-----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, JFtCcZhJ1ImFla7jb9C71XrlDcgnnu209oeYhGtgVwR/salwcQfyuFnbBXc6x+Tq 31o/RBBDGXyXlp6/WPUU7Q== 0000912057-01-004397.txt : 20010212 0000912057-01-004397.hdr.sgml : 20010212 ACCESSION NUMBER: 0000912057-01-004397 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNO RESTAURANT CORP CENTRAL INDEX KEY: 0000812075 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 042953702 STATE OF INCORPORATION: DE FISCAL YEAR END: 0929 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09573 FILM NUMBER: 1529372 BUSINESS ADDRESS: STREET 1: 100 CHARLES PARK RD CITY: WEST ROXBURY STATE: MA ZIP: 02132 BUSINESS PHONE: 6173239200 MAIL ADDRESS: STREET 1: 100 CHARLES PARK ROAD CITY: WEST ROXBURY STATE: MA ZIP: 02132 10-Q 1 a2037333z10-q.txt FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended DECEMBER 31, 2000 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 1-9573 UNO RESTAURANT CORPORATION -------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 04-2953702 ------------------------------- ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 100 CHARLES PARK ROAD, WEST ROXBURY, MASSACHUSETTS 02132 -------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (617) 323-9200 -------------------------------------------------------------- (Registrant's telephone number, including area code) -------------------------------------------------------------- (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 such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of February 2, 2001, 10,991,788 shares of the registrant's Common Stock, $.01 par value, were outstanding. UNO RESTAURANT CORPORATION INDEX
PAGE ---- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS............................3 Consolidated Balance Sheets -- December 31, 2000 and October 1, 2000...........3 Consolidated Statements of Income -- Thirteen weeks ended December 31, 2000 and January 2, 2000.................................4 Consolidated Statements of Cash Flows -- Thirteen weeks ended December 31, 2000 and January 2, 2000.................................5 Notes to Consolidated Financial Statements......................................6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......................8 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS..................12 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...............13
2 CONSOLIDATED BALANCE SHEETS (Amounts in thousands except per share data)
DECEMBER 31, OCTOBER 1, 2000 2000 ----------- --------- (UNAUDITED) ASSETS CURRENT ASSETS Cash $ 757 $ 788 Accounts receivable, net 3,735 3,530 Inventory 2,631 2,497 Prepaid expenses and other assets 2,164 1,999 --------- --------- TOTAL CURRENT ASSETS 9,287 8,814 PROPERTY AND EQUIPMENT Land 20,126 19,640 Buildings 37,218 35,215 Leasehold improvements 106,980 106,342 Equipment 66,059 64,385 Construction in progress 3,982 3,029 --------- --------- 234,365 228,611 Allowance for depreciation and amortization 90,075 86,619 --------- --------- 144,290 141,992 OTHER ASSETS Deferred income taxes 14,493 14,132 Liquor licenses and other assets 3,192 3,538 --------- --------- $171,262 $168,476 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 7,761 $ 9,851 Accrued expenses 9,316 8,459 Accrued compensation and taxes 2,898 2,889 Income taxes payable 1,558 558 Current portion of long-term debt and capital lease obligations 3,927 3,953 --------- --------- TOTAL CURRENT LIABILITIES 25,460 25,710 Long-term debt, net of current portion 52,257 50,900 Capital lease obligations, net of current portion 452 453 Other liabilities 9,355 9,699 SHAREHOLDERS' EQUITY Preferred Stock, $1.00 par value, 1,000 shares authorized, none issued Common Stock, $.01 par value, 25,000 shares authorized, 15,774 and 15,744 shares issued and outstanding in fiscal years 2001 and 2000, respectively 158 158 Additional paid-in capital 58,943 58,755 Retained earnings 57,874 56,038 --------- --------- 116,975 114,951 Treasury Stock (4,784 shares in fiscal years 2001 and 2000) at cost (33,237) (33,237) --------- --------- TOTAL SHAREHOLDERS' EQUITY 83,738 81,714 --------- --------- $171,262 $168,476 ========= =========
