-----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, GLS+f/CKd8e6d3YmxHbQDLJdOtMHXMulcFHEsnFxdnC5rX2n4UAFPeVnnGNAn5zc psNx9U6qsYSri4aiEUNU2Q== 0000916080-96-000009.txt : 19960820 0000916080-96-000009.hdr.sgml : 19960820 ACCESSION NUMBER: 0000916080-96-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960819 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOBLE ROMANS INC CENTRAL INDEX KEY: 0000709005 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 351281154 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11104 FILM NUMBER: 96617571 BUSINESS ADDRESS: STREET 1: ONE VIRGINIA AVE STREET 2: SUITET 800 CITY: INDIANAPOLIS STATE: IN ZIP: 46204 BUSINESS PHONE: 3176343377 MAIL ADDRESS: STREET 1: ONE VIRGINIA AVENUE STREET 2: SUITE 800 CITY: INDIANAPOLIS STATE: IN ZIP: 46204 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 - ------------------------------------------------------------------------- FORM 10-Q - ------------------------------------------------------------------------- (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996 OR ___TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . ------- ----------- Commission file number: 0-11104 NOBLE ROMAN'S, INC. (Exact name of registrant as specified in its charter) Indiana 35-1281154 (State or other (I.R.S. Employer jurisdiction of organization) Identification No.) One Virginia Avenue, Suite 800 Indianapolis, Indiana 46204 (Address of principal executive offices) (Zip Code) (317) 634-3377 (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 l5(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 such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- As of August 15, 1996, there were 4,131,324 shares of Common Stock, no par value, outstanding. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. The following condensed consolidated financial statements are included herein: Condensed consolidated balance sheets as of December 31, 1995 and June 30, 1996 Page 3 Condensed consolidated statements of operations for the six and three months ended June 30, 1995 and 1996 Page 4 Condensed consolidated statements of cash flows for the six months ended June 30, 1995 and 1996 Page 5 The interim condensed consolidated financial statements included herein reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented, which adjustments are of a normal recurring nature. The Company provides for current and deferred income tax liabilities and assets utilizing an asset and liability approach along with a valuation allowance as appropriate. At December 31, 1995 the Company determined that it needed to revise its financial reporting for deferred income tax liability and, therefore, increased its accrual for income tax expense. The change effected the entire 1995 year and when spread over the year had the effect of lowering previously reported first quarter 1995 earnings by $17,331 and second quarter 1995 by $7,948. This change is reflected on the Condensed Consolidated Statement of Operations for the six and three months ended June 30, 1995 included herein. Noble Roman's, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) December 31 June 30 1995 1996 ------------- ---------- Assets Current assets: Cash $ 229,462 $ 256,559 Accounts receivable 950,622 946,854 Inventories 980,534 1,003,520 Prepaid expenses 512,949 767,689 ------------- ---------- Total current assets 2,673,567 2,974,622 Property and equipment, less accumulated depreciation and amortization of $3,737,594 and $4,090,022 9,135,949 9,177,257 Costs in excess of assets acquired, net 6,722,812 6,592,322 Other assets 1,476,426 1,576,463 ------------- ---------- $ 20,008,754 $20,320,664 ------------- ---------- Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 946,033 $ 1,981,526 Notes payable - current 761,128 1,011,128 Other current liabilities 1,019,247 677,437 ------------- ---------- Total current liabilities 2,726,408 3,670,091 Long-term liabilities: Revolving line of credit 2,914,919 4,000,000 Notes payable-less current portion 8,150,793 7,672,892 Capital leases 258,037 117,050 Deferred tax liability 696,041 169,129 ------------- ---------- Total long-term liabilities 12,019,790 11,959,071 Stockholders' equity Common stock, no par value, authorized 9,000,000 shares, issued 4,131,324 and 4,131,324 5,458,431 5,458,431 Retained earnings (195,875) (766,929) ------------- ---------- Total stockholder's equity 5,262,556 4,691,502 ------------- ---------- $ 20,008,754 $20,320,664 ------------- ----------
