-----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, WmVi9xu8uZZvBB1QscjMM6Yoo+fWxWoVINM4f27StZwADDmunodbcZwSPNt0nBHv thX3a2rSdzRfHEqqRojmTA== 0000950135-98-000496.txt : 19980209 0000950135-98-000496.hdr.sgml : 19980209 ACCESSION NUMBER: 0000950135-98-000496 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971228 FILED AS OF DATE: 19980206 SROS: NYSE 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: 98523330 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 UNO RESTAURANT CORP. 1 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 28, 1997 ------------------- 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 January 28, 1998, 10,939,055 shares of the registrant's Common Stock, $.01 par value, were outstanding. 2 UNO RESTAURANT CORPORATION INDEX PAGE ---- PART I. FINANCIAL INFORMATION - ------------------------------ ITEM 1. FINANCIAL STATEMENTS.....................................3 Consolidated Balance Sheets -- December 28, 1997 and September 28, 1997.................3 Consolidated Statements of Income -- Thirteen weeks ended December 28, 1997 and December 29, 1996............4 Consolidated Statements of Cash Flows -- Thirteen weeks ended December 28, 1997 and December 29, 1996........................................5 Notes to Consolidated Financial Statements...............................................6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS................................7 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS...........................10 PART II. OTHER INFORMATION - --------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................11 2 3
CONSOLIDATED BALANCE SHEETS (Amounts in thousands except share data) Dec. 28, Sept 28, 1997 1997 --------- --------- (Unaudited) ASSETS CURRENT ASSETS Cash $ 1,937 $ 1,486 Royalties receivable 348 728 Consumer products receivable 416 844 Inventory 2,357 2,326 Deferred pre-opening costs 1,158 949 Prepaid expenses and other assets 2,606 1,959 --------- --------- TOTAL CURRENT ASSETS 8,822 8,292 PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS Land 15,933 15,883 Buildings 27,357 25,265 Leasehold improvements 89,540 87,047 Equipment 50,855 49,802 Construction in progress 2,087 4,201 --------- --------- 185,772 182,198 Less allowance for depreciation and amortization 59,834 56,841 --------- --------- 125,938 125,357 OTHER ASSETS Deferred income taxes 7,044 6,599 Royalty fee 220 241 Liquor licenses and other assets 3,266 3,243 --------- --------- $ 145,290 $ 143,732 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 4,691 $ 6,966 Accrued expenses 8,334 7,563 Accrued compensation and taxes 2,263 2,641 Income taxes payable 1,869 2,076 Current portion of long-term debt and capital lease obligations 4,059 3,132 --------- --------- TOTAL CURRENT LIABILITIES 21,216 22,378 Long-term debt, net of current portion 43,992 42,516 Capital lease obligations, net of current portion 818 867 Other liabilities 7,166 7,091 SHAREHOLDERS' EQUITY Preferred Stock, $1.00 par value, 1,000,000 shares authorized, none issued Common Stock, $.01 par value, 25,000,000 shares auth- orized, 10,965,455 and 13,754,480 shares issued and out- standing in Fiscal Years 1998 and 1997, respectively 138 138 Additional paid-in capital 53,813 53,803 Retained earnings 38,024 36,816 --------- --------- 91,975 90,757 Treasury Stock (2,790,597 shares at cost, in Fiscal Years 1998 and 1997, respectively) (19,877) (19,877) --------- --------- TOTAL SHAREHOLDERS' EQUITY 72,098 70,880 --------- --------- $ 145,290 $ 143,732 ========= =========
3 4 CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands except per share data)
Thirteen Weeks Ended ------------------------------ Dec 28, Dec 29, 1997 1996 ------- ------ REVENUES Restaurant sales $41,611 $38,967 Consumer product sales 2,285 2,162 Franchise income 1,072 1,035 ------- ------- 44,968 42,164 COSTS AND EXPENSES Cost of sales 11,331 10,703 Labor and benefits 13,749 12,899 Occupancy 6,990 6,574 Other operating costs 3,758 3,601 General and administrative 3,126 3,110 Depreciation and amortization 3,288 3,012 ------- ------- 42,242 39,899 ------- ------- OPERATING INCOME 2,726 2,265 OTHER EXPENSE 923 610 ------- ------- Income before income taxes 1,803 1,655 Provision for income taxes 595 563 ------- ------- NET INCOME $ 1,208 $ 1,092 ======= ======= BASIC EARNINGS PER SHARE $ .11 $ .09 ======= ======= Weighted average shares outstanding 10,965 12,202 ======= ======= DILUTED EARNINGS PER SHARE $ .11 $ .09 ======= ======= Weighted average shares outstanding- including common stock equivalents 11,021 12,279 ======= =======
