SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 8-K/A
AMENDMENT NO. 2
TO
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported):August 19, 1996 (April 5, 1996)
The Italian Oven, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Pennsylvania
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
0-27182 25-1624305
---------------------- ---------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
Eleven Lloyd Ave., Latrobe, PA 15650
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(412) 537-5380
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
<PAGE>
Item 7. Financial Statements and Exhibits
As reported in the Company's Amendment No. 1 to Current Report on Form 8-K/A
dated May 16, 1996, on April 29, 1996, the Company completed the acquisition of
the operating assets of four franchised restaurants of the Company, Ovens of
Cranberry, Ltd., Ovens of Monroeville, Ltd., Ovens of Erie One, Ltd. and Ovens
of North Hills, Ltd., which owned four The Italian Oven restaurants in the
Western Pennsylvania market.
The Company hereby files this Amendment No. 2 on Form 8-K/A to file the
financial statements and related pro forma financial statements required
pursuant to Item 7 of Form 8-K with respect to the operating assets of these
four restaurants. However, as reported in the Company's Current Report on Form
8-K dated August 19, 1996, effective as of July 29, 1996, the Company sold the
operating assets of the Erie and Cranberry restaurants in order to obtain cash
for immediate operating needs. The pro forma results shown herein do not reflect
this subsequent sale of the Erie and Cranberry locations.
<PAGE>
(a) Financial statements of businesses acquired.
OVENS OF MONROEVILLE, LTD.
OVENS OF ERIE ONE, LTD.
OVENS OF NORTH HILLS, LTD.
OVENS OF CRANBERRY, LTD.
COMBINED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995 AND MARCH 31, 1996
TOGETHER WITH REPORT OF
INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
The Italian Oven:
We have audited the combined balance sheet of Ovens of Monroeville, Ltd., Ovens
of Monroeville, Ltd., Ovens of Erie One, Ltd., Ovens of North Hills, Ltd., and
Ovens of Cranberry, Ltd., (all Pennsylvania partnerships) as of December 31,
1995 and the related combined statement of operations and cash flows for the
year then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Ovens of
Monroeville, Ltd., Ovens of Erie One, Ltd., Ovens of North Hills, Ltd., and
Ovens of Cranberry, Ltd., as of December 31, 1995, and the results of operations
and cash flows for the year ended in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania,
July 15, 1996
<PAGE>
OVENS OF MONROEVILLE, LTD.
--------------------------
OVENS OF ERIE ONE, LTD.
-----------------------
OVENS OF NORTH HILLS, LTD.
--------------------------
OVENS OF CRANBERRY, LTD.
------------------------
COMBINED BALANCE SHEETS
-----------------------
DECEMBER 31, 1995 AND MARCH 31, 1996
------------------------------------
December 31, March 31,
ASSETS 1995 1996
------ ---------- -----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 161,542 $ 100,928
Accounts receivable 37,815 29,338
Inventories 27,675 30,344
Prepaid expenses 26,201 25,297
---------- ----------
Total current assets 253,233 185,907
---------- ----------
FIXED ASSETS:
Equipment 722,054 722,054
Leasehold improvement 841,313 841,313
Restaurant decor 52,426 52,426
---------- ----------
1,615,793 1,615,793
Less- Accumulated depreciation (465,117) (505,304)
---------- ----------
Fixed assets, net 1,150,676 1,110,489
INTANGIBLE ASSETS, net of accumulated
amortization of $95,057 and $106,307,
respectively 215,175 202,650
LIQUOR LICENSES, net of accumulated
amortization of $77,183 and $84,533,
respectively 75,936 68,503
OTHER NONCURRENT ASSETS 3,580 3,580
---------- ----------
TOTAL ASSETS $1,698,600 $1,571,129
========== ==========
The accompanying notes are an integral part of these statements.
<PAGE>
OVENS OF MONROEVILLE, LTD.
--------------------------
OVENS OF ERIE ONE, LTD.
-----------------------
OVENS OF NORTH HILLS, LTD.
--------------------------
OVENS OF CRANBERRY, LTD.
