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 thirteen weeks ended March 28, 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 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 April 19, 2004, there were 19,679,286 shares of Common Stock of the Registrant outstanding.
CHICAGO PIZZA & BREWERY, INC.
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(In thousands)
| March 28, 2004 |
December 28, 2003 | |||||
| (Unaudited) | ||||||
| Assets |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 2,790 | $ | 4,899 | ||
| Investments |
24,130 | 22,041 | ||||
| Accounts and other receivables |
1,990 | 1,869 | ||||
| Inventories |
852 | 959 | ||||
| Prepaids and other current assets |
723 | 1,164 | ||||
| Deferred taxes |
909 | 1,175 | ||||
| Total current assets |
31,394 | 32,107 | ||||
| Property and equipment, net |
48,691 | 46,306 | ||||
| Goodwill |
4,673 | 4,762 | ||||
| Notes receivable |
950 | — | ||||
| Other assets, net |
472 | 530 | ||||
| Total assets |
$ | 86,180 | $ | 83,705 | ||
| Liabilities and Shareholders’ Equity |
||||||
| Current liabilities: |
||||||
| Accounts payable |
$ | 2,728 | $ | 2,796 | ||
| Accrued expenses |
8,507 | 8,533 | ||||
| Current portion of reserve for store closures |
— | 55 | ||||
| Current portion of notes payable to related parties |
38 | 151 | ||||
| Current portion of long-term debt |
— | 2 | ||||
| Total current liabilities |
11,273 | 11,537 | ||||
| Deferred income taxes |
363 | 143 | ||||
| Reserve for store closures |
72 | 74 | ||||
| Other liabilities |
842 | 900 | ||||
| Total liabilities |
12,550 | 12,654 | ||||
| Commitments and contingencies |
||||||
| Shareholders’ equity: |
||||||
| Preferred stock, 5,000 shares authorized, none issued or outstanding |
— | — | ||||
| Common stock, no par value, 60,000 shares authorized and 19,679 and 19,649 shares issued and outstanding as of March 28, 2004 and December 28, 2003, respectively |
62,662 | 62,513 | ||||
| Capital surplus |
2,163 | 2,109 | ||||
| Retained earnings |
8,805 | 6,429 | ||||
| Total shareholders’ equity |
73,630 | 71,051 | ||||
| Total liabilities and shareholders’ equity |
$ | 86,180 | $ | 83,705 | ||
See accompanying notes to unaudited consolidated financial statements.
1
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
| For The Thirteen Weeks Ended |
||||||||
| March 28, 2004 |
March 30, 2003 |
|||||||
| Revenues |
$ | 28,977 | $ | 23,795 | ||||
| Costs and expenses: |
||||||||
| Cost of sales ($3.8 million and $3.3 million related party) |
7,409 | 6,290 | ||||||
| Labor and benefits |
10,576 | 8,644 | ||||||
| Occupancy |
2,230 | 1,759 | ||||||
| Operating expenses |
3,093 | 2,660 | ||||||
| General and administrative |
2,520 | 2,104 | ||||||
| Depreciation and amortization |
1,158 | 913 | ||||||
| Restaurant opening expense |
239 | 412 | ||||||
| Gain from sale of Pietro’s restaurants |
(1,658 | ) | — | |||||
| Total costs and expenses |
25,567 | 22,782 | ||||||
| Income from operations |
3,410 | 1,013 | ||||||
| Other income (expense): |
||||||||
| Interest income |
105 | 105 | ||||||
| Interest expense |
(2 | ) | (8 | ) | ||||
| Other income, net |
85 | 162 | ||||||
| Total other income |
188 | 259 | ||||||
| Income before income taxes |
3,598 | 1,272 | ||||||
| Income tax expense |
1,222 | 444 | ||||||
| Net income |
$ | 2,376 | $ | 828 | ||||
| Net income per share: |
||||||||
| Basic |
$ | 0.12 | $ | 0.04 | ||||
| Diluted |
$ | 0.12 | $ | 0.04 | ||||
| Weighted average number of shares outstanding: |
||||||||
| Basic |
19,425 | 19,375 | ||||||
| Diluted |
20,518 | 20,145 | ||||||
See accompanying notes to unaudited consolidated financial statements.
2
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
| Common Stock |
Capital Surplus |
Retained Earnings |
Total | |||||||||||
| Shares |
Amount |
|||||||||||||
| Balance, December 28, 2003 |
19,649 | $ | 62,513 | $ | 2,109 | $ | 6,429 | $ | 71,051 | |||||
| Exercise of stock options, net |
30 | 149 | — | — | 149 | |||||||||
| Tax benefit from stock option exercises |
— | — | 54 | — | 54 | |||||||||
| Net income |
— | — | — | 2,376 | 2,376 | |||||||||
| Balance, March 28, 2004 |
19,679 | $ | 62,662 | $ | 2,163 | $ | 8,805 | $ | 73,630 | |||||
See accompanying notes to unaudited consolidated financial statements.
