<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934.
For the quarterly period ended October 24, 1999.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934. For the transition period from _________ to __________.
Commission File Number 0-18369
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BOSTON RESTAURANT ASSOCIATES, INC.
----------------------------------
(Name of Small Business Issuer as Specified in its Charter)
Delaware 61-1162263
--------- ----------
(State or Other (I.R.S. Employer
Jurisdiction of Identification
Incorporation or No.)
Organization)
999 Broadway
Saugus, Massachusetts 01906
---------------------------
(Address of Principal
Executive Offices)
(781) 231-7575
(Issuer's Telephone Number,
Including area code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 November 29, 1999, there were 7,035,170 shares of the issuer's Common
Stock, par value $.01 per share, outstanding.
1
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BOSTON RESTAURANT ASSOCIATES, INC.
INDEX
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of October 24, 1999 and
April 25, 1999...................................................... 3
Condensed Consolidated Statements of Operations for the thirteen
weeks and twenty-six weeks ended October 24, 1999 and October 25,
1998.............................................................. . 4
Condensed Consolidated Statements of Cash Flows for the twenty-six
weeks ended October 24, 1999 and October 25, 1998 .................. 5
Notes to Condensed Consolidated Financial Statements ................6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................8
PART II - OTHER INFORMATION...................................................15
SIGNATURES............................................................17
2
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
OCTOBER 24 APRIL 25
1999 1999
---------- ----------
<S> <C> <C>
ASSETS
Current:
Cash and cash equivalents $1,916,345 $1,863,299
Accounts receivable $44,680 $32,121
Inventories $230,223 $214,657
Prepaid expenses and other $64,864 $51,085
---------- ----------
Total current assets $2,256,112 $2,161,162
---------- ----------
Property and equipment:
Building $512,500 $512,500
Leasehold improvements $3,950,945 $3,220,587
Equipment, furniture an $2,827,480 $2,290,488
---------- ----------
$7,290,925 $6,02575
Less accumulated depreciation and amount $2,839,171 $2,567,084
---------- ----------
Net property and equipment $4,451,754 $3,456,491
Other assets $1,217,613 $1,270,041
---------- ----------
Total assets $7,925,479 $6,887,694
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $316,297 $236,770
Accrued expenses $620,370 $651,089
Current maturities:
Notes payable-stockholder $4,866 $4,740
Long-term debt $315,295 $122,076
Obligations under capital leases $182,487 $102,200
---------- ----------
Total current liabilities $1,439,315 $1,116,875
Long-term obligations:
Notes payable-stockholder, less current maturities $114,105 $116,569
Long-term debt, less current maturities $906,185 $362,925
Obligations under capital leases, less current
maturities $515,131 $331,403
Subordinated debentures $1,500,000 $1,500,000
Deferred rent $120,000 $106,513
---------- ----------
Total liabilities $4,594,736 $3,534,285
---------- ----------
Minority interest in consolidated subsidiary $10,247 $29,009
---------- ----------
Commitments and contingencies
Stockholders' equity :
Preferred stock, $.01 par value, 10,000,000
shares authorized in 1999; none issued $0 $0
Common stock, $.01 par value, 25,000,000
shares authorized, 7,060,170 shares issued $70,602 $70,602
Additional paid in capital 0,938,877 $10,922,636
Accumulated deficit ($7,664,290) ($7,668,838)
---------- -----------
Total paid-in capital and retained earnings $3,345,189 $3,324,400
Treasury stock, 25,000 shares of common stock
at cost ($24,693) $0
---------- -----------
Total stockholders' equity $3,320,496 $3,324,400
Total liabilities and stockholders' equity $7,925,479 $6,887,694
========== ===========
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
<CAPTION>
BOSTON RESTAURANTS ASSOCIATES,INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Thirteen Weeks Ended Twenty-six Weeks Ended
October 24 October 25 October 24 October 25
1999 1998 1999 1998
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Restaurant sales $3,525,137 $3,105,983 $6,726,645 $6,062,683
Franchise Fees $0 $0 $0 $0
Royalties $1,976 $0 $3,524 $0
-------------- --------------- -------------- --------------
Total revenues $3,527,113 $3,105,983 $6,730,169 $6,062,683
