UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended February 1, 2004
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 1-10711
WORLDWIDE RESTAURANT CONCEPTS, INC.
(Exact Name of Registrant as specified in its Charter)
| Delaware | 95-4307254 | |
| (State or other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
15301 Ventura Blvd., Suite 300, Building B, Sherman Oaks, California 91403
(Address of Principal Executive Offices, including zip code)
(818) 662-9800
(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 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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.) Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class |
Outstanding at February 29, 2004 | |
| Common Stock $0.01 Par Value | 27,417,827 shares |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WORLDWIDE RESTAURANT CONCEPTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
| ASSETS |
February 1, 2004 |
April 30, 2003 | ||||
| Current Assets: |
||||||
| Cash and cash equivalents |
$ | 25,932 | $ | 26,303 | ||
| Restricted cash |
5,229 | 2,050 | ||||
| Receivables, net of an allowance of $531 at February 1, 2004 and $695 at April 30, 2003 |
2,273 | 2,560 | ||||
| Inventories |
4,677 | 4,448 | ||||
| Deferred income taxes |
2,382 | 2,382 | ||||
| Prepaid expenses and other current assets |
1,677 | 2,205 | ||||
| Assets related to restaurants held for sale |
6,004 | 4,026 | ||||
| Total current assets |
48,174 | 43,974 | ||||
| Property and equipment, net |
72,361 | 67,998 | ||||
| Long-term notes receivable (including $200 of related party receivables at February 1, 2004 and April 30, 2003), net of an allowance of $0 at February 1, 2004 and $56 at April 30, 2003 |
1,162 | 828 | ||||
| Deferred income taxes |
10,236 | 9,985 | ||||
| Goodwill, net |
23,647 | 23,636 | ||||
| Intangible assets, net of accumulated amortization of $1,070 at February 1, 2004 and $799 at April 30, 2003 |
2,287 | 2,162 | ||||
| Other assets |
823 | 1,065 | ||||
| Total assets |
$ | 158,690 | $ | 149,648 | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
WORLDWIDE RESTAURANT CONCEPTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except par value)
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
February 1, 2004 |
April 30, 2003 |
||||||
| Current Liabilities: |
||||||||
| Current portion of long-term debt |
$ | 7,423 | $ | 6,844 | ||||
| Accounts payable |
10,571 | 14,119 | ||||||
| Other current liabilities |
21,743 | 23,529 | ||||||
| Income taxes payable |
2,578 | 3,108 | ||||||
| Total current liabilities |
42,315 | 47,600 | ||||||
| Long-term debt, net of current portion |
32,384 | 18,431 | ||||||
| Deferred gains and revenues |
9,322 | 9,715 | ||||||
| Pension liability |
12,914 | 13,326 | ||||||
| Total liabilities |
96,935 | 89,072 | ||||||
| Minority interest |
22 | 127 | ||||||
| Stockholders’ Equity: |
||||||||
| Capital stock - |
||||||||
| Preferred, authorized 1,000 shares, $5 par value; no shares issued or outstanding |
— | — | ||||||
| Common, authorized 50,000 shares, $0.01 par value; issued and outstanding 29,408 and 27,408 shares and 29,232 and 27,232 shares at February 1, 2004 and April 30, 2003, respectively |
294 | 292 | ||||||
| Additional paid-in capital |
280,368 | 280,001 | ||||||
| Accumulated deficit |
(202,023 | ) | (205,207 | ) | ||||
| Treasury stock, 2,000 shares at February 1, 2004 and April 30, 2003, at cost |
(4,135 | ) | (4,135 | ) | ||||
| Accumulated other comprehensive loss |
(12,771 | ) | (10,502 | ) | ||||
| Total stockholders’ equity |
61,733 | 60,449 | ||||||
| Total liabilities and stockholders’ equity |
$ | 158,690 | $ | 149,648 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
WORLDWIDE RESTAURANT CONCEPTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE FORTY WEEKS ENDED FEBRUARY 1, 2004 AND FEBRUARY 2, 2003
(Unaudited)
(In thousands, except per share data)
| February 1, 2004 |
February 2, 2003 | |||||
| Revenues |
||||||
| Restaurant sales |
$ | 252,662 | $ | 215,703 | ||
| Franchise revenues |
6,661 | 6,331 | ||||
| Total revenues |
259,323 | 222,034 | ||||
| Costs and Expenses |
||||||
| Cost of sales |
87,162 | 73,152 | ||||
| Labor and related expenses |
69,523 | 60,244 | ||||
| Other operating expenses |
64,517 | 53,219 | ||||
| Depreciation and amortization |
8,617 | 7,509 | ||||
| General and administrative expenses |
20,849 | 18,855 | ||||
| Total operating costs |
250,668 | 212,979 | ||||
