Noble Roman's Announces Second Quarter 2009 Earnings
INDIANAPOLIS, Aug. 10 /PRNewswire-FirstCall/ -- Noble Roman's, Inc. (OTC Bulletin Board: NROM), the Indianapolis based franchisor of Noble Roman's Pizza and Tuscano's Italian Style Subs, today announced results for the quarterly period ended June 30, 2009. Net income was $415,234 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 19.9 million. This was a 5.0% increase in net income over the quarterly period ended June 30, 2008 of $395,307, or $.02 per share basic and diluted, on weighted average number of common shares outstanding of 19.2 million, and diluted weighted average shares of 20.3 million. Total revenues for the quarterly period ended June 30, 2009 were $1.9 million compared to total revenues of $2.4 million for the comparable period in 2008.
For the six-month period ended June 30, 2009, the company reported a net income of $831,995, or $.04 per share basic and diluted, on weighted average number of common shares outstanding of 19.4 million and diluted weighted average shares of 19.9 million. This was a 16.1% increase in net income over the six-month period ended June 30, 2008 of $716,737, or $.04 per share basic and diluted, on weighted average number of common shares outstanding of 19.2 million, and diluted weighted average shares of 20.3 million. Total revenues for the six-month period ended June 30, 2009 were $3.8 million compared to $4.8 million for the corresponding period in 2008. The company's pre-tax income for the six-month period was $1,615,160 compared to $1,402,041 for the corresponding period in 2008. For the six-month period ended June 30, 2009, the company has exceeded its pre-tax income plan, as announced in the Form 10-Q for the quarterly period ended September 30, 2008, by approximately $56,000.
The increase in earnings was primarily the result of implementing the strategy announced during the third quarter of 2008: intensifying the company's focus on non-traditional franchising and discontinuing company operation of restaurants except for the two locations used for training and demonstration purposes. This strategy has allowed the company to narrow its focus and decrease its overhead and operating expenses during this period of weakened consumer activity and severe dislocations in lending markets. The company continues to believe that during such troubled economic times as these it has a unique opportunity for increasing unit growth and revenue within its non-traditional venues such as hospitals, military bases, universities, convenience stores, attractions, entertainment facilities, casinos, airports, travel plazas, office complexes and hotels, while at the same time operating with reduced overhead and operating costs. Total overhead and operating costs for the three-month period and six-month period ended June 30, 2009 were $1,098,827 and $2,179,464, respectively, compared to $1,661,081 and $3,370,436, respectively, for the corresponding periods in 2008.
Royalty and fee income, less initial franchise fees, equipment commissions and area development fees remained almost unchanged at $1,682,483 and $3,357,473, and $1,682,510 and $3,384,688 for the three-month and six-month periods ended June 30, 2009 and 2008, respectively. The decrease in total revenue was the result of selling fewer franchise agreements in the three-month and six-month periods ended June 30, 2009 compared to the comparable periods in 2008. For initial franchise fees, approximately $37,000 and $65,600 are included in royalty and fee income for the three-month and six-month periods ended June 30, 2009, respectively, and approximately $103,000 and $238,500 are included in the three-month and six-month periods ended June 30, 2008, respectively. For equipment commissions, approximately $20,338 and $76,361, and approximately $96,597 and $207,072 are included in royalty and fee income for the three-month and six-month periods ended June 30, 2009 and 2008, respectively. There were no area development fees in either the three-month or six-month periods in 2009 and there were area development fees of $104,825 in both the three-month and six-month periods ended June 30, 2008.
To augment the company's sales opportunities within non-traditional venues, in October 2008 the company introduced the new Noble Roman's Bistro service system. The Bistro incorporates all of the ingredient qualities for which Noble Roman's Pizza is known, and retains simplicity by using largely ready-to-use ingredients that require only final assembly and baking on site. It features the SuperSlice pizza, one-fourth of a large pizza, along with hot entrees such as chicken parmesan, baked pastas, hot sub sandwiches, breadsticks and calzones plus fresh salads and snacks. The Bistro is also available with an optional breakfast expansion menu featuring a wide variety of standard breakfast favorites. Customers move along the food display counter and are served to order as they go.
