UNITED STATES
SECURITIES 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 Exchange Act of 1934 for the quarterly period
ended June 27, 1997.
- 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 0-15782
SHOWBIZ PIZZA TIME, INC.
(Exact name of registrant as specified in its charter)
Kansas 48-0905805
(State or other jurisdiction of(I.R. S. Employer
incorporation or organization)Identification No.)
4441 West Airport Freeway
Irving, Texas 75062
(Address of principal executive offices,
including zip code)
(972) 258-8507
(Registrant's telephone number,
including area code)
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
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 -
At June 27, 1997, an aggregate of 18,674,079 shares of the
registrant's Common Stock, par value of $.10 each (being the
registrant's only class of common stock), were outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
ShowBiz Pizza Time, Inc.:
Page
Consolidated balance sheets as of June 27, 1997 (unaudited)
and December 27, 1996. . . . . . . . . . . . . . . . . . . . . 2
Unaudited consolidated statements of earnings for the three months
ended June 27, 1997 and June 28, 1996 . . . . . . . . . . . . . . . 3
Unaudited consolidated statements of earnings for the six months
ended June 27, 1997 and June 28, 1996 . . . . . . . . . . . . . . . 4
Unaudited consolidated statement of shareholders' equity for the
six months ended June 27, 1997 . . . . . . . . . . . . . . . . . . . 5
Unaudited consolidated statements of cash flows for the six months
ended June 27, 1997 and June 28, 1996 . . . . . . . . . . . . . . . 6
Notes to consolidated financial statements . . . . . . . . . . . . . 7
SHOWBIZ PIZZA TIME, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 27, 1997 AND DECEMBER 27, 1996
(Thousands, except share data)
ASSETS
<TABLE>
June 27, December 27,
1997 1996
----------- -----------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . $12,677 $ 3,402
Accounts receivable, including receivables
from related parties of $427 and $675,
respectively . . . . . . . . . . . . . . . . . . 2,640 3,543
Current portion of notes receivable, including
receivables from related parties of $203
and $221, respectively. . . . . . . . . . . . . 376 457
Inventories . . . . . . . . . . . . . . . . . . . 3,731 3,368
Prepaid expenses. . . . . . . . . . . . . . . . . 3,725 3,185
Current portion of deferred tax asset . . . . . . 16,170 13,633
------ ------
Total current assets . . . . . . . . . . . . . . 39,319 27,588
------ ------
Investments in related parties . . . . . . . . . . 1,486 1,315
------ ------
Property and equipment . . . . . . . . . . . . . . 173,081 163,998
------ -------
Deferred tax asset . . . . . . . . . . . . . . . . 2,890 12,296
------ -------
Other assets:
Notes receivable, less current portion,
including receivables from
related parties of $1,551 and $2,323,
respectively . . . . . . . . . . . . . . . . . 6,471 7,257
Other . . . . . . . . . . . . . . . . . . . . . . 4,326 4,126
------ ------
10,797 11,383
------ ------
$227,573 $216,580
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt . . . . . . . . $ 3,372 $ 1,785
Accounts payable and accrued liabilities. . . . . 33,641 31,738
------- -------
Total current liabilities. . . . . . . . . . . 37,013 33,523
------- -------
Long-term debt, less current portion . . . . . . . 25,516 34,668
------- ------
Deferred credits . . . . . . . . . . . . . . . . . 4,026 3,795
------- ------
Other liabilities. . . . . . . . . . . . . . . . . 1,010 1,010
----- ------
Redeemable preferred stock, $60 par value,
redeemable for $2,974 in 2005. . . . . . . . . . 2,159 2,108
------- ------
Shareholders' equity:
Common stock, $.10 par value; authorized
50,000,000 shares; 21,783,255
and 21,519,075 shares issued,
respectively . . . . . . . . . . . . . . . . . 2,178 2,152
Capital in excess of par value. . . . . . . . . . 157,364 153,795
Retained earnings . . . . . . . . . . . . . . . . 31,281 17,613
Deferred compensation . . . . . . . . . . . . . . (2,711) (1,821)
Less treasury shares of 3,109,176 at
both dates, at cost. . . . . . . . . . . . . . (30,263) (30,263)
------ ------
157,849 141,476
------- -------
$227,573 $216,580
======== ========
</TABLE>
See notes to consolidated financial statements.
