLL COSTS 1,293,000 1,266,000
OCCUPANCY AND OTHER EXPENSES 958,000 950,000
SELLING, GENERAL AND ADMINISTRATIVE 1,599,000 1,498,000
--------- ---------
7,700,000 7,223,000
--------- ---------
INCOME FROM OPERATIONS 510,000 461,000
OTHER INCOME (EXPENSE):
INTEREST INCOME 29,000 29,000
INTEREST EXPENSE (117,000) (176,000)
OTHER INCOME (EXPENSE) (4,000)
--------- ---------
(92,000) (147,000)
--------- ---------
INCOME BEFORE INCOME TAXES 418,000 314,000
PROVISION FOR INCOME TAXES 156,000 111,000
--------- ---------
NET INCOME $ 262,000 $ 203,000
========= =========
EARNINGS PER COMMON SHARE AND
COMMON EQUIVALENT SHARE $0.08 $0.06
========= =========
WEIGHTED AVERAGE COMMON & COMMON
EQUIVALENT SHARES 3,442,000 3,399,000
========= =========
</TABLE>
SEE ACCOMPANYING NOTES
4
<PAGE> 5
SKYLINE CHILI, INC.
-------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
UNAUDITED
---------
<TABLE>
<CAPTION>
SIXTEEN WEEKS ENDED
----------------------------------------------
February 18, February 19,
1996 1995
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
NET INCOME $262,000 $203,000
ADJUSTMENTS TO RECONCILE NET
INCOME TO NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES
DEPRECIATION AND AMORTIZATION 497,000 449,000
DECREASE (INCREASE) IN:
ACCOUNTS RECEIVABLE 221,000 (410,000)
INVENTORIES 12,000 (80,000)
PREPAID EXPENSES 36,000 46,000
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE (642,000) (390,000)
ACCRUED LIABILITIES (322,000) (904,000)
OTHER - NET 21,000 3,000
----------- -----------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 85,000 (1,083,000)
INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (1,305,000) (376,000)
PROCEEDS FROM SALE OF PROPERTY
AND EQUIPMENT 196,000
ADDITIONS TO INTANGIBLE ASSETS (2,000) (18,000)
----------- -----------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES ($1,111,000) ($394,000)
</TABLE>
<TABLE>
<CAPTION>
SIXTEEN WEEKS ENDED
----------------------------------------------
February 18, February 19,
1996 1995
-------------- -------------
<S> <C> <C>
FINANCING ACTIVITIES:
PAYMENTS OF LONG-TERM DEBT (180,000) (170,000)
PROCEEDS FROM EXERCISE OF
STOCK OPTIONS 100,000
---------- ----------
NET CASH USED BY
FINANCING ACTIVITIES (80,000) (170,000)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,106,000) (1,647,000)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,910,000 2,709,000
---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $804,000 $1,062,000
========== ==========
CASH PAID FOR:
INTEREST $ 157,000 $ 282,000
INCOME TAXES $ 228,000 $ 70,000
</TABLE>
SEE ACCOMPANYING NOTES
5
<PAGE> 6
SKYLINE CHILI, INC.
-------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(UNAUDITED)
-----------
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for fair presentation have been included.
Operating results for the sixteen week period ended February 18, 1996 are not
necessarily indicative of the results that may be expected for the year ended
October 27, 1996. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on
Form 10-KSB for the year ended October 29, 1995.
RECLASSIFICATIONS
Certain fiscal 1995 amounts have been reclassified to conform to the fiscal
1996 presentation.
6
<PAGE> 7
SKYLINE CHILI, INC.
-------------------
Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of
----------------------------------
Operations
----------
Results of Operations
---------------------
Revenues
- --------
Total revenues for the first quarter ended February 18, 1996 of $8.2 million
increased 7% over the same period last year due to higher revenues from all
Company-owned restaurants, commissary operations and Franchise Fees and
Royalties.
Commissary revenues this quarter increased 9% over last year. Shipments of the
Company's frozen products were 13% over the same period last year due to an
additional price promotion early in the quarter. Shipments of the Cincinnati
Recipe product this quarter were 14% over the first quarter last year because
promotions have been scheduled at different times this year compared to last.
Product sales to the Company's franchised restaurants increased 7% compared to
the prior year's first quarter.
Company-owned restaurant revenues this quarter increased 5% over the prior
year. A 6% same-store sales increase was partially offset by the absence of
sales from a closed strip center location in the Cincinnati market that was
being replaced by a nearby newly constructed free- standing building that did
not begin operations until after the end of the first quarter.
The number of Company-owned units at the end of the first quarter remained at
31, unchanged from the end of fiscal 1995. The Company franchised one new unit
in Cincinnati, Ohio in the first quarter and currently has 53 franchised units,
an increase of one unit compared to the end of fiscal 1995.
Franchise fees and royalties increased 2% in the first quarter over the same
period last year due to increased shipments of chili to the franchisees which
includes royalties as part of the selling price.
