-----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, FHkE8kW+G0a4WSRjG6dD9R6xcJXqIKUCDhIer0xltjqK+/JKKHqePbFyI5vQxTRy 8agxHNsSO7mw0rRXZoMGlg== 0000950135-98-004552.txt : 19980812 0000950135-98-004552.hdr.sgml : 19980812 ACCESSION NUMBER: 0000950135-98-004552 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980628 FILED AS OF DATE: 19980810 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: 98680270 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 CORPORATION 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 JUNE 28, 1998 ------------------------- 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 August 3, 1998, 10,758,101 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 -- June 28, 1998 and September 28, 1997............ 3 Consolidated Statements of Income -- Thirteen and thirty-nine weeks ended June 28, 1998 and June 29, 1997................. 4 Consolidated Statements of Cash Flows -- Thirty-nine weeks ended June 28, 1998 and June 29, 1997................................... 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
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CONSOLIDATED BALANCE SHEETS (Amounts in thousands except share data) June 28, Sept.28, 1998 1997 --------- -------- (Unaudited) ASSETS CURRENT ASSETS Cash $ 2,227 $ 1,486 Royalties receivable 382 728 Consumer products receivable 570 844 Inventory 2,245 2,326 Deferred pre-opening costs 949 Prepaid expenses and other assets 2,534 1,959 -------- -------- TOTAL CURRENT ASSETS 7,958 8,292 PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS Land 16,689 15,883 Buildings 27,944 25,265 Leasehold improvements 91,738 87,047 Equipment 52,328 49,802 Construction in progress 1,873 4,201 -------- -------- 190,572 182,198 Less allowance for depreciation and amortization 65,900 56,841 -------- -------- 124,672 125,357 OTHER ASSETS Deferred income taxes 7,503 6,599 Royalty fee 178 241 Liquor licenses and other assets 3,197 3,243 -------- -------- $143,508 $143,732 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 5,846 $ 6,966 Accrued expenses 7,952 7,563 Accrued compensation and taxes 2,653 2,641 Income taxes payable 726 2,076 Current portion of long-term debt and capital lease obligations 4,074 3,132 -------- -------- TOTAL CURRENT LIABILITIES 21,251 22,378 Long-term debt, net of current portion 41,067 42,516 Capital lease obligations, net of current portion 717 867 Other liabilities 7,203 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 authorized, 13,771,674 and 13,754,480 shares issued and outstanding in Fiscal Years 1998 and 1997, respectively 138 138 Additional paid-in capital 53,898 53,803 Retained earnings 40,009 36,816 -------- -------- 94,045 90,757 Treasury Stock (2,917,193 and 2,790,597 shares at cost,in Fiscal Years 1998 and 1997, respectively) (20,775) (19,877) -------- -------- TOTAL SHAREHOLDERS' EQUITY 73,270 70,880 -------- -------- $143,508 $143,732 ======== ========
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CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands except per share data) Thirteen Weeks Ended Thirty-nine Weeks Ended ------------------------ ------------------------- June 28, June 29, June 28, June 29, 1998 1997 1998 1997 -------- -------- -------- -------- REVENUES Restaurant sales $45,288 $41,987 $130,171 $120,414 Consumer product sales 2,475 2,210 7,083 6,526 Franchise income 1,190 1,189 3,349 3,322 ------- ------- -------- -------- 48,953 45,386 140,603 130,262 COSTS AND EXPENSES Cost of sales 12,311 11,118 35,477 32,307 Labor and benefits 14,940 13,803 43,236 39,996 Occupancy 7,065 6,825 21,025 19,905 Other operating costs 4,567 4,245 13,369 12,519 General and administrative 3,487 3,338 9,824 9,588 Depreciation and amortization 3,059 2,965 9,136 8,691 Special charges 4,000 4,000 ------- ------- -------- -------- 45,429 46,294 132,067 127,006 ------- ------- -------- -------- OPERATING INCOME 3,524 (908) 8,536 3,256 OTHER INCOME (EXPENSE) (963) (711) (2,821) (1,987) ------- ------- -------- -------- Income before income taxes 2,561 (1,619) 5,715 1,269 Provision for income taxes 844 (549) 1,886 432 ------- ------- -------- -------- Net income before cumulative effect of change in accounting principle $ 1,717 ($1,070) $ 3,829 $ 837 Cumulative effect of change in accounting principle for preopening costs net of income taxes 636 ------- ------- -------- -------- NET INCOME (LOSS) $ 1,717 ($1,070) $ 3,193 $ 837 ======= ======= ======== ======== Basic and Diluted Earnings per Share: Net income $ .16 $ (.09) $ .35 $ .07 Cumulative effect of change in accounting principle $ (.06) ------- ------- -------- -------- Net income $ .16 $ (.09) $ .29 $ .07 ======= ======= ======== ======== Weighted average shares outstanding: Basic 10,895 12,175 10,930 12,197 Diluted 10,990 12,216 10,989 12,256