Page 2
SHOWBIZ PIZZA TIME, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Thousands, except per share data)
<TABLE>
Three Months Ended
June 27, 1997 June 28, 1996
--------------- --------------
<S> <C> <C>
Food and beverage revenues . . . . . . . . . $ 56,585 $ 47,845
Games and merchandise revenues . . . . . . . 26,261 20,867
Franchise fees and royalties . . . . . . . . 777 827
Interest income, including related party
income of $50 and $60,respectively. . . . 296 291
Joint venture income . . . . . . . . . . . . 112 18
------ ------
84,031 69,848
------ ------
Costs and expenses:
Cost of sales . . . . . . . . . . . . . . . . 39,388 34,700
Selling, general and administrative
expenses, including related party
expenses of $32 in 1996 . . . . . . . . . . 12,321 10,267
Depreciation and amortization . . . . . . . . 6,327 6,098
Interest expense. . . . . . . . . . . . . . . 727 862
Gain) loss on property transactions . . . . . (40) 23
Other operating expenses. . . . . . . . . . . 15,384 14,058
------- -------
74,107 66,008
------- -------
Income before income taxes . . . . . . . . . . 9,924 3,840
------- -------
Income taxes:
Current expense . . . . . . . . . . . . . . . 1,092 312
Deferred expense. . . . . . . . . . . . . . . 2,927 1,263
------ ------
4,019 1,575
------ ------
Net income . . . . . . . . . . . . . . . . . . $ 5,905 $ 2,265
===== =====
Earnings per common and common equivalent share:
Primary:
Net income . . . . . . . . . . . . . . . . . $ .31 $ .12
====== =======
Weighted average shares outstanding . . . . . 18,908 18,521
====== ======
Fully diluted:
Net income . . . . . . . . . . . . . . . . . $ .31 $ .12
======= =======
Weighted average shares outstanding . . . . . 19,055 18,531
======= ======
</TABLE>
See notes to consolidated financial statements.
page 3
SHOWBIZ PIZZA TIME, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Thousands, except per share data)
<TABLE>
Six Months Ended
----------------------------------
June 27, 1997 June 28, 1996
------------- -------------
<S> <C> <C>
Food and beverage revenues . . . . . . . . $ 119,039 $ 102,121
Games and merchandise revenues . . . . . . 54,087 43,551
Franchise fees and royalties . . . . . . . 1,698 1,968
Interest income, including related party income
of $107 and $126, respectively. . . . . 524 547
Joint venture income . . . . . . . . . . . 277 113
------- ------
175,625 148,300
------- -------
Costs and expenses:
Cost of sales . . . . . . . . . . . . . . 81,582 72,160
Selling, general and administrative
expenses, including related party
expenses of $31 and $63, respectively . . 26,042 21,683
Depreciation and amortization . . . . . . . 12,644 11,979
Interest expense. . . . . . . . . . . . . 1,417 1,753
(Gain) loss on property transactions. . . . (68) 112
Other operating expenses. . . . . . . . . . 30,751 28,002
152,368 135,689
-------- -------
Income before income taxes . . . . . . . . . 23,257 12,611
------- -------
Income taxes:
Current expense. . . . . . . . . . . . . . 2,559 1,426
Deferred expense . . . . . . . . . . . . . 6,860 3,745
------ ------
9,419 5,171
------ ------
Net income . . . . . . . . . . . . . . . . . $ 13,838 $ 7,440
======= =======
Earnings per common and common equivalent share:
Primary:
Net income . . . . . . . . . . . . . . . . . $ .72 $ .39
======= =======
Weighted average shares outstanding . . . . . 18,862 18,458
======= =======
Fully diluted:
Net income . . . . . . . . . . . . . . . . . $ .72 $ .39
======= =======
Weighted average shares outstanding . . . . . 19,035 18,512
======= =======
</TABLE>
See notes to consolidated financial statements.