Noble Roman's, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) Six Months Ended Three Months Ended June 30 June 30 1995 1996 1995 1996 ------- ------- ------- ------- Restaurant revenue $15,823,691 $16,860,810 $ 7,779,443 $ 8,145,365 Royalties 116,217 98,419 58,964 39,700 Administrative fees and other 194,672 142,501 85,305 30,475 ----------- -------- ---------- ---------- Total revenue 16,134,580 17,101,730 7,923,712 8,215,540 Restaurant operating expenses: Cost of revenue 2,861,257 3,308,766 1,422,836 1,683,557 Salaries and wages 4,946,390 5,476,232 2,466,216 2,755,105 Rent 1,333,004 1,489,877 666,597 774,017 Advertising 723,676 808,754 358,070 407,469 Other 3,695,409 4,169,871 1,851,198 2,134,542 Depreciation and amortization 566,705 595,744 282,875 298,622 General and administrative 956,102 1,103,804 457,725 678,000 Cost of attempted acquisition and equity offering 768,389 768,389 ----------- -------- ---------- ---------- Operating income 1,052,037 (619,707) 418,195 (1,284,161) Interest and other expense 583,432 707,642 298,758 374,125 ----------- -------- ---------- ---------- Income before income taxes 468,605 (1,327,349) 119,437 (1,658,286) Income taxes 165,886 (468,437) 48,948 (585,375) ----------- ------- ---------- ---------- Net income $302,719 $ (858,912) $ 70,489 $(1,072,911) ----------- ------- ---------- ---------- Net income per share $ .08 $ (.21) $ .02 $ (.26) Weighted average number of common shares outstanding 3,995,495 4,131,324 3,997,574 4,131,324
Noble Roman's and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30 ------------------------------------------- 1995 1996 ------------------------------------------- OPERATING ACTIVITIES Net income $ 309,605 $ (858,912) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 658,538 654,637 Changes in operating assets and liabilities (increase) decrease in: Accounts receivable (62,413) 3,768 Inventory (159,429) (22,986) Prepaid expenses (348,409) (254,740) Other assets 10,000 (100,037) Increase (decrease) in: Accounts payable 729,466 1,031,936 Accrued expenses (386,071) (868,722) ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 751,287 (415,056) INVESTING ACTIVITIES Purchase of fixed assets (1,111,839) (387,367) Payments received on notes receivable 1,023 -- ---------- ----------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (1,110,816) (387,367) FINANCING ACTIVITIES Proceeds from long-term debt -- 1,085,081 Proceeds from sale of common stock 17,510 -- Principal payments on long-term debt and capital lease obligations (152,521) (255,561) ---------- ----------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (135,011) 829,520 ---------- ----------- INCREASE (DECREASE) IN CASH (494,540) 27,097 Cash at beginning of period 621,726 229,462 ---------- ----------- Cash at end of period $ 127,186 $ 256,559 ---------- -----------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION Noble Roman's, Inc. and Subsidiaries Results of Operations - Six month and three month periods ended June 30, 1995 and 1996 The following table sets forth the percentage relationship to total revenue of the listed items included in Noble Roman's consolidated statement of operations. Certain items are shown as a percentage of restaurant revenue. Six Months Ended Three Months Ended June 30 June 30 1995 1996 1995 1996 -------- -------- -------- -------- Revenue: Restaurant revenue 98.1% 98.6% 98.2% 99.1% Royalties .7 .6 .7 .5 Administrative fees and other 1.2 .8 1.1 .4 -------- -------- -------- -------- 100.0 100.0 100.0 100.0 Restaurant operating expenses (1): Cost of revenue 18.1 19.6 18.3 20.7 Salaries and wages 31.3 32.5 31.7 33.8 Rent 8.4 8.8 8.6 9.5 Advertising 4.6 4.8 4.6 5.0 Other 23.4 24.7 23.8 26.2 Depreciation and amortization 3.5 3.5 3.6 3.6 General and administrative 5.9 6.5 5.8 8.3 Loss from withdrawn acquisition and offering -- 4.5 -- 9.4 -------- -------- -------- -------- Operating income 6.5 (3.6) 5.3 (15.6) Interest 3.6 4.1 3.8 4.6 -------- -------- -------- -------- Income before federal income taxes 2.9% (7.8%) 1.5% (20.2%) (1) As a percentage of restaurant revenue
Total revenue increased 6.0% and 3.7% in the six months and three months ended June 30, 1996, respectively. The increase was primarily attributable to revenue at the four new restaurants opened after the second quarter in 1995 and the one new restaurant opened during the first quarter of 1996. Cost of revenue as percentage of restaurant revenue increased from 18.1% in the first six months of 1995 to 19.6% in the same period in 1996 and from 18.3% to 20.7% in the three month period ended June 30, 1995 and 1996, respectively. The increase was primarily the result of increased cheese prices and a 25th Anniversary price rollback promotion in April, 1996. Salaries and wages increased as a percentage of restaurant revenue from 31.3% and 31.7% for the six and three month periods ended June 30, 1995 compared to 32.5% and 33.8% in the same periods in 1996. The increase was attributable to a higher average hourly wage and to inefficient scheduling of hourly employees, both of which were the result of senior management's focus on an acquisition during those periods. Other expenses increased as a percentage of revenue from 23.4% and 23.8% in the six and three month periods ended in 1995 to 24.7% and 26.2% in the same periods in 1996. This increase was primarily attributable to the lack of execution of the operating controls as a result of the Company's senior management being focused on an acquisition which was subsequently withdrawn. General and administrative expenses as a percentage of total revenue increased from 5.9% and 5.8% during the six and three month periods ended June 30, 1995 to 6.5% and 8.3% in the same periods in