FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
For the Quarterly Period Ended April 19, 1997
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 30, 1997, 8,806,650 shares of the registrant's Common Stock were
outstanding.
<PAGE>
BERTUCCI'S, INC.
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements:
<S> <C> <C>
1) Consolidated Condensed Balance Sheets
April 19, 1997, and December 28, 1996 4
2) Consolidated Condensed Statements of Operations
For Sixteen Weeks Ended April 19, 1997,
and April 20, 1996 5
3) Consolidated Condensed Statements of Shareholders'
Equity For Sixteen Weeks Ended April 19, 1997 6
4) Consolidated Condensed Statements of Cash
Flows For Sixteen Weeks Ended April 19, 1997,
and April 20, 1996 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>
<PAGE>
PART I: FINANCIAL INFORMATION
<PAGE>
BERTUCCI'S, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
April 19, December 28,
1997 1996
-------------------------------
(in thousands)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,705 $ 4,266
Inventories 1,055 1,048
Accounts receivable 181 179
Note receivable 76 76
Prepaid expenses 874 475
Deferred preopening costs 338 510
Prepaid taxes 1,027 1,027
------------- -------------
Total current assets 7,256 7,581
------------- -------------
PROPERTY AND EQUIPMENT, at cost:
Land 2,902 2,902
Buildings 10,416 10,360
Leasehold improvements 73,106 72,416
Machinery and equipment 37,067 35,674
Construction in progress 289 250
------------- -------------
123,780 121,602
Less - Accumulated depreciation 32,265 29,705
------------- -------------
Net property and equipment 91,515 91,897
PREPAID TAXES 1,275 1,275
OTHER ASSETS 1,853 1,776
------------- -------------
$ 101,899 $ 102,529
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable-current $ 25 $ 25
Accounts payable 3,805 4,179
Accrued expenses 1,250 1,078
Accrued payroll and employee benefits 3,415 3,298
Accrued taxes 2,057 1,859
------------- -------------
Total current liabilities 10,552 10,439
DEFERRED RENT 6,274 6,064
NOTES PAYABLE 25 50
LONG-TERM DEBT 16,438 18,438
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 -
8,790,428 shares at December 28, 1996
and 8,806,650 shares at April 19, 1997 44 44
Additional paid-in capital 44,910 44,841
Retained earnings 23,656 22,653
------------- -------------
Total shareholders' equity 68,610 67,538
------------- -------------
$ 101,899 $ 102,529
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
<PAGE>
BERTUCCI'S, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Sixteen Weeks Ended
----------------------------------
April 19, April 20,
1997 1996
-------------- --------------
(in thousands, except share data)
<S> <C> <C>
NET SALES $ 40,337 $ 38,259
-------------- --------------
COSTS AND EXPENSES:
Cost of sales 10,118 9,798
Operating expenses 20,945 19,881
General and administrative expenses 2,432 2,477
Depreciation and amortization 2,719 2,712
Taxes other than income 2,181 2,101
-------------- --------------
Total costs and expenses 38,395 36,969
-------------- --------------
Operating income 1,942 1,290
INTEREST EXPENSE, net 367 418
INTEREST INCOME 4 6
-------------- --------------
Income before income tax expense 1,579 878
INCOME TAX EXPENSE 576 329
-------------- --------------
Net income $ 1,003 $ 549
============== ==============
WEIGHTED AVERAGE SHARES OUTSTANDING 8,883,801 8,892,502
============== ==============
EARNINGS PER SHARE $ 0.11 $ 0.06
============== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
<PAGE>
BERTUCCI'S, INC.
