-----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, TSPVn2tJBcVR1sdztM/yXuVokmrzQ25rC7ZzLe0mOLAWZLcNad+dytVkHvV2oYqi b4n7Eq91W5r19/Z4AG8Tlw== 0000950123-96-004360.txt : 19960903 0000950123-96-004360.hdr.sgml : 19960903 ACCESSION NUMBER: 0000950123-96-004360 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATHANS FAMOUS INC CENTRAL INDEX KEY: 0000069733 STANDARD INDUSTRIAL CLASSIFICATION: 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: 96610248 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 NATHAN'S FAMOUS, INC. 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 [ x ] Quarterly report pursuant Section to 13 or 15(d) of the Securities Act of 1934 for the quarterly period ended JUNE 30, 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 June 30, 1996, an aggregate of 4,722,216 shares of the registrant's common stock, par value of $.01, were outstanding. 2 NATHAN'S FAMOUS, INC. AND SUBSIDIARIES INDEX Page Number ------ PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) Consolidated Balance Sheets - June 30, 1996 and March 31, 1996 3 Consolidated Statements of Earnings - Thirteen Weeks Ended June 30, 1996 and June 25, 1995 4 Consolidated Statements of Stockholders' Equity - Thirteen Weeks Ended June 30, 1996 5 Consolidated Statements of Cash Flows - Thirteen Weeks Ended June 30, 1996 and June 25, 1995 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- 3 PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements NATHAN'S FAMOUS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts)
June March 30, 1996 31, 1996 -------- -------- (Unaudited) Current assets: Cash and cash equivalents including restricted cash of $280 and $280, respectively $ 682 $ 801 Marketable investment securities 6,040 6,128 Franchise and other receivables, net 1,166 1,108 Inventory 228 226 Prepaid income taxes 834 746 Prepaid expenses and other current assets 47 331 Deferred income taxes 571 571 -------- -------- Total current assets 9,568 9,911 Property and equipment, net 5,782 5,615 Intangible assets, net 11,929 12,025 Other assets, net 234 214 -------- -------- $ 27,513 $ 27,765 ======== ======== Current liabilities: Current installments of obligations under capital leases $ 21 $ 23 Accounts payable 366 1,003 Accrued expenses and other current liabilities 4,707 4,671 Deferred franchise fees 314 277 -------- -------- Total current liabilities 5,408 5,974 Obligations under capital leases, net of current installments 29 35 Deferred area development fees 131 200 Other liabilities 397 414 -------- -------- Total liabilities 5,965 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 32,272 32,261 Accumulated deficit (10,771) (11,166) -------- -------- Total stockholders' equity 21,548 21,142 -------- -------- $ 27,513 $ 27,765 ======== ========
See accompanying notes to consolidated financial statements. -3- 4 NATHAN'S FAMOUS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS THIRTEEN WEEKS ENDED JUNE 30, 1996 AND JUNE 25, 1995 (In thousands, except per share amounts) (Unaudited)
1996 1995 ------ ------ Sales $5,773 $5,375 Franchise fees and royalties 813 805 License royalties 254 358 Investment and other income 132 285 ------ ------ Total revenues 6,972 6,823 ------ ------ Costs and expenses: Cost of restaurant sales 3,313 3,066 Restaurant operating expenses 1,665 1,544 Depreciation and amortization 261 421 Amortization of intangible assets 96 141 General and administrative 976 1,206 Interest expense 2 5 ------ ------ Total costs and expenses 6,313 6,383 ------ ------ Earnings before income taxes 659 440 Provision for income taxes 264 207 ------ ------ Net earnings $ 395 $ 233 ====== ====== Net earnings per common share $ 0.08 $ 0.05 ====== ====== Weighted average number of common and common equivalent shares outstanding 4,722 4,722 ====== ======
See accompanying notes to consolidated financial statements. -4- 5 NATHAN'S FAMOUS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY THIRTEEN WEEKS ENDED JUNE 30, 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 11 11 Net earnings 395 395 --------- ----------- --------- -------- -------- -------- Balance, June 30, 1996 4,722,216 $ 47 $ 32,388 $ (116) $(10,771) $ 21,548 ========= =========== ========= ======== ======== ========
