-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PnNk+CvE+n7PEZeLRIz41/pnRNT1pDTuR06d7CYaIy/GGCq6vwXq0UqEp3NFz/3y YW7nKnxjniyIo9cOYc6O1w== 0000069733-96-000002.txt : 19961111 0000069733-96-000002.hdr.sgml : 19961111 ACCESSION NUMBER: 0000069733-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960929 FILED AS OF DATE: 19961108 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATHANS FAMOUS INC CENTRAL INDEX KEY: 0000069733 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 113166443 STATE OF INCORPORATION: DE FISCAL YEAR END: 0329 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-03189 FILM NUMBER: 96657230 BUSINESS ADDRESS: STREET 1: 1400 OLD COUNTRY RD CITY: WESTBURY STATE: NY ZIP: 11590 BUSINESS PHONE: 5163388500 MAIL ADDRESS: STREET 1: 1400 OLD COUNTRY RD STREET 2: STE 400 CITY: WESTBURY STATE: NY ZIP: 11590 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 290549 Mark One [ x ] Quarterly report pursuant to Section 13 or 15(d) of the Securities Act of 1934 for the quarterly period ended September 29, 1996. [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Act of 1934 for the transition period from to . Commission File Number 1-3189 NATHAN'S FAMOUS, INC. (Exact name of registrant as specified in its charter) Delaware 11-3166443 (State or other jurisdiction of (IRS employer incorporation or organization) identification number) 1400 Old Country Road, Westbury, New York 11590 (Address of principal executive offices including zip code) (516) 338-8500 (Registrant's telephone number, including area code) 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 Act of 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 such filing requirements for the past 90 days. Yes x No At September 29, 1996, an aggregate of 4,722,216 shares of the registrant's common stock, par value of $.01, were outstanding. NATHAN'S FAMOUS, INC. AND SUBSIDIARIES INDEX Page Number PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) Consolidated Balance Sheets - September 29, 1996 and March 31, 1996 3 Consolidated Statements of Earnings - Thirteen Weeks Ended September 29, 1996 and September 24, 1995 4 Consolidated Statements of Earnings - Twenty-six Weeks Ended September 29, 1996 and September 24, 1995 5 Consolidated Statements of Stockholders' Equity - Twenty-six Weeks Ended September 29, 1996 6 Consolidated Statements of Cash Flows - Twenty-six Weeks Ended September 29, 1996 and September 24, 1995 7 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13 SIGNATURES 14 PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements NATHAN'S FAMOUS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts)
September March 29, 1996 31, 1996 (Unaudited) Assets Current assets: Cash and cash equivalents including restricted cash of $280 and $280, respectively $2,050 $ 801 Marketable investment securities 5,843 6,128 Franchise and other receivables 1,004 1,108 Inventory 275 226 Prepaid income taxes 893 746 Prepaid expenses and other current assets 210 331 Deferred income taxes 571 571 Total current assets 10,846 9,911 Property and equipment, net 5,707 5,615 Intangible assets, net 11,833 12,025 Other assets, net 193 214 $28,579 $27,765 Current liabilities: Current maturities of long-term debt $17 $23 Accounts payable 700 1,003 Accrued expenses and other current liabilities 5,117 4,671 Deferred franchise fees 252 277 Total current liabilities 6,086 5,974 Long-term debt, net of current maturities 27 35 Deferred area development fees 98 200 Deferred income taxes --- --- Other Liabilities 327 414 Total liabilities 6,538 6,623 Stockholders' equity: Common stock, $.01 par value - 20,000,000 shares authorized, 4,722,216 issued and outstanding 47 47 Additional paid-in-capital 32,285 32,261 Accumulated deficit (10,291) (11,166) Total stockholders' equity 22,041 21,142 $28,579 $27,765 See accompanying notes to consolidated financial statements.
