SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
ý Quarterly Report Voluntarily Filed Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
For the Quarterly Period Ended September 28, 2005
Commission File Number 333-62775
BERTUCCI’S CORPORATION
(Exact name of registrant as specified in its charter)
Delaware |
| 06-1311266 |
(State or other jurisdiction of |
| (I.R.S. Employer |
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155 Otis Street, Northborough, Massachusetts |
| 01532-2414 |
(Address of principal executive offices) |
| (Zip Code) |
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Registrant’s telephone number, including area code: (508) 351-2500 |
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 the filing requirements for the past 90 days.
Yes o No ý
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer |
| o |
| Accelerated filer |
| o |
| Non-accelerated filer |
| ý |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No ý
3,012,982 shares of the registrant’s Common Stock were outstanding on January 10, 2006
BERTUCCI’S CORPORATION
FORM 10-Q
TABLE OF CONTENTS
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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EXHIBITS |
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2
BERTUCCI’S CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
|
| September 28, |
| December 29, |
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| 2005 |
| 2004 |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
| $ | 13,771 |
| $ | 12,291 |
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Restricted cash |
| 2,180 |
| 2,403 |
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Accounts receivable |
| 696 |
| 1,334 |
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Inventories |
| 1,438 |
| 1,388 |
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Prepaid expenses and other current assets |
| 367 |
| 534 |
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Total current assets |
| 18,452 |
| 17,950 |
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Property and Equipment, at cost: |
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Land |
| 259 |
| 259 |
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Buildings |
| 697 |
| 697 |
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Capital leases - land and buildings |
| 5,764 |
| 5,764 |
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Leasehold improvements |
| 68,524 |
| 66,632 |
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Furniture and equipment |
| 46,523 |
| 44,537 |
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| 121,767 |
| 117,889 |
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Less - accumulated depreciation and amortization |
| (65,746 | ) | (57,101 | ) | ||
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| 56,021 |
| 60,788 |
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Construction work in process |
| — |
| 1,567 |
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Net property and equipment |
| 56,021 |
| 62,355 |
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Goodwill |
| 26,127 |
| 26,127 |
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Deferred finance costs, net |
| 2,340 |
| 2,862 |
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Liquor licenses, net |
| 2,372 |
| 2,414 |
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Other assets |
| 639 |
| 513 |
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TOTAL ASSETS |
| $ | 105,951 |
| $ | 112,221 |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Current Liabilities: |
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Promissory notes - current portion |
| $ | 41 |
| $ | 40 |
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Capital lease obligations - current portion |
| 83 |
| 74 |
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Accounts payable |
| 6,887 |
| 7,819 |
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Accrued expenses |
| 13,918 |
| 16,457 |
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Total current liabilities |
| 20,929 |
| 24,390 |
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Promissory notes, net of current portion |
| 739 |
| 781 |
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Capital lease obligations, net of current portion |
| 6,028 |
| 6,102 |
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Senior Notes |
| 85,310 |
| 85,310 |
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Deferred gain on sale leaseback transaction |
| 1,920 |
| 2,002 |
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Other long-term liabilities |
| 8,478 |
| 8,368 |
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Total liabilities |
| 123,404 |
| 126,953 |
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Commitments and Contingencies |
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Stockholders’ Deficit: |
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Common stock, $.01 par value |
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Authorized - 8,000,000 shares |
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Issued - 3,764,995 and 3,667,495 shares, respectively; Outstanding 3,012,982 and 2,915,482 shares, respectively |
| 38 |
| 37 |
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Less treasury shares, 752,013 at cost |
| (8,480 | ) | (8,480 | ) | ||
Additional paid-in capital |
| 29,617 |
| 29,046 |
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Accumulated deficit |
| (38,628 | ) | (35,335 | ) | ||
Total stockholders’ deficit |
| (17,453 | ) | (14,732 | ) | ||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
| $ | 105,951 |
| $ | 112,221 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
BERTUCCI’S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
|
| Thirteen weeks ended |
| Thirty-nine weeks ended |
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| September 28, |
| September 29, |
| September 28, |
| September 29, |
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| 2005 |
| 2004 |
| 2005 |
| 2004 |
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| (As Restated - See |
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Net sales |
| $ | 49,654 |
| $ | 49,260 |
| $ | 152,185 |
| $ | 150,440 |
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Cost of sales and expenses: |
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Cost of sales |
| 11,316 |
| 12,256 |
| 35,498 |
| 36,695 |
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Operating expenses |
| 30,051 |
| 29,509 |
| 91,895 |
| 92,605 |
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General and administrative expenses |
| 3,740 |
| 2,655 |
| 10,521 |
| 9,226 |
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Asset impairment charge |
| — |
| — |
| 907 |
| 3,894 |
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Depreciation, amortization, deferred rent and pre-opening expenses |
| 2,601 |
| 3,244 |
| 8,773 |
| 9,518 |
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Total cost of sales and expenses |
| 47,708 |
| 47,664 |
| 147,594 |
| 151,938 |
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Income (loss) from operations |
| 1,946 |
| 1,596 |
| 4,591 |
| (1,498 | ) | ||||
Interest expense, net |
| (2,613 | ) | (2,664 | ) | (7,884 | ) | (7,963 | ) | ||||
Loss before income taxes |
| (667 | ) | (1,068 | ) | (3,293 | ) | (9,461 | ) | ||||
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Income taxes |
| — |
| — |
| — |
| — |
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Net loss |
| $ | (667 | ) | $ | (1,068 | ) | $ | (3,293 | ) | $ | (9,461 | ) |
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Basic and diluted loss per share |
| $ | (0.23 | ) | $ | (0.36 | ) | $ | (1.12 | ) | $ | (3.21 | ) |
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Weighted-average shares outstanding - basic and diluted |
| 2,953,864 |
| 2,944,377 |
| 2,942,372 |