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
-------------------- Paid-In Retained Shareholders'
Shares Par Capital Earnings Equity
--------- --------- ---------- --------- -------------
(in thousands)
<S> <C> <C> <C> <C> <C>
BALANCE, December 28, 1996 8,790 $ 44 $ 44,841 $ 22,653 $ 67,538
Issuance of stock 17 - 69 - 69
Net income - - - 1,003 1,003
--------- --------- ---------- ---------- ----------
BALANCE, April 19, 1997 8,807 $ 44 $ 44,910 $ 23,656 $ 68,610
========= ========= ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
<PAGE>
BERTUCCI'S, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Sixteen Weeks Ended
-----------------------
April 19, April 20,
1997 1996
----------- ---------
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,003 $ 549
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 2,822 2,712
(Increase) decrease in inventories (7) 16
Increase in prepaid expenses, accounts
receivable, notes receivable and other assets (368) (1)
Decrease in accounts payable (374) (24)
Increase in accrued expenses and deferred rent 500 197
Increase in accrued, deferred and prepaid taxes 198 372
--------- ----------
Net cash provided by operations 3,774 3,821
--------- ----------
CASH FLOWS USED FROM INVESTING ACTIVITIES:
Additions to preopening costs (90) (446)
Additions to property and equipment (2,179) (4,192)
Purchases of liquor licenses (110) -
--------- ----------
Net cash used by investing activities (2,379) (4,638)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 69 59
Paydown of debt (2,000) -
Decrease in notes payable (25) (25)
--------- ----------
Net cash provided by (used by)
financing activities (1,956) 34
--------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (561) (783)
CASH AND CASH EQUIVALENTS, beginning of period 4,266 1,384
--------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 3,705 $ 601
========= ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for ---
Interest, net of amount capitalized $ 370 $ 410
========= ==========
Income taxes $ 547 $ 37
========= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
<PAGE>
BERTUCCI'S, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
April 19, 1997
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 19, 1997 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 1996
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 1996 Annual Report and Form 10-K.
2. Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings Per Share (SFAS
128). This Statement establishes standards for computing and presenting earnings
per share and applies to entities both publicly traded common stock or potential
common stock. SFAS 128 is effective for financial statements for both interim
and annual periods ending after December 15, 1997, and early adoption is not
permitted. When adopted, the Statement will require restatement of prior years'
earnings per share. The Company will adopt this Statement for its annual report
on Form 10-K for the year ended December 27, 1997. Assuming that SFAS 128 had
been implemented, basic earnings per share would have been $0.11 and $0.06 for
the sixteen-week periods ended April 19, 1997, and April 20, 1996, respectively,
and $0.36 for the year ended December 28, 1996. Under this Statement, diluted
earnings per share would not have differed from the earnings per share disclosed
on the consolidated condensed statement of operations.
<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 19, April 20,
1997 1996
------------- ------------
NET SALES 100.0% 100.0%
------------- ------------
<S> <C> <C>
COSTS AND EXPENSES:
Cost of sales 25.1 25.6
Operating expenses 51.9 51.9
General and administrative expenses 6.0 6.5
Depreciation and amortization 6.8 7.1
Taxes other than income 5.4 5.5
------------- ------------
Total costs and expenses 95.2 96.6
------------- ------------
Operating income 4.8 3.4
INTEREST EXPENSE, net 0.9 1.1
INTEREST INCOME - -
------------- ------------
Income before income tax expense 3.9 2.3
INCOME TAX EXPENSE 1.4 0.9
------------- ------------
Net income 2.5% 1.4%
============= ============
NUMBER OF RESTAURANTS:
Restaurants open at beginning of period 80 76
Restaurants opened during period 1 3
Restaurants closed during period - (3)
------------- ------------
Restaurants open at end of period 81 76
</TABLE>
<PAGE>
Sixteen Weeks Ended April 19, 1997, Compared to Sixteen Weeks
Ended April 20, 1996
Net sales increased $2.1 million, or 5.4%, to $40.3 million in the first
quarter of fiscal year 1997, from $38.3 million in the first quarter of fiscal
year 1996. The increase in net sales primarily came from the seven new
restaurants opened in fiscal year 1996, and one new restaurant opened in the
first quarter of 1997. Comparative restaurant sales during the first quarter
were positive by 1%. This modest increase reflects the Company's first year of
being closed on Easter Day, as well as the higher amount of advertising in the
first quarter of 1996.