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CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Thirty-nine weeks Ended ------------------------- June 28, June 29, 1998 1997 -------- --------- OPERATING ACTIVITIES Net Income (Loss) $ 3,193 $ 837 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,222 9,401 Deferred income taxes (904) (2,083) Provision for deferred rent 396 446 (Gain)Loss on disposal of equipment (6) (15) Special charges 4,000 Cumulative effect of change in accounting principle 949 Changes in operating assets and liabilities, net of effects from business acquisitions: Royalties\consumer product receivables 346 17 Inventory 81 18 Prepaid expenses and other assets (278) (1,385) Accounts payable and other liabilities (882) 1,024 Income taxes payable (1,350) (748) -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 10,767 11,512 INVESTMENT ACTIVITIES Additions to property, equipment and leasehold improvements (8,574) (13,830) Proceeds from sale of fixed assets 8 1,103 -------- -------- NET CASH USED FOR INVESTING ACTIVITIES (8,566) (12,727) FINANCING ACTIVITIES Proceeds from revolving credit agreement 41,565 49,043 Principal payments on revolving credit agreement and capital lease obligations (42,222) (48,564) Purchase of Treasury Stock (898) (524) Exercise of stock options 95 248 -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES (1,460) 203 -------- -------- INCREASE (DECREASE) IN CASH 741 (1,012) CASH AT BEGINNING OF PERIOD 1,486 1,828 -------- -------- CASH AT END OF PERIOD $ 2,227 $ 816 ======== ========
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 June 28, 1998.
Thirteen Weeks Ended Thirty-nine Weeks Ended ---------------------------- ---------------------------- June 28, June 29, June 28, June 29, 1998 1997 1998 1997 ----------- ---------- ----------- ---------- Numerator for Basic Earnings per Share: Weighted average shares outstanding 10,894,964 12,174,949 10,930,142 12,196,836 Common Stock equivalents: Stock options 95,497 40,728 58,713 58,697 ----------- ---------- ----------- ---------- Numerator for Diluted Earnings per Share: Weighted average shares outstanding including common stock equivalents 10,990,461 12,215,677 10,988,855 12,255,533 =========== ========== =========== ========== Net Income(Loss) before cumulative effect of change in accounting principle $ 1,717,000 ($1,070,000) $ 3,829,000 $ 837,000 Cumulative effect of change in accounting principle for preopening costs net of income taxes 636,000 ----------- ---------- ----------- ---------- Net Income(Loss) $ 1,717,000 ($1,070,000) $ 3,193,000 $ 837,000 =========== ========== =========== ========== Basic and Diluted Earnings per Share: Net Income(Loss) before cumulative effect of change in accounting principle $ .16 $ (.09) $ .35 $ .07 Cumulative effect of change in accounting principle $ (.06) ----------- ---------- ----------- ---------- Net Income(Loss) $ .16 $ (.09) $ .29 $ .07 =========== ========== =========== ==========
6 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.) NOTE C - PRE-OPENING COSTS In 1998, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants (AICPA) issued Statement of Position 98-5 ("SOP 98-5") entitled "Reporting on the Costs of Start-up Activities." The SOP 98-5 requires companies to expense as incurred all start-up and pre-opening costs that are not otherwise capitalizable as long lived assets. This new accounting standard is effective for fiscal years beginning after December 15, 1998 with early adoption encouraged. The Company has elected early implementation of the accounting standard retroactive to the beginning of fiscal 1998. The cumulative effect of this change in accounting principle was $636,000, net of income taxes. 7 8 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 and operate new and existing 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 tables set 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 JUNE 28, 1998 COMPARED TO THIRTEEN WEEKS ENDED JUNE 29, 1997
