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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
For the Quarterly Period Ended April 20, 1996
Commission File Number 0-19315
Bertucci's, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2947209
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
14 Audubon Road, Wakefield, Massachusetts, 01880
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 246-6700
Indicate by check mark whether the registrant (1) has filed all reports required
to be filled by section 13 or 15(d) of the Securities Exchange Act of the 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 the filing
requirements for the past 90 days.
Yes [X] No [ ]
On May 31, 1996, 8,739,552 shares of the registrant's Common Stock were
outstanding.
<PAGE>
BERTUCCI'S, INC.
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements:
1) Consolidated Condensed Balance Sheets
April 20, 1996, and December 30, 1995 4
2) Consolidated Condensed Statements of Operations
For Sixteen Weeks Ended April 20, 1996,
and April 22, 1995 5
3) Consolidated Condensed Statements of Shareholders'
Equity For Sixteen Weeks Ended April 20, 1996 6
4) Consolidated Condensed Statements of Cash
Flows - Sixteen Weeks Ended April 20, 1996,
and April 22, 1995 7
5) Notes to Consolidated Condensed Financial
Statements 8
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 9-11
PART II: OTHER INFORMATION 12
</TABLE>
2
<PAGE>
PART I:FINANCIAL INFORMATION
3
<PAGE>
BERTUCCI'S, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
April 20, December 30,
1996 1995
(in thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 601 $ 1,384
Inventories 935 951
Accounts receivable 131 154
Note receivable 70 70
Prepaid expenses 467 366
Deferred preopening costs 838 818
Prepaid taxes 758 758
----------------- -----------------
Total current assets 3,800 4,501
----------------- -----------------
PROPERTY AND EQUIPMENT, at cost:
Land 2,902 2,902
Buildings 10,344 10,324
Leasehold improvements 69,336 69,028
Machinery and equipment 33,784 32,274
Construction in progress 1,525 1,216
Equipment under capital lease 164 164
----------------- -----------------
118,055 115,908
Less - Accumulated depreciation 26,289 26,048
----------------- -----------------
Net property and equipment 91,766 89,860
----------------- -----------------
PREPAID TAXES 2,405 2,405
OTHER ASSETS 2,096 2,172
----------------- -----------------
$ 100,067 $ 98,938
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable-current $ 25 $ 25
Accounts payable 4,219 4,243
Accrued expenses 798 513
Accrued restaurant closing expense 1,313 1,539
Accrued payroll and employee benefits 2,466 2,419
Accrued taxes 1,391 1,019
----------------- -----------------
Total current liabilities 10,212 9,758
DEFERRED RENT 5,667 5,575
NOTES PAYABLE 50 75
LONG-TERM DEBT 19,438 19,438
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value -
Authorized - 200,000 shares, none issued - -
Common stock, $.005 par value -
Authorized - 15,000,000 shares
Issued and outstanding -
8,728,442 shares at December 30, 1995 and
8,739,552 shares at April 20, 1996 44 44
Additional paid-in capital 44,679 44,620
Retained earnings 19,977 19,428
----------------- -----------------
Total shareholders' equity 64,700 64,092
----------------- -----------------
$ 100,067 $ 98,938
================= =================
</TABLE>
The accompanying notes are an integral part
of these consolidated condensed financial statements.
4
<PAGE>
BERTUCCI'S, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Sixteen Weeks Ended
April 20, 1996 April 22, 1995
(in thousands, except per share data)
<S> <C> <C>
NET SALES $ 38,259 $ 35,446
------------------ ------------------
COSTS AND EXPENSES:
Cost of sales 9,798 9,051
Operating expenses 19,881 17,326
General and administrative expenses 2,477 2,641
Depreciation and amortization 2,712 2,762
Taxes other than income 2,101 1,932
------------------ ------------------
Total costs and expenses 36,969 33,712
------------------ ------------------
Operating income 1,290 1,734
INTEREST EXPENSE, net 418 323
INTEREST INCOME 6 8
------------------ ------------------
Income before income tax expense 878 1,419
INCOME TAX EXPENSE 329 517
------------------ ------------------
Net income $ 549 $ 902
================== ==================
WEIGHTED AVERAGE SHARES OUTSTANDING 8,892,502 8,890,120
================== ==================
EARNINGS PER SHARE $ 0.06 $ 0.10
================== ==================
</TABLE>
The accompanying notes are an integral part
of these consolidated condensed financial statements.
