UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended:December 31, 1995 Commission File Number: 0-18590
GOOD TIMES RESTAURANTS INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
84-1133368
(I.R.S. Employer Identification No.)
8620 WOLFF COURT, SUITE 330, WESTMINSTER, CO 80030
(Address of principal executive offices) (Zip Code)
(303) 427-4221
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
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.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Total number of shares of common stock outstanding at December
31, 1995.
6,939,824 SHARES OF COMMON STOCK, .001 PAR VALUE
<PAGE>
Form 10-QSB
Quarter Ended December 31, 1995
INDEX
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets - 3
December 31, 1995
and September 30, 1995
Consolidated Statements of Operations - 4
For the three months ended December 31,
1995 and 1994
Consolidated Statement of Cash Flow - 5
For the three months ended December 31,
1995 and 1994
Notes to Financial Statements 6
ITEM 2. Management's Discussion and Analysis 7
PART II - OTHER INFORMATION
ITEMS 1 through 6. 10
Signature 11
<PAGE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
December 31, September 30,
1995 1995
CURRENT ASSETS:
Cash and cash equivalent $ 413,000 $ 767,000
Receivables 380,000 105,000
Inventories 75,000 70,000
Prepaid expenses and other 229,000 233,000
Total current assets 1,097,000 1,175,000
PROPERTY AND EQUIPMENT, at cost:
Land and building 2,698,000 2,574,000
Leasehold improvements 2,958,000 2,763,000
Fixtures and equipment 3,321,000 3,118,000
8,977,000 8,455,000
Less accumulated depreciation
and amortization (1,472,000) (1,305,000)
7,505,000 7,150,000
OTHER ASSETS:
Assets held for sale -0- 61,000
Note Receivables 745,000 744,000
Deposits & Other 146,000 155,000
891,000 960,000
TOTAL ASSETS $9,493,000 $9,285,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term debt $365,000 $298,000
Accounts payable 473,000 611,000
Accrued liabilities 839,000 1,061,000
Total current liabilities 1,677,000 1,970,000
LONG-TERM DEBT,
net of current maturities 924,000 378,000
DEFERRED LIABILITIES 229,000 216,000
MINORITY INTERESTS IN PARTNERSHIPS 2,049,000 1,735,000
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value;
50,000,000 shares authorized,
6,939,824 shares issued and
outstanding as of December 31,
1995 and 6,898,152 shares
issued and outstanding as
of September 30, 1995 7,000 7,000
Capital contributed in excess
of par value 11,725,000 11,683,000
Note receivable - shareholders (881,000) (881,000)
Accumulated deficit (6,237,000) (5,823,000)
Total stockholders' equity 4,614,000 4,986,000
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $9,493,000 $9,285,000<PAGE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
December 31,
1995 1994
NET REVENUES:
Restaurant sales, net $3,312,000 $5,053,000
Franchise revenues, net 20,000 56,000
Total revenues 3,332,000 5,109,000
RESTAURANT OPERATING EXPENSES:
Food & paper costs 1,235,000 1,663,000
Labor, occupancy & other 1,620,000 2,435,000
Depreciation & amortization 170,000 137,000
Total restaurant operating costs 3,025,000 4,235,000
INCOME FROM RESTAURANT OPERATIONS 307,000 874,000
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 718,000 756,000
INCOME (LOSS) FROM OPERATIONS (411,000) 118,000
OTHER INCOME & (EXPENSES)
Minority income (expense), net 26,000 (69,000)
Interest, net (19,000) (8,000)
Other, net (9,000) 4,000
Total other income & (expenses) (52,000) (73,000)
NET INCOME (LOSS) $(413,000) $ 45,000
NET INCOME (LOSS) PER SHARE $ (0.06) $ 0.01
WEIGHTED AVERAGE SHARES OUTSTANDING 6,940,000 6,767,376 <PAGE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
December 31,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $(413,000) $ 45,000
Depreciation and amortization 239,000 280,000
Changes in operating assets & liabilities --
(Increase) decrease in:
Prepaids & receivables 67,000 (110,000)
Inventories (5,000) (49,000)
Other assets (327,000) 147,000
Opening expenses (70,000) (105,000)
(Decrease) increase in:
Accounts payable (138,000) (92,000)
Accrued interest - (12,000)
Accrued property taxes 42,000 45,000
Accrued payroll & P/R taxes (26,000) 26,000
Other accrued liabilities/
deferred income (224,000) 92,000
Net cash provided by (used in)
operating activities (855,000) 267,000
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase) sale - FF&E, land,
building and improvements (479,000) (97,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt incurred (paid) 614,000 12,000
Minority interest 324,000 (201,000)
Paid in Capital activity 41,000 27,000
Net cash provided by (used in)
financing activities 979,000 (162,000)
INCREASE (DECREASE) IN CASH $(354,000) $ 8,000
<PAGE>
NOTES TO CONDSOLIDATED FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS:
In the opinion of management, the accompanying consolidated
financial statements contain all of the normal recurring
adjustments necessary to present fairly the financial position
of the Company as of December 31, 1995, the results of its
operations and its cash flow for the three month period ended
December 31, 1995. Operating results for the three month
period ended December 31, 1995 are not necessarily indicative
of the results that may be expected for the year ending
September 30, 1996.