13 Weeks Ended ----------------------- 6/28/98 6/29/97 ------- ------- REVENUES: Restaurant sales 92.5% 92.5% Consumer product sales 5.1 4.9 Franchise income 2.4 2.6 ----- ----- Total 100.0% 100.0% ----- ----- COSTS AND EXPENSES: Cost of food & beverages (1) 25.8% 25.2% Labor and benefits (1) 31.3 31.2 Occupancy costs (1) 14.8 15.4 Other operating costs (1) 9.6 9.6 General and administrative 7.1 7.4 Depreciation and amortization (1) 6.4 6.7 Special charges (1) 9.1 ----- ----- Operating income 7.2 (2.0) Other income (expense) 2.0 (1.6) ----- ----- Income before taxes 5.2 (3.6) Provision for income taxes 1.7 (1.2) ----- ----- Net income 3.5% (2.4)% ===== =====
(1) Percentage of restaurant and consumer product sales NUMBER OF RESTAURANTS AT END OF QUARTER: Company-owned Uno's - full service 94 90 Franchised Uno's - full service 62 65 8 9 Total revenue increased 7.9% to $49.0 million from $45.4 million last year. Company-owned restaurant sales rose 7.9% to $45.3 million from $42.0 million last year due primarily to 6.7% growth in store operating weeks of full-service Pizzeria Uno units resulting from the addition of six restaurants during the past four quarters. One restaurant was closed during the quarter. Comparable-store sales for the third quarter were up 0.8% from the same period last year. Average weekly sales, which includes sales at comparable stores as well as new units, increased 1.5% during the third quarter, reflecting higher-than-average sales levels for its newest prototype units. The latest variation of the new prototype units generated sales volumes approximately 6% higher than our comparable-store average for the quarter. Consumer product sales increased 12.0% for the third quarter this year to $2,475,000 from $2,210,000 last year. Sales of fresh product to retail grocers posted a 15.5% gain over the same period last year. Sales in the contract food service category grew 6.9%, bolstered by increased shipments to hotels, cinemas and corporate dining accounts. New retail chain and restaurant accounts also contributed to the increase over last year offsetting declines in airline, private label and club store sales. Franchise income, which includes royalty income and initial franchise fees, were virtually flat against last year at $1,190,000 versus $1,189,000 last year. Royalty income decreased 5.6% to $1,097,000 this year compared to $1,162,000 last year. The decline in royalty income was partially due to a reduction in franchise operating weeks as a result of closing seven franchise units since the beginning of the fiscal year. Franchise fees of $93,300 were recorded this year compared to $27,500 last year. Operating income was $3,524,000, which represents an operating margin of 7.2%. An operating loss of $908,000 was recorded last year as the result of a $4,000,000 charge in accordance with SFAS 121. Exclusive of the SFAS 121 charge, operating income for the third quarter last year was $3,092,000 which represents an operating margin of 6.8%. Cost of food and beverage as a percentage of restaurant and consumer product sales increased to 25.8% compared to 25.2% last year. This increase was due in part to higher cheese costs, which were up approximately 9% over last years levels, a shift in mix towards higher cost menu items and a higher cost of sales in the consumer products segment. Labor costs were up slightly 31.3% from 31.2% last year as a percentage of restaurant and consumer product sales as an increase in the average wage rate was offset by increased productivity and lower benefit expense. Occupancy costs declined as a percentage of restaurant and consumer product sales to 14.8% from 15.4% due to operating leverage gains from higher unit volumes. Other operating costs were flat at 9.6% as a percentage of restaurant