INDIANAPOLIS, Nov. 10, 2011 (GLOBE NEWSWIRE) -- Noble Roman's, Inc. (OTCBB:NROM), the Indianapolis based franchisor of Noble Roman's Pizza and Tuscano's Italian Style Subs, today announced results for the quarterly period ended September 30, 2011. Net income from continuing operations was $327,603 or $.02 per share basic and diluted on weighted average number of common shares outstanding of 19.5 million and diluted weighted average shares of 20.2 million. This compares to net income from continuing operations of $406,710 for the quarterly period ended September 30, 2010, or $.02 per share basic and diluted on weighted average number of common shares outstanding of 19.4 million and diluted weighted average shares of 20.1 million. Total revenues for the quarterly period ended September 30, 2011 were $1.8 million compared to total revenues of $1.9 million for the comparable period in 2010. The company recorded a net loss from discontinued operations in the quarter ended September 30, 2011 of $316,022 and a net loss from discontinued operations of $935,237 in the quarter ended September 30, 2010. After the loss on discontinued operations, net income was $11,581 for the quarter ended September 30, 2011 compared to a net loss of $528,527 for the quarter ended September 30, 2010, or net income of $.00 per share and a net loss of $.03 per share basic and diluted, respectively.
For the nine-month period ended September 30, 2011, the company reported a net income from continuing operations of $1,084,540, or $.06 per share basic and $.05 per share diluted on weighted average number of common shares outstanding of 19.5 million and diluted weighted average shares of 20.1 million. This compares to net income from continuing operations of $1,133,050 for the nine-month period ended September 30, 2010, or $.06 per share basic and diluted on weighted average number of common shares outstanding of 19.4 million and diluted weighted average shares of 20.1 million. Total revenues for the nine-month period ended September 30, 2011 and September 30, 2010 were both $5.4 million. The company reported a loss on discontinued operations for the nine-month period ended September 30, 2011 of $316,022 and a loss on discontinued operations for the nine-month period ended September 30, 2010 of $935,237. After the loss on discontinued operations the company's net income for the nine-month period ended September 30, 2011 was $768,518, or $.04 per share basic and diluted, and a net income of $197,815, or $.01 per share basic and diluted, for the comparable period in 2010,
Total revenue decreased from $1,852,897 to $1,765,651 and increased from $5,440,343 to $5,448,157 for the three-month and nine-month periods ended September 30, 2011, respectively, compared to the corresponding periods in 2010. Franchisee fees and equipment commissions ("upfront fees") decreased from $60,378 to $39,527 and from $267,470 to $185,491 during the three-month and nine-month periods ended September 30, 2011 compared to the corresponding periods in 2010. Royalties and fees, less upfront fees, decreased from $1,651,697 to $1,584,416 and increased from $4,759,036 to $4,845,041 for the three-month and nine-month periods ended September 30, 2011, respectively, compared to the corresponding periods in 2010. The breakdown of royalties and fees, less upfront fees, are royalties and fees from non-traditional franchises other than grocery stores were $971,313 and $3,133,619 for the three-month and nine-month periods ended September 30, 2011, respectively, and $1,169,309 and $3,225,837 for the three-month and nine-month periods ended September 30, 2010, respectively; fees from the grocery store take-n-bake were $325,419 and $873,019 for the three-month and nine-month periods ended September 30, 2011, respectively, and $144,166 and $257,191 for the three-month and nine-month periods ended September 30, 2010, respectively; and royalties and fees from traditional locations were $287,684 and $838,404 for the three-month and nine-month periods ended September 30, 2011, respectively, and $338,222and $1,276,008 for the three-month and nine-month periods ended September 30, 2010, respectively. Included in royalties and fees from traditional locations were $200,000 and $600,000 for the three-month and nine-month periods ended September 30, 2011, respectively, and $275,000 and $1,080,000 for the three-month and nine-month periods ended September 30, 2010, respectively, for royalties and fees recognized as collectible from traditional locations which are no longer operating.
Total fees increased $181,253 and $615,828 for the three-month and nine-month periods ended September 30, 2011 compared to the corresponding periods in 2010 from grocery stores take-n-bake locations primarily as a result of adding new locations partially offset by lower sales per location due to the unusual hot summer months. The increase of revenue from grocery store take-n-bake locations was offset by decreases in royalties and fees from non-traditional locations other than grocery stores and traditional locations. Royalties and fees from non-traditional locations decreased $197,996 and $92,218 for the three-month and nine-month periods ended September 30, 2011 compared to the corresponding periods in 2010. The decreases in the non-traditional royalties and fees were primarily from sales decreases in entertainment centers of all types including family entertainment centers, bowling centers, parks and zoos. Management believes this resulted from the unusually hot summer weather throughout most of the country combined with low consumer spending. Royalties and fees from traditional locations decreased $50,538 and $437,604 for the three-month and nine-month periods ended September 2011 compared to the corresponding periods in 2010. This decrease was the result of a decrease of $75,000 and $480,000 for the three-month and nine-month periods ended September 30, 2011 in royalties and fees recognized as collectible from traditional locations which are no longer operating.