-------------- --------------- -------------- --------------
Costs and expenses:
Cost of food, beverages and liquor $747,388 $658,681 $1,380,426 $1,256,352
Payroll $982,245 $862,496 $1,898,752 $1,732,527
Other operating expenses $1,020,627 $876,861 $1,954,031 $1,751,806
General and administrative $387,707 $411,028 $825,674 $741,356
Depreciation and amortization $167,870 $143,444 $322,193 $277,779
-------------- --------------- -------------- --------------
Total costs and expenses $3,305,837 $2,952,510 $6,381,076 $5,759,820
-------------- --------------- -------------- --------------
Operating income before pre-opening costs $221,276 $153,473 $349,093 $302,863
Pre-opening costs $123,817 $16,000 $255,179 $33,000
-------------- --------------- -------------- --------------
Operating income $97,459 $137,473 $93,914 $269,863
Other income ($988) ($1,474) ($1,942) ($2,441)
Interest income ($16,852) ($22,342) ($31,353) ($38,611)
Interest expense $94,518 $75,796 $176,281 $160,419
-------------- --------------- -------------- --------------
Income before monority interest $20,781 $85,493 ($49,072) $150,496
Minority interest in net loss of subsidiary $13,044 $0 $53,620 $0
-------------- --------------- -------------- --------------
Net Income $33,825 $85,493 $4,548 $150,496
============== =============== ============= =============
Income per share-basic $0.00 $0.01 $0.00 $0.02
============== =============== ============= =============
Income per share-diluted $0.00 $0.01 $0.00 $0.02
============== =============== ============= =============
Weighted average number of
common shares outstanding-basic 7,054,895 7,024,170 7,057,533 7,023,807
============== =============== ============= =============
Weighted average number of
dilutive common shares outstanding 7,054,895 7,110,057 7,057,533 7,306,385
============== =============== ============= =============
</TABLE>
See accompanying notes
4
<PAGE>
<TABLE>
<CAPTION>
BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Twenty-six Weeks Ended
October 24 October 25
1999 1998
<S> <C> <C>
Cash flows provided by operating activities $285,060 $386,524
------------------ ------------------
Cash flows from investing activities:
Capital expenditures ($937,182) ($339,065)
------------------ ------------------
Cash flows used for investing activities ($937,182) ($339,065)
------------------ ------------------
Cash flows from financing activities:
Repayments of long-term debt ($108,521) ($100,000)
Repayments of capital lease obligations ($63,831) ($37,685)
Repayments of stockholder loans ($2,338) ($1,862)
Proceeds from subordinated debentures $0 $0
Proceeds from long-term debt $845,000 $0
Minority interest investment in subsidiary $34,858 $0
------------------ ------------------
Cash flows provided by (used for) financing activities $705,168 ($139,547)
------------------ ------------------
Increase (decrease) in cash and cash equivalents $53,046 ($92,088)
Cash and cash equivalents at beginning of period $1,863,299 $1,788,361
------------------ ------------------
Cash and cash equivalents at end of period $1,916,345 $1,696,273
================== ==================
</TABLE>
See accompanying notes.
5
<PAGE>
BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 24, 1999
(unaudited)
NATURE OF BUSINESS AND BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the thirteen-week period and twenty-six week period ended October
24, 1999 are not necessarily indicative of the results that may be expected for
the year ending April 30, 2000. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-KSB for the year ended April 25, 1999. The
balance sheet at April 25, 1999 has been derived from the audited financial
statements at that date.
The accompanying statements of operations and cash flows for the fiscal 2000
period reflect the consolidated operations and cash flows of one casual dining
Italian restaurant and ten Pizzeria Regina restaurants for the entire period and
two additional Pizzeria Regina restaurants for part of the period. The
accompanying statements of operations and cash flows for the fiscal 1999 period
reflect the consolidated operations and cash flows of one casual dining Italian
restaurant and nine Pizzeria Regina restaurants for the entire period and one
additional Pizzeria Regina restaurant for part of the period.
NET INCOME PER SHARE
The Company follows Statement of Financial Accounting Standards No. 128,
"Earnings per Share." The following is a reconciliation of the denominator
(number of shares) used in the computation of earnings per share. The numerator
(net income) is the same for the basic and diluted computations.