and consumer product sales as slightly higher advertising was offset by lower pre-opening costs for the period. General and administrative expenditures as a percentage of total revenues decreased to 7.1% from 7.4% last year as a result of continuing cost control measures and increased operating leverage. Depreciation and amortization expense as a percentage of restaurant and consumer product sales was down to 6.4% versus 6.7% last year due to increased sales leverage. Other expense of $963,000 increased from $711,000 last year. Interest expense increased to $912,000 from $662,000 last year due to a slightly higher borrowing rate and a higher level of debt. The increase in the debt level 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 years tax rate of 34% due to the impact of various tax credits. Net income increased to $1,717,000 from ($1,070,000) last year based on the factors noted above. 9 10 THIRTY-NINE WEEKS ENDED JUNE 28, 1998 COMPARED TO THIRTY-NINE WEEKS ENDED JUNE 29, 1997
39 Weeks Ended ----------------------- 6/28/98 6/29/97 ------- ------- REVENUES: Restaurant sales 92.6% 92.4% Consumer product sales 5.0 5.0 Franchise income 2.4 2.6 ----- ----- Total 100.0% 100.0% ----- ----- COSTS AND EXPENSES: Cost of food & beverages (1) 25.8% 25.5% Labor and benefits (1) 31.5 31.5 Occupancy costs (1) 15.3 15.7 Other operating costs (1) 9.7 9.9 General and administrative 7.0 7.4 Depreciation and amortization (1) 6.7 6.8 Special charges (1) 3.2 ----- ----- Operating income 6.0 2.5 Other income (expense) (2.0) (1.5) ----- ----- Income before taxes 4.0 1.0 Provision for income taxes 1.3 .3 ----- ----- Net income before cumulative effect of change in accounting principle 2.7 .7 Cumulative effect of change in accounting principle for pre-opening costs net of income taxes (.4) ----- ----- Net income 2.3% .7% ===== =====
(1) Percentage of restaurant and consumer product sales Total revenue increased 7.9% to $140.6 million from $130.3 million last year. Company owned restaurant sales rose 8.1% to $130.2 million from $120.4 million last year due primarily to 8.0% growth in store operating weeks of full service Pizzeria Uno units. Comparable store sales for the first three quarters of the fiscal year were 0.8% above the same period last year. During the same period, average weekly sales, which includes sales at comparable stores as well as new units, were up 1.4% above last year. Consumer product sales increased 8.5% to $7,083,000 from $6,526,000 for the first nine months this year compared to the same period last year. The contract food service category grew approximately 55% on increased shipments to hotels, cinemas and corporate dining accounts, while airline sales were essentially flat. Fresh product and private label sales to supermarket chains have declined approximately 6% due to a greater competition and reduced promotional activities in that category. Franchise income, which includes royalty income and initial franchise fees increased 0.8% to $3,349,000 from $3,322,000 last year. Royalty income increased 2.0% as average weekly sales improved by 2.0% for the first nine months of the fiscal year. Franchise fees of $93,300 were recorded this year compared to $130,000 last year. Operating income was $8,536,000, which represents an operating margin of 6.1%. Operating income for last year was $3,256,000, which represents an operating margin of 2.5%. Operating income for last year includes a special charge of $4,000,000 in connection with the Company's adoption of SFAS 121. Operating income last year exclusive of SFAS 121 was $7,256,000, which represents an operating margin of 5.6%. Cost of food and beverage as a percentage of restaurant and consumer product sales increased to 25.8% compared to 25.5% last year due to a shift in mix towards higher cost menu items. Labor costs remained unchanged at 31.5% this year as higher direct labor costs, driven by an increase in the average wage rate, were offset by lower costs for workers compensation and employee medical insurance programs. Occupancy costs decreased as a percentage of restaurant and consumer product sales to 15.3% 10 11 from 15.7% due to improved sales levels and an unusually mild