<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended DECEMBER 31, 1995
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 1-9573
-------------------------------------
UNO RESTAURANT CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2953702
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Charles Park Road, West Roxbury, Massachusetts 02132
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(617) 323-9200
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(Registrant's telephone number, including area code)
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(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
--- ---
As of February 12, 1996, 12,693,192 shares of the registrant's Common
Stock, $.01 par value, were outstanding.
<PAGE> 2
UNO RESTAURANT CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I. FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS.......................... 3
Consolidated Balance Sheets --
December 31, 1995 and October 1, 1995......... 3
Consolidated Statements of Income --
Thirteen weeks ended
December 31, 1995 and January 1, 1995......... 4
Consolidated Statements of Cash Flows --
Thirteen weeks ended December 31, 1995 and
January 1, 1995............................... 5
Notes to 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.............. 10
</TABLE>
2
<PAGE> 3
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share data)
<TABLE>
<CAPTION>
Dec. 31, Oct. 1,
1995 1995
--------- -------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 371 $ 1,305
Royalties receivable 725 725
Consumer product receivable 676 567
Inventory 2,345 2,226
Deferred pre-opening costs 868 1,253
Prepaid expenses and other assets 3,802 2,221
-------- --------
TOTAL CURRENT ASSETS 8,787 8,297
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Land 13,309 11,093
Buildings 20,004 18,056
Leasehold improvements 75,431 74,011
Equipment 42,966 42,430
Construction in progress 3,634 3,263
-------- --------
155,344 148,853
Less allowance for depreciation and amortization 38,572 36,355
-------- --------
116,772 112,498
OTHER ASSETS
Deferred income taxes 1,466 1,151
Royalty fee 385 405
Liquor licenses and other assets 2,967 2,909
-------- --------
$130,377 $125,260
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 4,848 $ 6,238
Accrued expenses 4,767 3,913
Accrued compensation and taxes 2,031 2,231
Income taxes payable 497 126
Current portion of long-term debt and capital
lease obligations 3,405 3,404
-------- --------
TOTAL CURRENT LIABILITIES 15,548 15,912
Long-term debt, net of current portion 28,340 21,750
Capital lease obligations, net of current portion 1,289 749
Other liabilities 3,890 3,722
SHAREHOLDERS' EQUITY
Preferred Stock, $1.00 par value, 1,000,000 shares
authorized, none issued
Common Stock, $.01 par value, 25,000,000 shares
authorized,12,991,292 and 13,682,270 shares issued and
outstanding in Fiscal Years 1996 and 1995, respectively 137 137
Additional paid-in capital 53,450 53,433
Retained earnings 33,002 32,457
-------- --------
86,589 86,027
Treasury Stock (694,100 and 358,100 shares at cost, in
Fiscal Years 1996 and 1995, respectively) (5,279) (2,900)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 81,310 83,127
-------- --------
$130,377 $125,260
======== ========
</TABLE>
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------------
Dec 31, Jan 1,
1995 1995
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<S> <C> <C>
REVENUES
Restaurant sales $37,370 $32,894
Consumer product sales 2,185 2,108
Franchise income 1,005 974
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40,560 35,976
COSTS AND EXPENSES
Cost of sales 10,295 9,067
Labor and benefits 12,486 10,660
Occupancy 6,406 5,310
Other operating costs 3,576 3,189
General and administrative 3,042 2,697
Depreciation and amortization 3,283 2,267
------- -------
39,088 33,190
------- -------
OPERATING INCOME 1,472 2,786
OTHER INCOME (EXPENSE) (620) (371)
------- -------
Income before income taxes 852 2,415
Provision for income taxes 307 895
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NET INCOME $ 545 $ 1,520
======= =======
EARNINGS PER COMMON SHARE $.04 $.13
======= =======
Weighted average shares outstanding 13,315 11,621
======= =======
</TABLE>
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
Thirteen weeks Ended
----------------------
Dec 31, Jan 1,
1995 1995
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<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 545 $ 1,520
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,308 2,283
Deferred income taxes (315) (116)
Provision for deferred rent 168 146
(Gain)\Loss on disposal of equipment 82 (4)
Changes in operating assets and liabilities, net
Of effects from business acquisitions:
Royalties receivable (109) 45
Inventory (119) (126)
Prepaid expenses and other assets (1,823) (1,263)
Accounts payable and other liabilities (789) 877
Income taxes payable 371 263
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,319 $ 3,625
INVESTMENT ACTIVITIES
Additions to property, equipment and
leasehold improvements (7,147) (11,738)
Proceeds from sale of fixed assets 125 4
Increase in deposit 3,000
Business acquisition, less cash acquired (3,301)
------- --------
NET CASH USED FOR INVESTING ACTIVITIES (7,022) (12,035)
FINANCING ACTIVITIES
Proceeds from revolving credit agreement 14,588 15,915
Principal payments on revolving credit agreement
and capital lease obligations (7,457) (8,357)
Purchase of Treasury Stock (2,379)
Exercise of stock options 17 60
------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,769 7,618
------- --------
DECREASE IN CASH (934) (792)
CASH AT BEGINNING OF PERIOD 1,305 961
------- --------
CASH AT END OF PERIOD $ 371 $ 169
======= ========
</TABLE>
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited, consolidated financial statements have been
prepared in accordance with instructions to Form 10-Q and, therefore, do not
include all information and footnotes normally included in financial statements
prepared in conformity with generally accepted accounting principles. They
should be read in conjunction with the financial statements of the company for
the fiscal year ended October 1, 1995.