This analysis shows that the take-n-bake grocery venue addition is being successful at generating additional revenues. The company has more than tripled the revenue generated from grocery store take-n-bake over the last 12 months. Royalties and fees from non-traditional other than grocery store take-n-bake declined by $197,996 during the third quarter, which more than offset the $105,778 gain for the first six months. Royalties and fees from traditional locations, taking out the effect of revenue recognized as collectible from traditional locations, increased slightly in both the three-month and nine-month periods. Management's prior assumptions had been that royalties and fees from traditional locations would remain constant but not expected to increase.
In September 2009, the company introduced a take-n-bake version of its pizza as an addition to its menu offerings. The take-n-bake pizza is designed primarily as a stand-alone offering for grocery stores but also as an add-on component for new and existing convenience store franchises.
The company now has signed agreements for 910 grocery store locations to operate the take-n-bake pizza program. As of September 30, 2011, 667 had been opened and, as of today, 730 have been opened. To further enhance the take-n-bake pizza offering, the company has added five carton-to-shelf retail items that require no assembly at the grocery store and enhance merchandising space in the grocery store. More recently, as a further enhancement to the take-n-bake pizza program, the company introduced six new "Signature Specialty" pizza combinations to its standard take-n-bake offering. The six new Signature Specialty pizzas are Hawaiian Pizza, Four Cheese Pizza, BBQ Pork Pizza, BBQ Chicken Pizza, Hoppin' Jalapeno Pizza and Parmesan Tomato Pizza. These combinations have proved to be popular with the traditional restaurant locations over the years.
To accelerate growth of the take-n-bake pizza in grocery stores, the company has signed agreements with nine grocery store distributors in different parts of the country to market the take-n-bake pizza program to their customer base. Since initiating this program less than a year ago, the company has signed agreements for 639 locations with those distributors' customers.
Lack of access to capital in recent years by many small to medium sized businesses, which make up the larger base of the company's pool of franchise prospects for its non-traditional franchise program, has slowed the company's rate of growth in these venues. However, recent activity in the last few months may suggest that the company will see a better rate of growth in the non-traditional franchise program other than grocery stores for the remainder of this year and into next year.
As previously reported, in an Order dated December 23, 2010, the Superior Court in Hamilton County, Indiana granted summary judgment in favor of the company and against all of the plaintiffs in a long-running lawsuit styled Kari Heyser, Fred Eric Heyser, Meck Enterprises, LLC, et al vs. Noble Roman's, Inc., et al, filed in Superior Court Hamilton County, Indiana in June 2008. As a result, the plaintiff's allegations of fraud against the company and certain of its officers were determined to be without merit. In addition to the fraud claim, one group of franchisee plaintiffs asserted a separate claim under the Indiana Franchise Act. The court denied summary judgment on this claim finding the existence of a genuine issue of material facts which had to be determined rather than decided as a matter of law, but did not render any opinion on the merits of that claim. The plaintiffs filed a motion with the Court asking it to correct errors and reconsider the order for summary judgment, which was denied. Plaintiffs later appealed to the Indiana Court of Appeals and that appeal with dismissed with prejudice. Since that time, plaintiffs have filed numerous other motions in an attempt to get the summary judgment order of December 23, 2010 reversed. The Court has now denied all of those motions as moot except for allegations of misconduct by an adverse party. That allegation is set for hearing on November 15, 2011.
On September 21, 2011, the company filed motions for partial summary judgment as to liability on the company's counterclaims against the plaintiffs in the approximate amount of $3.6 million plus attorney fees, cost of collection and prejudgment interest. The plaintiffs filed a response to those motions on November 7, 2011. After reviewing the response, the company will file a reply and the Court has set a hearing on those motions for December 6, 2011. The company intends to prosecute the counterclaims and obtain and execute on judgments against the plaintiffs.
The statements contained in this press release concerning the company's future revenues, profitability, financial resources, market demand and product development are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) relating to the company that are based on the beliefs of the management of the company, as well as assumptions and estimates made by and information currently available to the company's management. The company's actual results in the future may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the company's operations and business environment, including, but not limited to, market acceptance of recently introduced products, competitive factors and pricing pressures, the current litigation with certain former traditional franchisees, non-renewal of franchise agreements, shifts in market demand, compliance with the terms of the company's bank credit agreement, general economic conditions and other factors including, but not limited to, changes in demand for the company's products or franchises, the success or failure of individual franchisees and changes in prices or supplies of food ingredients and labor as well. Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. The company undertakes no obligations to update the information in this press release for subsequent events.