3 CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands except per share data)
THIRTEEN WEEKS ENDED -------------------------------- December 31, January 2, 2000 2000 ----------- --------- REVENUES Restaurant sales $55,459 $49,028 Consumer product sales 3,333 2,811 Franchise income 1,497 1,307 -------- -------- 60,289 53,146 COSTS AND EXPENSES Cost of food and beverages 15,127 13,363 Labor and benefits 19,184 16,203 Occupancy costs 8,348 7,346 Other operating costs 5,199 4,398 General and administrative 4,810 4,203 Depreciation and amortization 3,438 3,224 Pre-opening costs 241 475 -------- -------- 56,347 49,212 OPERATING INCOME 3,942 3,934 INTEREST AND OTHER EXPENSE 1,139 640 -------- -------- INCOME BEFORE INCOME TAXES 2,803 3,294 PROVISION FOR INCOME TAXES 967 1,120 -------- -------- NET INCOME $ 1,836 $ 2,174 ======== ======== Earnings per Share: Basic $ .17 $ .19 Diluted $ .16 $ .18 Weighted average shares outstanding: Basic 10,981 11,303 Diluted 11,198 12,077
4 CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands)
THIRTEEN WEEKS ENDED -------------------- December 31, January 2, 2000 2000 ----------- -------- OPERATING ACTIVITIES Net income $ 1,836 $ 2,174 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,466 3,258 Deferred income taxes (361) (520) Provision for deferred rent 69 73 Gain on disposal of equipment (3) (23) Contribution to employee benefit program 0 55 Changes in operating assets and liabilities, net of effects from business acquisitions: Accounts receivable (205) (955) Inventory (134) (208) Prepaid expenses and other assets 171 (658) Accounts payable and other liabilities (1,637) (175) Income taxes payable 1,000 (337) -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 4,202 2,684 INVESTMENT ACTIVITIES Additions to property, equipment and leasehold improvements (5,754) (6,923) Proceeds from sale of fixed assets 3 23 -------- -------- NET CASH USED FOR INVESTING ACTIVITIES (5,751) (6,900) FINANCING ACTIVITIES Proceeds from revolving credit agreement 14,976 21,647 Principal payments on revolving credit agreement and capital lease obligations (13,646) (17,404) Exercise of stock options 188 293 -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 1,518 4,536 -------- -------- INCREASE (DECREASE) IN CASH (31) 320 CASH AT BEGINNING OF PERIOD 788 752 -------- -------- CASH AT END OF PERIOD $ 757 $ 1,072 ======== ========
Certain amounts in fiscal 2000 have been reclassified to permit comparison. 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - BASIS OF PRESENTATION The accompanying unaudited, consolidated financial statements have been prepared in accordance with instructions to Form 10-Q and, therefore, do not include all information and footnotes normally included in financial statements prepared in conformity with generally accepted accounting principles. They should be read in conjunction with our financial statements for the fiscal year ended October 1, 2000. The accompanying financial statements include all adjustments (consisting only of normal recurring accruals) that management considers necessary for a fair presentation of its financial position and results of operations for the interim periods presented. NOTE B - EARNINGS PER SHARE Basic earnings per share represents net income divided by the weighted average shares of common stock outstanding during the period. Weighted average shares used in diluted earnings per share include common stock equivalents arising from stock options using the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share.