NATHAN'S FAMOUS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS THIRTEEN WEEKS ENDED SEPTEMBER 29, 1996 AND SEPTEMBER 24, 1995 (In thousands, except per share amounts) (Unaudited)
1996 1995 Sales $5,957 $5,911 Franchise fees and royalties 881 895 License royalties 304 363 Other income 220 172 Total revenues 7,362 7,341 Costs and expenses: Cost of restaurant sales 3,427 3,367 Restaurant operating expenses 1,780 1,840 Depreciation and amortization 260 444 Amortization of intangible assets, debt issuance and pre-opening costs 103 154 General and administrative 947 1,107 Interest expense 12 6 Total costs and expenses 6,529 6,918 Earnings before income taxes 833 423 Provision for income taxes 353 187 Net earnings $ 480 $ 236 Net earnings per common share $ 0.10 $ 0.05 Weighted average number of common and common equivalent shares outstanding 4,722 4,722 See accompanying notes to consolidated financial statements.
NATHAN'S FAMOUS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS TWENTY-SIX WEEKS ENDED SEPTEMBER 29, 1996 AND SEPTEMBER 24, 1995 (In thousands, except per share amounts) (Unaudited)
1996 1995 Sales $11,730 $11,286 Franchise fees and royalties 1,694 1,700 License royalties 558 721 Other income 352 457 Total revenues 14,334 14,164 Costs and expenses: Cost of restaurant sales 6,740 6,433 Restaurant operating expenses 3,445 3,384 Depreciation and amortization 521 865 Amortization of intangible assets, debt issuance and pre-opening costs 199 295 General and administrative 1,923 2,313 Interest expense 14 11 Total costs and expenses 12,842 13,301 Earnings before income taxes 1,492 863 Provision for income taxes 617 394 Net earnings $ 875 $ 469 Net earnings per common share $ 0.19 $ 0.10 Weighted average number of common and common equivalent shares outstanding 4,722 4,722 See accompanying notes to consolidated financial statements.
NATHAN'S FAMOUS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY TWENTY-SIX WEEKS ENDED SEPTEMBER 29, 1996 (In thousands, except share amounts) (Unaudited)
Total Additional Deferred Accum- Stock- Common Common Paid in- Compen- ulated holders' Shares Stock Capital sation Deficit Equity Balance, March 31, 1996 4,722,216 $ 47 $ 32,388 $(127) $(11,166) $21,142 Amortization of deferred compensation relating to restricted stock 24 24 Net earnings 875 875 --------- ----- -------- ------ -------- ------- Balance, Sept. 29, 1996 4,722,216 $ 47 $ 32,388 $(103) $(10,291) $22,041 --------- ----- -------- ------ -------- ------- See accompanying notes to consolidated financial statements.
NATHAN'S FAMOUS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS TWENTY-SIX WEEKS ENDED SEPTEMBER 29, 1996 AND SEPTEMBER 24, 1995 (In thousands) (Unaudited)
1996 1995 Cash flows from operating activities: Net earnings $ 875 469 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 521 865 Amortization of intangible assets 199 295 Provision for doubtful accounts 30 104 Other 24 23 Changes in assets and liabilities: Marketable investment securities 285 (3,674) Franchise and other receivables 74 (515) Inventory (49) (347) Prepaids and other current assets (30) 138 Deferred income taxes - 105 Accounts payable and accrued expenses 143 210 Deferred franchise fees (25) - Other assets 21 10 Deferred area development fees (102) (77) Other non current liabilities (87) 34 Net cash (used in) provided by operating activities 1,879 (2,360) Cash flows from investing activities: Purchase of property and equipment (616) (1,140) Purchase of franchise restaurants - (150) Net cash used in investing activities (616) (1,290) Cash flows from financing activities: Principal repayment of borrowings (14) (30) Net cash used in financing activities (14) (30) Net increase (decrease) in cash and cash equivalents 1,249 (3,680) Cash and cash equivalents, beginning of period 801 4,086 Cash and cash equivalents, end of period $ 2,050 $ 406 Cash paid during the period for: Interest $ 3 $ 11 Income taxes 90 458 See accompanying notes to consolidated financial statements.