3
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| For The Thirteen Weeks Ended |
||||||||
| March 28, 2004 |
March 30, 2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 2,376 | $ | 828 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
1,158 | 913 | ||||||
| Deferred income taxes |
486 | 53 | ||||||
| Tax benefit from stock options exercised |
54 | 39 | ||||||
| Gain on sale of Pietro’s restaurants |
(1,658 | ) | — | |||||
| Changes in assets and liabilities: |
||||||||
| Accounts and other receivables |
(130 | ) | (33 | ) | ||||
| Inventories |
107 | (20 | ) | |||||
| Prepaids and other current assets |
442 | 225 | ||||||
| Other assets, net |
10 | 3 | ||||||
| Accounts payable |
(68 | ) | (1,968 | ) | ||||
| Accrued expenses |
(141 | ) | 72 | |||||
| Reserve for store closures |
(57 | ) | (8 | ) | ||||
| Other liabilities |
(11 | ) | (74 | ) | ||||
| Net cash provided by operating activities |
2,568 | 30 | ||||||
| Cash flows from investing activities: |
||||||||
| Purchases of property and equipment |
(3,872 | ) | (3,320 | ) | ||||
| Purchases of investments |
(5,439 | ) | (14,072 | ) | ||||
| Proceeds from investments sold |
3,350 | 8,234 | ||||||
| Proceeds from sale of Pietro’s restaurants |
1,250 | — | ||||||
| Proceeds from sale of restaurant equipment, net of expenses |
— | 36 | ||||||
| Net cash used in investing activities |
(4,711 | ) | (9,122 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Payments on long-term debt |
(2 | ) | (3 | ) | ||||
| Proceeds from exercise of stock options |
149 | 43 | ||||||
| Payments on notes payable to related parties |
(113 | ) | (107 | ) | ||||
| Net cash provided by (used in) financing activities |
34 | (67 | ) | |||||
| Net decrease in cash and cash equivalents |
(2,109 | ) | (9,159 | ) | ||||
| Cash and cash equivalents, beginning of period |
4,899 | 29,053 | ||||||
| Cash and cash equivalents, end of period |
$ | 2,790 | $ | 19,894 | ||||
See accompanying notes to unaudited consolidated financial statements.
4
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of Chicago Pizza & Brewery, Inc. and its wholly owned subsidiaries. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
The accompanying consolidated financial statements have not been audited by our independent auditors. The financial statements include all adjustments (consisting of normal recurring accruals), which are, in our opinion, necessary for a fair presentation of our financial position, results of operations and cash flows for such periods. However, these results are not necessarily indicative of results for any other interim period or for our full year.
Certain information and footnote disclosures normally included in consolidated financial statements in accordance with accounting principles generally accepted in the United States have been omitted pursuant to requirements of the Securities and Exchange Commission (SEC). A description of our accounting policies and other financial information is included in our audited consolidated financial statements as filed with the SEC on Form 10-K for the year ended December 28, 2003. We believe that the disclosures included in our accompanying interim financial statements and footnotes are adequate to make the information not misleading, but should be read in conjunction with our consolidated financial statements and notes thereto included in the Form 10-K. The accompanying consolidated balance sheet as of December 28, 2003 has been derived from our audited financial statements.
Effective July 1, 2002, we changed our fiscal year end from December 31 to the Sunday closest to December 31 in each year. In connection with this change in fiscal year, we also realigned our fiscal quarters whereby the first, second and third quarters will each consist of 13 weeks. The fourth quarter will typically consist of 13 weeks, except approximately every fifth year it will consist of 14 weeks. The fourth quarter of 2004 will consist of 14 weeks.
INVESTMENTS
All investments are classified as held-to maturity and are reported at amortized cost and realized gains and losses are reflected in earnings.
Investments consist of the following (in thousands):
| March 28, 2004 |
December 28, 2003 | |||||
| U.S. and government agency securities |
$ | 213 | $ | 964 | ||
| International and government agency securities |
739 | — | ||||
| U.S. corporate notes and bonds |
23,178 | 21,077 | ||||
| Total Investments |
$ | 24,130 | $ | 22,041 | ||
Average maturity for the Company’s total investment portfolio was 9 months as of March 28, 2004 and December 28, 2003.
NET INCOME PER SHARE