THIRTEEN WEEKS ENDED ---------------------------- DECEMBER 31, JANUARY 2, 2000 2000 ----------- ---------- Numerator for Basic Earnings per Share: Weighted average shares outstanding 10,981,278 11,303,383 Common Stock equivalents: Stock options 216,464 773,862 ----------- ----------- Numerator for Diluted Earnings per Share: Weighted average shares outstanding including common stock equivalents 11,197,742 12,077,245 =========== =========== Net income $1,836,000 $2,174,000 =========== =========== Basic and Diluted Earnings per Share: Basic $ .17 $ .19 =========== =========== Diluted $ .16 $ .18 =========== ===========
NOTE C - 10% COMMON STOCK DIVIDEND On November 30, 1999, the Company declared a 10% Common Stock dividend payable on December 23, 1999 to stockholders of record as of December 13, 1999. All share and per share data in the accompanying financial statements have been retroactively adjusted to reflect the stock dividend. NOTE D - NEW ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which is effective for fiscal year 2001. This statement requires all derivatives to be carried on the 6 balance sheet as assets or liabilities at fair value. The accounting for changes in the fair value of the derivatives would depend on the hedging relationship and would be reported in the income statement, or as a component of comprehensive income. We adopted this new accounting standard during the first quarter of fiscal 2001. The adoption of SFAS No. 133 did not have a material impact on the consolidated financial statements. In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 101, REVENUE RECOGNITION IN FINANCIAL STATEMENTS. SAB 101 clarifies the SEC staff's views on applying generally accepted accounting principles to revenue recognition in financial statements. We are required to adopt SAB 101 in the fourth quarter of fiscal 2001, and we believe that the adoption of this pronouncement will not have an impact on the consolidated financial statements. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SAFE HARBOR CAUTIONARY STATEMENT From time to time, information and statements provided by our filings with the Securities and Exchange Commission, shareholder reports, press releases and oral statements may include forward-looking statements which reflect our current view with respect to future events and financial performance. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from historical results or those anticipated. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Risks and uncertainties include, without limitation, the ability to open new restaurants and operate new and existing restaurants profitably, changes in local, regional and national economic conditions, especially economic conditions in the areas in which our restaurants are concentrated, increasingly intense competition in the restaurant industry, increases in food, labor, employee benefits and similar costs, and other risks detailed from time to time in our news releases, reports to shareholders and periodic reports filed with the Securities and Exchange Commission. The following table sets forth the percentage relationship to total revenues, unless otherwise indicated, of certain items included in our income statements and operating data for the periods indicated: THIRTEEN WEEKS ENDED DECEMBER 31, 2000 COMPARED TO THIRTEEN WEEKS ENDED JANUARY 2, 2000
13 WEEKS ENDED ------------------------------- 12/31/00 1/02/00 -------- ------- REVENUES: Restaurant sales 92.0% 92.3% Consumer product sales 5.5 5.3 Franchise income 2.5 2.4 ------ ------ Total 100.0% 100.0% ------ ------ COSTS AND EXPENSES: Cost of food and beverages (1) 25.7% 25.8% Labor and benefits (1) 32.6 31.3 Occupancy costs (1) 14.2 14.2 Other operating costs (1) 8.8 8.5 General and administrative 8.0 7.9 Depreciation and amortization (1) 5.8 6.2 Pre-opening costs (2) 0.4 1.0 Operating income 6.5 7.4 Interest and other expense 1.9 1.2 ------ ------ Income before income taxes 4.6 6.2 Provision for income taxes 1.6 2.1 ------ ------ Net income 3.0% 4.1% ====== ======
(1) Percentage of restaurant and consumer product sales (2) Percentage of restaurant sales NUMBER OF RESTAURANTS AT END OF QUARTER: Company-owned Uno's - full service 110 101 Franchised Uno's - full service 67 61