5
<PAGE>
BERTUCCI'S, INC.
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In Retained Shareholders'
Shares Par Capital Earnings Equity
(in thousands)
<S> <C> <C> <C> <C> <C>
BALANCE, December 30, 1995 8,728 $ 44 $ 44,620 $ 19,428 $ 64,092
Issuance of stock 12 - 59 - 59
Net income - - - 549 549
---------- ------------ ------------- ------------- --------------
BALANCE, April 20, 1996 8,740 $ 44 $ 44,679 $ 19,977 $ 64,700
========== ============ ============= ============= ==============
</TABLE>
The accompanying notes are an integral part
of these consolidated condensed financial statements.
6
<PAGE>
BERTUCCI'S, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Sixteen Weeks Ended
April 20, 1996 April 22, 1995
(in thousands)
--------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 549 $ 902
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 2,712 2,762
(Increase) decrease in inventories 16 (118)
Increase in prepaid expenses, accounts receivable, notes receivable
and other assets (1) (92)
Decrease in accounts payable (24) (2,045)
Increase in accrued expenses and deferred rent 197 522
Increase (decrease) in accrued, deferred and prepaid taxes 372 (561)
--------------- --------------
Net cash provided by operations 3,821 1,370
--------------- --------------
CASH FLOWS USED FROM INVESTING ACTIVITIES:
Additions to preopening costs (446) (435)
Additions to property and equipment (4,192) (6,622)
--------------- --------------
Net cash used by investing activities (4,638) (7,057)
--------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 59 65
Proceeds from debt - 4,938
Decrease in notes payable (25) (25)
---------------- --------------
Net cash provided by financing activities 34 4,978
---------------- --------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (783) (709)
CASH AND CASH EQUIVALENTS, beginning of period 1,384 750
---------------- --------------
CASH AND CASH EQUIVALENTS, end of period $ 601 $ 41
================ ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for ---
Interest, net of amount capitalized $ 410 $ 268
================ ==============
Income taxes $ 37 $ 408
================ ==============
</TABLE>
The accompanying notes are an integral part
of these consolidated condensed financial statements.
7
<PAGE>
BERTUCCI'S, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
April 20, 1996
1. Basis of Presentation
In the opinion of management, the accompanying consolidated condensed
financial statements contain all normal recurring adjustments necessary for a
fair presentation. The results of operations for the sixteen-week period ended
April 20, 1996 are not necessarily indicative of the results to be expected for
the full year.
The significant accounting policies followed by the Company are set forth
in the notes to Consolidated Financial Statements in the Company's 1995 Annual
Report and Form 10-K filed with the Securities and Exchange Commission. These
financial statements should be read in conjunction with the financial statements
included in the 1995 Annual Report and Form 10-K.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following table sets forth the percentage relationship to net sales of
certain items included in the company's income statements for the periods
indicated.
<TABLE>
<CAPTION>
Sixteen Weeks Ended
----------------------------------------------
April 20, April 22,
1996 1995
---------------- ---------------
<S> <C> <C>
NET SALES 100.0% 100.0%
---------------- ---------------
COSTS AND EXPENSES:
Costs of sales 25.6 25.5
Operating expenses 51.9 48.9
General and administrative expenses 6.5 7.5
Depreciation and amortization 7.1 7.8
Taxes other than income 5.5 5.4
---------------- ---------------
Total costs and expenses 96.6 95.1
---------------- ---------------
Operating income 3.4 4.9
INTEREST EXPENSE, net 1.1 0.9
INTEREST INCOME - -
---------------- ---------------
Income before income tax expense 2.3 4.0
INCOME TAX EXPENSE 0.9 1.5
---------------- ---------------
Net income 1.4% 2.5%
================ ===============
NUMBER OF RESTAURANTS:
Restaurants open at beginning of period 76 67
Restaurants opened during period 3 3
Restaurants closed during period (3) -
---------------- ---------------
Restaurants open at end of period 76 70
</TABLE>
9
<PAGE>
Sixteen Weeks Ended April 20, 1996
Compared to Sixteen Weeks Ended April 22, 1995
Net sales increased $2.8 million, or 7.9%, to $38.3 million in the first
quarter of fiscal year 1996, from $35.4 million in the first quarter of fiscal
year 1995. The increase in net sales came from the nine new restaurants opened
in fiscal year 1995, and three new restaurants opened in the first quarter of
1996. Comparable restaurant sales during the first quarter were flat, but the
Company estimates that over 3.0% of total sales were lost due to severe winter
weather.