Page 4
SHOWBIZ PIZZA TIME, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
(Thousands, except per share data)
<TABLE>
Common Capital in Deferred Treasury
Stock Excess of Retained Compen- Stock
Shares Par Value Par Value Earnings sation Shares Cost
------ --------- --------- -------- ------- ------ ----
<S><C> <C> <C> <C> <C> <C> <C>
Balances, December 27, 1996. .
21,519 $ 2,152 $153,795 $ 17,613 $(1,821) 3,109 $(30,263)
Net income . . . . . . . . . 13,838
Redeemable preferred
stock accretion . . . . . . (51)
Redeemable preferred stock dividends,
$2.40 per share. . . . . . (119)
Stock options exercised. . .
156 16 1,709
Stock grant plan . . . . .
105 10 1,800 (1,800)
Tax benefit from the exercise of stock
options and stock grants . .
(9)
Stock issued under 401(k) plan . .
3 59
Stock split costs. . . . . .
10
Amortization of deferred compensation
910
------ ----- ------- ------- ------- ----- -------
Balances, June 27, 1997. . . .
21,783 $2,178 $157,364 $31,281 $(2,711) 3,109 $(30,263)
====== ====== ======== ======= ======= ===== ========
</TABLE>
See notes to consolidated financial statements.
Page 5
SHOWBIZ PIZZA TIME, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Thousands)
<TABLE>
Six Months Ended
June 27, 1997 June 28, 1996
------------- -------------
<S> <C> <C>
Operating activities:
Net income . . . . . . . . . . . . . . . $13,838 $ 7,440
Adjustments to reconcile net income to cash
provided by operations:
Depreciation and amortization. . . . . . . . 12,644 11,979
Deferred tax expense . . . . . . . . . . . . 6,860 3,745
(Gain) loss on property transactions . . . . (68) 112
Compensation expense under stock
grant plan. . . . . . . . . . . . . . . . 910 910
Other. . . . . . . . . . . . . . . . . . . . 231 220
Net change in receivables, inventory,
prepaids, payables and
accrued liabilities . . . . . . . . . . . . 1,903 1,802
------ ------
Cash provided by operations . . . . . . . . 36,318 26,208
------- -------
Investing activities:
Purchases of property and equipment. . . . . (21,525) (20,807)
Additions to notes receivable. . . . . . . . (759) (800)
Payments received on notes receivable. . . . 1,626 1,403
(Increase) decrease in investments, deferred
charges and other assets . . . . . . . . . . (668) 81
----- ------
Cash used in investing activities. . . . . . (21,326) (20,123)
Financing activities:
Payments on debt and line of credit. . . . . (7,400) (1,700)
Reduction of capital lease obligations . . . (56) (46)
Exercise of stock options . . . . . . . . . 1,725 197
Redeemable preferred stock dividends . . . . (119) (119)
Other. . . . . . . . . . . . . . . . . . . . 133
------- ------
Cash used in financing activities. . . . . . (5,717) (1,668)
------- -------
Increase in cash and cash equivalents . . . . 9,275 4,417
Cash and cash equivalents, beginning
of period. . . . . . . . . . . . . . . . . . 3,402 5,589
-------- --------
Cash and cash equivalents, end of period . . .$ 12,677 $ 10,006
======== ========
</TABLE>
See notes to consolidated financial statements.
Page 6
SHOWBIZ PIZZA TIME, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 27, 1997 AND JUNE 28, 1996
(Unaudited)
1. Interim financial statements:
In the opinion of management, the accompanying financial
statements for the periods ended June 27, 1997 and June 28, 1996
reflect all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the Company's financial
condition, results of operations and cash flows in accordance with
generally accepted accounting principles.
Certain information and footnote disclosures normally included
in the consolidated financial statements prepared in accordance
with generally accepted accounting principles have been omitted.