6
<PAGE>
Thirteen weeks ended Twenty-six weeks ended
-------------------- ----------------------
October 24 October 25 October 24 October 25
1999 1998 1999 1998
---- ---- ---- ----
Basic 7,054,895 7,024,170 7,057,533 7,023,807
Shares
Effect of
Dilutive
Securities:
Options 0 85,887 0 282,578
------ -------
Diluted
Shares 7,054,895 7,110,057 7,057,533 7,306,385
========= ========= ========= =========
The following table summarizes securities that were outstanding as of October
24, 1999 and October 25, 1998, but not included in the calculation of net income
per share because such securities are anti-dilutive:
Thirteen weeks ended Twenty-six weeks ended
-------------------- ----------------------
October 24 October 25 October 24 October 25
1999 1998 1999 1998
---- ---- ---- ----
Options 1,217,446 368,346 1,217,446 90,000
Warrants 550,000 2,843,000 550,000 2,843,000
Convertible
Debentures 1,200,000 1,200,000 1,200,000 1,200,000
7
<PAGE>
ITEM 2. Management's Discussion and Analysis or Plan of Operation
----------------------------------------------------------
Results of Operations
- ---------------------
Overview
- --------
Operating income before pre-opening expenses for the thirteen week period was
$221,000 compared to $153,000 in the prior year's period. Pre-opening expenses
were $124,000 in the current period, compared to $16,000 in the prior year's
period, resulting in net operating income of $97,000 in the current period and
$137,000 in the prior year's period. The increase in pre-opening expenses is
primarily attributable to the increased number of Pizzeria Regina restaurant
openings.
Thirteen Weeks Ended October 24, 1999 as Compared to Thirteen Weeks ended
- -------------------------------------------------------------------------
October 25, 1998
- ----------------
Restaurant Sales. Restaurant sales in the current period were $3,525,000,
- ----------------
compared to $3,106,000 restaurant sales in the prior year's period. The
increase in restaurant sales was partially attributable to the opening of the
new Kingston, Massachusetts Pizzeria Regina food court kiosk in June of 1999 and
the opening of the new Holyoke, Massachusetts Pizzeria Regina food court kiosk
in September of 1999. Comparable sales for the restaurants open throughout both
fiscal 2000 and 1999 periods increased by approximately 3.2%.
Net Sales at the Company's Pizzeria Regina restaurants increased to $2,701,000
in the current period from $2,360,000 in the prior year's period. The increase
in net sales was principally due to the additional sales from the new Kingston
and Holyoke Pizzeria Regina food court kiosks and an increase in aggregate same
store sales for existing Pizzeria Regina restaurants.
Net sales at the Company's full service casual dining restaurant, Polcari's
North End, increased by 10.2% to $818,000 in the current period from $742,000 in
the prior year's period. This increase was primarily attributable to increased
customer traffic.
Royalties. The Company recognized $2,000 in royalties from the first franchise
- ---------
Pizzeria Regina restaurant which opened in Louisville, Kentucky in May of 1999.
Costs and Expenses
- ------------------
Cost of Food, Beverages and Liquor. Cost of food, beverages and liquor as a
- ----------------------------------
percentage of restaurant sales was 21% in both the fiscal 2000 and fiscal 1999
periods.
The cost of food, beverages and liquor as a percentage of net sales at the
Pizzeria Regina restaurants was 18% in both the fiscal 2000 and fiscal 1999
periods.
The cost of food, beverages and liquor as a percentage of net sales at the
Company's full service casual dining restaurants was 30% in the fiscal 2000
period and 31% in the fiscal 1999 period. The decrease in cost as a percentage
of restaurant sales was primarily due to improved cost controls.
8
<PAGE>
Other Operating Expenses
- ------------------------
Payroll Expenses. Payroll expenses were $982,000 (28% of sales) in the current
- ----------------
period compared to $862,000 (28% of sales) in the prior year's period.
Payroll expenses at the Pizzeria Regina restaurants increased to $714,000 (26%
of sales) in the current period from $599,000 (25% of sales) in the prior year's
period. The increase in payroll expenses at the Pizzeria Regina restaurants was
primarily attributable to the opening of the two new Pizzeria Regina food court
kiosks.
Payroll expenses at the Company's full service casual dining restaurants
increased to $216,000 (26% of sales) in the current period from $213,000 (29% of
sales) in the prior year's period, with the decline as a percentage of sales due
to increased restaurant revenue. Payroll expenses at the Company's Commissary
were $52,000 for the fiscal 2000 period as compared to $51,000 in the fiscal
1999 period.