| 2,949,279 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
BERTUCCI’S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
|
| Thirty-nine Weeks Ended |
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| September 28, 2005 |
| September 29, 2004 |
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| (As Restated - See |
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Cash flows from operating activities |
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Net loss |
| $ | (3,293 | ) | $ | (9,461 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
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Depreciation, amortization and deferred rent |
| 9,109 |
| 9,572 |
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Asset impairment charge |
| 907 |
| 3,894 |
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Stock compensation expense |
| 172 |
| — |
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Changes in operating assets and liabilities |
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Inventories |
| (50 | ) | (227 | ) | ||
Prepaid expenses, receivables and other |
| 847 |
| (45 | ) | ||
Other accrued expenses |
| (2,598 | ) | (3,045 | ) | ||
Accounts payable |
| (932 | ) | (167 | ) | ||
Tenant allowance received |
| 208 |
| 356 |
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Other operating assets and liabilities |
| (127 | ) | 41 |
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Total adjustments |
| 7,536 |
| 10,379 |
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Net cash provided by operating activities |
| 4,243 |
| 918 |
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Cash flows from investing activities |
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Additions to property and equipment |
| (3,280 | ) | (6,381 | ) | ||
Decrease (increase) in restricted cash |
| 223 |
| (791 | ) | ||
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Net cash used in investing activities |
| (3,057 | ) | (7,172 | ) | ||
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Cash flows from financing activities |
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Purchase of treasury shares |
| — |
| (142 | ) | ||
Sale of common stock |
| 400 |
| 10 |
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Payment on promissory note |
| (41 | ) | (40 | ) | ||
Principal payments under capital lease obligations |
| (65 | ) | (33 | ) | ||
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Net cash provided by (used in) financing activities |
| 294 |
| (205 | ) | ||
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Net increase (decrease) in cash and cash equivalents |
| 1,480 |
| (6,459 | ) | ||
Cash and cash equivalents, beginning of year |
| 12,291 |
| 12,647 |
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Cash and cash equivalents, end of period |
| $ | 13,771 |
| $ | 6,188 |
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Supplemental Disclosure of Cash Flow Information: |
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Cash paid for interest |
| $ | 9,880 |
| $ | 9,863 |
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Cash paid for income taxes |
| $ | 50 |
| $ | 380 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
BERTUCCI’S CORPORATION
Notes To Condensed Consolidated Financial Statements
September 28, 2005
(Unaudited)
1. Basis of Presentation
The unaudited condensed consolidated financial statements (the “Unaudited Financial Statements”) presented herein have been prepared by Bertucci’s Corporation and include all of its subsidiaries (collectively, the “Company”) after elimination of inter-company accounts and transactions, without audit, and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the interim periods presented. The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. It is suggested the Unaudited Financial Statements be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K/A for the year ended December 29, 2004, which was filed with the Securities and Exchange Commission on January 19, 2006 (the “2004 Annual Report Amendment”). The operating results for the thirty-nine weeks ended September 28, 2005 may not be indicative of the results expected for any succeeding interim period or for the entire year ending December 28, 2005.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
2. Recent Accounting Pronouncements
In June 2005, the Emerging Issues Task Force of the Financial Accounting Standards Board (“FASB”) reached a consensus on Issue No. 05-6, Determining the Amortization Period for Leasehold Improvements (“EITF 05-6”). The guidance requires that leasehold improvements acquired in a business combination or purchased subsequent to the inception of a lease be amortized over the lesser of the useful life of the assets or a term that includes renewals that are reasonably assured at the date of the business combination or purchase. The guidance is effective for periods beginning after June 29, 2005. The adoption of EITF 05-6 is not expected to have a material effect on the Company’s consolidated financial position or results of operations.
In May 2005, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 154, Accounting Changes and Error Corrections–A Replacement of APB Opinion No. 20 and FASB Statement No. 3 (“SFAS No. 154”). SFAS No. 154 applies to all voluntary changes in accounting principle and requires retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable. SFAS No. 154 requires that a change in depreciation, amortization, or depletion method for long-lived, non-financial assets be accounted for as a change of estimate affected by a change in accounting principle. SFAS No. 154 also carries forward without change the guidance in Accounting Principals Board (“APB”) Opinion No. 20 with respect to accounting for changes in accounting estimates, changes in the reporting unit and correction of an error in previously issued financial statements. The Company is required to adopt SFAS No. 154 for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of SFAS No. 154 is not expected to have a material effect on the Company’s consolidated financial position or results of operations.
In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment (“SFAS No. 123R”). This Statement is a revision of SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. SFAS No. 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. The Statement requires entities to recognize stock compensation expense for awards of equity instruments to employees based on the grant-date fair value of those awards (with limited exceptions). SFAS No. 123R is effective for the first annual reporting period that begins after December 15, 2005. The Company is evaluating the two methods of adoption allowed by SFAS No. 123R; the modified-prospective transition method and the modified-retrospective transition method.
6
3. Restatement of Financial Statements
Initial Restatement
In the first quarter of 2005 the Company initiated a review of its lease accounting, including leased liquor licenses, and leasehold depreciation practices. As a result, the Company corrected its accounting for leases and restated its financial statements for all periods prior to December 29, 2004 and certain financial information to correct errors in lease accounting policies (the “Initial Restatement”). The Company had historically accounted for tenant improvement allowances as reductions to the related leasehold improvement asset on the consolidated balance sheets and capital expenditures in investing activities on the consolidated statements of cash flows. Also, the Company had historically recognized rent on a straight-line basis over a lease term commencing with the initial occupancy date, or Company-operated retail store opening date. In addition, the depreciable lives of certain leasehold improvements and other long-lived assets on those properties were not aligned with the non-cancelable lease term.