l996. This increase as a percentage of total revenue was primarily attributable to same store net revenue decline, to hiring additional supervisory personnel because of senior management's focus on an acquisition and to additional training and hiring expense because of turnover of restaurant level management due to ineffective supervision. Operating income decreased from $1,052 thousand and $418 thousand in the six and three month periods ended June 30, 1995 to ($620 thousand) and ($1,284 thousand) in the same periods in 1996. Operating income decreased because of the poor operating controls discussed in the three previous paragraphs and because of the $768 thousand cost incurred in the second quarter 1996 for an acquisition and equity offering which was abandoned in June, 1996. Interest expense increased from $583 thousand and $299 thousand for the six and three month periods ended June 30, 1995 to $708 thousand and $374 thousand in the same periods in 1996. This increase is the result of a higher interest rate on the Company's debt as a result of the refinancing in December, 1995 in order to repay notes which had a short term maturity and because of an increase in the amount of outstanding debt. Income before federal income taxes decreased from $469 thousand and $119 thousand for the six and three month periods ended June 30, 1995 to ($1,327 thousand) and ($1,658 thousand) in the same periods in 1996. This decrease was primarily attributable to the attempted acquisition of a 180 restaurant pizza chain and the withdrawal of that attempt which both resulted in the cost directly attributable to that effort and to the inefficiencies in the Company's operations as a result of senior management's focus and time involvement in that acquisition. LIQUIDITY AND CAPITAL RESOURCES As a result of the $768 thousand spent on the attempted acquisition of 180 restaurants located in Boston, Massachusetts and surrounding areas and because of the Company's inefficient operations as a result of that attempted acquisition and of senior management's time and focus on that acquisition, the Company is in technical default of the terms of its senior credit facility as the Company is out of compliance with the various financial covenants and has a shortage of working capital. Management of the Company has had ongoing discussions with representatives of the bank which provides the senior credit facility regarding restructuring the credit facility to meet the current needs. The Company has requested the bank to increase its credit facility by $2 million and to revise the various financial covenants contained in the credit facility agreement. Representatives of the bank have expressed a desire to work with the Company subject to further review and analysis. Management believes that cash generated from future operations will be sufficient to meet its needs provided the existing credit facility is amended as discussed in the previous paragraph. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. From time to time, the Company is involved in litigation relating to claims arising out of its normal business operations. The Company believes that none of its current proceedings, individually or in the aggregate, will have a material adverse effect on the Company. ITEM 2. CHANGES IN SECURITIES. None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. As a result of the $768 thousand spent on the attempted acquisition of 180 restaurants located in Boston, Massachusetts and surrounding areas and because of the Company's inefficient operations as a result of that attempted acquisition and of senior management's time and focus on that acquisition, the Company is in technical default of the terms of its senior credit facility as the Company is out of compliance with the various financial covenants and has a shortage of working capital. Management of the Company has had ongoing discussions with representatives of the bank which provides the senior credit facility regarding restructuring the credit facility to meet the current needs. The Company has requested the bank to increase its credit facility by $2 million and to revise the various financial covenants contained in the credit facility agreement. Representatives of the bank have expressed a desire to work with the Company subject to further review and analysis. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit 27 Financial Data Schedule SIGNATURES 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 thereunto duly authorized. NOBLE ROMAN'S, INC. Date: August 19, 1996 By: /s/ Paul W. Mobley ------------------------- Paul W. Mobley, President (Principal Executive Officer and Chief Financial Officer) EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 0000709005 NOBLE ROMAN'S, INC. 6-MOS DEC-31-1996 JUN-30-1996 256,559 0 1,046,854 (100,000) 1,003,520 2,974,622 13,267,279 (4,090,022) 20,320,664 3,670,091 12,940,199 0 0 5,458,431 (766,929) 20,320,664 16,860,810 17,101,730 3,308,766 11,947,734 2,467,937 0 707,642 (1,327,349) (468,437) (858,912) 0 0 0 (858,912) (.21) (.21)
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