Other Operating Expenses, Exclusive of Payroll. Other operating expenses
- ----------------------------------------------
exclusive of payroll in the current period were $1,021,000 (29% of sales),
compared to $877,000 (28% of sales) in the prior year's period. The increase
was primarily attributable to the opening of the new Kingston and Holyoke
Pizzeria Regina food court kiosks.
Other operating expenses from the Pizzeria Regina restaurants increased to
$794,000 (29% of sales) in the current period from $676,000 (29% of sales) in
the prior year's period. This increase is primarily attributable to the
addition of two new Pizzeria Regina food court kiosks.
Other operating expenses at the Company's full service casual dining restaurants
increased to $212,000 (26% of sales) in the current period from $190,000 (26% of
sales) in the prior year's period. Other operating expenses also include
commissary expenses, which increased to $14,000 in the current period, as
compared to $12,000 in the prior year's period.
General and Administrative Expenses. General and administrative expenses were
- -----------------------------------
$388,000 (11% of sales) in the current period, as compared to $411,000 (13 % of
sales) in the prior year's period.
Depreciation and Amortization Expenses. Depreciation and amortization expense
- --------------------------------------
was $168,000 (5% of sales) in fiscal 2000 period, compared to $143,000 (5% of
sales) in fiscal 1999 period. The increase in depreciation and amortization
expense was primarily attributable to the opening of the two new Pizzeria Regina
food court kiosks.
Pre-Opening Costs.
- -----------------
Pre-opening costs were $124,000 in Fiscal 2000 period, compared to $16,000 in
fiscal 1999 period. Pre-opening costs consisted primarily of costs associated
with Regina Venture's North End Restaurants, and costs associated with the new
food court kiosk at the Holyoke Mall in Holyoke, Massachusetts, which opened in
September of 1999. Pre-opening costs also included costs associated with the
two franchise Pizzeria Regina restaurants, one located in Louisville, Kentucky
which opened in May of 1999 and the second located in Las Vegas, Nevada which is
scheduled to open in the fall of fiscal 2000.
9
<PAGE>
Interest Expense and Interest Income. Interest expense increased to $95,000 in
- ------------------------------------
the current period from $76,000 in the prior year's period. The increase in
interest expense was associated with additional borrowings under the Company's
credit facility.
Interest income decreased to $17,000 in fiscal 2000 period from $22,000 in
fiscal 1999 period. This was primarily attributable to a decrease in cash
reserves.
Twenty-six Weeks Ended October 24, 1999 as Compared to Twenty-six Weeks ended
- -----------------------------------------------------------------------------
October 25, 1998
- ----------------
Restaurant Sales. Restaurant sales in the current period were $6,727,000,
- ----------------
compared to $6,063,000 in the prior year's period. The increase in restaurant
sales was attributable to the opening of the new Kingston, Massachusetts food
court kiosk in June of 1999 and the Holyoke, Massachusetts food court kiosk in
September of 1999. Comparable sales for the restaurants open throughout both
fiscal 2000 and 1999 periods increased approximately 3.7%.
Net sales at the Company's Pizzeria Regina restaurants increased to $5,103,000
in the current period from $4,626,000 in the prior's year's period. The
increase in net sales was principally due to the additional sales from the new
Kingston and Holyoke Pizzeria Regina food court kiosks, and an increase in
aggregate same store sales for existing Pizzeria Regina restaurants.
Net sales at the Company's full service casual dining restaurant, Polcari's
North End, increased by approximately 12.8% to $1,613,000 in the current period
from $1,429,000 in the prior year's period. This increase was primarily
attributable to increased customer counts.
On October 27, subsequent to the end of the second quarter the Company opened an
additional Pizzeria Regina food court kiosk at Providence Place Mall in
Providence, Rhode Island.
Royalties. The Company recognized $4,000 in royalties from the first franchise
- ---------
Pizzeria Regina restaurant, which opened in Louisville, Kentucky in May of 1999.
Cost and Expenses
- -----------------
Cost of Food, Beverages and Liquor. Cost of food, beverages and liquor as a
- ----------------------------------
percentage of net sales was 21% in both fiscal 2000 and fiscal 1999 periods.
The cost of food, beverages and liquor as a percentage of restaurant sales at
the Pizzeria Regina restaurants was 17% in both fiscal 2000 and fiscal 1999
periods.