See accompanying notes to consolidated financial statements. -5- 6 NATHAN'S FAMOUS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THIRTEEN WEEKS ENDED JUNE 30, 1996 AND JUNE 25, 1995 (In thousands) (Unaudited)
1996 1995 ------- -------- Cash flows from operating activities: Net earnings $ 395 $ 233 Adjustments to reconcile net earnings to net cash provided by / (used in) operating activities: Depreciation 261 410 Amortization of intangible assets 96 152 Provision for doubtful accounts 15 38 Other 11 12 Changes in assets and liabilities: Marketable investment securities 88 (2,459) Franchise and other receivables (73) (586) Inventory (2) (95) Prepaid income taxes (88) 385 Prepaid and other current assets 284 165 Deferred income taxes _ 51 Accounts payable and accrued expenses (601) (274) Deferred franchise fees 37 85 Other assets (20) 36 Deferred area development fees (69) (52) Other non current liabilities (16) (21) ------- ------- Net cash provided by / (used in) operating activities 318 (1,920) ------- ------- Cash flows from investing activities: Purchase of property and equipment (429) (715) Purchase of franchise restaurant -- (150) ------- ------- Net cash used in investing activities (429) (865) ------- ------- Cash flows from financing activities: Principal repayment of obligations under capital leases (8) ( 5 ) ------- ------- Net cash used in financing activities (8) (5) ------- ------- Net decrease in cash and cash equivalents (119) (2,790) Cash and cash equivalents, beginning of period 801 4,086 ------- ------- Cash and cash equivalents, end of period $ 682 $ 1,296 ======= ======= Cash paid during the period for: Interest $ 2 $ 6 Income taxes 31 31
See accompanying notes to consolidated financial statements. -6- 7 NATHAN'S FAMOUS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1996 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 30, 1996 and June 25, 1995 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 31, 1996. NOTE B - RECLASSIFICATIONS Certain reclassifications of prior period balances have been made to conform to the June 30, 1996 presentation. NOTE C - EARNINGS PER SHARE Weighted average common shares outstanding for the thirteen weeks ended June 30, 1996 and June 25, 1995 were 4,722,216. There were no common stock equivalents for the thirteen weeks ended June 30, 1996 and June 25, 1995. -7- 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Thirteen weeks ended June 30, 1996 compared to June 25, 1995 Revenues Company-owned restaurant sales increased 7.4% or $398,000 to $5,773,000 for the thirteen weeks ended June 30, 1996 ("first quarter fiscal 1997") from $5,375,000 for the thirteen weeks ended June 25, 1995 ("first quarter fiscal 1996"). Sales from non comparable units were $444,000 higher during the first quarter fiscal 1997 than the first quarter fiscal 1996 due primarily to the units opened subsequent to the first quarter fiscal 1996. Comparable unit sales (units operating for 18 months or longer as of the beginning of the fiscal year), declined by $46,000 or 1.0% in the first quarter fiscal 1997 versus the first quarter fiscal 1996. The Company has recently renovated two of it's larger restaurants and has experienced satisfactory sales increases thus far. Plans are currently being developed to renovate and modernize the appearance and design of certain other units. The Company has also implemented a more aggressive local store marketing campaign and value pricing strategy in order to address the sales softness. At June 30, 1996 and June 25, 1995, there were 25 and 27 Company-owned units, respectively. Franchise fees and royalties increased by $8,000 or 1.0% to $813,000 in the first quarter fiscal 1997 compared to $805,000 in the first quarter fiscal 1996. Franchise royalties decreased by $39,000 or 5.8% to $623,000 in the first quarter fiscal 1997 as compared to $662,000 in the first quarter fiscal 1996. Franchise restaurant sales, upon which royalties are based, decreased to $15,853,000 in the first quarter fiscal 1997 as compared to $16,937,000 in the first quarter fiscal 1996 due primarily to lower comparable store sales. At June 30, 1996 there were 175 franchise restaurants as compared to 163 at June 25, 1995. Franchise fee income increased to $190,000 in the first quarter fiscal 1997 as compared to $143,000 in the first quarter fiscal 1996. During the first quarter fiscal 1997, franchisees opened 7 new units versus the first quarter fiscal 1996 in