Following a review of its lease accounting treatment and relevant accounting literature, the Company determined it should: (a) report tenant improvement allowances as deferred liabilities in the consolidated balance sheets and initiate the amortization of those liabilities at the relevant initial occupancy date; (b) classify the change in the deferred liability related to the tenant allowances in the operating activities on the Condensed Consolidated Statements of Cash Flows; (c) conform the depreciable lives for buildings on leased land and other leasehold improvements to the shorter of the economic life of the asset or the lease term used for determining the capital versus operating lease classification and calculating straight-line rent; and (d) include option periods in the depreciable lives assigned to leased buildings and leasehold improvements and in the calculation of straight-line rent expense only in instances in which the exercise of the option period can be reasonably assured and failure to exercise such options would result in an economic penalty.
The restatement for leaseholds also resulted in restatements of amounts previously reported for asset impairments.
The Initial Restatement did not have any impact on the Company’s previously reported net sales or compliance with any covenant under its debt instruments.
Current Restatement
In connection with the preparation of this Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2005, the Company discovered errors in its detailed property and equipment records adjusted during the Initial Restatement. Management then conducted an investigation into the extent and magnitude of these errors, which involved the calculation of depreciation expense on multiple property records and the related impact on income taxes for the fiscal years 1998 through 2004, inclusive, and the first two fiscal quarters of 2005 (the “Relevant Period”), to determine if a restatement of its financial statements was necessary. Based upon this investigation, in January 2006 the Company determined additional aggregate depreciation expense of approximately $3.5 million was required for the Relevant Period and income tax expense was not properly adjusted in the Initial Restatement. Based upon this investigation, in January 2006 the Company determined an additional aggregate depreciation expense of approximately $3.5 million was required for the Relevant Period and a restatement of its financial statements, including those contained in its: (1) Annual Report on Form 10-K for the fiscal year ended December 29, 2004, which was filed with the SEC on April 13, 2005 (the “Original 2004 10-K”); (2) Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2005, which was filed with the SEC on May 13, 2005 (the “Original 2005 First Quarter 10-Q”); and (3) Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 2005, which was filed with the SEC on August 12, 2005 (the “Original 2005 Second Quarter 10-Q”), and together with the Original 2004 10-K and the Original 2005 First Quarter 10-Q, (the “Subject Filings”), was necessary (the “Current Restatement”). Accordingly, the Company determined it should amend the Subject Filings to reflect the proper recording of depreciation and income tax expense and its impact on the consolidated Balance Sheets, Statements of Operations, Stockholders’ Deficit, and Cash Flows for the periods reported therein.
The Company also restated its Statements of Cash Flows to present the change in restricted cash as an investing activity. These amounts had previously been reported as a financing activity.
7
The Current Restatement did not have any impact on the Company’s previously reported net sales during the Relevant Period. The following is a summary of the impact of the Current Restatement on the Company’s condensed consolidated statements of operations and cash flow for the thirteen and thirty-nine weeks ended September 29, 2004 (in thousands, except per share data):
For the periods ended September 29, 2004
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| Thirteen Weeks Ended |
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| As Previously |
| As Originally |
| As Restated |
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Operating expenses |
| $ | 29,521 |
| $ | 29,509 |
| $ | 29,509 |
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Deferred rent, depreciation, amortization and pre-opening expenses |
| 3,111 |
| 3,379 |
| 3,244 |
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Income (loss) from operations |
| 1,717 |
| 1,461 |
| 1,596 |
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Interest expense, net |
| (2,654 | ) | (2,664 | ) | (2,664 | ) | |||
Net loss |
| (937 | ) | (1,203 | ) | (1,068 | ) | |||
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Basic and diluted loss per share |
| (0.32 | ) | (0.41 | ) | (0.36 | ) | |||
|
| Thirty-nine Weeks Ended |
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| As Previously |
| As Originally |
| As Restated |
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Operating expenses |
| $ | 92,640 |
| $ | 92,605 |
| $ | 92,605 |
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Deferred rent, depreciation, amortization and pre-opening expenses |
| 9,456 |
| 9,949 |
| 9,518 |
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Asset impairment charge |
| 3,338 |
| 3,894 |
| 3,894 |
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Income (loss) from operations |
| (915 | ) | (1,929 | ) | (1,498 | ) | |||
Interest expense, net |
| (7,934 | ) | (7,963 | ) | (7,963 | ) | |||
Net loss |
| (8,849 | ) | (9,892 | ) | (9,461 | ) | |||
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Basic and diluted loss per share |
| (3.00 | ) | (3.35 | ) | (3.21 | ) | |||
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Cash flows from operating activities |
| 555 |
| 918 |
| 918 |
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Cash flows used in investing activities |
| (6,025 | ) | (6,381 | ) | (7,172 | ) | |||
Cash flows used in financing activities |
| (989 | ) | (996 | ) | (205 | ) | |||
4. Liquor Licenses
Transferable liquor licenses purchased are accounted for at the lower of cost or fair market value and are not amortized. Annual renewal fees are expensed as incurred. The carrying value of transferable liquor licenses was $2.0 million at each of September 28, 2005 and December 29, 2004. Non-transferable liquor licenses are amortized on a straight-line basis over the contractual life of the license. Accumulated amortization at September 28, 2005 and December 29, 2004 for non-transferable liquor licenses was $182,000 and $140,000, respectively. Amortization expense for the thirty-nine weeks ended September 28, 2005 was $42,000 and is expected to be $56,000 per year through fiscal 2010.