The cost of food, beverages and liquor as a percentage of restaurant sales at
the Company's full service casual dining restaurants was 31% in both fiscal 2000
and 1999 periods.
10
<PAGE>
Other Operating Expenses
- ------------------------
Payroll Expenses. Payroll expenses were $1,899,000 (28% of sales) in the
- ----------------
current period compared to $1,733,000 (29% of sales) in the prior year's period.
Payroll expenses at the Pizzeria Regina restaurants increased to $1,333,000 (26%
of sales) in the current period from $1,204,000 (26% of sales) in the prior
year's period. The increase in payroll expenses at the Pizzeria Regina
restaurants was primarily attributable to the opening of the two new Pizzeria
Regina food court kiosks.
Payroll expenses at the Company's full service casual dining restaurant
increased to $462,000 (29% of sales) in the current period from $430,000 (30%
of sales) in the prior year's period, with the decline as a percentage of sales
due to increased restaurant revenue. Payroll expenses at the Company's
Commissary were $104,000 for the fiscal 2000 period as compared to $99,000 in
the fiscal 1999 period.
Other Operating Expenses, Exclusive of Payroll Other operating expenses
- ----------------------------------------------
exclusive of payroll in the current period were $1,954,000 (29% of sales),
compared to $1,752,000 (29% of sales) in the prior year's period. The increase
in other operating expenses in the current period was primarily attributable to
the opening of the new Kingston and Holyoke Pizzeria Regina food court kiosks.
Other operating expenses from the Pizzeria restaurants increased to $1,501,000
(29% of sales) in the current period from $1,353,000 (29% of sales) in the prior
year's period. The increase is primarily attributable to the addition of two
new Pizzeria Regina food court kiosks.
Other operating expenses at the Company's full service casual dining restaurants
increased to $422,000 (26% of sales) in the current period from $373,000 (26% of
sales) in the prior year's period. This increase was primarily attributable to
increased restaurant revenue. Other operating expenses also include commissary
expenses, which increased to $27,000 in the current period, as compared to
$26,000 in the prior year's period. In addition, the Company realized
franchising costs of $3,000 in the fiscal 2000 period.
General and Administrative Expenses. General and administrative expenses were
- -----------------------------------
$826,000 (12% of sales) in the current period, as compared to $741,000 (12% of
sales) in the prior year's period. The increase in general and administrative
expenses was due, principally, to real estate site selection and corporate
consulting expenses.
Depreciation and Amortization Expenses. Depreciation and amortization expense
- --------------------------------------
was $322,000 (5% of sales) in fiscal 2000 period, compared to $278,000 (5% of
sales) in fiscal 1999 period. The increase in depreciation and amortization
expense was primarily attributable to the opening of the two new Pizzeria Regina
food court kiosks.
11
<PAGE>
Pre-Opening Costs.
- -----------------
Pre-opening costs were $255,000 in Fiscal 2000 period, compared to $33,000 in
fiscal 1999 period. Pre-opening costs consisted primarily of costs associated
with Regina Venture's North End Restaurants, and costs associated with the three
new food court kiosks at the Independence Mall in Kingston, Massachusetts which
opened in June of 1999, at the Holyoke Mall in Holyoke, Massachusetts which
opened in September of 1999 and at the Providence Place Mall in Providence,
Rhode Island, which opened in October of 1999. Pre-opening costs also included
costs associated with the two franchise Pizzeria Regina restaurants, one located
in Louisville, Kentucky which opened in May of 1999 and the second located in
Las Vegas, Nevada which is scheduled to open in the fall of fiscal 2000.
Interest Expense and Interest Income. Interest Expense increased to $176,000 in
- ------------------------------------
the current period as compared to interest expense in the prior year's period of
$160,000. This increase in interest expense was associated with additional
borrowings under the Company's credit facility.
Interest income decreased to $31,000 in fiscal 2000 from $39,000 in fiscal 1999.
This decrease was primarily attributable to a decrease in cash reserves.
Liquidity and Capital Resources.
- --------------------------------
At October 24, 1999, the Company had net working capital of approximately
$817,000 and cash and cash equivalents of approximately $1,916,000.