4 5 CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands)
Thirteen Weeks Ended -------------------------------- Dec 28, Dec 29, 1997 1996 -------- -------- OPERATING ACTIVITIES Net Income $ 1,208 $ 1,092 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,315 3,038 Deferred income taxes (445) (324) Provision for deferred rent 139 140 (Gain)loss on disposal of equipment (24) Changes in operating assets and liabilities, net Of effects from business acquisitions: Royalties receivable 380 22 Inventory (31) 188 Prepaid expenses and other assets (732) (2,232) Accounts payable and other liabilities (1,915) (510) Income taxes payable (207) (197) -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,712 $ 1,193 INVESTMENT ACTIVITIES Additions to property, equipment and leasehold improvements (3,625) (3,529) Proceeds from sale of fixed assets 41 -------- -------- NET CASH USED FOR INVESTING ACTIVITIES (3,625) (3,488) FINANCING ACTIVITIES Proceeds from revolving credit agreement 15,765 15,995 Principal payments on revolving credit agreement and capital lease obligations (13,411) (15,423) Exercise of stock options 10 33 -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 2,364 605 -------- -------- INCREASE/(DECREASE) IN CASH 451 (1,690) CASH AT BEGINNING OF PERIOD 1,486 1,828 -------- -------- CASH AT END OF PERIOD $ 1,937 $ 138 ======== ========
5 6 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 the financial statements of the company for the fiscal year ended September 28, 1997. 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 In 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings per Share. Statement 128 replaced the previously reported primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. All earnings per share amounts for all periods have been presented, and where necessary, restated to conform to the Statement 128 requirements. Basic and diluted earnings per share were equivalent to each other for the quarter ended December 28, 1997.
Thirteen Weeks Ended -------------------- Dec 28, Dec 29, 1997 1996 ----------- ----------- Numerator for Basic Earnings per Share: Weighted average shares outstanding 10,965,252 12,202,097 Common Stock equivalents: Stock options 55,884 77,308 ----------- ----------- Numerator for Diluted Earnings per Share: Weighted average shares outstanding- including common stock equivalents 11,021,136 12,279,405 =========== =========== Net Income $ 1,208,000 $ 1,092,000 =========== =========== BASIC EARNINGS PER COMMON SHARE $ .11 $ .09 =========== =========== DILUTED EARNINGS PER COMMON SHARE $ .11 $ .09 =========== ===========
6 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 the Company in filings with the Securities and Exchange Commission, shareholder reports, press releases and oral statements may include forward-looking statements which reflect the Company's current views 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. The Company undertakes 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 Company's ability to open new restaurants profitably, changes in local, regional and national economic conditions, especially economic conditions in the areas in which the Company's 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 the Company's 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 the Company's income statements and operating data for the periods indicated: THIRTEEN WEEKS ENDED DECEMBER 28, 1997 COMPARED TO THIRTEEN WEEKS ENDED DECEMBER 29, 1996