8 TOTAL REVENUES. Total revenues increased 13.4% to $60.3 million from $53.1 million last year. RESTAURANT SALES. Company-owned restaurant sales rose 13.1% to $55.5 million during the first three months of fiscal 2001 from $49.0 million last year, due primarily to the net addition of nine restaurants during the past four quarters. This new unit growth led to an 11.1% increase in operating weeks for the first quarter versus the same period last year. Comparable store sales rose 0.3% for the quarter, also contributing to the sales growth. Average weekly sales, which includes sales at comparable stores as well as new units, increased 1.9% during the first quarter, reflecting higher-than-average sales levels for our newest prototype units. One company-owned restaurant opened and one was closed during the quarter. CONSUMER PRODUCT SALES. Consumer product sales increased 18.6% during the first quarter of fiscal 2001 to $3.3 million from $2.8 million last year. Sales in the contract food service category grew 34.5% over last year, primarily reflecting increased shipments to airlines. Sales of fresh product to retail grocers in the Northeast were down 14.5%, due in part to lower levels of promotional activity during the first quarter of fiscal 2001. FRANCHISE INCOME. Franchise income, which includes royalty income and initial franchise fees, increased to $1.5 million from $1.3 million last year. Royalty income rose 10.0% to $1.4 million this year compared to $1.2 million last year, reflecting an 8.9% increase in total operating weeks and a 2.9% gain in average weekly sales for full-service franchised restaurants. Franchise fees of $145,000 were recorded during the first quarter of fiscal 2001 compared to $78,000 last year and five full-service franchised restaurants opened during the quarter, three domestic and two international. COST OF FOOD AND BEVERAGES. Cost of food and beverages as a percentage of restaurant and consumer product sales decreased to 25.7% from 25.8% last year, reflecting the benefit of slightly lower commodity costs. LABOR AND BENEFITS. Labor costs as a percentage of restaurant and consumer product sales rose to 32.6% from 31.3%, primarily due to an increase in the average wage rate, slightly lower direct labor productivity and higher management staffing levels. OCCUPANCY COSTS. Occupancy costs at 14.2% as a percentage of restaurant and consumer product sales were unchanged from last year, as lower repairs & maintenance and rent expense offset higher utilities and real estate taxes. OTHER OPERATING COSTS. Other operating costs as a percentage of restaurant and consumer product sales increased to 8.8% from 8.5% due to higher advertising and marketing expense. GENERAL AND ADMINISTRATIVE. General and administrative expense as a percentage of total revenues increased to 8.0% from 7.9% last year, primarily reflecting growth in salary and wage costs. DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense as a percentage of restaurant and consumer product sales declined to 5.8% from 6.2% last year due to sales leverage gains. PRE-OPENING COSTS. Pre-opening costs as a percentage of restaurant sales decreased to 0.4% from 1.0% as the number of restaurant openings declined from three during the first quarter of fiscal 2000 to one in the first quarter of fiscal 2001. OPERATING INCOME. Operating income was $3,942,000, which represents an operating margin of 6.5%. Operating income for last year was $3,934,000, which represents an operating margin of 7.4%. INTEREST AND OTHER EXPENSE. Interest and other expense of $1,139,000 is up from $640,000 last year, primarily reflecting the impact of an $18.7 million increase in the average bank debt outstanding. PROVISION FOR INCOME TAXES. The effective tax rate for the quarter was 34.5% versus an effective tax rate of 34.0% for the same quarter last year. 9 NET INCOME. Net income decreased to $1.8 million from $2.2 million last year based on the factors noted above. LIQUIDITY AND SOURCES OF CAPITAL The following table presents a summary of the Company's cash flows for the period ended December 31, 2000. (IN THOUSANDS) Net cash provided by operating activities $ 4,202 Net cash used in investing activities (5,751) Net cash provided by financing activities 1,518 -------- Decrease in cash $ (31) ======== Historically, we have leased most of our restaurant locations and pursued a strategy of controlled growth, financing our expansion principally from operating cash flow, public equity offerings, the sale of senior, unsecured notes, and revolving lines of credit. During the first three months of fiscal 2001, our investment in property, equipment and leasehold improvements was $5.8 million. We currently plan to open approximately six to eight restaurants in fiscal 2001, one of which was opened in the first quarter. The average cash investment required to open a full service Pizzeria Uno restaurant, excluding land and pre-opening costs, is approximately $1.7 million. As of December 31, 2000, we had outstanding indebtedness of $51.9 million under our $55 million credit facility, $456,000 in capital lease obligations and $4.3 million under our mortgage financing. Advances under the revolving credit facility will accrue interest at the lender's prime rate plus 0-50 basis points, or