During the twenty-six weeks ended October 24, 1999, the Company had an increase
in cash and cash equivalents of $53,000 reflecting net cash provided by
operating activities of $285,000 net cash used for investing activities of
$937,000 and net cash provided by financing activities of $705,000. Net cash
provided by operating activities included an increase in accounts payable of
$80,000, an increase in deferred rent of $13,000, partially offset by an
increase in prepaid expenses of $14,000, an increase in inventories of $16,000,
an increase in accounts receivable of $13,000, and a reduction in accrued
expenses of $31,000. Net cash used for investing activities reflect costs
associated with the opening of the new Pizzeria Regina locations in Kingston,
Massachusetts, Holyoke, Massachusetts and Providence, Rhode Island and site
expansion costs incurred to date.
Net cash provided by financing activities of $705,000 consisted of net
repayments of long term debt of $109,000 and lease obligations and stockholder
loans in the aggregate amount of $66,000, offset by Italian Ventures' minority
interest contributions to Regina Ventures of $35,000, proceeds of $845,000 from
the BankBoston credit line.
At October 24, 1999, the Company had current liabilities of $1,439,000,
including $316,000 of accounts payables, $620,000 of accrued liabilities, and
current maturities of long term obligations in the amount of $503,000. At
October 24, 1999, the Company had long-term obligations, less current
maturities, in the amount of $3,155,000, including $906,000 due under its credit
facility with BankBoston, $114,000 of loans payable to a stockholder, $515,000
due under the capital lease obligations, $1,500,000 of convertible subordinated
debentures, and $120,000 of deferred rent. As of October 24, 1999, the Company
has accessed its credit facility with BankBoston in the amount of $1,383,000.
12
<PAGE>
The Pizzeria Regina food court kiosk opened at the Independence Mall, Kingston,
MA on June 21, 1999 and at the Holyoke Mall, Holyoke, MA on September 14, 1999.
Subsequently, on October 27, 1999, a Pizzeria Regina food court kiosk opened at
Providence Place Mall, Providence, Rhode Island. The Company entered into a
lease to open a new Polcari's North End Restaurant in Salem, New Hampshire,
which is currently scheduled to open in January 2000.
The Company believes that its existing resources, cash flow from operations,
borrowing under its credit facility, and the net proceeds from the March 1998
Rights Offering will be sufficient to allow it to meet its obligations over the
next twelve months.
Year 2000 Systems
- -----------------
Many currently installed computer systems and software are coded to accept only
two digit entries in the date code fields. Beginning in the year 2000, these
date code fields will need to accept four digit entries to distinguish twenty-
first century dates from twentieth century dates. As a result, within the next
year, computer systems and/or software used by many companies may need to be
upgraded to comply with such "Year 2000" requirements.
The Company has been assessing the potential impact of Year 2000 on the
processing of date-sensitive information by the Company's automated information
and point-of-sale systems and computerized information systems. While there can
be no assurance that Year 2000 matters will be satisfactorily identified and
resolved, the Company currently believes that most of its computer hardware and
software systems are already Year 2000 compliant and that Year 2000 issues will
not have a material adverse effect on the Company. As of October 24, 1999, the
estimated remaining cost for Year 2000 compliance is $50,000 to $60,000.
The Company's Year 2000 initiative is being managed by an internal staff member
and is designed to ensure that there are no adverse effects on the Company's
ability to conduct business at the restaurant level and to process and support
restaurant activity at the corporate level. Under its current Year 2000 plan,
the Company has brought a number of its systems into Year 2000 compliance,
subject to additional Year 2000 testing and responsive actions.
As part of its Year 2000 initiative, the Company is also evaluating scenarios
that may occur and developing contingency and business continuity plans tailored
for Year 2000-related occurrences. The Company believes that the most
reasonably likely, worst case scenario of a Year 2000 problem would result from
a third party's failure to adequately resolve Year 2000 issues, leading to a
complete failure of its point-of-sale and ordering systems. This failure would
require the Company to resort to "non-computerized" means to undertake such
restaurant functions as placing customer orders, preparing customer checks,
accounting of restaurant receipts, recording and ordering restaurant inventory
and supplies, evaluating menu mix and analyzing other operating statistics.
While the Company believes that it is equipped to operate in such a "non-
computerized" mode, it could suffer lost revenues, increased operating costs,
loss of customers or other business interruptions of a material nature.
The above information is based on the Company's current best estimates, which
were derived using numerous assumptions of future events, including the
availability and future costs of certain technological advancements. Given the
complexity of these issues and possible as yet unidentified risks, actual
results may vary materially from those anticipated and discussed above.