------------------------
COMBINED BALANCE SHEETS
-----------------------
DECEMBER 31, 1995 AND MARCH 31, 1996
------------------------------------
December 31, March 31,
LIABILITIES AND PARTNERS' CAPITAL 1995 1996
- --------------------------------- ---------- -----------
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 144,557 $ 130,689
Accrued liabilities 105,897 156,875
Current portion of long-term debt 130,714 130,714
---------- ----------
Total current liabilities 381,168 418,278
LONG-TERM DEBT, less current portion 822,398 789,719
---------- ----------
Total liabilities 1,203,566 1,207,997
PARTNERS' CAPITAL 495,034 363,132
---------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $1,698,600 $1,571,129
========== ==========
The accompanying notes are an integral part of these statements.
<PAGE>
OVENS OF MONROEVILLE, LTD.
--------------------------
OVENS OF ERIE ONE, LTD.
-----------------------
OVENS OF NORTH HILLS, LTD.
--------------------------
OVENS OF CRANBERRY, LTD.
------------------------
COMBINED STATEMENTS OF OPERATIONS
---------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1995 AND
----------------------------------------
QUARTER ENDED MARCH 31, 1996
----------------------------
December 31, March 31,
1995 1996
---------- -----------
(Unaudited)
RESTAURANT SALES $4,622,349 $ 993,705
COST OF RESTAURANT SALES 1,264,870 283,665
LABOR COSTS 1,560,345 358,802
---------- ----------
Gross profit 1,797,134 351,238
---------- ----------
OPERATING EXPENSES:
Selling, general and administrative 1,647,037 362,623
Depreciation 180,723 40,151
Amortization 81,283 19,875
---------- ----------
Total operating expenses 1,909,043 422,649
---------- ----------
Loss from operations (111,909) (71,411)
---------- ----------
OTHER EXPENSE (INCOME):
Interest expense 82,613 18,738
Miscellaneous expense 2,668 41,634
---------- ----------
Total other expense 85,281 60,372
---------- ----------
NET LOSS $ (197,190) $ (131,783)
========== ==========
The accompanying notes are an integral part of these statements.
<PAGE>
OVENS OF MONROEVILLE, LTD.
--------------------------
OVENS OF ERIE ONE, LTD.
-----------------------
OVENS OF NORTH HILLS, LTD.
--------------------------
OVENS OF CRANBERRY, LTD.
------------------------
COMBINED STATEMENTS OF CASH FLOWS
---------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1995 AND
----------------------------------------
QUARTER ENDED MARCH 31, 1996
----------------------------
December 31, March 31,
1995 1996
---------- -----------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (197,190) $ (131,783)
Adjustments to reconcile net loss to
net cash provided by operating
activities-
Depreciation and amortization 262,006 60,026
---------- ----------
64,816 (71,757)
Changes in assets and liabilities-
Accounts receivable 116,347 8,477
Inventories 1,546 (2,669)
Prepaid expenses and
other current assets (9,129) 904
Accounts payable 91,589 (13,868)
Accrued expenses 40,180 50,978
---------- ----------
Net cash provided by (used in)
operating activities 305,349 (27,935)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (502,373) -
Other noncurrent, net (74,842) -
---------- ----------
Net cash (used in) provided by
investing activities (577,215) -
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (131,114) (32,679)
Proceeds from borrowings of long-term debt 380,000 -
Issuance of common stock 1,000 -
---------- ----------
Net cash provided by (used in)
financing activities 249,886 (32,679)
---------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (21,980) (60,614)
CASH AND CASH EQUIVALENTS, beginning of period 183,522 161,542
---------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 161,542 $ 100,928
========== ==========
SUPPLEMENTAL DATA:
Cash payments for interest $ 84,479 $ 18,920
========== ==========
The accompanying notes are an integral part of these statements.
<PAGE>
OVENS OF MONROEVILLE, LTD.
--------------------------
OVENS OF ERIE ONE, LTD.
-----------------------
OVENS OF NORTH HILLS, LTD.
--------------------------
OVENS OF CRANBERRY, LTD.
