FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
( X ) Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Quarterly period Ended: October 31, 1998.
OR
( ) Transition Report Under Section 13 or 15(d)
The Securities Exchange Act of 1934
Commission File Number O-2825
SWISS CHALET, INC.
(Exact name of Registrant as specified in its charter)
COMMONWEALTH OF PUERTO RICO 66-020-0307
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
105 De Diego Avenue
Santurce, Puerto Rico 00911
(Address of principal executive offices) (Zip Code)
(787)721-1200
(Registrant's telephone number, including area code)
Unchanged
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file requirements for the past 90 days.
Yes__X___ No ______
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Sections 12,13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes__X___ No______
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock as of the latest practical date :
Number of shares of Common Stock outstanding at November 09,1998
: 1,401,162
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL INFORMATION
SWISS CHALET, INC.
CONDENSED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED OCTOBER 1998 AND 1997
(UNAUDITED) - NOTE A
SIX MONTHS ENDED THREE MONTHS ENDED
OCTOBER 31 OCTOBER 31
1998 1997 1998 1997
_____________________ _______________________
Net Sales and $2,218,980 $2,404,041 $1,199,796 $1,229,640
Other Income
COST AND EXPENSES
Cost of Sales 35,122 41,861 17,778 22,669
Operating Expenses 1,754,703 1,775,131 867,343 908,457
and other deductions
Interest Expense - - - -
NET INCOME $ 429,155 587,049 314,675 298,514
Weighted Average 1,401,162 1,401,162 1,401,162 1,401,162
Number of Common
Shares Outstanding
NET INCOME PER SHARE 0.31c 0.42c 0.22c 0.21c
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SWISS CHALET, INC.
CONDENSED BALANCE SHEET
OCTOBER 31, 1998
(UNAUDITED) - NOTE A
OCTOBER 31
1998
__________
ASSETS
CURRENT ASSETS
Cash and Cash equivalents $1,525,662
Securities held to maturity 869,906
Accounts Receivable, Net 547,307
Inventories 33,169
Other Current Assets 48,894
__________
TOTAL CURRENT ASSETS $3,024,938
INVESTMENT IN CONDOMINIUM AND LAND
PROPERTY, PLANT AND EQUIPMENT, Net 3,392,839
OTHER ASSETS 109,352
__________
TOTAL ASSETS $6,527,129
__________
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 467,528
Dividends Payable 112,354
__________
TOTAL CURRENT LIABILITIES $ 579,882
Deferred Compensation Liability 103,100
SHAREHOLDER'S EQUITY,
Common Stock at stated value $ 700,581
Additional paid in capital 24,069
Retained Earnings 5,119,497
__________
$5,844,147
__________
TOTAL LIABILITIES $6,527,129
__________
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SWISS CHALET, INC.
CONDENSED STATEMENTS OF CHANGES IN CASH FLOWS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1998 AND 1997
(UNAUDITED) - NOTE A
SIX MONTHS ENDED
OCTOBER 31
1998 1997
Cash Flow from Operations :
Net Income $ 429,155 $ 587,049
Adjustments (net) ( 201,928) 168,839
__________ _________
Net Cash from operations $ 227,227 $ 755,888
Cash Flow from Investing activities 628,957 ( 112,786)
Cash Flow from Financing activities ( 968,329) ( 968,942)
__________ _________
Increase/(Decrease) in Cash Flow $( 112,145) $( 325,840)
Cash and Cash equivalents - beginning 1,637,807 2,282,403
__________ _________
Cash and Cash equivalents - ending $1,525,662 $1,956,563
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SWISS CHALET, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited Condensed Financial Statements have been
prepared in accordance with the instructions to Form 10-QSB and, therefore,
do not include all information and footnotes necessary for a fair
presentation of financial position in conformity with generally accepted
accounting principles. The unaudited Condensed Financial Statements contain
all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of Management, necessary to a fair statement of the
results for the period presented. The interim results are not necessarily
indicative of the results which may be expected for the full year. The
subject Condensed Financial Statements should be read in conjunction with
the summary of significant accounting policies set forth in Note 1 to the
Financial Statements included in the Company's Annual Report to
Shareholders for the year ended April 30, 1998.
Depreciation of the original building is spread over a 50 year life
while equipment is depreciated over useful lives ranging from 5 to 10 years
depending on its type.
NOTE B - PROVISIONS FOR INCOME TAX
Local Income Tax is not provided for until the year end. however, if
such provision had been made it would have amounted to less than $25,000.00
for the three month period.
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PART I
SWISS CHALET, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is Management's discussion and analysis of certain
significant factors which have affected the Company's earnings during the
periods included in the accompanying Condensed Statements of Income.
A summary of the period to period changes in the principal items
included in the Condensed Statement of Income is shown below:
SIX MONTHS ENDED THREE MONTHS ENDED
OCTOBER 31 OCTOBER 31
INCREASE INCREASE
(DECREASE) % (DECREASE) %
_______________________________________
Net Sales & Other Income $(185,061) (7.6) $( 29,844) ( 2.4)
Cost of Sales ( 6,739) (16.1) ( 4,891) (21.6)
Operation Expenses and ( 20,428) ( 1.2) ( 41,114) ( 4.5)
Other Deductions
Interest - N/A - N/A
Net Income (157,894) (26.9) 16,161 5.4
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SWISS CHALET, INC.
The comparative table of occupancies and average rates is shown below
for the six month period.
Occupancy Average Rate
1997 1996 1997 1996
May 62% 64% $88.09 $89.00
June 57% 72% 91.13 90.16
July 57% 71% 87.42 85.86
Aug 67% 79% 85.38 85.95
Sept 53% 64% 85.61 88.70
Oct 97% 75% 88.10 87.90
Average 6 months 66% 71% $87.63 $87.85
It has been an unusual year for the Company in that the first
five months reflected lower occupancies and drastically reduced profits.
This was a direct consequence of a brutally competitive market due to the
increased number of hotel rooms available. The whole picture changed with
Hurricane Georges which arrived on September 21 bringing with it an influx
of relief personnel such as Red Cross and FEMA to our hotel which had been
fortunate enough to have suffered very little in the way of operational
damages. In addition several of our direct competitors closed for repairs
and, in two cases, are unlikely to be open for the winter season. As a
result the October figures helped to close the gap and, as the occupancy
and average rates for November are unusually strong, we are very optimistic
that the winter season will be a good one. Payroll and Other expenses
remain well controlled particularly in the second quarter. As mentioned in
earlier reports the Company has eliminated all long term debt and interest
expense due to the strong cash flows generated from operations.
The Company's primary source of working capital is from funds provided
from operations. Working capital increased over the six month period by
$864 and, as mentioned above, all long term debt has been repaid. The
Company believes that it's excess cash from operations will be sufficient
to finance it's long and short term capital needs including the payment of
accrued dividends.
The Company's Accounting, Property Management System, Electronic
Keys, and stock registration systems are Y2K compliant and we anticipate
replacing our telephone equipment in the ensuing year. We are on-line with
the Best Western reservations system which is, to our understanding, fully
compliant. Mechanical equipment is still being evaluated but we do not
consider our exposure to be material.
PART II
6. EXHIBITS AND REPORTS ON FORM 8K
NONE
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SWISS CHALET, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its be half by
the undersigned thereunto duly authorized.
SWISS CHALET, INC.
DATE :11/26/98 BY:__________________________
PETER D. SOMECH
Treasurer, Director and
Principal Financial Officer
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