winter season. Other operating costs decreased slightly to 9.7% from 9.9% last year due primarily to lower advertising expenditures. General and administrative costs as a percentage of total revenues decreased to 7.0% from 7.4% last year as a result of continuing cost control measures and increased sales leverage. Depreciation and amortization expenses as a percentage of restaurant and consumer product sales decreased slightly to 6.7% from 6.8 last year due to increased sales leverage. Other expense of $2,821,000 increased from $1,987,000 last year. Interest expense increased to $2,699,000 from $1,901,000 last year due to a slightly higher borrowing rate and a higher level of debt. The increase in the debt level 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 first three quarters of the fiscal year compared favorably to last years tax rate of 34% due to the impact of various tax credits. The Company adopted SOP 98-5 "Reporting on the Costs of Start-up Activities" retroactive to the beginning of the fiscal year. Net income for the first nine months was $3,193,000 which reflects the change in accounting principle adopted. LIQUIDITY AND SOURCES OF CAPITAL The following table presents a summary of the Company's cash flows for the period ended June 28, 1998.
(In Thousands) -------------- Net cash provided by operating activities $10,767 Net cash used in investing activities (8,566) Net cash provided by financing activities (1,460) ------- Increase (Decrease) in cash $ 741 =======
Historically, the Company had 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 nine months of fiscal 1998, the Company's investment in property, equipment and leasehold improvements was $10.8 million. The Company currently plans to open approximately four restaurants in fiscal 1998, all of which were open by the third quarter. The average cash investment required to open a full service Pizzeria Uno restaurant, excluding land and pre-opening costs, is approximately $1.6 million. As of June 28, 1998, the Company had outstanding indebtedness of $40.1 million under its $55 million unsecured revolving credit facility, $916,000 in capital lease obligations and $4,843,000 under its mortgage financing. Advances under the revolving credit facility will accrue interest at the lender's prime rate plus 0-50 basis points, or alternatively, 100-175 basis points above LIBOR. The Company anticipates using the revolving credit facility in the future for the development of additional restaurants, and for working capital. On April 22, 1998, the Board of Directors of the Company authorized the repurchase of up to 1,000,000 additional 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. During the first three quarters of the fiscal year the Company has repurchased 126,596 shares at an average price of $6.95. At the end of the quarter the Company had 2,917,193 shares in its treasury account. The Company believes that existing cash balances, cash generated from operations and borrowing under its revolving line of credit will be sufficient to fund the Company's capital requirements for the foreseeable future. The Company is currently obligated under 95 leases, including 93 leases for Company-owned restaurants, 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. 11 12 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 12 13 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 June 28, 1998. 13 14 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: August 10, 1998 By: /s/ Craig S. Miller ------------------- ----------------------------------- Craig S. Miller Chief Executive Officer (Principal Executive Officer) Date: August 10, 1998 By: /s/ Robert M. Vincent ------------------- ----------------------------------- Robert M. Vincent Senior Vice President-Finance, and Chief Financial Officer (Principal Financial Officer) 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 US$ 9-MOS SEP-27-1998 SEP-29-1997 JUN-28-1998 1 2,227 0 952 0 2,245 7,958 190,572 65,900 143,508 21,251 48,977 0 0 138 73,132 143,508 140,603 140,603 35,477 132,067 0 0 2,821 5,715 1,886 3,829 0 0 636 3,193 .29 .29 5-02(31) NET OF TREASURY STOCK
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