NATHAN'S FAMOUS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 29, 1996 NOTE A - BASIS OF PRESENTATION The accompanying consolidated financial statements of Nathan's Famous, Inc. and Subsidiaries (the "Company") for the thirteen and twenty-six week periods ended September 29, 1996 and September 24, 1995 have been prepared in accordance with generally accepted accounting principles. These financial statements include all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of financial condition, results of operations and cash flows for such periods. However, these results are not necessarily indicative of results for any other interim period or the full year. Certain information and footnote disclosures normally included in financial statements in accordance with generally accepted accounting principles have been omitted pursuant to the requirements of the Securities and Exchange Commission. Management believes that the disclosures included in the accompanying interim financial statements and footnotes are adequate to make the information not misleading, but should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1996. NOTE B - RECLASSIFICATIONS Certain reclassifications of prior period balances have been made to conform to the September 29, 1996 presentation. NOTE C - EARNINGS PER SHARE Weighted average common shares outstanding for the thirteen and twenty-six weeks ended September 29, 1996 and September 24, 1995 were 4,722,216. There were no common stock equivalents for the thirteen and twenty-six weeks ended September 29, 1996 and September 24, 1995. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Thirteen weeks ended September 29, 1996 compared to September 24, 1995 Revenues Company-owned restaurant sales increased 0.8% or $46,000 to $5,957,000 for the thirteen weeks ended September 29, 1996 ("second quarter fiscal 1997") from $5,911,000 for the thirteen weeks ended September 24, 1995 ("second quarter fiscal 1996"). The Company opened one new unit during fiscal 1997 which generated sales of $148,000 during the quarter. Comparable unit sales (units operating for 18 months or longer as of the beginning of the fiscal year) declined $132,000 or 2.5% during the quarter. The Company has implemented a more aggressive local store marketing campaign and value pricing strategy in order to address the sales softness. In March 1996 the Company completed the renovation of two of it's larger restaurants and has experienced sales increases at such stores thus far. Plans are currently being developed to renovate and modernize the appearance of certain other units. At September 29, 1996 and September 24, 1995, there were 26 and 27 Company-owned units, respectively. Franchise fees and royalties decreased by $14,000 or 1.6% to $881,000 in the second quarter fiscal 1997 compared to $895,000 in the second quarter fiscal 1996. Franchise royalties decreased by $3,000 or 0.5% to $692,000 in the second quarter fiscal 1997 as compared to $695,000 in the second quarter fiscal 1996. Franchisee sales upon which royalties are based decreased to $17,312,000 in the second quarter fiscal 1997 as compared to $17,689,000 in the second quarter fiscal 1996 due primarily to lower comparable sales which were partially offset by sales from the new units. At September 29, 1996 there were 180 franchise units as compared to 168 at September 24, 1995. Franchise fee income was $189,000 in the second quarter fiscal 1997 as compared to $200,000 in the second quarter fiscal 1996. During the second quarter fiscal 1997 franchisees and licensees opened 15 new units as compared to 11 new units opened during the second quarter fiscal 1996. Lower franchise fees were earned during the second quarter fiscal 1997 due mostly to the type of units opened which are smaller, offer a limited menu and provide lower initial fees but ongoing royalties based on a higher percentage of sales. License royalties decreased by $59,000 or 16.3% to $304,000 in the second quarter 1996 as compared to $363,000 in the second quarter fiscal 1996. This decrease results from the Company no longer amortizing the deferred fee received from SMG, Inc., in connection with their license agreement for the sale of Nathan's frankfurters in supermarkets. The amortization period concluded in February 1996. Other income increased to $220,000 in the second quarter fiscal 1997 from $172,000 in the second quarter fiscal 1996 primarily due to reversing an accrual for expected costs in connection with the closing of a restaurant. Costs and Expenses Cost of restaurant sales increased by $60,000 from $3,367,000 in the