The consolidated balance sheet as of September 30, 1995 is
derived from the audited financial statements, but does not
include all disclosures required by generally accepted
accounting principles. As a result, these financial
statements should be read in conjunction with the Company's
form 10-KSB/A for the fiscal year ended September 30, 1995.
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE COMPANY
General
On July 27, 1992, the stockholders of Good Times Restaurants
Inc. (the "Company") approved a merger with Round The Corner
Restaurants, Inc. ("RTC"). For financial statement purposes, RTC
was considered the acquiring company and the transaction was
treated as a purchase by RTC of the Company, effective August 1,
1992. For legal purposes, however, the Company remained the
surviving entity and the combined entity retained the Company's
capital structure.
In February 1993, the Company's operations and management were
reorganized to allow Good Times Drive Thru Inc. ("Drive Thru") and
RTC to function as separately accountable entities and to allow
RTC's and Drive Thru's managements to focus exclusively on their
respective businesses. The Company provided administrative and
accounting support to Drive Thru and RTC in fiscal 1995 and charged
monthly management fees of $70,000 and $35,000, respectively, for
such services. On September 29, 1995, the Company completed the
sale of RTC to Hot Concepts Management Group, L.L.C. and ceased
providing these services to RTC. As a result, the Company will no
longer receive management fees from RTC. The Company does not
anticipate a material reduction in its general and administrative
expenses due to the sale of RTC. However, the Company is able to
provide management services to Drive Thru without increasing
general and administrative expenses in spite of the increase in the
number of Drive Thru units. Management has begun to aggressively
reduce general and administrative expenses reflecting its operation
as a one market company. Beginning in fiscal 1996, the
administrative and accounting functions of the Company will be
consolidated with Drive Thru's operations and no management fees
will be charged to Drive Thru.
The following presents certain historical financial
information of the operations of the Company. This financial
information includes the combined operations of the Company, Drive
Thru, and RTC for the three month period ended December 31, 1994
and the results of the Company and Drive Thru for the three month
period ended December 31, 1995.
Results of Operations
Net Revenues. Net revenues for the three months ended
December 31, 1995, decreased $1,777,000 (35%) to $3,332,000 from
$5,109,000 for same prior year period. This decrease is
attributable to the sale of RTC in fiscal 1995 and the elimination
of RTC's results from the Company's consolidated financial results.
In the three month period ended December 31, 1994, RTC had net
revenues of $1,950,000. There was an increase of $173,000 (5%) in
net revenue of Drive Thru to $3,332,000 for the three months ended
December 31, 1995 from $3,159,000 for the same prior year period.
The increase in Drive Thru's net revenues is primarily due to net
sales of Good Times units not opened for the full prior year
period. The Company's additional revenues from Good Times units
not open for the full prior year period were significantly offset
by a decline in same store sales for company-owned and joint-venture Good Times
units of approximately $367,000 (12%) for the three
month period ended December 31, 1995 from the comparable prior year
period. Drive Thru had twenty-six units open at the end of the
period of which seven were franchised units, ten joint venture
units and nine wholly-owned units compared to twenty units open at
the end of the prior year period of which five were franchised
units, seven joint-venture units and eight wholly-owned units.
(One company-owned Good Times unit in Greeley, Colorado was sold to
a franchisee in March 1995 and is included in the total of company-owned stores
for the prior year period.)