13
<PAGE>
The Company has undertaken a review concerning the ability of its internal
information systems, including its internal accounting systems, to handle date
information and to function appropriately from and after January 1, 2000, and
does not believe that the total cost to address any changes required as a result
of the so-called "Year 2000 Problem" will be material. In addition, the Company
has evaluated the impact of possible Year 2000 problems encountered by its
suppliers and customers upon the Company and does not believe that any problems
would have material effect upon the Company. The Company has reviewed various
scenarios, including realistic worst case scenarios, and has concluded that it
is unlikely that there will be any material impact on the Company.
"Safe Harbor" Statement, Under the Private Securities Litigation Reform Act of
- ------------------------------------------------------------------------------
1995
- ----
Forward-looking statements in this report, including without limitation
statements relating to the adequacy of the Company's resources, and the timing
of the Company's expansion, are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Investors are cautioned
that such forward-looking statements involve risks and uncertainties, including
without limitation: potential quarterly fluctuations in the Company's operating
results; seasonality of sales; competition; risks associated with expansion; the
Company's reliance on key employees; risks generally associated with the
restaurant industry; risks associated with geographic concentration of the
Company's restaurants; risks associated with serving alcoholic beverages; and
other risks and uncertainties indicated from time to time in the Company's
filings with the Securities and Exchange Commission.
14
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings.
------------------
No material litigation.
ITEM 2. Changes in Securities.
----------------------
None.
ITEM 3. Defaults Upon Senior Securities.
--------------------------------
None.
ITEM 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
Boston Restaurant Associates, Inc. held its Annual Meeting of Stockholders
on September 13, 1999. At the meeting, the stockholders approved (a) the
election of seven directors for the ensuing year and until their successors are
duly elected and qualified, and (b) the ratification of the appointment of BDO
Seidman LLP as auditors for fiscal year 2000.
<TABLE>
<CAPTION>
a) Election of Directors:
- -------------------------------------------------------------------------------------
NOMINEE FOR AGAINST OR WITHHELD ABSTENTIONS AND BROKER
NON-VOTES
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
George R. Chapdelaine 5,189,720 23,797 0
- -------------------------------------------------------------------------------------
Joseph J. Caruso 5,192,520 20,997 0
- -------------------------------------------------------------------------------------
Roger Lipton 5,192,520 20,997 0
- -------------------------------------------------------------------------------------
Kathleen Mason 5,192,520 20,997 0
- -------------------------------------------------------------------------------------
John P. Polcari, Jr. 5,192,520 20,997 0
- -------------------------------------------------------------------------------------
Lucille Salhany 5,192,520 20,997 0
- -------------------------------------------------------------------------------------
Terrance A. Smith 5,192,520 20,997 0
- -------------------------------------------------------------------------------------
<CAPTION>
b) Ratify the appointment of BDO Seidman LLP as auditors for fiscal year 2000:
- -------------------------------------------------------------------------------------
FOR AGAINST, WITHHELD OR BROKER NON-VOTES
ABSTAINED
- -------------------------------------------------------------------------------------
Approval 5,205,996 7,521 0
- -------------------------------------------------------------------------------------
</TABLE>
ITEM 5. Other Information.
------------------
None.
15
<PAGE>
ITEM 6. Exhibits and Reports On Form 8-K.
---------------------------------
(a) Exhibits.
---------
(27) Financial Data Schedule
(b) Reports On Form 8-K.
--------------------
1. Form 8-K dated 29 September 1999 reporting under Item 5 the
implementation of a previously authorized and announced repurchase of
shares of common stock by the Company.
16
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BOSTON RESTAURANT ASSOCIATES, INC.
