-----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, SgfteHFj8NjBGZKkbtOuDoMs9eebyBYcbHFC57kTsGDkTnd+PBun+TzloTu2vc4q DqbHJJR1YIvxSCKfUbk5GQ== 0000069733-97-000009.txt : 19970812 0000069733-97-000009.hdr.sgml : 19970812 ACCESSION NUMBER: 0000069733-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970629 FILED AS OF DATE: 19970811 SROS: NASD 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: 97655699 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 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 [ x ] Quarterly report pursuant to Section 13 or 15(d) of the Securities Act of 1934 for the quarterly period ended June 29, 1997. [ ] 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 June 29, 1997, an aggregate of 4,722,216 shares of the registrant's common stock, par value of $.01, were outstanding. -1- NATHAN'S FAMOUS, INC. AND SUBSIDIARIES INDEX
Page Number PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) Consolidated Balance Sheets - June 29, 1997 and March 30, 1997 3 Consolidated Statements of Earnings - Thirteen Weeks Ended June 29, 1997 and June 30, 1996 4 Consolidated Statements of Stockholders' Equity - Thirteen Weeks Ended June 29, 1997 5 Consolidated Statements of Cash Flows - Thirteen Weeks Ended June 29, 1997 and June 30, 1996 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12
-2- PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements NATHAN'S FAMOUS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts)
June March 29, 1997 30, 1997 (Unaudited) Current assets: Cash and cash equivalents including restricted cash of $280 and $280, respectively $ 241 $ 647 Marketable investment securities 7,850 7,640 Franchise and other receivables, net 1,351 1,039 Inventory 217 213 Prepaid income taxes --- --- Prepaid expenses and other current assets 258 502 Deferred income taxes 415 415 ----- ----- Total current assets 10,332 10,456 Property and equipment, net 5,916 5,480 Intangible assets, net 11,555 11,640 Other assets, net 192 218 ----- ----- $27,995 $27,794 ======= ======= Current liabilities: Current installments of obligations under capital leases $ 17 $ 17 Accounts payable 568 754 Accrued expenses and other current liabilities 4,503 4,614 Deferred franchise fees 283 269 ----- ----- Total current liabilities 5,371 5,654 Obligations under capital leases, net of current installments 18 21 Deferred area development fees --- --- Other liabilities 144 143 ----- ----- Total liabilities 5,533 5,818 ----- ----- Stockholders' equity: Common stock, $.01 par value - 20,000,000 shares authorized, 4,722,216 issued and outstanding 47 47 Additional paid-in-capital 32,319 32,307 Accumulated deficit (9,904) (10,378) ------- ------- Total stockholders' equity 22,462 21,976 ------- ------- $27,995 $27,794 ======== ======= See accompanying notes to consolidated financial statements.
-3- NATHAN'S FAMOUS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS THIRTEEN WEEKS ENDED JUNE 29, 1997 AND JUNE 30, 1996 (In thousands, except per share amounts) (Unaudited)
1997 1996 ---- ---- Sales $5,907 $5,773 Franchise fees and royalties 671 813 License royalties 405 254 Investment and other income 379 132 ------ ----- Total revenues 7,362 6,972 ------ ----- Costs and expenses: Cost of sales 3,503 3,313 Restaurant operating expenses 1,613 1,665 Depreciation and amortization 252 261 Amortization of intangible assets 96 96 General and administrative 1,103 976 Interest expense 1 2 ----- ----- Total costs and expenses 6,568 6,313 ----- ----- Earnings before income taxes 794 659 Provision for income taxes 320 264 ----- ----- Net earnings $ 474 $ 395 ====== ====== Net earnings per common share $ 0.10 $ 0.08 ====== ====== Weighted average number of common and common equivalent shares outstanding 4,766 4,722 ====== ====== See accompanying notes to consolidated financial statements.
-4- NATHAN'S FAMOUS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY THIRTEEN WEEKS ENDED JUNE 29, 1997 (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 30, 1997 4,722,216 $ 47 $ 32,388 $ ( 81) $(10,378) $21,976 Amortization of deferred compensation relating to restricted stock 12 12 Net earnings 474 474 ---------- -------- --------- --------- --------- ------- Balance, June 29, 1997 4,722,216 $ 47 $ 32,388 $ ( 69) $( 9,904) $22,462 ========= ========== ========= ========= ========= ======== See accompanying notes to consolidated financial statements.