alternatively, at 75-175 basis points above LIBOR. In June 2000, we amended our $55 million credit facility to increase the revolver component from $26.6 million to $36.6 million, leaving the remaining original principal amounts of the term loans of the facility unchanged. The maturity of the revolver is now June 2005. We anticipate using the revolving credit facility in the future for the development of additional restaurants and for working capital. We are currently negotiating the potential sale and leaseback of several restaurant and other properties that are expected to generate cash proceeds of approximately $35 million. These transactions will require an amendment to our revolving credit facility. On November 30, 1999, our board of directors declared a 10% stock dividend on the outstanding shares of our common stock. The stock dividend was payable on December 23, 1999 to shareholders of record as of December 13, 1999. On February 25, 2000, the board of directors amended its authorization regarding the repurchase of the company's common stock. Under this amendment, the company has approval to repurchase up to 1,500,000 shares of its common stock at such time and at such prices as the company deems appropriate. To date under this authorization, we have repurchased 1,392,775 shares, with no share repurchases occurring during the first quarter of fiscal 2001. We believe that existing cash balances, cash generated from operations and borrowing under our revolving line of credit will be sufficient to fund our capital requirements for the foreseeable future. We are currently obligated under 105 leases, including 101 leases for Company- owned restaurants, two leases for our executive offices, one lease for an office building containing one of our restaurants and one lease for a mill shop. IMPACT OF INFLATION Inflation has not been a major factor in our business for the last several years. We believe we have historically been able to pass on increased costs through menu price increases, but there can be no assurance that we will be able to do so in the future. Future increases in local area construction costs could adversely affect our ability to expand. 10 SEASONALITY Our business is seasonal in nature, with revenues and, to a greater degree, operating income being lower in the first and second fiscal quarters than in other quarters. Our seasonal business pattern is due to our concentration of units in the Northeast, and the resulting lower winter volumes. 11 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS We have market risk exposure to interest rates on our fixed and variable rate debt obligations and we manage this exposure through the use of interest rate swaps. We do not enter into contracts for trading purposes. The information below summarizes our market risk associated with debt obligations and derivative financial instruments as of December 31, 2000. For debt obligations, the table presents principal cash flows and related average interest rates by expected fiscal year of maturity. For variable rate debt obligations, the average variable rates are based on implied forward rates as derived from appropriate quarterly spot rate observations as of the fiscal quarter end. For interest rate swaps, the table presents the notional amounts and related weighted average interest rates by fiscal year of maturity. The average variable rates are the implied forward rates as derived from appropriate quarterly spot rate observations as of the fiscal quarter end. Expected Fiscal Year of Maturity (US$ in millions)
FAIR VALUE 2001 2002 2003 2004 2005 THEREAFTER 12/31/00 ---- ---- ---- ---- ---- ---------- -------- Liabilities: Fixed Rate $0.18 $0.26 $0.28 $0.31 $ 0.34 $ 2.95 $ 4.32 Average Interest Rate 8.75% 8.75% 8.75% 8.75% 8.75% Variable rate $2.76 $3.68 $2.42 $2.00 $41.00 -- $51.86 Average Interest Rate 6.78% 6.98% 7.34% 7.54% 7.73% Interest Rate Swaps: Receive Variable/ Pay Fixed $10.0 $ 0.01 Weighted Average Pay Rate 5.80% -- -- -- -- -- Average Receive Rate 5.33% -- -- -- -- --
12 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS None. (b) REPORTS ON FORM 8-K Uno Restaurant Corporation did not file any Reports on Form 8-K during the quarter ended December 31, 2000. 13 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. UNO RESTAURANT CORPORATION ------------------------------------ (Registrant) Date: FEBRUARY 9, 2001 By: /S/ CRAIG S. MILLER ----------------- ------------------------------------- Craig S. Miller Chief Executive Officer (Principal Executive Officer) Date: FEBRUARY 9, 2001 By: /S/ ROBERT M. VINCENT ----------------- ------------------------------------- Robert M. Vincent Executive Vice President and Chief Financial Officer (Principal Financial Officer) 14 -----END PRIVACY-ENHANCED MESSAGE-----