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Noble Roman's, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) |
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| Assets |
December 31, 2010 |
September 30, 2011 |
| Current assets: | ||
| Cash | $ 337,044 | $ 248,505 |
| Accounts and notes receivable - net | 920,304 | 1,141,996 |
| Inventories | 316,913 | 343,242 |
| Assets held for resale | 246,278 | 249,671 |
| Prepaid expenses | 235,778 | 323,160 |
| Deferred tax asset - current portion | 1,400,000 | 1,400,000 |
| Total current assets | 3,456,317 | 3,706,574 |
| Property and equipment: | ||
| Equipment | 1,139,050 | 1,147,749 |
| Leasehold improvements | 12,283 | 12,283 |
| 1,151,333 | 1,160,032 | |
| Less accumulated depreciation and amortization | 784,282 | 832,969 |
| Net property and equipment | 367,051 | 327,063 |
| Deferred tax asset (net of current portion) | 10,150,558 | 9,646,485 |
| Other assets including long-term receivables - net | 2,920,853 | 3,499,219 |
| Total assets | $ 16,894,779 | $ 17,179,341 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Current portion of long-term note payable to bank | $ 1,875,000 | $ 1,975,000 |
| Accounts payable and accrued expenses | 654,319 | 671,448 |
| Total current liabilities | 2,529,319 | 2,646,448 |
| Long-term obligations: | ||
| Note payable to bank (net of current portion) | 2,625,000 | 1,800,000 |
| Note payable to officer | 855,821 | 1,055,821 |
| Total long-term liabilities | 3,480,821 | 2,855,821 |
| Stockholders' equity: | ||
|
Common stock – no par value (25,000,000 shares authorized, 19,419,317 issued and outstanding as of December 31, 2010 and 19,469,317 as of September 30, 2011) |
23,116,317 |
23,214,279 |
|
Preferred stock (5,000,000 shares authorized and 20,625 issued and outstanding as of December 31, 2010 and September 30, 2011) |
800,250 |
800,250 |
| Accumulated deficit | (13,031,928) | (12,337,457) |
| Total stockholders' equity | 10,884,639 | 11,677,072 |
| Total liabilities and stockholders' equity | $ 16,894,779 | $ 17,179,341 |
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Noble Roman's, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) |
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2010 | 2011 | 2010 | 2011 | |
| Royalties and fees | $1,712,075 | $1,623,943 | $5,026,506 | $5,030,533 |
| Administrative fees and other | 5,485 | 3,107 | 26,193 | 22,502 |
| Restaurant revenue | 135,337 | 138,601 | 387,644 | 395,122 |
| Total revenue | 1,852,897 | 1,765,651 | 5,440,343 | 5,448,157 |
| Operating expenses: | ||||
| Salaries and wages | 244,396 | 251,790 | 729,912 | 736,929 |
| Trade show expense | 75,463 | 77,112 | 226,304 | 260,359 |
| Travel expense | 36,362 | 50,919 | 109,365 | 150,393 |
| Other operating expenses | 167,994 | 165,286 | 534,552 | 520,516 |
| Restaurant expenses | 131,472 | 137,508 | 378,715 | 385,975 |
| Depreciation and amortization | 14,574 | 36,311 | 42,792 | 86,170 |
| General and administrative | 394,227 | 405,281 | 1,204,003 | 1,217,099 |
| Total expenses | 1,064,488 | 1,124,207 | 3,225,643 | 3,357,441 |
| Operating income | 788,409 | 641,444 | 2,214,700 | 2,090,716 |
| Interest and other expense | 114,937 | 98,965 | 338,478 | 294,823 |
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Income before income taxes from continuing operations |
673,472 |
542,479 |
1,876,222 |
1,795,893 |
| Income tax expense | 266,762 | 214,876 | 743,172 | 711,353 |
| Net income from continuing operations | 406,710 | 327,603 | 1,133,050 | 1,084,540 |
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Loss from discontinued operations net of tax benefit of $604,415 in 2010 and $207,280 in 2011 |
(935,237) |
(316,022) |
(935,237) |
(316,022) |
| Net income (loss) | (528,527) | 11,581 | 197,813 | 768,518 |
| Cumulative preferred dividends | 24,682 | 24,682 | 65,729 | 74,047 |
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Net income (loss) available to common stockholders |
$ (553,209) |
$ (13,101) |
$ 132,084 |
$ 694,471 |
| Earnings per share – basic: | ||||
| Net income from continuing operations | $ .02 | $ .02 | $ .06 | $ .06 |
| Net loss from discontinued operations | (.05) | (.02) | (.05) | (.02) |
| Net income (loss) | (.03) | .00 | .01 | .04 |
|
Net income (loss) available to common stockholders |
$ (.03) |
$ .00 |
$ .01 |
$ .04 |
|
Weighted average number of common shares outstanding |
19,413,092 |
19,469,317 |
19,412,699 |
19,453,932 |
| Diluted earnings per share: | ||||
| Net income from continuing operations | $ .02 | $ .02 | $ .06 | $ .05 |
| Net loss from discontinued operations | (.05) | (.02) | (.05) | (.02) |
| Net income (loss) | (.03) | .00 | .01 | .04 |
|
Net income (loss) available to common stockholders |
$ (.03) |
$ .00 |
$ .01 |
$ .03 |
|
Weighted average number of common shares outstanding |
20,112,463 |
20,159,153 |
20,112,070 |
20,143,768 |