Date: December 1, 1999 By: /s/ George R. Chapdelaine
-------------------------
George R. Chapdelaine, President and
Chief Executive Officer
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 24, 1999 AND APRIL 25, 1999
(UNAUDITED) AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THIRTEEN
WEEKS ENDED OCTOBER 24, 1999 AND OCTOBER 25, 1998 (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000926295
<NAME> BOSTON RESTAURANT ASSOCIATES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> JUL-26-1999
<PERIOD-END> OCT-24-1999
<EXCHANGE-RATE> 1.00
<CASH> 1,916,345
<SECURITIES> 0
<RECEIVABLES> 44,680
<ALLOWANCES> 0
<INVENTORY> 230,223
<CURRENT-ASSETS> 2,256,112
<PP&E> 7,290,925
<DEPRECIATION> 2,839,171
<TOTAL-ASSETS> 7,925,479
<CURRENT-LIABILITIES> 1,439,315
<BONDS> 0
0
0
<COMMON> 70,352
<OTHER-SE> 3,250,144
<TOTAL-LIABILITY-AND-EQUITY> 7,925,479
<SALES> 3,525,137
<TOTAL-REVENUES> 3,528,101
<CGS> 747,388
<TOTAL-COSTS> 3,429,654
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 94,518
<INCOME-PRETAX> 33,825
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,825
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 25, 1998 AND APRIL 26, 1998
(UNAUDITED) AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THIRTEEN
WEEKS ENDED OCTOBER 25, 1998 AND OCTOBER 26, 1997 (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000926295
<NAME> BOSTON RESTAURANT ASSOCIATES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-25-1999
<PERIOD-START> JUL-27-1998
<PERIOD-END> OCT-25-1998
<EXCHANGE-RATE> 1.00
<CASH> 1,696,273
<SECURITIES> 0
<RECEIVABLES> 44,587
<ALLOWANCES> 0
<INVENTORY> 218,860
<CURRENT-ASSETS> 2,036,274
<PP&E> 5,740,825
<DEPRECIATION> 2,349,744
<TOTAL-ASSETS> 6,765,992
<CURRENT-LIABILITIES> 1,029,700
<BONDS> 0
0
0
<COMMON> 70,242
<OTHER-SE> 3,371,785
<TOTAL-LIABILITY-AND-EQUITY> 6,765,992
<SALES> 3,105,983
<TOTAL-REVENUES> 3,107,457
<CGS> 658,681
<TOTAL-COSTS> 2,968,510
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75,796
<INCOME-PRETAX> 85,493
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 85,493
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 24, 1999 AND APRIL 25, 1999
(UNAUDITED) AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE TWENTY-
SIX WEEKS ENDED OCTOBER 24, 1999 AND OCTOBER 25, 1998 (UNAUDITED) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000926295
<NAME> BOSTON RESTAURANT ASSOCIATES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> APR-26-1999
<PERIOD-END> OCT-24-1999
<EXCHANGE-RATE> 1.00
<CASH> 1,916,345
<SECURITIES> 0
<RECEIVABLES> 44,680
<ALLOWANCES> 0
<INVENTORY> 230,223
<CURRENT-ASSETS> 2,256,112
<PP&E> 7,290,925
<DEPRECIATION> 2,839,171
<TOTAL-ASSETS> 7,925,479
<CURRENT-LIABILITIES> 1,439,315
<BONDS> 0
0
0
<COMMON> 70,352
<OTHER-SE> 3,250,144
<TOTAL-LIABILITY-AND-EQUITY> 7,925,479
<SALES> 6,726,645
<TOTAL-REVENUES> 6,732,111
<CGS> 1,380,426
<TOTAL-COSTS> 6,636,255
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 176,281
<INCOME-PRETAX> 4,548
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,548
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 25, 1998 AND APRIL 26, 1998
(UNAUDITED) AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE TWENTY-
SIX WEEKS ENDED OCTOBER 25, 1998 AND OCTOBER 26, 1997 (UNAUDITED) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000926295
<NAME> BOSTON RESTAURANT ASSOCIATES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-25-1999
<PERIOD-START> APR-27-1998
<PERIOD-END> OCT-25-1998
<EXCHANGE-RATE> 1.00
<CASH> 1,696,273
<SECURITIES> 0
<RECEIVABLES> 44,587
<ALLOWANCES> 0
<INVENTORY> 218,860
<CURRENT-ASSETS> 2,036,274
<PP&E> 5,740,825
<DEPRECIATION> 2,349,744
<TOTAL-ASSETS> 6,765,992
<CURRENT-LIABILITIES> 1,029,700
<BONDS> 0
0
0
<COMMON> 70,242
<OTHER-SE> 3,371,785
<TOTAL-LIABILITY-AND-EQUITY> 6,765,992
<SALES> 6,062,683
<TOTAL-REVENUES> 6,065,124
<CGS> 1,256,352
<TOTAL-COSTS> 5,792,820
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 160,419
<INCOME-PRETAX> 150,496
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150,496
<EPS-BASIC> .02
<EPS-DILUTED> .02
</TABLE>
