FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
( X ) Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Quarterly period Ended: January 31, 1999.
OR
( ) Transition Report Under Section 13 or 15(d)
The Securities Exchange Act of 1934
Commission File Number O-2825
SWISS CHALET, INC.
(Exact name of Registrant as specified in its charter)
COMMONWEALTH OF PUERTO RICO 66-020-0307
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
105 De Diego Avenue
Santurce, Puerto Rico 00911
(Address of principal executive offices) (Zip Code)
(787)721-1200
(Registrant's telephone number, including area code)
Unchanged
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file requirements for the past 90 days.
Yes__X___ No ______
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Sections 12,13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes__X___ No______
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock as of the latest practical date :
Number of shares of Common Stock outstanding at February 25,1999
: 1,401,162
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL INFORMATION
SWISS CHALET, INC.
CONDENSED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED JANUARY 1999 AND 1998
(UNAUDITED) - NOTE A
NINE MONTHS ENDED THREE MONTHS ENDED
JANUARY 31 JANUARY 31
1999 1998 1999 1998
_____________________ _______________________
Net Sales and $3,867,134 $3,774,617 $1,648,154 $1,370,576
Other Income
COST AND EXPENSES
Cost of Sales 58,464 63,559 23,342 21,698
Operating Expenses 2,757,827 2,722,141 1,003,124 947,010
and other deductions
Interest Expense - - - -
NET INCOME $1,050,843 988,917 621,688 401,868
Weighted Average 1,401,162 1,401,162 1,401,162 1,401,162
Number of Common
Shares Outstanding
NET INCOME PER SHARE 0.75c 0.71c 0.44c 0.29c
-1-
SWISS CHALET, INC.
CONDENSED BALANCE SHEET
JANUARY 31, 1999
(UNAUDITED) - NOTE A
JANUARY 31
1999
__________
ASSETS
CURRENT ASSETS
Cash and Cash equivalents $1,781,785
Securities held to maturity 1,057,631
Accounts Receivable, Net 461,719
Inventories 20,849
Other Current Assets 41,727
__________
TOTAL CURRENT ASSETS $3,363,711
INVESTMENT IN CONDOMINIUM AND LAND
PROPERTY, PLANT AND EQUIPMENT, Net 3,528,855
OTHER ASSETS 114,225
__________
TOTAL ASSETS $7,006,791
__________
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 598,496
Dividends Payable 115,992
__________
TOTAL CURRENT LIABILITIES $ 714,488
Deferred Compensation Liability 106,700
SHAREHOLDER'S EQUITY,
Common Stock at stated value $ 700,581
Additional paid in capital 24,069
Retained Earnings 5,460,953
__________
$6,185,603
__________
TOTAL LIABILITIES $7,006,791
__________
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SWISS CHALET, INC.
CONDENSED STATEMENTS OF CHANGES IN CASH FLOWS
FOR THE NINE MONTHS ENDED JANUARY 31, 1999 AND 1998
(UNAUDITED) - NOTE A
NINE MONTHS ENDED
JANUARY 31
1999 1998
Cash Flow from Operations :
Net Income $ 1,050,843 $ 988,917
Adjustments (net) 117,067 73,009
__________ _________
Net Cash from operations $ 1,167,910 $1,061,926
Cash Flow from Investing activities 220,991 ( 343,639)
Cash Flow from Financing activities (1,244,923) (1,245,695)
__________ _________
Increase/(Decrease) in Cash Flow $ 143,978 $( 527,408)
Cash and Cash equivalents - beginning 1,637,807 2,282,403
__________ _________
Cash and Cash equivalents - ending $1,781,785 $1,754,995
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SWISS CHALET, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited Condensed Financial Statements have been
prepared in accordance with the instructions to Form 10-QSB and, therefore,
do not include all information and footnotes necessary for a fair
presentation of financial position in conformity with generally accepted
accounting principles. The unaudited Condensed Financial Statements contain
all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of Management, necessary to a fair statement of the
results for the period presented. The interim results are not necessarily
indicative of the results which may be expected for the full year. The
subject Condensed Financial Statements should be read in conjunction with
the summary of significant accounting policies set forth in Note 1 to the
Financial Statements included in the Company's Annual Report to
Shareholders for the year ended April 30, 1998.
Depreciation of the original building is spread over a 50 year life
while equipment is depreciated over useful lives ranging from 5 to 10 years
depending on its type.
NOTE B - PROVISIONS FOR INCOME TAX
Local Income Tax is not provided for until the year end. however, if
such provision had been made it would have amounted to less than $25,000.00
for the three month period.
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PART I
SWISS CHALET, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is Management's discussion and analysis of certain
significant factors which have affected the Company's earnings during the
periods included in the accompanying Condensed Statements of Income.
A summary of the period to period changes in the principal items
included in the Condensed Statement of Income is shown below:
NINE MONTHS ENDED THREE MONTHS ENDED
JANUARY 31 JANUARY 31
INCREASE INCREASE
(DECREASE) % (DECREASE) %
_______________________________________
Net Sales & Other Income $ 92,517 2.5 $ 277,578 20.3
Cost of Sales ( 5,095) (8.0) 1,644 7.6
Operation Expenses and 35,687 1.3 56,114 3.2
Other Deductions
Interest - N/A - N/A
Net Income 61,926 6.3 219,820 54.7
-5-
SWISS CHALET, INC.
The comparative table of occupancies and average rates is shown below
for the nine month period.
Occupancy Average Rate
1998/99 1997/98 1998/99 1997/98
May 62% 64% $88.09 $89.00
June 57% 72% 91.13 90.16
July 57% 71% 87.42 85.86
Aug 67% 79% 85.38 85.95
Sept 53% 64% 85.61 88.70
Oct 97% 75% 88.10 87.90
Nov 94% 76% 96.01 87.16
Dec 82% 74% 105.33 92.13
Jan 82% 76% 115.61 108.34
Average 9 months 72% 72% $94.62 $90.67
As reported in the previous filing the Company had experienced a
dramatic turnaround following the arrival of Hurricane Georges on September
21,1998. The brutally competitive market that had existed prior to the
hurricane was converted into a very favorable operating climate as
several of our competitors closed due to damage or economic factors. In
addition the lobby renovation is almost complete making the hotel more
attractive and easier to sell. As a result the hotel had a record net
income for the third quarter in spite of having to reserve for a potential
bad debt of almost $40,000. Payroll and other expense remained well
controlled and the prognosis for the fourth quarter appears excellent.
The Company's Accounting, Property Management System, Electronic Keys
and stock registration systems are Y2K compliant and we anticipate
replacing our telephone system during this year. Mechanical equipment
does not, in the opinion of management, represent a significant exposure.
As mentioned in earlier reports the Company has eliminated all long term
debt and interest expense due to the strong cash flows generated from
operations.
The Company's primary source of working capital is from funds provided
from operations. Working capital increased over the nine month period by
$205,091 and all long term debt has been repaid. The Company believes that
it's excess cash from operations will be sufficient to finance it's long
and short term capital needs including the payment of accrued dividends.
PART II
6. EXHIBITS AND REPORTS ON FORM 8K
NONE
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SWISS CHALET, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its be half by
the undersigned thereunto duly authorized.
SWISS CHALET, INC.
DATE :02/24/99 BY:__________________________
PETER D. SOMECH
Treasurer, Director and
Principal Financial Officer
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
10QSB REPORT FOR THE QUARTER AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH 10QSB.
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<NAME> SWISS CHALET , INC.
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<CURRENT-ASSETS> 3,363,711
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