which 9 new units were opened. Higher franchise fees were earned during the first quarter fiscal 1997 than during the first quarter fiscal 1996 due primarily to the higher recognition of fees associated with expired development agreements. License royalties decreased by $104,000 or 29.1% to $254,000 in the first quarter fiscal 1997 as compared to $358,000 in the first quarter 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. Investment and other income decreased to $132,000 in the first quarter fiscal 1997 from $285,000 in the first quarter fiscal 1996 due primarily to decreased earnings on the Company's marketable investment securities as a result of the change in performance of the financial markets. -8- 9 Costs and Expenses Cost of restaurant sales increased by $247,000 from $3,066,000 in the first quarter fiscal 1996 to $3,313,000 in the first quarter fiscal 1997. As a percentage of restaurant sales, cost of restaurant sales increased to 57.4% in the first quarter fiscal 1997 as compared to 57.0% in the first quarter fiscal 1996. This increase is due primarily to the impact on food costs as a result of the expanded value pricing strategies employed during the first quarter fiscal 1997. 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 increased by $121,000 from $1,544,000 in the first quarter fiscal 1996 to $1,665,000 in the first quarter fiscal 1997.This increase can be attributable to the number of operating weeks and type of Company-owned units operating during the first quarter fiscal 1997 as compared to the first quarter fiscal 1996. As a percentage of restaurant sales, restaurant operating expenses were 28.7% in the first quarter fiscal 1996 as compared to 28.8% in the first quarter fiscal 1997. In June 1996, the Company closed two unprofitable restaurants. Depreciation and amortization decreased by $160,000 or 38.0% from $421,000 in the first quarter fiscal 1996 to $261,000 in the first quarter fiscal 1997. Amortization of intangibles, debt issuance and pre-opening costs decreased by $45,000 or 31.9% from $141,000 in the first quarter fiscal 1996 to $96,000 in the first 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 $230,000 or 19.1% to $976,000 in the first quarter fiscal 1997 as compared to $1,206,000 in the first quarter 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 the first quarter fiscal 1997. As a percentage of total revenues, general & administrative costs for the first quarter fiscal 1997 was 14.0% as compared to 17.7% in the first quarter fiscal 1996. Income Tax Provision In the first quarter fiscal 1997, the income tax provision was $264,000 or 40.1% of income before income taxes. In the first quarter fiscal 1996, the income tax provision was $207,000 or 47.0% of income before income taxes. -9- 10 LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents at June 30, 1996 aggregated $682,000, decreasing by $119,000 during the fiscal 1997 period. At June 30, 1996, marketable investment securities totalled $6,040,000 and net working capital increased slightly to $4,160,000 from March 31, 1996. Cash provided by operations of $318,000 in the fiscal 1997 period is primarily attributable to net income of $395,000, non-cash charges of $383,000, including depreciation and amortization of $357,000, decrease in prepaid and other current assets of $284,000, decrease in accounts payable and accrued expenses of $601,000, increase in franchise and other receivables of $73,000 and decrease in deferred area development fees of $69,000. Cash used in investing activities of $429,000 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. -10- 11 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 30, 1996. -11- 12 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 12, 1996 By: /s/ Wayne Norbitz -------------------- Wayne Norbitz President and Chief Operating Officer (Principal Executive Officer) Date: August 12, 1996 By: /s/ Ronald G. DeVos ---------------------- Ronald G. DeVos Vice President - Finance and Chief Financial Officer (Principal Financial and Accounting Officer) -12- EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS MAR-30-1997 APR-01-1996 JUN-30-1996 682 6,040 1,746 580 228 9,568 11,591 5,809 27,513 5,408 0 0 0 47 21,501 27,513 5,773 6,972 3,313 2,022 961 15 2 659 264 395 0 0 0 395 .08 0
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