5. Restaurant Closing Reserves
Restaurant closing reserves were established as part of the acquisition of Bertucci’s, Inc. in July 1998. These reserves were related to estimated future lease commitments and exit costs to close 18 Bertucci’s locations. In 2001, the Company accrued an additional $4.2 million related to selected locations (all of which had been closed), consisting of estimated lease commitments and certain exit costs. It was originally expected the Company would be able to exit these locations, sublease the locations or otherwise be released from the related leases. However, due to market conditions, the Company has been unable to sublease or exit certain of these leases.
The closed restaurant reserve was calculated net of sublease income at ten locations partially or fully subleased as of September 28, 2005.
8
The Company remains primarily liable for the remaining lease obligations should the sublessee default. Total sublease income excluded from the reserve is approximately $6.2 million for subleases expiring at various dates through 2017. There have been no defaults by sublessees to date.
Activity within the reserve was as follows (in thousands):
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| Thirty-nine weeks ended |
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| September 28, |
| September 29, |
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| 2005 |
| 2004 |
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Balance, beginning of the year |
| $ | 659 |
| $ | 1,449 |
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Payments charged against reserve |
| (255 | ) | (469 | ) | ||
Balance, end of period |
| $ | 404 |
| $ | 980 |
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Current portion (included in accrued expenses) |
| $ | 288 |
| $ | 615 |
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Noncurrent portion |
| 116 |
| 365 |
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| $ | 404 |
| $ | 980 |
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6. Loss per Share
Basic loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that could occur if options or other contracts to issue common stock were exercised or converted into common stock. For the periods ended September 28, 2005 and September 29, 2004 options representing 963,929 and 554,021 shares of common stock, respectively, were excluded from the calculation of diluted loss per share because of their anti-dilutive effect.
7. Income Taxes
The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Additionally, the Company is required to consider both negative and positive evidence in determining if a valuation allowance is required on a quarterly basis. Management previously recorded a full valuation allowance for its deferred tax assets and continues to record an allowance quarterly for the tax benefits associated with the current period’s losses.
8. Stock-Based Compensation
In accordance with SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), the Company has elected to account for stock-based compensation under the intrinsic value method with disclosure of the effects of fair value accounting on net loss and loss per share on a pro forma basis. The Company’s stock-based compensation plan is described more fully in Note 10 of Notes to Consolidated Financial Statements in the 2004 Annual Report Amendment and in the Company’s Form 8-K filed with the SEC on October 3, 2005. The Company accounts for this plan under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. No stock-based employee compensation cost related to stock options is reflected in net loss, as all options granted had an exercise price equal to, or in excess of, the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net loss and loss per share if the Company had applied the fair value recognition provisions of SFAS No. 123 (in thousands, except per share data):
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| Thirteen weeks ended |
| Twenty-six weeks ended |
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| June 29, |
| June 30, |
| June 29, |
| June 30, |
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| 2005 |
| 2004 |
| 2005 |
| 2004 |
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Net loss, as reported |
| $ | (667 | ) | $ | (1,068 | ) | $ | (3,293 | ) | $ | (9,461 | ) | |||
Add: Stock-based employee compensation expense included in reported net loss |
| 26 |
| — |
| 172 |
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Adjust: Net stock-based employee compensation income (expense) determined under fair value based method for all awards |
| (3 | ) | 61 |
| (130 | ) | (95 | ) | |||||||
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Pro forma net loss |
| $ | (644 | ) | $ | (1,007 | ) | $ | (3,251 | ) | $ | (9,556 | ) | |||
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Basic and diluted loss per share |
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As reported |
| $ | (0.23 | ) | $ | (0.36 | ) | $ | (1.12 | ) | $ | (3.21 | ) | |||
Pro forma |
| $ | (0.22 | ) | $ | (0.34 | ) | $ | (1.10 | ) | $ | (3.24 | ) | |||
9
During the first three quarters of 2005, the Company awarded bonuses to two senior employees and certain officers and independent members of the Board of Directors consisting of an aggregate of 37,500 shares of Common Stock with an average fair value of $4.59 per share. Accordingly, the grant of such shares resulted in a $172,000 compensation charge to the Company.
During the third quarter of 2005, the Company’s Board of Directors approved the adoption of the Bertucci’s Corporation Amended and Restated 1997 Equity Incentive Plan (the “Plan”) to increase the number of shares that are available for issuance under the Plan from 750,000 to 1,100,000.
The net stock-based employee compensation expense determined under the fair value based method for the current periods includes income resulting from the forfeitures of non-vested options.
9. Asset Impairment Charge
The Company’s long-lived assets consist primarily of goodwill, other intangible assets, and leasehold improvements related to its restaurant operations. SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, requires management to test the recoverability of long-lived assets (excluding goodwill) by comparing estimated undiscounted future operating cash flows expected to be generated from these assets to the carrying amounts of the assets whenever events or changes in circumstances indicate the carrying value may not be recoverable. If cash flows are not sufficient to recover the carrying amount of the assets, impairment has occurred and the assets are written down to fair value. Significant estimates and assumptions regarding future sales, cost trends, productivity and market maturity are required to be made by management in order to test for impairment under this standard.