The unaudited consolidated financial statements referred to above
should be read in conjunction with the financial statements and
notes thereto included in the Company's Form 10-K filed with the
Securities and Exchange Commission for the year ended December 27,
1996. Results of operations for the periods ended June 27, 1997 and
June 28, 1996 are not necessarily indicative of the results for the
year.
2. Earnings per common and common equivalent share:
Earnings per common and common equivalent share were computed
based on the weighted average number of common and common
equivalent shares outstanding during the period. Net income
available per common share has been adjusted for the items
indicated below, and earnings per common and common equivalent
share were computed as follows (thousands, except per share data):
<TABLE>
Three Months Ended Six Months Ended
---------------------- ---------------------
June 27, June 28, June 27, June 28,
1997 1996 1997 1996
------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income . . . . . . . . $ 5,905 $ 2,265 $13,838 $ 7,440
Accretion of redeemable
preferred stock. . . . . (25) (24) (51) (51)
Redeemable preferred
stock dividends. . . . . (59) (59) (119) (119)
------ ------ ------ ------
Adjusted income
applicable to common
and common equivalent
shares . . . . . . . . $ 5,821 $ 2,182 $13,668 $ 7,270
======= ======= ======= =======
Primary:
Weighted average number of common shares
outstanding . . . . 18,452 18,243 18,432 18,232
Common stock equivalents:
Stock purchase options. . 456 278 430 226
------ ------- ------- -------
Weighted average number of shares
outstanding . . . . . .
18,908 18,521 18,862 18,458
====== ====== ====== ======
Earnings per common and common
equivalent share. . .$ .31 $ .12 $ .72 $ .39
======= ====== ====== ======
Fully diluted:
Weighted average number of common shares
outstanding . . . . . 18,452 18,243 18,432 18,232
Common stock equivalents:
Stock purchase options. . 603 288 603 280
------ ------ ------ ------
Weighted average number of shares
outstanding. . . . . .19,055 18,531 19,035 18,512
====== ====== ====== ======
Earnings per common and common
equivalent share . . .$ .31 $ .12 $ .72 $ .39
====== ====== ====== ======
</TABLE>
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 128 "Earnings Per Share"
effective for years ending after December 15, 1997. The Company
does not believe that adoption will have a material impact on
historical earnings per share.
Page 7
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Second Quarter 1997 Compared to Second Quarter 1996
- ---------------------------------------------------
A summary of the results of operations of the Company as a
percentage of revenues for the two quarters is shown below.
<TABLE>
Three Months Ended
June 27, 1997 June 28, 1996
------------- -------------
<S> <C> <C>
Revenue. . . . . . . . . . . . . 100.0% 100.0%
----- -----
Costs and expenses:
Cost of sales. . . . . . . . . 46.9 49.8
Selling, general and administrative 14.6 14.7
Depreciation and amortization 7.5 8.7
Interest expense . . . . . . . .9 1.2
(Gain) loss on property transactions
Other operating expenses 18.3 20.1
------- -------
88.2 94.5
------- -------
Income before income taxes 11.8 5.5
Income tax expense . . . . . . . 4.8 2.3
------- -------
Net income . . . . . . . . . . . 7.0% 3.2%
======= ======
</TABLE>
Revenues
--------
Revenues increased to $84.0 million in the second quarter of
1997 from $69.8 million in the second quarter of 1996 primarily due
to an increase of 12.3% in comparable store sales of the Company's
Chuck E. Cheese's restaurants which were open during all of the
second quarters of both 1997 and 1996. In addition, the Company
purchased 19 restaurants from its largest franchisee in September
1996. Management believes that several factors contributed to the
comparable store sales increase with the primary factor being sales
increases at repositioned stores. Menu prices increased
approximately 2.5% between the periods.
Costs and Expenses
------------------
Costs and expenses as a percentage of revenues decreased to
88.2% in the second quarter of 1997 from 94.5% in the second
quarter of 1996.