------------------------
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------
DECEMBER 31, 1995
-----------------
1. ORGANIZATION AND OPERATION:
Ovens of Monroeville, Ltd., Ovens of Erie One, Ltd., Ovens of North Hills, Ltd.
and Ovens of Cranberry, Ltd. (collectively, the Ovens) are all partnerships
formed to own and operate family style pizza and pasta restaurants under the
name "The Italian Oven."
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accompanying combined financial statements reflect the application of the
following significant accounting policies:
Basis of Presentation
The combined financial statements include the accounts of the Ovens. The four
separate partnerships have been combined for presentation purposes as they are
engaged in the same business and are under common control of the same general
partners. All significant intercompany transactions and accounts have been
eliminated.
The interim financial information included herein has been prepared by the Ovens
without audit. The financial information presented herein, while not necessarily
indicative of results to be expected for the full year, reflects all
adjustments, consisting of normal recurring adjustments, which in the opinion of
the Ovens are necessary for a fair presentation of the results for the periods
indicated.
Cash Equivalents
The Ovens consider all short-term investments with maturities of three months or
less when acquired to be cash equivalents.
Inventories
Inventories, which consist of food and beverages, retail gift items and paper
supplies, are stated at the lower of cost (first-in, first-out method) or
market.
<PAGE>
Fixed Assets
Fixed assets are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets, which are as
follows:
Equipment 5 years
Leasehold improvements 31.5 years
Decor 5 years
Upon disposition, the cost and related accumulated depreciation are removed from
the accounts and the resulting gain or loss is reflected in income (loss) for
the period.
Maintenance and repairs which are not considered to extend the useful lives of
assets are charged to operations as incurred.
Amortization
Organizational expenses and liquor licenses are being amortized on a
straight-line basis over five years and franchise fees are amortized on a
straight-line basis over 10 years.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements as
well as the reported amounts of income and expenses during the reporting period.
Actual results may differ from those estimates.
3. LONG-TERM DEBT:
Long-term debt consisted of the following:
December 31, March 31,
1995 1996
---------- ----------
(Unaudited)
Note payable, due in equal
installments through March 1, 1997,
including interest at 8.07% $ 113,095 $ 104,167
Note payable, due in equal installments
through October 20, 1997,
including interest at 6.91% 191,667 179,166
Note payable, due in equal installments
through September 21, 1999,
including interest at 8.25% 258,350 247,100
Note payable, due in equal installments
through March 2, 2000,
including interest at 8.5% 380,000 380,000
Other long-term debt 10,000 10,000
---------- ----------
953,112 920,433
Less- Current portion 130,714 130,714
---------- ----------
$ 822,398 $ 789,719
========== ==========
The long-term debt is collateralized by all of the inventory, accounts, contract
rights, equipment and general intangibles of the Ovens.
<PAGE>
Maturities of long-term debt as of December 31, 1995, are as follows:
Year Ending December 31-
1996 $374,783
1997 261,713
1998 160,867
1999 140,549
2000 15,200
Thereafter -
--------
$953,112
========
4. COMMITMENTS:
The Ovens lease restaurant space under noncancelable operating leases. The
restaurant leases contain options to renew for terms of five to 10 years with
increases in charges per renewal period ranging from 2.8% to 37%. Some of the
lease agreements contain provisions which require additional rents based upon
gross sales. Following are the future minimum lease payments relating to these
lease obligations:
Year Ending December 31,-
1996 $ 245,410
1997 195,191
1998 172,956
1999 175,804
2000 181,500
Thereafter 502,375
----------
$1,473,236
==========
Rent expense, consisting solely of minimum rents, charged to operations was
$274,756 for fiscal year 1995 and $69,392 for the quarter ended March 31, 1996.
5. INCOME TAXES:
As partnerships, all taxable income resulting from the Ovens' operations accrues
to the shareholders; accordingly, the Ovens are not liable for either federal or
state income taxes.
6. RELATED PARTY TRANSACTIONS:
One of the partners of Ovens of North Hills, Ltd. provided a $10,000 loan to the
partnership. The entire balance was outstanding as of December 31, 1995.