During the second quarter of 2005, the Company assessed certain non-performing restaurants for recoverability and determined an impairment of fixed assets existed at four restaurant locations. The Company estimated the fair value of these assets based on the net present value of the expected cash flows of the four restaurants. The carrying amount of the assets exceeded the fair value of the assets by approximately $0.9 million. The Company recorded an impairment charge during the quarter to reflect the write down of the affected assets to fair value.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
All statements other than statements of historical facts included in this Report on Form 10-Q, including, without limitation, statements set forth under this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate” or “believe” or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements will prove to have been correct, it can give no assurance that such expectations will prove to be correct. Factors that could cause actual results to materially differ include, without limitation: (a) the Company’s high degree of leverage which could, among other things, reduce the Company’s ability to obtain financing for operations and expansion, place the Company at a competitive disadvantage and limit the Company’s flexibility to adjust to changing market conditions; (b) the challenges of managing geographic expansion; (c) changes in food costs, supplies and key supplier relationships; and (d) the possible adverse impact of government regulation on the Company. Other factors that could adversely affect the Company’s business and prospects are described in its filings with the SEC. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
The following discussion should be read in conjunction with the condensed consolidated financial statements of Bertucci’s Corporation (the “Company”), and the notes thereto included herein, as well as the Original 2004 10-K, as amended by the 2004 Annual Report Amendment.
10
General
Bertucci’s Corporation, a Delaware corporation (the “Company”), is the owner and operator of a chain of full-service casual dining, Italian-style restaurants under the names Bertucci’s Brick Oven Pizzeria® and Bertucci’s Brick Oven Ristorante®. As of September 28, 2005, the Company operated 92 restaurants located primarily in the northeastern United States.
In July 1998, the Company completed its acquisition of Bertucci’s Restaurant Corp.’s parent entity, Bertucci’s, Inc., for a purchase price, net of cash received, of approximately $89.4 million (the “Acquisition”). The Company financed the Acquisition primarily through the issuance of $100 million of 10 ¾ % senior notes due 2008 (the “Senior Notes”). The Senior Notes are still outstanding as to $85.3 million in principal.
Management’s Discussion and Analysis of Financial Condition and Results of Operations gives effect to the restatement of the Consolidated Financial Statements discussed in Note 3 of the Notes to the Condensed Consolidated Financial Statements.
Results of Operations
The following table sets forth the percentage relationship to net sales, unless otherwise indicated, of certain items included in the Company’s condensed consolidated statements of operations, as well as certain operating data, for the periods indicated:
(Percentage of Net Sales)
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| Thirteen weeks ended |
| Thirty-nine weeks ended |
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| September 28, |
| September 29, |
| September 28, |
| September 29, |
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| 2005 |
| 2004 |
| 2005 |
| 2004 |
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Net sales |
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
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Cost of sales and expenses: |
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Cost of sales |
| 22.8 | % | 24.9 | % | 23.3 | % | 24.4 | % |
Operating expenses |
| 60.5 | % | 59.9 | % | 60.4 | % | 61.6 | % |
General and administrative expenses |
| 7.5 | % | 5.4 | % | 6.9 | % | 6.1 | % |
Asset impairment charge |
| — |
| — |
| 0.6 | % | 2.6 | % |
Depreciation, amortization, deferred rent, and pre-opening expenses |
| 5.2 | % | 6.6 | % | 5.8 | % | 6.3 | % |
Total cost of sales and expenses |
| 96.0 | % | 96.8 | % | 97.0 | % | 101.0 | % |
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Income (loss) from operations |
| 4.0 | % | 3.2 | % | 3.0 | % | (1.0 | )% |
Interest expense, net |
| (5.3 | )% | (5.4 | )% | (5.2 | )% | (5.3 | )% |
Loss before income taxes |
| (1.3 | )% | (2.2 | )% | (2.2 | )% | (6.3 | )% |
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Income taxes |
| — |
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| — |
| — |
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Net loss |
| (1.3 | )% | (2.2 | )% | (2.2 | )% | (6.3 | )% |
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Restaurant Operating Data: |
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Increase in comparable restaurant sales (a) |
| (1.3 | )% | 1.0 | % | (1.2 | )% | 2.9 | % |
Number of restaurants: |
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Restaurants open, beginning of period |
| 92 |
| 90 |
| 91 |
| 89 |
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Restaurants opened |
| — |
| 1 |
| 1 |
| 2 |
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Total restaurants open, end of period |
| 92 |
| 91 |
| 92 |
| 91 |
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(a) The Company defines comparable restaurant sales as net sales from restaurants that have been open for at least one full fiscal year at the beginning of the fiscal year.
Thirteen Weeks Ended September 28, 2005 Compared to Thirteen Weeks Ended September 29, 2004
Net Sales. Total net sales increased by approximately $400,000, or 0.8%, to $49.7 million during the third quarter of 2005 from $49.3 million during the third quarter of 2004. The increase was primarily due to 25.6 incremental restaurant weeks from three restaurants opened since January 2004 offset by a 1.3% decrease in the 89 comparable restaurants’ sales. Comparable Bertucci’s restaurant dine-in guest counts decreased 1.6% for the third quarter of 2005 as compared to the third quarter of 2004. Bertucci’s comparable restaurant dine-in sales decreased 2.3% and comparable carry-out and delivery sales increased 2.8% for the quarter as compared to the third quarter of 2004. For the 89 comparable restaurants, average weekly sales were approximately $41,700 for the third quarter of 2005 compared to approximately $42,200 per week for the third quarter of 2004.