second quarter fiscal 1996 to $3,427,000 in the second quarter fiscal 1997. As a percentage of restaurant sales, cost of restaurant sales increased to 57.5% in the second quarter fiscal 1997 as compared to 57.0% in the second quarter fiscal 1996 due principally to the net impact of higher percentage food costs resulting from the Company's pricing strategies which were mostly offset by reduced labor costs. Restaurant operating expenses decreased as a percentage of restaurant sales from 31.1% in the second quarter fiscal 1996 to 29.9% in the second quarter fiscal 1997. This decrease primarily resulted from the benefit derived from closing two unprofitable restaurants in the first quarter of fiscal 1997. Depreciation and amortization decreased by $184,000 or 41.4% from $444,000 in the second quarter fiscal 1996 to $260,000 in the second quarter fiscal 1997. Amortization of intangibles, debt issuance and pre-opening costs decreased by $51,000 or 33.1% from $154,000 in the second quarter fiscal 1996 to $103,000 in the second quarter fiscal 1997. These decreases are primarily attributable to the reduced depreciation and amortization expense resulting from the implementation of Financial Accounting Standards Board Statement No. 121 during the fourth quarter of fiscal 1996. General and administrative expenses decreased by $160,000 or 14.5% to $947,000 in the second quarter fiscal 1997 as compared to $1,107,000 in the second quarter fiscal 1996. This decrease partially results from corporate staff reductions made during fiscal 1997. Additionally, certain one-time benefits and timing differences further lowered general and administrative expenses for the second quarter fiscal 1997. As a percentage of total revenues, general & administrative costs for the second quarter fiscal 1997 were 12.9% as compared to 15.1% for the second quarter fiscal 1996. Income Tax Provision In the second quarter fiscal 1997, the income tax provision was $353,000 or 42.4% of income before income taxes. In the second quarter fiscal 1996, the income tax provision was $187,000 or 44.2% of income before income taxes. The fiscal 1997 tax rate has been reduced to reflect the Company's estimated effective state tax rate. Twenty-six weeks ended September 29, 1996 compared to September 24, 1995 Revenues Restaurant sales increased 3.9% or $444,000 to $11,730,000 for the twenty-six weeks ended September 29, 1996 ("fiscal 1997") from $11,286,000 for the twenty-six weeks ended September 24, 1995 ("fiscal 1996"). The Company opened one new unit during fiscal 1997 which generated sales of $148,000. Comparable unit sales (units operating for 18 months or longer as of the beginning of the fiscal year) declined $178,000 or 1.8% during the period. Sales continue to be adversely affected by the discount strategies of the Company's principal competitors, increased competition and certain external factors affecting specific restaurants. The Company has implemented a more aggressive local store marketing campaign and value pricing strategy in order to address the sales softness. In March 1996 the Company completed the renovation of two of it's larger restaurants and has experienced sales increases at such stores thus far. Plans are currently being developed to renovate and modernize the appearance of certain other units. Franchise fees and royalties decreased by $6,000 or 0.4% to $1,694,000 in fiscal 1997 compared to $1,700,000 in fiscal 1996. Franchise royalties declined to $1,316,000 in fiscal 1997 as compared to $1,357,000 in fiscal 1996, representing a decrease of 3.0% or $41,000. Franchise restaurant sales upon which royalties are based decreased to $33,165,000 in fiscal 1997 as compared to $34,626,000 in fiscal 1996 primarily due to lower comparable sales which were partially offset by sales from the new units. Franchise fee income increased to $378,000 in fiscal 1997 as compared to $343,000 in fiscal 1996. During fiscal 1997, franchisees and licensees opened 22 new units versus fiscal 1996 in which 20 new units were opened. Higher franchise fees were earned during fiscal 1997 as compared to fiscal 1996 due primarily to the higher recognition of fees associated with expired development agreements. License royalties decreased by $163,000 or 22.6% to $558,000 in fiscal 1997 as compared to $721,000 in fiscal 1996. The majority of this decrease results from the Company no longer amortizing the deferred fee received from SMG, Inc., in connection with their license agreement for the sale of Nathan's frankfurters in supermarkets. The amortization period concluded in February 1996. Other