13 Weeks 13 Weeks Ended Ended 12/28/97 12/29/96 -------- -------- REVENUES: Restaurant sales 92.5% 92.4% Consumer product sales 5.1 5.1 Franchise income 2.4 2.5 ----- ----- Total 100.0% 100.0% ----- ----- COSTS AND EXPENSES: Cost of food & beverages (1) 25.8% 26.0% Labor and benefits (1) 31.3 31.4 Occupancy costs (1) 15.9 16.0 Other operating costs (1) 8.6 8.8 General and administrative 7.0 7.4 Depreciation and amortization (1) 7.5 7.3 ----- ----- Operating income 6.1 5.4 Other expense 2.1 1.5 ----- ----- Income before income taxes 4.0 3.9 Provision for income taxes 1.3 1.3 ----- ----- Net income 2.7% 2.6% ===== =====
(1) Percentage of restaurant and consumer product sales 7 8 NUMBER OF RESTAURANTS AT END OF QUARTER: Company-owned Uno's - full service 95 86 Franchised Uno's - full service 66 64
Total revenue increased 6.7% to $45.0 million from $42.2 million last year. Company-owned restaurant sales rose 6.8% to $41.6 million from $39.0 million last year due primarily to a 9.1% growth in store operating weeks of full-service Pizzeria Uno units resulting from the addition of nine restaurants during the past four quarters. Comparable-store sales for Uno units for the first three months of the fiscal year were 0.6% below the same period last year. During the same period, average weekly sales, which includes sales at comparable stores as well as new units, were 0.6% above last year, reflecting higher-than-average sales levels for the nine new prototype units opened during the past four quarters. Consumer product sales rose slightly to $2.3 million for the first quarter of fiscal 1998 as compared to $2.2 million in the first quarter last year. Sales to food service providers were up as the company continued its initial shipments of product to Sainsbury's Supermarket PLC. Sales volumes in the fresh retail and wholesale segments have declined during the first quarter due in part to a reduction in promotional activities and an increase in competition in the supermarket segment. Franchise income, which includes royalty income and initial franchise fees, increased slightly to $1,072,000 from $1,035,000 last year. Royalty income increased 6.4% as operating weeks increased 4.9% and average weekly sales improved by 2.8% for the first three months of the fiscal year. One full-service restaurant was opened during the quarter and six new full-service units have been added during the past four quarters. Cost of food and beverage as a percentage of restaurant and consumer product sales dropped slightly to 25.8% this year from 26.0% last year. Slightly lower cheese costs this year versus last year contributed to the cost reduction for the quarter. Labor and benefits as a percentage of restaurant and consumer product sales dropped by 10 basis points from the prior year. Increases in the average wage rate, primarily from the September 1997 minimum wage increase, were more than offset by savings achieved from lower benefit cost. Occupancy costs and other operating expenses declined slightly, principally due to operating leverage associated with higher average unit volumes. General and administrative expenditures were up less than 1% from a year ago, however, as a percentage of total revenues these expenses declined to 7.0% from 7.4% last year. Depreciation and amortization expenses as a percentage of restaurant and consumer product sales increased to 7.5% from 7.3% last year principally due to higher amortization of pre-opening costs as the Company's unit growth rate has increased slightly versus the prior year. 8 9 Operating income for the first quarter of the fiscal year increased 20.4% to $2,726,000 from $2,265,000 last year. The operating margin for the period increased to 6.1% from 5.4%. The increase in operating income and margin are based on the factors mentioned above. Other expense of $923,000 increased from $610,000 last year. Interest expense increased from $621,000 last year to $884,000 this year due to higher debt level. The increase in debt levels was a result of the Company's share repurchase program completed in the fourth quarter of fiscal 1997. The effective tax rate of 33% for the quarter compared favorably to last year's rate of 34% due in part to the impact of various tax credits. Net income increased to $1,208,000 from $1,092,000 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 28, 1997.