11
Cost of Sales. Cost of sales decreased by approximately $1 million, or 8.1%, to $11.3 million during the third quarter of 2005 from $12.3 million during the third quarter 2004. Expressed as a percentage of net sales, overall cost of sales decreased to 22.8% during the third quarter of 2005 from 24.9% during the third quarter of 2004. Of this 2.1% decrease, approximately 0.4% is attributed to a menu mix shift generally to lower priced, lower cost items, approximately 1.3% was due to decreases in certain ingredient costs, and approximately 0.4% from improved restaurant cost controls.
Operating Expenses. Operating expenses increased by approximately $600,000, or 2.0%, to $30.1 million during the third quarter of 2005 from $29.5 million during the third quarter of 2004. Expressed as a percentage of net sales, operating expenses increased to 60.5% in the third quarter of 2005 from 59.9% during the third quarter of 2004. The increase is primarily due to the timing of marketing expenditures ($1 million) and increased utility costs ($500,000) partially offset by reduced employee benefit costs and other insurance ($900,000).
General and Administrative Expenses. General and administrative expenses increased by approximately $1.0 million, or 37.0%, to $3.7 million during the third quarter of 2005 from $2.7 million during the third quarter of 2004. Expressed as a percentage of net sales, general and administrative expenses increased to 7.5% in the third quarter of 2005 from 5.4% in the third quarter of 2004. The dollar increase over the prior year period is primarily attributable to bonus expense accruals as year-to-date cash flow results are currently exceeding targeted levels under the Company’s bonus plan as well as prior year accrual reductions of $266,000.
Depreciation, Amortization, Deferred Rent and Pre-opening Expenses. Depreciation, amortization, deferred rent and pre-opening expenses decreased by approximately $600,000, or 18.8%, to $2.6 million during the third quarter of 2005 from $3.2 million during the third quarter of 2004. The decrease is primarily due to pre-opening expenses of a restaurant opening in the third quarter of 2004 versus no opening in the third quarter of 2005. Expressed as a percentage of net sales, depreciation, amortization, deferred rent and pre-opening expenses decreased to 5.2% in the third quarter of 2005 from 6.6% during the third quarter of 2004.
Interest Expense, net. Net interest expense of $2.6 million was essentially flat as compared to the third quarter of 2004.
Income Taxes. The Company has an historical trend of recurring pre-tax losses. The Company previously recorded a full valuation allowance for its net deferred tax asset. The Company also provided a full valuation allowance relating to the tax benefits generated since 2003 (primarily from its operating losses). As of December 29, 2004, the Company had net operating losses and tax credit carry forwards totaling $7.8 million.
Thirty-Nine Weeks Ended September 28, 2005 Compared to Thirty-Nine Weeks Ended September 29, 2004
Net Sales. Total net sales increased by approximately $1.8 million, or 1.2%, to $152.2 million during the first three quarters of 2005 from $150.4 million during the first three quarters of 2004. The increase was primarily due to 83.6 incremental restaurant weeks from three restaurants opened since January 2004 offset by a 1.2% decrease in the 89 comparable restaurants’ sales. Comparable Bertucci’s restaurant dine-in guest counts decreased 1.2% for the first three quarters of 2005 as compared to the first three quarters of 2004. Bertucci’s comparable restaurant dine-in sales decreased 1.9% and comparable carry-out and delivery sales increased 1.7% for the first three quarters of 2005 as compared to the first three quarters of 2004. For the 89 comparable restaurants, average weekly sales were approximately $42,600 for the first three quarters of 2005 compared to approximately $43,000 per week for the first three quarters of 2004.
Cost of Sales. Cost of sales decreased by approximately $1.2 million, or 3.3%, to $35.5 million during the first three quarters of 2005 from $36.7 million during the first three quarters 2004. Expressed as a percentage of net sales, overall cost of sales decreased to 23.3% during the first three quarters of 2005 from 24.4% during the first three quarters of 2004. Of this 1.1% decrease, approximately 0.3% is attributed to a menu mix shift generally to lower priced, lower cost items, approximately 0.5% was due to decreases in certain ingredient costs, and approximately 0.3% from improved restaurant cost controls.
Operating Expenses. Operating expenses decreased by $700,000, or 0.8%, to $91.9 million during the first three quarters of 2005 from $92.6 million during the first three quarters of 2004. Expressed as a percentage of net sales, operating expenses decreased to 60.4% in the first three quarters of 2005 from 61.6% during the first three quarters of 2004. The dollar decrease was primarily due to lower marketing expenditures ($1.8 million less than the prior year), partially offset by increased utility costs and the operation of three non-comparable restaurants. The Company expects marketing expenditures for all of 2005 will be approximately $1.0 million less than in 2004.
12
General and Administrative Expenses. General and administrative expenses increased by approximately $1.3 million, or 14.1%, to $10.5 million during the first three quarters of 2005 from $9.2 million during the first three quarters of 2004. Expressed as a percentage of net sales, general and administrative expenses increased to 6.9% in the first three quarters of 2005 from 6.1% in the first three quarters of 2004. The dollar increase over the prior year period is primarily attributable to: (a) bonus expense accruals as year-to-date cash flow results are currently exceeding targeted levels under the Company’s bonus plan while the prior year did not ($1.2 million); and (b) stock compensation expense relating to the award of 37,500 shares of common stock to key members of management and independent members of the Board of Directors (approximately $262,000 including associated payroll taxes).
Asset Impairment Charge. During the second quarter of 2005, the Company assessed certain non-performing restaurants for recoverability and determined an impairment of fixed assets existed at four restaurant locations. The Company estimated the fair value of these assets based on the net present value of the expected cash flows of the four restaurants. The carrying amount of the assets exceeded the fair value of the assets by approximately $0.9 million. The Company recorded an impairment charge during the quarter to reflect the write down of the affected assets to fair value.
