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 quarter ended June 29, 2003
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 0-21423
CHICAGO PIZZA & BREWERY, INC.
(Exact name of registrant as specified in its charter)
| California | 33-0485615 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
16162 Beach Boulevard
Suite 100
Huntington Beach, California 92647
(Address and zip code of principal executive offices)
(714) 848-3747
(Registrants telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 ¨.
Indicate by check mark if the filer is an accelerated filer (as defined in Rule 12B-2 of the Act). YES x NO ¨.
As of July 29, 2003, there were 19,405,453 shares of Common Stock of the Registrant outstanding.
CHICAGO PIZZA & BREWERY, INC.
| Page | ||||
| PART I. FINANCIAL INFORMATION |
||||
| Item 1. |
Consolidated Financial Statements | |||
| Consolidated Balance Sheets—June 29, 2003 (Unaudited) and December 29, 2002 |
1 | |||
| 2 | ||||
| Unaudited Consolidated Statements of Cash Flows—Six Periods Ended June 29, 2003 and June 30, 2002 |
3 | |||
| 4 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 6 | ||
| Item 3. |
Quantitative and Qualitative Disclosures about Market Risk | 12 | ||
| Item 4. |
Controls and Procedures | 12 | ||
| PART II. OTHER INFORMATION |
||||
| Item 1. |
Legal Proceedings | 12 | ||
| Item 2. |
Changes in Securities and Use of Proceeds | 14 | ||
| Item 3. |
Defaults Upon Senior Securities | 14 | ||
| Item 4. |
Submission of Matters to a Vote of Security Holders | 14 | ||
| Item 5. |
Other Information | 14 | ||
| Item 6. |
Exhibits and Reports on Form 8-K | 14 | ||
| SIGNATURES | 15 | |||
| Certifications | ||||
PART I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
CHICAGO PIZZA & BREWERY, INC.
| June 29, 2003 |
December 29, 2002 | |||||
| (Unaudited) | ||||||
| Assets |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 4,572,000 | $ | 29,053,000 | ||
| Investments |
24,930,000 | 3,681,000 | ||||
| Accounts and other receivables |
861,000 | 691,000 | ||||
| Inventories |
844,000 | 780,000 | ||||
| Prepaid expenses and other current assets |
345,000 | 1,322,000 | ||||
| Deferred taxes |
450,000 | 384,000 | ||||
| Total current assets |
32,002,000 | 35,911,000 | ||||
| Property and equipment, net |
41,086,000 | 36,177,000 | ||||
| Deferred income taxes |
— | 170,000 | ||||
| Goodwill |
4,762,000 | 4,762,000 | ||||
| Other assets, net |
708,000 | 829,000 | ||||
| Total assets |
$ | 78,558,000 | $ | 77,849,000 | ||
| Liabilities and Shareholders’ Equity |
||||||
| Current liabilities: |
||||||
| Accounts payable |
$ | 2,556,000 | $ | 4,868,000 | ||
| Accrued expenses |
5,831,000 | 4,709,000 | ||||
| Current portion of notes payable to related parties |
371,000 | 399,000 | ||||
| Current portion of long-term debt |
7,000 | 9,000 | ||||
| Total current liabilities |
8,765,000 | 9,985,000 | ||||
| Notes payable to related parties |
— | 151,000 | ||||
| Long-term debt |
— | 2,000 | ||||
| Deferred income taxes |
35,000 | — | ||||
| Reserve for store closures |
125,000 | 185,000 | ||||
| Other liabilities |
987,000 | 910,000 | ||||
| Total liabilities |
9,912,000 | 11,233,000 | ||||
| Commitments and contingencies |
||||||
| Shareholders’ equity: |
||||||
| Preferred stock, 5,000,000 shares authorized, none issued or outstanding |
— | — | ||||
| Common stock, no par value, 60,000,000 shares authorized and 19,405,000 and 19,305,000 shares issued and outstanding as of June 29, 2003 and December 29, 2002, respectively |
62,156,000 | 62,085,000 | ||||
| Capital surplus |
1,748,000 | 1,695,000 | ||||
| Retained earnings |
4,742,000 | 2,836,000 | ||||
| Total shareholders’ equity |
68,646,000 | 66,616,000 | ||||
| Total liabilities and shareholders’ equity |
$ | 78,558,000 | $ | 77,849,000 | ||
See accompanying notes to unaudited consolidated financial statements.