Cost of sales decreased as a percentage of revenues to 46.9%
in the second quarter of 1997 from 49.8% in the comparable period
of 1996. Cost of food, beverage, prize and merchandise items as a
percentage of restaurant sales decreased to 16.5% in the second
quarter of 1997 from 17.7% in the second quarter of 1996 primarily
due to an increase in menu prices and lower cost of cheese between
the two periods. Restaurant labor expenses as a percentage of
restaurant sales decreased to 27.5% during the second quarter of
1997 from 29.2% in the second quarter of 1996 primarily due to an
increase in comparable store sales and more effective utilization
of hourly employees.
Selling, general and administrative expenses as a percentage
of revenues declined slightly to 14.6% in the second quarter of
1997 from 14.7% in the second quarter of 1996.
Depreciation and amortization expenses as a percentage of
revenues declined to 7.5% in the second quarter of 1997 from 8.7%
in the second quarter of 1996 primarily due to the increase in
comparable store sales, a change effected in the first quarter of
1997 in the estimated useful lives of certain fixed assets and the
acquisition of restaurants in 1996 with lower depreciation expense
than existing restaurants. Depreciation expense was reduced
approximately $540,000 in the second quarter of 1997 due to the
change in the estimated useful lives of certain fixed assets based
on a review of historical asset utilization.
Page 8
Interest expense decreased to approximately $727,000 in the
second quarter of 1997 from approximately $862,000 in the second
quarter of 1996 due primarily to a decrease in outstanding debt
since the second quarter of 1996.
Other operating expenses decreased as a percentage of
revenues to 18.3% in the second quarter of 1997 from 20.1% in the
second quarter of 1996 primarily due to the increase in comparable
store sales and the fact that a significant portion of operating
costs are fixed.
Net Income
----------
The Company had net income of $5.9 million in the second
quarter of 1997 compared to $2.3 million in the second quarter of
1996 due to the changes in revenues and expenses discussed above.
The Company's primary and fully diluted earnings per share was $.31
per share in the second quarter of 1997 compared to $.12 per share
in the second quarter of 1996.
First Six Months of 1997 Compared to First Six Months of 1996
- -------------------------------------------------------------
A summary of the results of operations of the Company as a
percentage of revenues for the first six months is shown below.
<TABLE>
Six Months Ended
-----------------------------------
June 27, 1997 June 28, 1996
------------- -------------
<S> <C> <C>
Revenue. . . . . . . . . . . . . 100.0% 100.0%
------ ------
Costs and expenses:
Cost of sales. . . . . . . . . 46.5 48.7
Selling, general and administrative 14.8 14.6
Depreciation and amortization 7.2 8.1
Interest expense . . . . . . . .8 1.2
(Gain) loss on property transactions .1
Other operating expenses 17.5 18.9
------ ------
86.8 91.6
------ ------
Income before income taxes 13.2 8.4
Income tax expense . . . . . . . 5.3 3.5
------ ------
Net income . . . . . . . . . . . 7.9% 4.9%
====== ======
</TABLE>
Revenues
--------
Revenues increased to $175.6 million in the first six months
of 1997 from $148.3 million in the first six months of 1996
primarily due to an increase of 11.1% in comparable store sales of
the Company's Chuck E. Cheese's restaurants which were open during
all of the first six months of both 1997 and 1996. In addition, the
Company purchased 19 restaurants from its largest franchisee in
September 1996. Management believes that several factors
contributed to the comparable store sales increase with the primary
factor being sales increases at repositioned stores. Menu prices
increased approximately 2.8% between the periods.
Costs and Expenses
------------------
Costs and expenses as a percentage of revenues decreased to
86.8% in the first six months of 1997 from 91.6% in the first six
months of 1996.
Cost of sales decreased as a percentage of revenues to 46.5%
in the first six months of 1997 from 48.7% in the comparable period
of 1996. Cost of food, beverage, prize and merchandise items as a
percentage of restaurant sales decreased to 16.5% in the first six
months of 1997 from 17.4% in the first six months of 1996 primarily
due to an increase in menu prices and lower cost of cheese between
the two periods. Restaurant labor expenses as a percentage of
restaurant sales decreased to 27.1% during the first six months of
1997 from 28.5% in the first six months of 1996 primarily due to an
increase in comparable store sales and more effective utilization
of hourly employees.