The accompanying financial statements include all adjustments (consisting
only of normal recurring accruals) that management considers necessary for a
fair presentation of its financial position and results of operations for the
interim periods presented.
NOTE B - INTEREST RATE SWAP
On October 26, 1995, the Company entered into a five year interest rate swap
agreement involving the exchange of floating rate interest payment obligations
for fixed rate interest payment obligations. The notional amount of this
interest rate swap agreement was $20 million. The Company entered into this
agreement in order to manage interest costs and risks associated with
fluctuating interest rates.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth the percentage relationship to total revenues,
unless otherwise indicated, of certain items included in the Company's income
statements and operating data for the periods indicated:
THIRTEEN WEEKS ENDED DECEMBER 31, 1995 COMPARED TO THIRTEEN WEEKS ENDED JANUARY
1, 1995
<TABLE>
<CAPTION>
13 Weeks 13 Weeks
Ended Ended
12/31/95 1/1/95
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<S> <C> <C>
REVENUES:
Restaurant sales 92.1 % 91.4 %
Consumer product sales 5.4 5.9
Franchise income 2.5 2.7
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Total 100.0 % 100.0 %
----- -----
COSTS AND EXPENSES:
Cost of food & beverages (1) 26.0 % 25.9 %
Labor and benefits (1) 31.6 30.5
Occupancy costs (1) 16.2 15.2
Other operating costs (1) 9.0 9.1
General and administrative 7.5 7.5
Depreciation and amortization (1) 8.3 6.5
----- -----
Operating income 3.6 7.7
Other income (expense) (1.5) (1.0)
----- -----
Income before taxes 2.1 6.7
Provision for income taxes .8 2.5
----- -----
Net income 1.3 4.2
===== =====
</TABLE>
(1) Percentage of restaurant and consumer product sales
NUMBER OF RESTAURANTS
AT END OF QUARTER:
<TABLE>
<S> <C> <C>
Company-owned Uno's full service 80 66
Franchised Uno's - full service 60 59
</TABLE>
Total revenue increased 12.7% to $40.6 million from $36.0 million last year.
Company-owned restaurant sales rose 13.6% to $37.4 million from $32.9 million
last year due primarily to 24% growth in store operating weeks of full-service
Pizzeria Uno units resulting from the addition of 14 restaurants during the past
four quarters. Comparable-store sales for Uno units for the first three months
of the fiscal year were 4.6% below the same period last year. During the same
period, average weekly sales, which includes sales at comparable stores as well
as new units, were 7.6% below last year, reflecting lower-than-average sales
levels for the 14 units opened during the past four quarters.
Consumer product sales increased 3.7% to $2,185,000 from $2,108,000 for the
first quarter last year. The growth reflects new business within the frozen
product category and increases in sales volumes for existing customers in the
fresh refrigerated segment.
7
<PAGE> 8
Franchise income, which includes royalty income and initial franchise fees,
increased to $1,005,000 from $974,000 last year. Royalty income increased 2.2%
due to average weekly sales gains of .9% for the first three months of the
fiscal year. Initial franchise fees amounted to $40,000 this year compared to
$30,000 last year.
Operating income for the first quarter of the fiscal year declined to $1,472,000
from $2,786,000 last year. The operating margin for the period decreased to 3.6%
from 7.7%. The declines in operating income and margin are due mostly to the
lower sales level at comparable stores, as well as the below-average sales level
at newly-opened units.
Cost of food and beverage as a percentage of restaurant and consumer product
sales remained relatively unchanged at 26.0% compared to 25.9% last year. Labor
costs increased to 31.6% as a percentage of restaurant and consumer product
sales from 30.5% in the prior year due to additional training costs associated
with the introduction of a new menu. Occupancy costs rose as a percentage of
restaurant and consumer product sales to 16.2% from 15.2% primarily due to lower
sales levels at comparable stores and new units. Other operating costs declined
slightly to 9.0% from 9.1% last year due in part to lower advertising
expenditures during the current quarter. General and administrative expenditures
were up approximately 13% from a year ago, however, as a percentage of total
revenues these expenses remain unchanged. Depreciation and amortization expenses
as a percentage of restaurant and consumer product sales increased to 8.3% from
6.5% last year for several reasons; increased amortization of pre-opening costs
associated with the higher rate of unit growth, lower sales levels at comparable
stores and new units, and increased capital expenditures for facility
renovations.
Other expense of $620,000 increased from $371,000 last year due principally to
higher interest costs relating to the increased level of debt used to fund the
Company's accelerated expansion plan and its ownership of an increasing number
of restaurant properties. In addition, the Company recorded a net loss of
approximately $82,000 for the disposition of various fixed assets. The effective
tax rate of 36% for the quarter compared favorably to last year's rate of 37%
due in part to generally lower state income taxes. Net income decreased to
$545,000 from $1,520,000 last year based on the factors noted above.