1
CHICAGO PIZZA & BREWERY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
| For The Three Periods Ended |
For The Six Periods Ended |
|||||||||||||||
| June 29, 2003 |
June 30, 2002 |
June 29, 2003 |
June 30, 2002 |
|||||||||||||
| Revenues |
$ | 25,412,000 | $ | 18,298,000 | $ | 49,207,000 | $ | 35,667,000 | ||||||||
| Costs and expenses: |
||||||||||||||||
| Cost of sales |
6,732,000 | 4,629,000 | 13,022,000 | 9,097,000 | ||||||||||||
| Labor and benefits |
8,982,000 | 6,615,000 | 17,626,000 | 12,956,000 | ||||||||||||
| Occupancy |
1,856,000 | 1,436,000 | 3,615,000 | 2,819,000 | ||||||||||||
| Operating expenses |
2,895,000 | 1,926,000 | 5,555,000 | 3,777,000 | ||||||||||||
| General and administrative |
2,248,000 | 1,734,000 | 4,352,000 | 3,343,000 | ||||||||||||
| Depreciation and amortization |
964,000 | 592,000 | 1,877,000 | 1,174,000 | ||||||||||||
| Restaurant opening expense |
291,000 | 109,000 | 703,000 | 121,000 | ||||||||||||
| Total costs and expenses |
23,968,000 | 17,041,000 | 46,750,000 | 33,287,000 | ||||||||||||
| Income from operations |
1,444,000 | 1,257,000 | 2,457,000 | 2,380,000 | ||||||||||||
| Other income (expense): |
||||||||||||||||
| Interest income |
100,000 | 172,000 | 205,000 | 203,000 | ||||||||||||
| Interest expense |
(4,000 | ) | (119,000 | ) | (12,000 | ) | (198,000 | ) | ||||||||
| Other income, net |
120,000 | 87,000 | 282,000 | 146,000 | ||||||||||||
| Total other income |
216,000 | 140,000 | 475,000 | 151,000 | ||||||||||||
| Income before income taxes |
1,660,000 | 1,397,000 | 2,932,000 | 2,531,000 | ||||||||||||
| Income tax expense |
582,000 | 487,000 | 1,026,000 | 885,000 | ||||||||||||
| Net income |
$ | 1,078,000 | $ | 910,000 | $ | 1,906,000 | $ | 1,646,000 | ||||||||
| Net income per share: |
||||||||||||||||
| Basic |
$ | 0.06 | $ | 0.05 | $ | 0.10 | $ | 0.10 | ||||||||
| Diluted |
$ | 0.05 | $ | 0.05 | $ | 0.09 | $ | 0.08 | ||||||||
| Weighted average number of shares outstanding: |
||||||||||||||||
| Basic |
19,379,000 | 18,676,000 | 19,387,000 | 16,430,000 | ||||||||||||
| Diluted |
20,337,000 | 19,895,000 | 20,259,000 | 19,573,000 | ||||||||||||
See accompanying notes to unaudited consolidated financial statements.
2
CHICAGO PIZZA & BREWERY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For The Six Periods Ended |
||||||||
| June 29, 2003 |
June 30, 2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 1,906,000 | $ | 1,646,000 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
1,877,000 | 1,174,000 | ||||||
| Deferred income taxes |
139,000 | 66,000 | ||||||
| Tax benefit from stock options exercised |
53,000 | — | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts and other receivables |
(170,000 | ) | (113,000 | ) | ||||
| Inventories |
(64,000 | ) | (4,000 | ) | ||||
| Prepaid expenses and other current assets |
977,000 | 733,000 | ||||||
| Other assets, net |
2,000 | (212,000 | ) | |||||
| Accounts payable |
(2,312,000 | ) | 538,000 | |||||
| Accrued expenses |
1,122,000 | 488,000 | ||||||
| Other liabilities |
174,000 | (47,000 | ) | |||||
| Net cash provided by operating activities |
3,704,000 | 4,269,000 | ||||||
| Cash flows from investing activities: |
||||||||
| Purchases of property and equipment |
(6,860,000 | ) | (4,033,000 | ) | ||||
| Purchases of investments |
(23,964,000 | ) | — | |||||
| Proceeds from investments |
2,715,000 | — | ||||||
| Increase in notes receivable from officer |
— | (40,000 | ) | |||||
| Proceeds from sale of restaurant equipment, net of expenses |
36,000 | 56,000 | ||||||
| Net cash used in investing activities |
(28,073,000 | ) | (4,017,000 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of common stock in connection with warrants exercised |
— | 35,721,000 | ||||||
| Payments on long-term debt |
(4,000 | ) | (3,337,000 | ) | ||||