-5- NATHAN'S FAMOUS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THIRTEEN WEEKS ENDED JUNE 29, 1997 AND JUNE 30, 1996 (In thousands) (Unaudited)
1997 1996 -------- -------- Cash flows from operating activities: Net earnings $ 474 $ 395 Adjustments to reconcile net earnings to net cash provided by / (used in) operating activities: Depreciation 252 261 Amortization of intangible assets 96 96 Provision for doubtful accounts 15 15 Other 12 11 Changes in assets and liabilities: Marketable investment securities (210) 88 Franchise and other receivables (327) ( 73) Inventory ( 4) ( 2) Prepaid income taxes --- ( 88) Prepaid and other current assets 244 284 Deferred income taxes --- --- Accounts payable and accrued expenses (297) (601) Deferred franchise fees 14 37 Other assets 26 (20) Deferred area development fees --- (69) Other non current liabilities 1 (16) ------ ------ Net cash provided by / (used in) operating activities 296 318 ------ ------ Cash flows from investing activities: Purchase of property and equipment (699) ( 429) Purchase of franchise restaurant --- --- ------ ------ Net cash used in investing activities (699) ( 429) ------ ------ Cash flows from financing activities: Principal repayment of obligations under capital leases (3) ( 8) ------ ------ Net cash used in financing activities (3) ( 8) ------ ------ Net decrease in cash and cash equivalents (406) ( 119) Cash and cash equivalents, beginning of period 647 801 ------- ------- Cash and cash equivalents, end of period $ 241 $ 682 ========= ========= Cash paid during the period for: Interest $ 1 $ 2 Income taxes 260 31 See accompanying notes to consolidated financial statements.
-6- NATHAN'S FAMOUS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 29, 1997 NOTE A - BASIS OF PRESENTATION The accompanying consolidated financial statements of Nathan's Famous, Inc. and subsidiaries (the "Company")for the thirteen week periods ended June 29, 1997 and June 30, 1996 have been prepared in accordance with generally accepted accounting principles. The unaudited financial statements include all adjustments (consisting of normal recurring adjustments) which, in the opinion of management, were necessary for a fair presentation of financial condition, results of operations and cash flows for such periods presented. 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 30, 1997. NOTE B - RECLASSIFICATIONS Certain reclassifications of prior period balances have been made to conform to the June 29, 1997 presentation. NOTE C - EARNINGS PER SHARE Weighted average common shares outstanding for the thirteen weeks ended June 29, 1997 and June 30, 1996 were 4,765,552 and 4,722,216, respectively. Common stock equivalents for the thirteen weeks ended June 29, 1997 and June 30, 1996 were 43,336 and 0 , respectively. -7- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Thirteen weeks ended June 29, 1997 compared to June 30, 1996 Revenues Total sales increased 2.3% or $134,000 to $5,907,000 for the thirteen weeks ended June 29, 1997 ("first quarter fiscal 1998") from $5,773,000 for the thirteen weeks ended June 30, 1996 ("first quarter fiscal 1997"). Company-owned restaurant sales increased 0.9% or $51,000 to $5,824,000 from $5,773,000. Comparable unit sales (units operating for 18 months or longer as of the beginning of the fiscal year), increased by $44,000 or 0.9% in the first quarter fiscal 1998 versus the first quarter fiscal 1997. The Company continues to emphasize the aggressive local store marketing activities and value pricing strategies that were implemented last year. Additionally, the Company has recently completed the renovation of its Yonkers, NY restaurant which is now operated as a co- branded Nathan's / Pizza Hut / TCBY. Plans are currently being developed to renovate and modernize the appearance and design of certain other units. At June 29, 1997 and June 30, 1996, there were 24 and 25 Company-owned units, respectively. Sales from the newly implemented Branded Product Program were $83,000 for the first quarter fiscal 1998. Franchise fees and royalties decreased by $142,000 or 17.5% to $671,000 in the first quarter fiscal 1998 compared to $813,000 in the first quarter fiscal 1997. Franchise royalties decreased by $55,000 or 8.8% to $568,000 in the first quarter fiscal 1998 as compared to $623,000 in the first quarter fiscal 1997. Franchise restaurant sales, upon which royalties are based, decreased by $1,892,000, to $13,961,000 in the first quarter fiscal 1998 as compared to $15,853,000 in the first quarter fiscal 1997. At June 29, 1997 there were 150 franchised or licensed restaurants as compared to 175 at June 30, 1996. During the first quarter fiscal 1997, the 53 Caldor units which were subsequently closed generated sales and royalties of approximately $2,133,000 and $85,000, respectively. Franchise fee income decreased to $103,000 in the first quarter fiscal 1998 as compared to $190,000 in the first quarter fiscal 