Food and Paper Costs. Food and paper costs were 37.3% of net
restaurant sales for Drive Thru for the three months ended December
31, 1995, compared to 35.2% for the prior year period. The
increase in food and paper costs is attributed to an increase in
discounting of Drive Thru's products that was made necessary in
order to remain price competitive with Drive Thru's major
competition. McDonald's, Burger King, and Wendy's have
significantly increased their promotions of special, limited- time
discounts on popular hamburger items such as "Big Macs", "Quarter
Pounders", "Whoppers", and combo meals featuring a hamburger item,
french fries and drink. In response, Drive Thru has increased the
size of its regular french fries and offered a larger drink in its
combo meals while raising prices nominally. Whereas management
believes that this change provides the customer with a better value
than it competitors' offerings; such change has resulted in higher
food cost on a net sales basis. Also impacting food and paper
costs is the timing of the receipt of vendor rebates which were
received in the period ended December 31, 1994 and contributed to
a 0.5% decrease in food and paper costs, but were not received in
the current period. The Company anticipates receiving comparable
vendor rebates in subsequent reporting periods.
Income From Restaurant Operations. For the three months ended
December 31, 1995 income from restaurant operations decreased to
$307,000 from $874,000 for the same prior year period. Of the
prior year amount, $604,000 was attributable to income from
restaurant operations of Drive Thru and $213,000 was attributable
to the income from operations of RTC. Drive Thru experienced a
decrease of $297,000 in income from restaurant operations as a
result of declining store sales and increased labor costs. Labor
costs as a percentage of net restaurant sales increased to 33.4% in
the period ended December 31, 1995 from 28.9% of net restaurant
sales in the prior year period, reflecting higher discounting,
lower per store sales, and an increase in average hourly wages due
to a very competitive labor market. Net franchise revenue
decreased $26,000 to $20,000 for the period ended December 31, 1995
from $56,000 for the prior year period. Franchise royalty income
for the period ended December 31, 1995 increased to $41,000 from
$33,000 for the prior year period, however, Drive Thru did not
receive any franchise or development fees in the current period
compared to $35,000 in such fees in the prior year period.
Income (Losses) From Operations. The Company had a loss from
operations of ($411,000) in the period ended December 31, 1995
compared to income from operations of $118,000 for the three months
ended December 31, 1994. Of the prior year amount, income from
operations at Drive Thru was $79,000 for the three months ended
December 31, 1994 and RTC's income from operations was $44,000.
The losses from operations are primarily a result of Drive
Thru's significantly lower income from restaurant operations (9.3%
of net restaurant sales) compared to the prior year period (19.5%
of net restaurant sales) and increases in general and
administrative expenses of $73,000.
Net Income (Loss). The net loss for the Company was
($413,000) for the three months ended December 31, 1995 compared to
net income for the Company of $45,000 for the comparable prior year
period. The net income for the Company for the three months ended
December 31, 1994 included net income of $44,000 for Drive Thru and
RTC's net income of $5,000. In addition to the net income of Drive
Thru and RTC in the three months ended December 31, 1994, the
Company incurred a loss of ($4,000) attributable principally to
depreciation of corporate assets and net interest expense.
Beginning in fiscal 1996, the operations of the Company and Good
Times will only be reported on a consolidated basis.
Liquidity and Capital Resources
As of December 31, 1995, the Company and Drive Thru had
$413,000 cash and marketable securities on hand. This amount is
not sufficient to cover working capital needs of the Company for
the remainder of the 1996 fiscal year. The Company had a combined
working capital deficit of ($580,000) including $365,000 of current
maturities of long-term debt. Because restaurant sales are
collected in cash and accounts payable for food and paper products
are paid two to four weeks later, restaurant companies often
operate with working capital deficits. Currently, operating cash
flow is not sufficient to cover the Company's working capital
needs. The Company and Drive Thru's cash position declined in the
period ended December 31, 1995 as a result of the utilization of a
significant portion of its cash-on-hand for the development of a
joint-venture Good Times unit in Denver, which opened in December
1995. Drive Thru's co-development partner has not made its full
required payment to Drive Thru as of the date of this filing, but
it is anticipated it will be made by March 1996. Therefore, in
order to bolster Drive Thru's cash reserves and provide additional
working capital, Drive Thru is negotiating the sale of a company-owned Drive
Thru restaurant and the disposition of four under-performing restaurants for
cash and notes.