Cost of sales, primarily food and beverages, increased from $9.8 million
in the sixteen weeks ended April 20, 1996, to $10.1 million in the corresponding
1997 period. As a percentage of net sales, these costs were 25.6% in the 1996
fiscal period, and 25.1% in the 1997 fiscal period. The percentage decrease came
from better buying opportunities and better efficiency at the operations level.
Restaurant operating expenses for the sixteen-week period increased from
$19.9 million in fiscal year 1996, to $20.9 million in fiscal year 1997. As a
percentage of net sales, operating expenses remained at 51.9% for both fiscal
periods. Although the Company experienced higher payroll costs in the 1997
fiscal period, most of the increase was offset by lower advertising and
insurance costs during the same period.
General and administrative expenses decreased from $2.5 million in the
sixteen weeks ended April 20, 1996, to $2.4 million in the corresponding 1997
period, and decreased, as a percentage of net sales, from 6.5% in the 1996
sixteen-week period, to 6.0% in the 1996 sixteen-week period. This decrease came
from a reduction in costs associated with opening new stores, reduction in
region operating costs, and the result of attrition at the corporate level.
Depreciation and amortization expense decreased, as a percentage of net
sales, from 7.1% in the 1996 period, to 6.8% in the 1997 sixteen-week period.
This decrease was attributable to the amortization expense on fewer new
restaurants.
Taxes other than income increased from $2.1 million during the sixteen
weeks ended April 20, 1996, to $2.2 million in the corresponding 1997 period,
due to increases in real property taxes and payroll taxes.
Interest expense decreased from $418,000 to $367,000 for the sixteen
weeks of 1996 and 1997, respectively. This decrease was attributable to the
lower amount of bank borrowings in the 1997 sixteen-week period.
The effective income tax rate decreased from 37.5% for the sixteen weeks
ended April 20, 1996, to 36.5% for the corresponding period ending April 19,
1997.
<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
20, 1996, and April 19, 1997, the amounts outstanding under this bank
line-of-credit were $18.4 and $16.4 million, respectively.
During the sixteen weeks ended April 20, 1996, and April 19, 1997, the
Company's investment in property and equipment was $4.2 million and $2.2
million, respectively. The investments were funded with cash provided by
operations, and with the proceeds of financing activities.
Cash provided by operations amounted to $3.8 million for both the
sixteen weeks ended April 20, 1996, and April 19, 1997.
The Company opened one new restaurant in the first sixteen weeks of
1997, and expects to open a total of 7 new restaurants by the end of fiscal year
1997, with an additional 8 to 10 restaurants planned for fiscal year 1998. The
Company expects to expend approximately $9.0 million in fiscal year 1997, and
approximately $11.0 million in fiscal year 1998 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 1998.
<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
Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the period covered by
this report.
<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 30, 1997 By: /s/ Joseph Crugnale
---------------------
Joseph Crugnale
President and Chief
Executive Officer
Date: May 30, 1997 By: /s/ Norman S. Mallett
---------------------
Norman S. Mallett
Vice President - Finance
Chief Financial Officer
and Treasurer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000874971
<NAME> BERTUCCI'S, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-END> APR-19-1997
<CASH> 3,705
<SECURITIES> 0
<RECEIVABLES> 257
<ALLOWANCES> 0
<INVENTORY> 1,055
<CURRENT-ASSETS> 7,256
<PP&E> 123,780
<DEPRECIATION> 32,265
<TOTAL-ASSETS> 101,899
<CURRENT-LIABILITIES> 10,552
<BONDS> 0
0
0
<COMMON> 44
<OTHER-SE> 68,566
<TOTAL-LIABILITY-AND-EQUITY> 101,899
<SALES> 40,337
<TOTAL-REVENUES> 40,337
<CGS> 10,118
<TOTAL-COSTS> 10,118
<OTHER-EXPENSES> 25,844
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 363
<INCOME-PRETAX> 1,579
<INCOME-TAX> 576
<INCOME-CONTINUING> 1,003
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,003
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