Page 9
Selling, general and administrative expenses as a percentage
of revenues increased slightly to 14.8% in the first six months of
1997 from 14.6% in the comparable period of 1996 primarily due to
start-up costs related to the outsourcing and evaluation of a toll-free
birthday reservation system, management development expenses
and stock offering costs incurred in the first six months of 1997.
Depreciation and amortization expenses as a percentage of
revenues declined to 7.2% in the first six months of 1997 from 8.1%
in the first six months of 1996 primarily due to the increase in
comparable store sales, a change effected in the first quarter of
1997 in the estimated useful lives of certain fixed assets and the
acquisition of restaurants in 1996 with lower depreciation expense
than existing restaurants. Depreciation expense was reduced
approximately $1.1 million in the first six months of 1997 due to
the change in the estimated useful lives of certain fixed assets
based on a review of historical asset utilization.
Interest expense decreased to $1.4 million the first six
months of 1997 from $1.8 million in the first six months of 1996
due primarily to a decrease in outstanding debt since the second
quarter of 1996.
Other operating expenses decreased as a percentage of
revenues to 17.5% in the first six months of 1997 from 18.9% in the
first six months of 1996 primarily due to the increase in
comparable store sales and the fact that a significant portion of
operating costs are fixed.
Net Income
----------
The Company had net income of $13.8 million in the first six
months of 1997 compared to $7.4 million in the first six months of
1996 due to the changes in revenues and expenses discussed above.
The Company's primary and fully diluted earnings per share was $.72
per share in the first six months of 1997 compared to $.39 per
share in the first six months of 1996.
Financial Condition, Liquidity and Capital Resources
Cash provided by operations increased to $36.3 million in the
first six months of 1997 from $26.2 million in the comparable
period of 1996. Cash outflows from investing and financing
activities for the first six months of 1997 were $21.3 million and
$5.7 million, respectively. The Company's primary requirements for
cash relate to planned capital expenditures and debt service. The
Company expects that it will satisfy such requirements from cash
provided by operations and, if necessary, funds available under its
line of credit.
The Company remodeled 19 restaurants in the first six months of
1997 and 126, 87 and 10 restaurants in 1996, 1995 and 1994,
respectively under a repositioning program. The Company
anticipates completing its repositioning program by remodeling its
remaining three restaurants in the third quarter of 1997.
Expenditures relating to the repositioning program have been
financed primarily by cash flow from operations and borrowings
under the Company's line of credit.
The Company plans to open approximately five new stores in 1997
and 15 new stores in 1998. The Company currently anticipates
its cost of opening such new stores to average approximately $1.5
million per store and will vary depending upon many factors including
the size of the store and whether the store is an inline or freestanding
building. In addition to such new store openings,the Company plans to
expand 10 to 15 existing stores in 1997 by an average of 1,000 to 4,000
square feet per store. The Company also anticipates completing Phase II
remodels to as many as 100 stores in 1997 at an average cost of
approximately $160,000 per store. A Phase II remodel generally includes
a new game package, enhanced prize and merchandise offerings and improved
product presentation and service. In the first six months of 1997, the
Company opened one new restaurant, expanded two restaurants and completed
Phase II remodels in 34 restaurants. The Company currently estimates that
capital expenditures in 1997, including expenditures for the
remodeling of existing stores, new store openings, existing store
expansions and equipment investments, will be approximately $40 to
$50 million. The Company plans to finance these expenditures
through cash flow from operations and, if necessary, borrowings
under the Company's line of credit.
Page 10
The Company's total credit facility of $43 million consists of
$28 million in term notes and a $15 million line of credit. Term
notes totaling $18 million with annual interest of 10.02% mature in
2001 and term notes totaling $10 million with annual interest equal
to LIBOR plus 3.5% mature in 2000. Interest under the $15 million
line of credit is dependent on earnings and debt levels of the
Company and ranges from prime plus 0% to .5% or, at the Company's
option, LIBOR plus 2%to 3%. Currently, any borrowings under this
line of credit would be at prime rate or LIBOR plus 2%. As of June
27, 1997, there were no borrowings under the line of credit. The
Company is required to comply with certain financial ratio tests
during the terms of the loan agreements.