A management fee of 3.3% of net sales is charged to the restaurants by The
Refresh Group, a partnership owned by the partners of the Ovens. Total
management fee expense for the year ended December 31, 1995, was $157,960 and
for the quarter ended March 31, 1996, was $32,791.
A monthly royalty of 4% of restaurant sales is paid to the franchisor. The total
royalty fee expense for the year ended December 31, 1995, was $182,433 and for
the quarter ended March 31, 1996, was $28,839.
The Ovens must also contribute 1% of restaurant sales (1-1/2% before January 1,
1994) to a National Advertising Fund administered by the franchisor.
7. SUBSEQUENT EVENT:
Subsequent to December 31, 1995, the four restaurants owned by the Ovens were
sold to The Italian Oven, Inc., the franchisor. The sales price was $2,714,500,
subject to certain purchase accounting adjustments.
<PAGE>
(b) Pro Forma Financial Information.
PRO FORMA FINANCIAL INFORMATION
The following Pro Forma Financial Statements are based on the historical
financial statements of The Italian Oven, Inc. (the "Company") and the Ovens of
Monroeville, Ltd., the Ovens of Erie One, Ltd., the Ovens of North Hills, Ltd.,
and the Ovens of Cranberry, Ltd. (collectively, "the Ovens"), adjusted to give
effect to the acquisition of the Ovens by the Company. The Pro Forma Balance
Sheet assumes the acquistion and the restructuring activities occurred as of the
most recent balance sheet date prior to the acquisition date of April 29, 1996.
The Pro Forma Income Statement assumes that the acquisition and the
restructuring activities occurred as of the first day of the Company's 1995
fiscal year.
The pro forma financial information reflects the purchase method of
accounting for the acquisition of the Ovens, and accordingly, is based on
estimated purchase accounting adjustments that are subject to further revision
depending upon completion of any appraisals or other studies of the fair values
of the Ovens' assets and liabilities.
The pro forma financial information reflects certain assumptions described
above and in Notes to Pro Forma Income Statement below, including the Company's
estimates of certain anticipated cost savings resulting from the Company and the
Ovens' restructuring activities. The actual savings may be higher or lower than
these estimates. The pro forma statements should be read in conjunction with the
audited consolidated financial statements of the Company and the related notes
thereto which are included in the Company's Annual Report on Form 10-K for its
fiscal year ended December 31, 1995, the Company's Current Report on Form 8-K
dated July 15, 1996 (each as filed with the Securities and Exchange Commission)
and the audited combined financial statements of the Ovens that are filed
herewith.
The pro forma financial information does not purport to present what the
Company's results of operations would actually have been if the acquisition of
the Ovens and the integration and restructuring activities had occurred on the
assumed dates, as specified above, or to project the Company's financial
condition or results of operations for any future period.
Effective July 1996, the Company sold the assets acquired from Ovens of
Erie One, Ltd. and Ovens of Cranberry, Ltd. The following pro forma statements
have not been adjusted for the effects of this transaction.
<PAGE>
The Italian Oven, Inc.