income decreased to $352,000 in fiscal 1997 from $457,000 in fiscal 1996 primarily due to reduced investment income. Costs and Expenses Cost of restaurant sales increased by $307,000 from $6,433,000 in fiscal 1996 to $6,740,000 in fiscal 1997. This increase primarily results from costs associated with operating different units during fiscal 1997. As a percentage of restaurant sales, the cost of restaurant sales increased to 57.5% in fiscal 1997 as compared to 57.0% in fiscal 1996 due principally to the net impact of higher percentage food costs resulting from the Company's pricing strategies which were mostly offset by reduced labor costs. Restaurant operating expenses decreased as a percentage of restaurant sales from 30.0% in the fiscal 1996 period to 29.4% in the fiscal 1997. This decrease primarily resulted from the benefit derived from closing two unprofitable restaurants in the first quarter of fiscal 1997. Depreciation and amortization decreased by $344,000 or 39.8% from $865,000 in fiscal 1996 to $521,000 in fiscal 1997. Amortization of intangibles, debt issuance and pre-opening costs decreased by $96,000 or 32.5% from $295,000 in fiscal 1996 to $199,000 in fiscal 1997. These decreases are primarily attributable to the reduced depreciation and amortization expense resulting from the implementation of Financial Accounting Standards Board Statement No. 121 during the fourth quarter of fiscal 1996. General and administrative expenses decreased by $390,000 or 16.9% to $1,923,000 in fiscal 1997 as compared to $2,313,000 in fiscal 1996. This decrease partially results from corporate staff reductions made during fiscal 1996 and the first quarter fiscal 1997. Additionally, certain one-time benefits and timing differences further lowered general and administrative expenses for fiscal 1997. As a percentage of total revenues, general & administrative costs for fiscal 1997 was 13.4% as compared to 16.3% in fiscal 1996. Income Tax Provision In fiscal 1997 the income tax provision was $617,000 or 41.4% of income before income taxes. In fiscal 1996 the income tax provision was $394,000 or 45.7% of income before income taxes. The fiscal 1997 tax rate has been reduced to reflect the Company's estimated effective state tax rate. Liquidity and Capital Resources Cash and cash equivalents at September 29, 1996 aggregated $2,050,000, increasing by $1,249,000 during the fiscal 1997 period. At September 29, 1996, marketable investment securities totalled $5,843,000 and net working capital increased to $4,760,000 from $3,937,000 at March 31, 1996. Cash provided by operations of $1,879,000 in fiscal 1997 to date is primarily attributable to net income of $875,000, non-cash charges of $774,000, including depreciation and amortization of $720,000, a decrease in marketable investment securities of $285,000, an increase in accounts payable and accrued expenses of $143,000, a decrease in franchise and other receivables of $74,000 and decreases in deferred area development fees and other non current liabilities of $102,000 and $87,000, respectively. Cash used in investing activities of $616,000 represents property and equipment purchases relating to the construction of a new Company-owned unit which opened in July 1996, and other fixed asset additions. Management believes that available cash, marketable investment securities, and internally generated funds should provide sufficient capital for its planned operations and expansion program through fiscal 1997. The Company also maintains a $5,000,000 uncommitted bank line of credit. The Company has not borrowed any funds to date under this line of credit. PART II. OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27 - Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter ended September 29, 1996. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NATHAN'S FAMOUS, INC. Date: November 4, 1996 By: /s/ Wayne Norbitz Wayne Norbitz President and Chief Operating Officer (Principal Executive Officer) Date: November 4, 1996 By: /s/ Ronald DeVos Ronald DeVos Vice President - Finance and Chief Financial Officer EX-27 2 FDS --
5 The schedule contains summary financial information extracted from the condensed financial statements for the quarter ended September 30, 1996 and is qualified in its entirety by reference to such statements. (All figures in thousands except per share amounts.) 6-mos Mar-30-1997 Sep-29-1996 2,050 5,843 1,610 606 275 10,846 11,778 6,071 28,579 6,086 0 0 0 47 21,994 28,579 11,730 2,604 6,740 4,165 1,893 30 14 1,492 617 875 0 0 0 875 0.19 0.00
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