Cost of Sales - Commissary
- --------------------------
Cost of sales for the first quarter was 74% of the corresponding revenue
figures compared to 72% for the same period last year. A lower average beef
price was offset by an unfavorable mix shift to products with a higher cost of
sales rate compared to the same period last year. The Company's cost of sales
rate is heavily influenced by beef prices which can fluctuate significantly.
Restaurant Operating Expenses
- -----------------------------
The cost of food and paper products was 28% of the corresponding revenue figure
for both the first quarter and the same period last year. Labor costs for the
first quarter improved to 30% compared to 31% for the same period last year due
to decreased restaurant crew turnover. Occupancy and other expenses for the
first quarter were slightly (.8%) over the first quarter last year.
General and Administrative Expenses
- -----------------------------------
Selling, general and administrative expenses were 7% higher for the first
quarter compared to last year due to increased training and related expense
connected with the opening of a new restaurant in Columbus, Ohio and increases
in administrative bonuses.
7
<PAGE> 8
Income from Operations
- -----------------------
Income from operations for the fiscal 1996 first quarter was 11% over the first
quarter last year principally because of revenue increases.
Other Income (Expense)
- ---------------------
Interest expense for the first quarter was lower than the same period in the
prior year because of lower debt levels resulting from scheduled principal
payments and a reduction in the interest rate occurring late in fiscal 1995 on
the City of Fairfield, Ohio Adjustable Rate Demand Industrial Development
Revenue Bonds.
Liquidity and Capital Resources
-------------------------------
Cash levels dropped from their fiscal 1995 year end level by $1.1 million
because of capital spending and decreased accounts payable and accrued
liability levels. Working capital as of February 18, 1996 of $946,000 was
approximately $409,000 below the prior fiscal year end level.
During the first quarter of fiscal year 1996, the Company spent $1 million
towards construction of two free-standing restaurant locations in Cincinnati
and Columbus, Ohio. The Columbus restaurant is in a new trade area and the
Cincinnati restaurant is a relocation of an existing strip-center location.
Both of these restaurants began operations early in the second quarter. The
Company spent approximately $300,000 in the first quarter of fiscal 1996 on
equipment replacements and other ongoing maintenance throughout the system.
All of these activities were funded by existing cash and cash from operations.
The Company intends to spend approximately $2 million towards the construction
of four free-standing restaurants in Cincinnati and Columbus, Ohio. Two of
the locations will be in new trade areas and the other two will replace
existing strip-center locations. All four restaurants should be completed and
begin operations before the end of fiscal 1996. The Company believes that cash
provided by operations and its $4 million unsecured bank line of credit will be
adequate to fund planned expansion and new equipment purchases.
The Company maintains a compensating balance of $400,000 with the bank that has
issued a letter of credit guaranteeing payment of the principal and related
interest on the City of Fairfield, Ohio Adjustable Rate Demand Industrial
Development Revenue Bonds issued in 1990 to fund in part the construction of
the Company's new commissary, warehouse and office facility. There are no
legal restrictions on the use of those compensating balance funds.
8
<PAGE> 9
Skyline Chili, Inc.
-------------------
Form 10-QSB
February 18, 1996
PART II. OTHER INFORMATION
---------------------------
<TABLE>
<S> <C>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
- -------
(a) Exhibits filed with this Report
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None.
</TABLE>
9
<PAGE> 10
SIGNATURE
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Skyline Chili, Inc.
-------------------
Registrant
by: /s/ Kevin R. McDonnell
-----------------------------------------------
Kevin R. McDonnell
President and Chief Executive
Officer (Duly Authorized Officer)
by: /s/ Jeffry W. Shelton
-----------------------------------------------
Jeffry W. Shelton, Vice President - Finance,
Chief Financial Officer and Treasurer
(Principal Financial and Principal Accounting Officer)
Date: April 3, 1996
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's unaudited consolidated balance sheets and statements of income as and
for the three months (sixteen weeks) ended February 18, 1996 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000803497
<NAME> SKYLINE CHILI, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-27-1996
<PERIOD-START> OCT-30-1995
<PERIOD-END> FEB-18-1996
<CASH> 804
<SECURITIES> 0
<RECEIVABLES> 853
<ALLOWANCES> 0
<INVENTORY> 1,212
<CURRENT-ASSETS> 3,160
<PP&E> 21,491
<DEPRECIATION> 7,043
<TOTAL-ASSETS> 18,217
<CURRENT-LIABILITIES> 2,214
<BONDS> 5,908
<COMMON> 5,367
0
0
<OTHER-SE> 4,259
<TOTAL-LIABILITY-AND-EQUITY> 18,217
<SALES> 7,837
<TOTAL-REVENUES> 8,210
<CGS> 2,641
<TOTAL-COSTS> 7,700
<OTHER-EXPENSES> 92
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 117
<INCOME-PRETAX> 418
<INCOME-TAX> 156
<INCOME-CONTINUING> 262
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 262
<EPS-PRIMARY> .08
<EPS-DILUTED> 0
</TABLE>
|
|