Depreciation, Amortization, Deferred Rent and Pre-opening Expenses. Depreciation, amortization, deferred rent and pre-opening expenses decreased by approximately $700,000, or 7.4%, to $8.8 million during the first three quarters of 2005 from $9.5 million during the first three quarters of 2004. The decrease is primarily due to reduced deferred rent as the majority of restaurant leases are past the half-way point of their primary terms and includable renewal periods. Additionally, pre-opening expenses were $280,000 less than in 2004 due to one restaurant opening in 2005 versus three in 2004. Expressed as a percentage of net sales, depreciation, amortization, deferred rent and pre-opening expenses decreased to 5.8% in the first three quarters of 2005 from 6.3% during the first three quarters of 2004.
Interest Expense, net. Net interest expense decreased by approximately $100,000, or 1.3%, to $7.9 million during the first three quarters of 2005 from $8.0 million during the first three quarters of 2004.
Income Taxes. The Company has an historical trend of recurring pre-tax losses. The Company previously recorded a full valuation allowance for its net deferred tax asset. The Company also provided a full valuation allowance relating to the tax benefits generated since 2003 (primarily from its operating losses). As of December 29, 2004, the Company had net operating losses and tax credit carry forwards totaling $7.8 million.
Liquidity and Capital Resources
The Company has historically met its capital expenditures and working capital needs through a combination of operating cash flow and bank and mortgage borrowings, the sale of the Senior Notes, the sale of Common Stock, and, in fiscal 2003, two sale leaseback transactions. Future capital and working capital needs are expected to be funded from net cash flows provided by operating cash flow and cash on hand.
Net cash flows provided by operating activities were approximately $4.2 million for the first three quarters of 2005, approximately $3.2 million more than the approximate $1.0 million provided during the first three quarters of 2004. As of September 28, 2005, the Company had cash and cash equivalents of $13.8 million.
The Company’s capital additions were approximately $3.3 million during the first three quarters of 2005 compared to approximately $6.4 million for the comparable prior year period. The capital expenditures were primarily comprised of $419,000 for a new restaurant which opened in the first quarter of 2005 and $2.9 million for remodeling and maintenance capital. The Company anticipates capital expenditures for the remainder of 2005 will be approximately $1.7 million.
As of September 28, 2005, the Company had $92.2 million in consolidated indebtedness, $85.3 million pursuant to the Senior Notes, $6.1 million of capital lease obligations, and $0.8 million of promissory notes. The Senior Notes contain no financial covenants and the Company, as of the filing of this report on Form 10-Q, is in compliance with all non-financial covenants related to the Senior Notes. The Senior Notes bear interest at the rate of 10 ¾% per annum, payable semi-annually on January 15 and July 15. The Senior Notes are due in full on July 15, 2008.
Through July 15, 2006, the Company may, at its option, redeem any or all of the Senior Notes at face value, plus a declining premium, which is 1.79% through July 15, 2006. After July 15, 2006, the Senior Notes may be redeemed at face value. Additionally, under certain circumstances, including a change of control or following certain asset sales, the holders of the Senior Notes may require the Company to repurchase the Senior Notes, at a redemption price of 101% of face value.
13
The Company is operating without a line of credit and is funding all of its capital expenditures, debt reductions and operating needs out of cash flows from operations and cash on hand.
The Company has a $4.0 million (maximum) letter of credit facility (which was renewed in December 2005) as collateral with third party administrators for self insurance reserves. As of September 28, 2005 and the filing of this report on Form 10-Q, this facility was collateralized with $2.2 million of cash restricted from general use. Letters of credit totaling $2.2 million were outstanding on September 28, 2005 and as of the filing of this report on Form 10-Q.
The Company believes the cash flow generated from its operations and cash on hand should be sufficient to fund its debt service requirements, lease obligations, expected capital expenditures and other operating expenses for the next twelve months. Until the 2008 maturity of its Senior Notes, the Company expects to be able to service its debt, but the lack of short term borrowing availability may impede growth. The Company is evaluating various refinancing alternatives for its Senior Notes prior to their maturity in 2008.
The Company’s future operating performance and ability to service or refinance the Senior Notes will be subject to future economic conditions and to financial, business and other factors, many of which are beyond the Company’s control. Significant liquidity demands will arise from debt service on the Senior Notes.
There have been no material changes to the Company’s contractual obligations and commitments from those disclosed in the Original 2004 10-K.
Impact of Inflation
Inflationary factors such as increases in labor, food or other operating costs could adversely affect the Company’s operations. The Company does not believe inflation has had a material impact on its financial position or results of operations for the periods discussed above. Management believes through the proper leveraging of purchasing size, labor scheduling, and restaurant development analysis, inflation will not have a material adverse effect on operations during the foreseeable future. There can be no assurance inflation will not materially adversely affect the Company.
Seasonality
The Company’s quarterly results of operations have fluctuated and are expected to continue to fluctuate depending on a variety of factors, including the timing of new restaurant openings and related pre-opening and other startup expenses, net sales contributed by new restaurants, increases or decreases in comparable restaurant sales, competition and overall economic conditions. The Company’s business is also subject to seasonal influences of consumer spending, dining out patterns and weather. As is the case with many restaurant companies, the Company typically experiences lower net sales and net income during the first and fourth quarters. Because of these fluctuations in net sales and net loss, the results of operations of any quarter are not necessarily indicative of the results that may be achieved for a full year or any future quarter.