Net cash provided by operating activities $1,712 Net cash used in investing activities (3,625) Net cash provided by financing activities 2,364 ------- Increase (Decrease) in cash $ 451 =======
Historically, the Company has leased most of its restaurant locations and pursued a strategy of controlled growth, financing its expansion principally from operating cash flow, public equity offerings, the sale of senior, unsecured notes, and revolving lines of credit. During the first quarter of fiscal 1998, the Company's investment in property, equipment and leasehold improvements was $3.6 million. The Company currently plans to open approximately six restaurants in fiscal 1998. The Company expects that the average cash investment required to open a full service Pizzeria Uno restaurant, excluding land and pre-opening costs, will be approximately $1.6 million. On November 4, 1997 the Company entered into a $55 million credit facility (the "$55 million facility") to replace its $50 million revolver. The $55 million facility consists of three components, a $26.6 million unsecured revolver, a $20 million secured mortgage facility and a $8.4 million term loan. The $26.6 million unsecured revolver is due in October 2002. The $20 million secured mortgage facility is due in 27 quarterly installments of $500,0000 plus interest commencing on January 31, 1998 with a final installment of the outstanding principal plus interest due in October 2004. The $8.4 million term loan is due in 20 quarterly installments of $420,000 plus interest commencing on January 31, 1998. Amounts borrowed under the $55 million facility accrue interest at variable rates based on, at the election of the Company, either the LIBOR plus 100-175 basis points or prime plus 0-50 basis points. The agreement contains certain financial covenants including a cash flow coverage ratio and a consolidated leverage ratio. The 9 10 Company anticipates using the unsecured revolver of the $55 million facility for the development of additional restaurants and for working capital needs. The Company used the proceeds of the $20 million secured mortgage facility component to refinance certain owned properties and used the $8.4 million term loan component to finance the "Dutch Auction" tender offer completed in the fourth quarter of fiscal 1997. As of December 28, 1997, the Company had outstanding indebtedness of $42.9 million under its $55 million revolving credit and term loan agreement, $4.9 million under its MetLife Capital mortgage program, and $1.0 million in capital lease obligations. In December 1997, the Board of Directors of the Company authorized the repurchase of up to 500,000 shares of the Company's Common Stock in the market from time to time. The shares of Common Stock to be purchased will be held in treasury and may be used by the Company from time to time for its employee benefit plans. The Company did not repurchase any stock during the first fiscal quarter and currently has 2.8 million shares in its treasury account. The Company believes that existing cash balances, cash generated from operations and borrowings under its mortgage commitment and revolving line of credit will be sufficient to fund the Company's capital requirements for the foreseeable future. The company is currently obligated under 92 leases, including 90 leases for Company-owned restaurants and two leases for its executive offices. The Company is currently negotiating the renewal of a lease for an office building containing one of its restaurants and continues to pay rent on a tenancy at will basis in the interim. IMPACT OF INFLATION Inflation has not been a major factor in the Company's business for the last several years. The Company believes it has historically been able to pass on increased costs through menu price increases, but there can be no assurance that it will be able to do so in the future. Future increases in local area construction costs could adversely affect the Company's ability to expand. SEASONALITY The Company's business is seasonal in nature, with revenues and, to a greater degree, operating income being lower in its first and second fiscal quarters than its other quarters. The Company's seasonal business pattern is due to its concentration of units in the Northeast, and the resulting lower winter volumes. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS NOT APPLICABLE. 10 11 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 28, 1997. 11 12 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 6, 1998 By: /s/ Craig S. Miller ----------------- ------------------- Craig S. Miller Chief Executive Officer (Principal Executive Officer) Date: February 6, 1998 By: /s/ Robert M. Vincent ----------------- --------------------- Robert M. Vincent Senior Vice President-Finance, and Chief Financial Office (Principal Financial Officer) 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS SEP-27-1998 SEP-29-1997 DEC-28-1997 1,937 00 764 00 2,357 8,822 185,772 59,834 145,290 21,216 51,976 00 00 138 71,960 145,290 44,968 44,968 11,331 42,242 00 00 923 1,803 595 1,208 00 00 00 1,208 .11 .11 Net of treasury stock.
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