Approximately $274,000 of the current maturities of long-term
debt is attributable to the short-term prepayment of a capital lease
obligation to Capital Associates International, Inc. ("Capital
Associates"). In 1995, Drive Thru entered into an equipment lease
line of credit in the amount of $2 million with Capital Associates,
of which it has utilized approximately $550,000 as of December 20,
1995. The line of credit required the Company and Drive Thru to
maintain certain financial and operating criteria. One such
requirement is that the Company and Drive Thru each maintain a net
worth of at least $5.5 million. As a result of the losses incurred
by the Company and Drive Thru in fiscal 1995, the Company and Drive
Thru are in violation of that requirement and the Lessor has
declared a technical event of default to have occurred. While the
Company is current on all payments to Capital Associates, it is
negotiating the restructuring of this obligation to include the
prepayment of one of the leases associated with the development of
a Good Times unit. The prepayment will only be paid out of
proceeds from the sale of a restaurant(s).
Net cash used in operations was $855,000 for the three month
period ended December 31, 1995. This was the result of the net
loss of ($413,000), plus non-cash net expenses totaling $348,000
(comprised primarily of depreciation and amortization and prepaids
and receivables), net increases in operating assets and liabilities
totaling $355,000 (primarily an increase of $327,000 of other
assets consisting of a note due from a franchisee for costs
incurred in development of a joint-venture Good Times unit and
opening expenses) and a decrease in accounts payable and other
accrued liabilities/deferred income consisting of expenses accrued
for the discontinuance of Good Times' Las Vegas operations, the
sale of RTC and severance agreements with certain Good Times
employees.
Net cash (used in) provided by investing activities by the
Company in the three month period ended December 31, 1995 was
($479,000). The Company used all cash in investing activities for
capital expenditures consisting primarily of expenditures for the
development of new Good Times restaurants. The Company expects
that capital expenditures will decrease in the future as additional
Good Times restaurants are not developed by Drive Thru, but by
franchisees. No new Drive Thru units are currently under
construction. The Company expects an additional three to five
franchised units to be opened by December 31, 1996.
Net cash provided by financing activities by the Company in
the three month period ended December 31, 1995 was $979,000. The
Company obtained cash in financing activities primarily through the
closing of one equipment lease financing from Capital Associates,
a loan for the development of the Boise, Idaho joint-venture Good
Times restaurant, and an increase in minority interest for the
development of a Colorado joint-venture restaurant.
Neither the Company nor Drive Thru have any bank lines of
credit.
Impact of Inflation
Drive Thru has not experienced a significant impact from
inflation. It is anticipated any operating expense increases will
be recovered by increasing menu prices to the extent that is
prudent considering competition.
Seasonality
Revenues of Drive Thru are subject to seasonal fluctuation
based primarily on weather conditions adversely affecting
restaurant sales in January, February and March.
<PAGE>
GOOD TIMES RESTAURANTS, INC. & SUBSIDIARIES
Part II. - Other Information
Item 1 - 5. Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) No Exhibits.
(b) No Form 8-Ks.
<PAGE>
SIGNATURE
Pursuant to the requirements of The Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GOOD TIMES RESTAURANTS INC.
DATE: February 13,1996 BY: /s/ Boyd E. Hoback, President &
Chief Executive Officer
Boyd E. Hoback, President
& Chief Executive Officer
BY: /s/ Thomas A. Gordon, Executive
Vice President & CFO
Thomas A. Gordon, Executive Vice
President & CFO
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000825324
<NAME> ROBIN BOEFF
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 413,000
<SECURITIES> 0
<RECEIVABLES> 380,000
<ALLOWANCES> 0
<INVENTORY> 75,000
<CURRENT-ASSETS> 1,097,000
<PP&E> 8,977,000
<DEPRECIATION> (1,472,000)
<TOTAL-ASSETS> 9,493,000
<CURRENT-LIABILITIES> 1,677,000
<BONDS> 0
<COMMON> 7,000
0
0
<OTHER-SE> 4,607,000
<TOTAL-LIABILITY-AND-EQUITY> 9,493,000
<SALES> 3,312,000
<TOTAL-REVENUES> 3,332,000
<CGS> 1,235,000
<TOTAL-COSTS> 3,025,000
<OTHER-EXPENSES> 718,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,000
<INCOME-PRETAX> (413,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (413,000)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
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