Critical Accounting Policies and Estimates
The discussion and analysis of the Company’s financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments affecting the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, estimates are evaluated, including those related to the impairment of long-lived assets, self-insurance, and closed restaurant reserves. Estimates are based on historical experience and on various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For a discussion of how these and other factors may affect the Company’s business, see the “Forward-Looking Statements” above and other factors included in the Company’s other filings with the SEC.
The Company’s critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company’s consolidated financial statements. The Company believes its critical accounting policies relate to the impairment of long-lived assets, income tax valuation allowances, self-insurance and closed restaurant reserves. For a more detailed discussion of the Company’s critical accounting policies and estimates, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” contained in the 2004 Annual Report Amendment. There
14
have been no material changes to the Company’s critical accounting policies and estimates from those disclosed in the 2004 Annual Report Amendment.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company has no exposure to specific risks related to derivatives or other “hedging” types of financial instruments. In addition, the Company does not have operations outside of the United States of America which expose it to foreign currency risk and substantially all of the Company’s outstanding debt has fixed interest rates.
Item 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures. The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as the Company’s are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
In connection with the preparation of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2005, the Company performed an evaluation under the supervision and with the participation of the Company’s management, including the CEO and CFO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). In performing this evaluation, management became aware of errors in its detailed property and equipment records. These errors involved the calculation of depreciation expense on multiple property records and the related impact on income taxes during the Relevant Period.
Subsequent to the discovery of these errors, management conducted an investigation concerning the extent and magnitude of these errors. As a result of this inquiry, on January 12, 2006 the Audit Committee and management concluded that: (1) the Company’s depreciation and income tax expense accounting practices were not appropriate as of September 28, 2005; (2) aggregate additional depreciation expense of approximately $3.5 million needed to be recorded in its financial statements for the Relevant Period, and income tax expense was not properly adjusted in the Initial Restatement, and therefore, its financial statements relating to the Relevant Period were required to be restated; and (3) the Company needed to amend the Subject Filings and restate the financial statements contained therein and reflect the proper recording of depreciation and income tax expense for the periods reported therein (collectively, the “Subject Financial Statements”). See Note 3 of Notes to Condensed Consolidated Financial Statements. Based on the determination the Company’s depreciation and income tax expense accounting practices were not appropriate as of September 28, 2005, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective as of that date.
Internal Control Over Financial Reporting. Based on the definition of “material weakness” in the Public Company Accounting Oversight Board’s Auditing Standard No. 2, (An Audit of Internal Control Over Financial Reporting Performed in Conjunction With an Audit of Financial Statements), restatement of the Subject Financial Statements is a strong indicator of the existence of a “material weakness” in the design or operation of internal control over financial reporting. Based on the evaluation of the Company’s controls and procedures, management concluded a material weakness existed in the Company’s internal control over financial reporting as it related to its depreciation expense accounting practices, and disclosed this to the Audit Committee and to the Company’s independent registered public accountants.
Remediation Steps to Address Material Weakness. To remediate the material weakness in the Company’s internal control over financial reporting, the Company has re-performed all of the necessary calculations and added sufficient review and approval procedures to assure management the material weakness has been corrected.
Change in Internal Control Over Financial Reporting. There were no significant changes in the Company’s internal control over financial reporting that occurred during the Company’s third fiscal quarter of 2005 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company did, however, make changes to its internal control over financial reporting in the first fiscal quarter of 2006, by making the changes to its depreciation and income tax expense accounting practices set forth above.
15
The Company is involved in various legal proceedings from time to time incidental to the conduct of its business. In the opinion of management, any ultimate liability arising out of such proceedings will not have a material adverse effect on the financial condition or results of operations of the Company.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the third quarter of 2005, the Company issued 5,250 shares of Common Stock to an officer and a senior employee as a bonus. The Company recorded a compensation charge of $25,905 in connection with the grant of these shares. Each grantee acknowledged in writing the transfer of their shares is subject to the provisions of a Stockholders’ Agreement, which is summarized in “Security Ownership of Certain Beneficial Owners and Management - Shareholders Agreement” in the Original 2004 10-K (“Stockholders’ Agreement”). If the grants of such shares are characterized as sales under Section 5 of the Securities Act of 1933, as amended (the “Act”), then the Company believes the grants were exempt from registration under the Act pursuant to the exemption provided by Section 4(2) of the Act. No commissions were paid to any underwriter in connection with the issuance of these shares.
The grants were issued as follows:
On July 21, 2005, the Company issued 3,000 shares of Common Stock to an officer.
On August 18, 2005, the Company issued 2,250 shares of Common Stock to a senior employee.
In addition, on September 27, 2005 the Company sold 30,000 shares of Common Stock to each of Stephen V. Clark, a director and Chief Executive Officer of the Company, and David G. Lloyd, a director and President of the Company, for a purchase price of $6.66 per share. The price per share was the Company’s estimate of fair value at the time of the sale, and was approved by the Company’s Board of Directors. Each of Messrs. Clark and Lloyd acknowledged in writing the transfer of their shares is subject to the provisions of the Stockholders’ Agreement. These sales were exempt from registration under the Act pursuant to the exemption provided by Section 4(2) of the Act. No commissions were paid to any underwriter in connection with the sale of these shares.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
None
Exhibits |
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| 31.1 |
| Certification of Stephen V. Clark pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*). |
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| 31.2 |
| Certification of David G. Lloyd pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*). |
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| (*) | — | Included with this report. |
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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.
| BERTUCCI’S CORPORATION | ||
| (Registrant) | ||
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Date: January 19, 2006 | By: | /s/ Stephen V. Clark |
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| Chief Executive Officer and Director | |
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Date: January 19, 2006 | By: | /s/ David G. Lloyd |
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| Chief Financial Officer and Director |
17