The Company believes it will realize substantial benefit from
utilization of approximately $25 million in net operating loss
carryforwards to reduce its federal income tax liability. Such net
operating loss carryforwards expire from years 1999 through 2002.
Although the use of such carryforwards could, under certain
circumstances, be limited, the Company is presently unaware of the
occurrence of any event which would result in the imposition of
such limitation. The Company has adopted an amendment to its
Restated Articles of Incorporation which is intended to prevent
changes in ownership of its common stock that would cause such
limitation. In addition, the Company has investment tax credit,
job tax credit and alternative minimum tax credit carryforwards of
approximately $8 million of which $5.8 million expires from years
1997 through 2008. Tax credit carryforwards can be utilized by the
Company only after all net operating loss carryforwards have been
realized. If the improvement in the Company's results of operations
does not continue, a portion of the net operating loss and tax
credit carryforwards could expire prior to utilization resulting in
a charge against income. Taxable income for the five years ended
December 27, 1996 was approximately $66 million. Based on current
results of repositioned restaurants, the Company currently projects
future taxable income levels sufficient to realize its net
operating loss and tax credit carryforwards prior to their
expiration after considering an allowance of $1.1 million for the
estimated expiration of tax credit carryforwards in 1997. However,
there can be no assurance that the levels of taxable income will be
sufficient to realize these benefits.
Page 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time the Company is involved in litigation, most
of which is incidental to its business. In the Company's opinion,
no litigation in which the Company currently is a party is likely
to have a material adverse effect on the Company's results of
operations, financial condition or cash flows.
Item 2. Changes in Securities.
None to report during quarter for which this report is filed.
Item 3. Defaults Upon Senior Securities.
None to report during quarter for which this report is filed.
Item 4. Submission of Matters to a Vote of Security Holders
On June 26, 1997, at the Company's annual meeting of shareholders, the
Company's shareholders re-elected Louis P. Neeb to serve the Company
as director. The votes included 16,141,721 shares in favor and 983,219
shares against. Richard M. Frank, Michael H. Magusiak, and Cynthia Pharr's
terms of office as directors of the Company continued after the meeting.
The shareholders did not approve amendments to the 1988 Nonstatutory
Employee Stock Option Plan. The votes included 5,995,425 shares in favor,
7,024,729 shares against,279,089 shares abstained and 3,825,697 shares
were no votes.
Item 5. Other Information.
None to report during quarter for which this report is filed.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
None.
b) Reports on Form 8-K
None filed during the quarter for which this report is filed.
Page 12
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.
SHOWBIZ PIZZA TIME, INC.
Dated: August 1, 1997 By: /s/ Larry Page
--------------------------
Larry G. Page
Executive Vice President
and Chief Financial Officer
Page 13
[ARTICLE] 5
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-02-1997
[PERIOD-END] JUN-27-1995
[CASH] 12,677
[SECURITIES] 0
[RECEIVABLES] 2,648
[ALLOWANCES] 8
[INVENTORY] 3,731
[CURRENT-ASSETS] 39,319
[PP&E] 285,197
[DEPRECIATION] 112,116
[TOTAL-ASSETS] 227,573
[CURRENT-LIABILITIES] 37,013
[BONDS] 25,516
[COMMON] 2,178
[PREFERRED-MANDATORY] 2,159
[PREFERRED] 0
[OTHER-SE] 155,671
[TOTAL-LIABILITY-AND-EQUITY] 227,573
[SALES] 173,126
[TOTAL-REVENUES] 175,625
[CGS] 81,582
[TOTAL-COSTS] 152,368
[OTHER-EXPENSES] 30,751
[LOSS-PROVISION] (68)
[INTEREST-EXPENSE] 1,417
[INCOME-PRETAX] 23,257
[INCOME-TAX] 9,419
[INCOME-CONTINUING] 13,838
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 13,838
[EPS-PRIMARY] .72
[EPS-DILUTED] .72
</TABLE>