Pro Forma Balance Sheet
As of March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Company and Ovens
Historical Historical Acquisition Pro Forma Pro Forma
Company Ovens (1) Adjustments Consolidated
------------ ------------ --------------------- ------------
ASSETS
<S> <C> <C> <C> <C> <C>
Cash and equivalents $ 7,339,661 $ 100,928 ($ 2,534,500) (2) $ 4,906,089
Accounts receivable, net 652,754 29,338 (25,532) (4) 656,560
Note receivable from related party 465,914 465,914
Inventories 330,289 30,345 360,634
Prepaid expenses and other
current assets 381,818 25,297 407,115
------------ ------------ ------------ ------------
Total current assets 9,170,436 185,908 (2,560,032) 6,796,312
Property, plant and
equipment, net 6,559,874 1,110,489 7,670,363
Intangible assets, net 786,166 202,650 988,816
Liquor licenses, net 89,443 68,503 157,946
Goodwill 1,430,935 (2) 1,430,935
Other assets 30,897 3,579 (56,319) (5) (21,843)
------------ ------------ ------------ ------------
$ 16,636,816 $ 1,571,129 ($ 1,185,416) $ 17,022,529
============ ============ ============ ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities 3,899,062 287,564 (25,532) (4) 4,161,094
Long-term debt, current portion 153,586 130,714 (130,714) (2) 153,586
Long-term liabilities 2,357,614 789,719 (789,719) (2) 2,357,614
------------ ------------ ------------ ------------
Total liabilities 6,410,262 1,207,997 (945,965) 6,672,294
------------ ------------ ------------ ------------
Common stock 43,509 635,000 (631,400) (2) 47,109
Paid in capital 22,053,222 176,400 22,229,622
Warrants outstanding 1,975,000 1,975,000
Treasury stock (231,368) (231,368)
Retained deficit (13,613,809) (271,868) 215,549 (13,670,128)
------------ ------------ ------------ ------------
Total shareholders' equity 10,226,554 363,132 (239,451) 10,350,235
------------ ------------ ------------ ------------
Total liabilities and shareholders' equity $ 16,636,816 $ 1,571,129 ($ 1,185,416) $ 17,022,529
============ ============ ============ ============
<FN>
The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>
<PAGE>
The Italian Oven, Inc.
Pro Forma Income Statement
For the Year Ended December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Company and Ovens
Historical Historical Acquisition Pro Forma Pro Forma
Company Ovens (1) Adjustments Consolidated
------------ ------------ --------------------- ------------
<S> <C> <C> <C> <C> <C>
Net Revenue $ 15,969,735 $4,622,349 ($182,433) (3) $20,409,651
------------ ------------ ------------- ------------
Costs and Expenses:
Cost of restaurant sales 3,165,430 1,264,870 4,430,300
Other restaurant expenses 7,509,704 1,560,345 9,070,049
Marketing, general and
administrative 7,326,785 1,649,765 (340,393) (3) 8,636,157
Depreciation and amortization 829,829 262,006 286,187 (5) 1,378,022
Interest expense, net 209,123 82,612 291,735
Inducement to convert preferred
stock to common stock 2,246,664 0 2,246,664
Other (income)/expense 11,923 (60) 11,863
------------ ------------- ----------- ------------
Total costs and expenses 21,299,458 4,819,538 (54,206) 26,064,790
------------ ------------- ----------- ------------
(Loss) before taxes on
income (5,329,723) (197,189) (128,227) (5,655,139)
Provision for income taxes (1,191) 0 0 (6) (1,191)
Minority interest (89,155) 0 0 89,155
------------ ------------- ----------- ------------
Net (loss) ($ 5,417,687) ($197,189) (128,227) ($5,567,175)
============ ============= =========== ============
Loss per share ($2.32) ($2.35)
============ ============
Weighted average number
of common shares
(fully diluted) 2,336,048 2,372,048
============ ============
<FN>
The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>
<PAGE>
The Italian Oven, Inc.
Pro Forma Income Statement
For the Quarter Ended March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Company and Ovens
Historical Historical Acquisition Pro Forma Pro Forma
Company Ovens (1) Adjustments Consolidated
------------ ------------ --------------------- ------------
<S> <C> <C> <C> <C> <C>
Net Revenue $4,631,378 $993,705 ($28,839) (3) $5,596,244
------------ ------------ ------------- -----------
Costs and Expenses:
Cost of restaurant sales 901,968 283,665 1,185,633
Other restaurant expenses 2,344,877 358,802 2,703,679
Marketing, general and
administrative 1,467,881 363,333 (61,630) (3) 1,769,584
Depreciation and amortization 278,878 60,026 71,547 (5) 410,451
Interest expense, net (112,374) 18,738 (93,636)
Inducement to convert preferred
stock to common stock 0
Other (income)/expense 11,567 41,043 52,610
------------ ------------ ------------- -----------
Total costs and expenses 4,892,797 1,125,607 9,917 6,028,321
------------ ------------ ------------- -----------
(Loss) before taxes on
income (261,419) (131,902) (18,922) (432,077)
Benefit for income taxes 102,318 0 0 (6) 102,318
Minority interest 16,292 0 0 16,292
------------ ------------ ------------- -----------
Net (loss) ($142,809) ($131,902) (38,756) ($313,467)
============ ============ ============= ===========
Income per share ($0.03) ($0.07)
============ ===========
Weighted average number
of common shares
(fully diluted) 4,327,991 4,363,991
============ ============
<FN>
The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>
<PAGE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
The pro forma adjustments to the balance sheet are as follows:
1. The historical accounts of the Ovens represent the combined financial
statements as of December 31, 1995.