LIQUIDITY AND SOURCES OF CAPITAL
The following table presents a summary of the Company's cash flows for the
period ended December 31, 1995.
<TABLE>
<S> <C>
Net cash provided by operating activities $ 1,319
Net cash used in investing activities (7,022)
Net cash provided by financing activities 4,769
-------
Increase (Decrease) in cash $ (934)
=======
</TABLE>
Historically, the Company has leased most of its restaurant locations and
pursued a strategy of controlled growth, financing its expansion principally
from operating cash flow, public equity offerings, the sale of senior, unsecured
notes, and revolving lines of credit. During the first quarter of fiscal 1996,
the Company's investment in property, equipment and leasehold improvements was
$7.1 million.
The Company currently plans to open approximately eight restaurants in fiscal
1996. The Company expects that the average cash investment required to open a
full service Pizzeria Uno restaurant, excluding land and pre-opening costs, will
8
<PAGE> 9
be approximately $1.5 million.
As of December 31,1995, the Company had outstanding indebtedness of $28.3
million under its $50.0 million unsecured revolving credit facility, $3.3
million of senior, unsecured notes and $1,361,000 in capital lease obligations.
The current revolving credit facility will convert to a three year term loan in
December 1997. Advances under the revolving credit facility will accrue interest
at the lender's prime rate, or alternatively, 100-150 basis points above LIBOR.
The Company anticipates using the revolving credit facility in the future for
repayment of the $3.3 million of principal outstanding under its senior,
unsecured notes, for the development of additional restaurants, and for working
capital.
In October 1995, the Board of Directors of the Company authorized the repurchase
of up to 1.5 million shares of the Company's Common stock in the market from
time to time during the subsequent six months. This superseded the Board of
Directors' previous authorization in July 1995 for the repurchase of up to a
total of 500,000 shares of the Company's Common Stock. As of February 12, 1996
the Company has repurchased a total of 992,200 shares of its Common Stock at an
average price of $7.08 per share.
The Company believes that existing cash balances, cash generated from operations
and borrowings under its revolving line of credit will be sufficient to satisfy
the Company's capital requirements through fiscal 1996.
The company is currently obligated under 85 leases, including 82 leases for
Company-owned restaurants, two leases for its executive offices, and a lease for
an office building containing one of its restaurants.
IMPACT OF INFLATION
Inflation has not been a major factor in the Company's business for the last
several years. The Company believes it has historically been able to pass on
increased costs through menu price increases, but there can be no assurance that
it will be able to do so in the future. Future increases in local area
construction costs could adversely affect the Company's ability to expand.
SEASONALITY
The Company's business is seasonal in nature, with revenues and, to a greater
degree, operating income being lower in its first and second fiscal quarters
than its other quarters. The Company's seasonal business pattern is due to its
concentration of units in the Northeast, and the resulting lower winter volumes.
9
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. Statement re: computation of per share earnings
(b) Reports on Form 8-K
Uno Restaurant Corporation did not file any Reports on Form 8-K
during the quarter ended December 31, 1995.
10
<PAGE> 11
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.
UNO RESTAURANT CORPORATION
(Registrant)
Date: February 13, 1996 By: /s/ Craig S. Miller
Craig S. Miller
President
Date: February 13, 1996 By: /s/ Robert M. Brown
Robert M. Brown
Senior Vice President-Finance,
and Chief Financial Officer
11
<PAGE> 1
Exhibit 11
Statement re: computation of per share earnings
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------
Dec 31, Jan 1,
1995 1995
----------- -----------
<S> <C> <C>
Weighted average shares outstanding 13,225,612 11,345,727
Common Stock equivalents:
Stock options 89,351 275,428
----------- -----------
13,314,963 11,621,155
=========== ===========
Net Income $ 545,000 $ 1,520,000
=========== ===========
EARNINGS PER COMMON SHARE $ .04 $ .13
=========== ===========
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-29-1996
<PERIOD-START> OCT-02-1995
<PERIOD-END> DEC-31-1995
<CASH> 371
<SECURITIES> 0
<RECEIVABLES> 1,401
<ALLOWANCES> 0
<INVENTORY> 2,345
<CURRENT-ASSETS> 8,787
<PP&E> 155,344
<DEPRECIATION> 38,572
<TOTAL-ASSETS> 130,377
<CURRENT-LIABILITIES> 15,548
<BONDS> 29,629
0
0
<COMMON> 137
<OTHER-SE> 81,173
<TOTAL-LIABILITY-AND-EQUITY> 130,377
<SALES> 40,560
<TOTAL-REVENUES> 40,560
<CGS> 10,295
<TOTAL-COSTS> 39,088
<OTHER-EXPENSES> 88
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 532
<INCOME-PRETAX> 852
<INCOME-TAX> 307
<INCOME-CONTINUING> 545
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 545
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
<FN>
<F1>ITEM NUMBER 5-02(31) NET OF TREASURY STOCK
</FN>
</TABLE>