| Operating income |
8,655 | 9,055 | ||||
| Interest expense |
2,311 | 1,969 | ||||
| Investment income |
423 | 612 | ||||
| Income before income taxes and minority interest |
6,767 | 7,698 | ||||
| Minority interest benefit |
121 | — | ||||
| Income before income taxes |
6,888 | 7,698 | ||||
| Provision for income taxes |
3,704 | 2,181 | ||||
| Net income |
$ | 3,184 | $ | 5,517 | ||
| Basic earnings per share |
$ | 0.12 | $ | 0.20 | ||
| Diluted earnings per share |
$ | 0.08 | $ | 0.20 | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
WORLDWIDE RESTAURANT CONCEPTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIXTEEN WEEKS ENDED FEBRUARY 1, 2004 AND FEBRUARY 2, 2003
(Unaudited)
(In thousands, except per share data)
| February 1, 2004 |
February 2, 2003 | ||||||
| Revenues |
|||||||
| Restaurant sales |
$ | 102,591 | $ | 87,526 | |||
| Franchise revenues |
2,570 | 2,382 | |||||
| Total revenues |
105,161 | 89,908 | |||||
| Costs and Expenses |
|||||||
| Cost of sales |
36,083 | 29,804 | |||||
| Labor and related expenses |
28,420 | 24,487 | |||||
| Other operating expenses |
26,705 | 21,954 | |||||
| Depreciation and amortization |
3,493 | 3,180 | |||||
| General and administrative expenses |
8,678 | 7,652 | |||||
| Total operating costs |
103,379 | 87,077 | |||||
| Operating income |
1,782 | 2,831 | |||||
| Interest expense |
1,060 | 717 | |||||
| Investment income |
162 | 143 | |||||
| Income before income taxes and minority interest |
884 | 2,257 | |||||
| Minority interest benefit |
83 | — | |||||
| Income before income taxes |
967 | 2,257 | |||||
| Provision for income taxes |
1,654 | 1,421 | |||||
| Net (loss) income |
$ | (687 | ) | $ | 836 | ||
| Basic (loss) earnings per share |
$ | (0.03 | ) | $ | 0.03 | ||
| Diluted (loss) earnings per share |
$ | (0.04 | ) | $ | 0.03 | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
WORLDWIDE RESTAURANT CONCEPTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FORTY WEEKS ENDED FEBRUARY 1, 2004 AND FEBRUARY 2, 2003
(Unaudited)
(in thousands)
| February 1, 2004 |
February 2, 2003 |
|||||||
| OPERATING ACTIVITIES |
||||||||
| Net income |
$ | 3,184 | $ | 5,517 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
8,617 | 7,509 | ||||||
| Deferred income tax provision (benefit) |
834 | (40 | ) | |||||
| Allowance for bad debts |
119 | 85 | ||||||
| Loss (gain) on sale of assets |
299 | (282 | ) | |||||
| Amortization of deferred revenue |
(970 | ) | (1,000 | ) | ||||
| Asset write downs and retirements |
519 | 355 | ||||||
| Foreign currency gain |
(818 | ) | (727 | ) | ||||
| Minority interest benefit |
(121 | ) | — | |||||
| Other |
(343 | ) | (31 | ) | ||||
| Changes in operating assets and liabilities: |
||||||||
| Receivables |
349 | (257 | ) | |||||
| Inventories |
130 | 97 | ||||||
| Prepaid expenses and other assets |
374 | (52 | ) | |||||
| Accounts payable |
(5,219 | ) | (1,985 | ) | ||||
| Deferred gains and other current liabilities |
(1,810 | ) | 1,153 | |||||
| Income taxes payable |
(1,041 | ) | (949 | ) | ||||
| Net cash provided by operating activities |
4,103 | 9,393 | ||||||
| INVESTING ACTIVITIES |
||||||||
| Additions to property and equipment |
(11,336 | ) | (11,328 | ) | ||||
| Proceeds from sale of property and equipment |
770 | 2,018 | ||||||
| Increase in restricted cash |
(3,179 | ) | (873 | ) | ||||
| Acquisition of minority interest in subsidiary |
(2,464 | ) | (1,041 | ) | ||||
| Other, net |
(886 | ) | 5 | |||||
| Net cash used in investing activities |
(17,095 | ) | (11,219 | ) | ||||
| FINANCING ACTIVITIES |
||||||||
| Issuance of long-term debt |
15,478 | 457 | ||||||
| Reduction of long-term debt |
(5,794 | ) | (5,718 | ) | ||||
| Sale of subsidiary equity |
50 | — | ||||||
| Distributions to minority interest partners |
(34 | ) | — | |||||
| Exercise of stock options |
369 | 89 | ||||||
| Net cash provided by (used in) financing activities |
10,069 | (5,172 | ) | |||||
| Effect of foreign exchange on cash |
2,552 | 997 | ||||||
| Net decrease in cash and cash equivalents |
(371 | ) | (6,001 | ) | ||||
| Cash and cash equivalents at beginning of period |
26,303 | 25,943 | ||||||
| Cash and cash equivalents at end of period |
$ | 25,932 | $ | 19,942 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
WORLDWIDE RESTAURANT CONCEPTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—(CONTINUED)
FOR THE FORTY WEEKS ENDED FEBRUARY 1, 2004 AND FEBRUARY 2 , 2003
(Unaudited)