2. To reflect the acquisition of the net assets of the Ovens and the
allocation of the purchase price on the basis of fair values of the assets
acquired and liabilities assumed. The purchase price consisted of cash of
$2,534,500 and 36,000 shares of the Company's stock valued at $180,000 at the
date of the acquisition. The book value of fixed assets and other noncurrent
assets as recorded on the books of the Ovens are assumed to approximate fair
value. These amounts are subject to change depending on the results of any
appraisals or other studies of the Ovens' assets and liabilities. The components
of the purchase price and its estimated allocation to the assets and liabilities
of the Ovens are as follows:
Current assets $ 185,908
Property, plant and equipment 1,110,489
Other assets 274,732
Goodwill 1,430,935
Current liabilities 287,564
The long-term debt of the Ovens of $920,433 was repaid as part of the
acquisition.
3. Adjustments to selling, general and administrative expenses:
<TABLE>
<CAPTION>
Three Months
Ended March 31,
Year Ended ------------------
December 31, 1995 1995 1996
----------------- ------- -------
<S> <C> <C> <C>
Eliminate management fees to Refresh Group $157,960 $19,016 $32,791
Eliminate royalty fees to corporate $182,433 $29,079 $28,839
-------- ------- -------
Total $340,393 $48,095 $61,630
======== ======= =======
</TABLE>
The management fees to Refresh Group are eliminated as the Refresh Group
will no longer be performing management services for the franchise restaurants.
The Company does not expect any additional expense to be incurred for the
operation of these restaurants.
The royalty fees are eliminated as only franchise restaurants are required
to pay the royalty fee.
4. Adjustment to eliminate intercompany receivables and payables between
the Company and the Ovens.
5. To record the amortization of the goodwill acquired as a result of the
acquisition over a five year period.
6. No income tax benefit was provided as it would be offset by a valuation
allowance as future utilization of any loss carryforward is not assured beyond a
reasonable doubt.
<PAGE>
(c) Exhibits.
10.1 Leasehold and Asset Purchase and Sale Agreement dated March 4, 1996 by
and between the Company and Mid America Restaurant Group, Inc.
(included as an exhibit to the Current Report on Form 8-K of the
Company dated May 9, 1996 and incorporated by reference herein).
10.2 First Amendment to Leasehold and Asset Purchase and Sale Agreement
dated March 22, 1996 by and among the Company, Mid America Restaurant
Group, Inc. and Mid America Restaurant Group of Kansas (included as an
exhibit to the Current Report on Form 8-K of the Company dated May 9,
1996 and incorporated by reference herein).
10.3 Second Amendment to Leasehold and Asset Purchase and Sale Agreement
dated March 29, 1996 by and among the Company, Mid America Restaurant
Group, Inc. and Mid America Restaurant Group of Kansas (included as an
exhibit to the Quarterly Report on Form 10-Q of the Company for the
quarter ended March 31, 1996 and incorporated by reference herein).
10.4 Agreement dated February 22, 1996, by and among the Company, Ovens of
Cranberry, Ltd., Ovens of Erie One, Ltd., Ovens of Monroeville, Ltd.,
Ovens of North Hills, Ltd., David S. Gallatin, Marc B. Robertshaw and
William J. Rosa (included as an exhibit to the Current Report on Form
8-K of the Company dated May 9, 1996 and incorporated by reference
herein).
<PAGE>
SIGNATURE
---------
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 hereunto duly authorized.
THE ITALIAN OVEN, INC.
----------------------
(Registrant)
By /s/ Gary L. Steib
----------------------------------------------
Gary L. Steib, Chief Financial Officer
Dated: August 19, 1996