Cost of sales, primarily food and beverages, increased from $9.1 million in
the sixteen weeks ended April 22, 1995, to $9.8 million in the corresponding
1996 period. As a percentage of net sales, these costs were 25.5% in the 1995
fiscal period, and 25.6% in the 1996 fiscal period. Although the price of olive
oil, tomatoes, flour, and cheese increased, the Company was able to offset most
of the increase by more efficient operations.
Restaurant operating expenses for the sixteen-week period increased from
$17.3 million in fiscal year 1995, to $19.9 million in fiscal year 1996. As a
percentage of net sales, operating expenses increased from 48.9% during the
sixteen weeks ended April 22, 1995, to 51.9% during the corresponding period in
1996. The increase was the result of advertising costs of 3.5%, as a percentage
of net sales, that were not present during the first quarter of 1995.
General and administrative expenses decreased from $2.6 million in the
sixteen weeks ended April 22, 1995, to $2.5 million in the corresponding 1996
period, and decreased, as a percentage of net sales, from 7.5% in the 1995
sixteen-week period, to 6.5% in the 1996 sixteen-week period. This decrease was
the result of attrition at the corporate level, and a reduction in training
costs due to fewer store openings expected this year.
Depreciation and amortization expense decreased, as a percentage of net
sales, from 7.8% in the 1995 period, to 7.1% in the 1996 sixteen-week period.
This decrease was attributable to the amortization expense on fewer new
restaurants.
Taxes other than income increased from $1.9 million during the sixteen
weeks ended April 22, 1995, to $2.1 million in the corresponding 1996 period,
due to increases in real property taxes on rented property.
Interest expense increased from $323,000 to $418,000 for the sixteen weeks
of 1995 and 1996, respectively. This increase was attributable to the higher
amount of bank borrowings in the 1996 sixteen-week period.
The effective income tax rate increased from 36.4% for the sixteen weeks
ended April 22, 1995, to 37.5% for the corresponding period ending April 20,
1996.
10
<PAGE>
Liquidity and Sources of Capital
To date, the Company has financed its expansion from operations, bank
borrowing, and private placements and public offerings of equity securities. The
Company does not have significant receivables or inventory and receives trade
credit based upon negotiated terms in purchasing food and supplies.
The Company has a bank line-of-credit in effect until November 30, 1997,
under which it may borrow up to $30.0 million. On November 30, 1997, the Company
will be able to convert the balance, if any, to a term loan maturing on November
30, 2000. The Company pays a fee of 1/4 of 1% on the unused balance, and
interest is calculated using LIBOR plus 1.25%. There are no compensating balance
arrangements or legal restrictions as to the withdrawal of these funds. At April
22, 1995, and April 20, 1996, the amounts outstanding under this bank
line-of-credit were $18.9 and $19.4 million, respectively.
During the sixteen weeks ended April 22, 1995, and April 20, 1996, the
Company's investment in property and equipment was $6.6 million and $4.2
million, respectively. The investments were funded with cash provided by
operations, and with the proceeds of financing activities.
Cash provided by operations amounted to $1.4 million and $3.8 million for
the sixteen weeks ended April 22, 1995, and April 20, 1996, respectively. Cash
from financing activities amounted to $5.0 million for the sixteen-week period
in 1995.
The Company opened three new restaurants in the first sixteen weeks of
1996, and expects to open a total of 8 new restaurants by the end of fiscal year
1996, with an additional five restaurants planned for fiscal year 1997. The
Company expects to expend approximately $13.0 million in fiscal year 1996, and
approximately $10.0 million in fiscal year 1997 to finance expansion. The
Company believes that it will have sufficient working capital and bank
borrowings to finance its expansion plans through the end of fiscal year 1997.
11
<PAGE>
PART II: OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the period covered by this
report.
12
<PAGE>
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.
BERTUCCI'S, INC.
----------------------------------
(Registrant)
Date: May 31, 1996 By: /s/ Joseph Crugnale
---------------------------------
Joseph Crugnale
President and Chief
Executive Officer
Date: May 31, 1996 By: /s/ Norman S. Mallett
---------------------------------
Norman S. Mallett
Vice-President - Finance
Cheif Financial Officer and
Treasurer
13
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