1997. During the first quarter fiscal 1998, franchisees and licensees opened 9 new units versus the first quarter fiscal 1997 in which 6 new units were opened. Higher franchise fees were earned during the first quarter fiscal 1997 than during the first quarter fiscal 1998 due primarily to the higher recognition of fees associated with expired development agreements. License royalties increased by $151,000 or 59.4% to $405,000 in the first quarter fiscal 1998 as compared to $254,000 in the first quarter fiscal 1997. The majority of this increase is a result of the Company's license arrangement with SMG, Inc., for the sale of Nathan's frankfurters in supermarkets. Of the total $151,000 increase, approximately $81,000 represents royalties earned from higher sales to supermarkets and $60,000 represents amortization of the deferred fee received from SMG, Inc. in conjunction with the renegotiation of their contract commencing January 1, 1997. -8- Investment and other income increased to $379,000 in the first quarter fiscal 1998 from $132,000 in the first quarter fiscal 1997. Approximately $128,000 of the increase is due primarily to increased earnings on the Company's marketable investment securities as a result of the change in performance of the financial markets. Additionally, the Company recognized a gain of approximately $130,000 from the sale of an underperforming restaurant. Costs and Expenses Cost of sales increased by $190,000 from $3,313,000 in the first quarter fiscal 1997 to $3,503,000 in the first quarter fiscal 1998. As a percentage of restaurant sales, cost of restaurant sales increased to 58.9% in the first quarter fiscal 1998 as compared to 57.4% in the first quarter fiscal 1997. This increase is due primarily to higher labor and associated fringe benefit costs. The Company continues to take steps to offset this margin erosion which has become necessary to remain competitive in the current marketplace. Restaurant operating expenses decreased by $52,000 from $1,665,000 in the first quarter fiscal 1997 to $1,613,000 in the first quarter fiscal 1998. This decrease can be attributed to the closure of two unprofitable restaurants in June 1996. As a percentage of restaurant sales, restaurant operating expenses were 28.8% in the first quarter fiscal 1997 as compared to 27.7% in the first quarter fiscal 1998. Depreciation and amortization decreased by $9,000 or 3.4% from $261,000 in the first quarter fiscal 1997 to $252,000 in the first quarter fiscal 1998. Amortization of intangibles of $96,000 remained constant in both fiscal years. General and administrative expenses increased by $127,000 or 13.0% to $1,103,000 in the first quarter fiscal 1998 as compared to $976,000 in the first quarter fiscal 1997. Approximately $75,000 of the increase relates to the effect of certain one-time benefits recognized in the first quarter fiscal 1997. Income Tax Provision In the first quarter fiscal 1998, the income tax provision was $320,000 or 40.3% of income before income taxes. In the first quarter fiscal 1997, the income tax provision was $264,000 or 40.1% of income before income taxes. -9- Liquidity and Capital Resources Cash and cash equivalents at June 29, 1997 aggregated $241,000, decreasing by $406,000 during the fiscal 1998 period. At June 29, 1997, marketable investment securities totalled $7,850,000 and net working capital increased slightly to $4,961,000 from March 30, 1997. Cash provided by operations of $296,000 in the fiscal 1998 period is primarily attributable to net income of $474,000, non-cash charges of $375,000, including depreciation and amortization of $348,000, a decrease in prepaid and other current assets of $244,000, a decrease in accounts payable and accrued expenses of $297,000, an increase in marketable investment securities of $210,000 and an increase in franchise and other receivables of $327,000. Cash used in investing activities of $699,000 represents capital acquisitions relating to the renovation of the Company-owned restaurant in Yonkers, NY, construction of a new Company-owned unit which is expected to open in August 1997 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 1998. 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. -10- PART II. OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K (a) Exhibits None. (b) No reports on Form 8-K were filed during the quarter ended June 29, 1997. -11- 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: August 7, 1997 By: /s/ Wayne Norbitz Wayne Norbitz President and Chief Operating Officer (Principal Executive Officer) Date: August 7, 1997 By: /s/ Ronald G. DeVos Ronald G. DeVos Vice President - Finance and Chief Financial Officer (Principal Financial and Accounting Officer) -12- EX-27 2
5 3-MOS MAR-30-1997 JUN-29-1997 241 7850 1947 596 217 10332 12736 6820 27995 5371 0 0 0 47 22415 27995 5907 7362 3503 1961 1088 15 1 794 320 474 0 0 0 474 0.10 0
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