The company has recently developed a take-n-bake pizza module as an addition to its menu offering. The take-n-bake pizza is primarily designed as an add-on component for new and existing convenience store franchisees, and as a stand-alone offering for grocery store chains. At the time of this report, the company has already signed agreements with 24 grocery stores, allowing them to operate the take-n-bake pizza program. Twenty-two of these stores have begun selling take-n-bake pizzas under the program, and the other two are expected to begin operations within the next two weeks. The take-n-bake program has also been integrated into the operations of three existing convenience stores, generating significant add-on sales, and is now being offered to all convenience store franchisees for a small training fee. The company has also begun approaching additional grocery stores and convenience stores regarding the take-n-bake program.
The company has also recently developed a grab-n-go service system for a limited portion of the Tuscano's menu. The grab-n-go system is designed to add sales opportunities at existing non-traditional Noble Roman's Pizza and/or Tuscano's Subs locations. The grab-n-go system has already been integrated into the operations of two existing locations, generating significant add-on sales. The system will be made available to other existing franchisees for a small training and administrative fee.
The company is now offering new, non-traditional franchisees the opportunity to open with both take-n-bake pizza and grab-n-go subs when they acquire a dual-brand franchise. Additionally, through changes in the menu, operating systems and equipment structure, the company is now able to offer dual Noble Roman's Pizza and Tuscano's Subs franchises at a significantly reduced investment cost. The company has recently begun promoting these enhancements for non-traditional locations, and plans to demonstrate the enhanced dual-brand configuration at the Foodservice At Retail Expo in Chicago August 18(th) and 19(th).
Updating the previously announced lawsuit styled Kari Heyser, et al (Plaintiffs), vs. Noble Roman's, Inc., et al (Defendants), discovery is in progress. Defendants filed the First Request for Production of Documents on February 9, 2009 and certain Plaintiffs produced some of the requested documents. However, many of the Plaintiffs produced no documents and the company, on July 27, 2009, filed a Motion to Compel the production against those Plaintiffs. Depositions have been scheduled for the Plaintiffs during August, September and October. Depositions of the Defendants have been scheduled during August and October. The company believes it has strong and meritorious legal and factual defenses to these claims and will vigorously defend its interest in the case.
The company filed a Counter-Claim for Damages against all of the Plaintiffs and moved to obtain Preliminary and Permanent Injunctions against a majority of the Plaintiffs to remedy the Plaintiff's continuing breaches of the applicable franchise agreements. The company's Motion for Preliminary Injunction was granted in October 2008. The company has asserted that none of the preliminarily enjoined Plaintiffs fully complied with the Court's Order and that several of them only minimally complied. Accordingly, the company filed a Motion to Require Full Compliance and To Show Cause why they should not be held in contempt and for attorney's fees as sanctions.
The company subsequently filed a Motion to Revoke the Temporary Admission Pro Hac Vice of David M. Duree, Plaintiff's former counsel, for filing fraudulent affidavits with the Court. The Court granted this motion on March 31, 2009. In the same ruling the Court: continued the Motion to Show Cause to allow parties time to conduct discovery, including depositions on the preliminarily enjoined Plaintiffs, on that issue; granted preliminary injunctions against Plaintiffs Gomes and Villasenor; dismissed claims against CIT Small Business Lending Corporation and PNC Bank with prejudice; and struck the fraudulent affidavits.
The company has filed a Motion for Partial Summary Judgment as to several issues in the Complaint. New counsel for Plaintiffs entered his appearance in the case on behalf of the Plaintiffs on July 7, 2009 and moved to dismiss the Company's Motion for Partial Summary Judgment. The Court has set a hearing on the Motion for Partial Summary Judgment for September 2, 2009.
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: competitive factors and pricing pressures, the current litigation with certain former traditional franchisees, shifts in market demand, 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, the impact of competitors' actions and changes in prices or supplies of food ingredients and labor as well as other factors. 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.
Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
Dec. 31, June 30,
2008 2009
---- ----
Assets
Current assets:
Cash $450,968 $261,698
Accounts and notes receivable - net 1,046,545 1,491,730
Inventories 223,024 199,897
Assets held for resale 242,690 242,717
Prepaid expenses 222,095 220,784
Current portion of long-term notes
receivable 5,810 34,046
Deferred tax asset - current portion 1,050,500 1,050,500
----------- -----------
Total current assets 3,241,632 3,501,372
----------- -----------
Property and equipment:
Equipment 1,206,979 1,230,678
Leasehold improvements 96,512 96,512
----------- -----------
1,303,491 1,327,190
Less accumulated depreciation and
amortization 821,422 864,271
----------- -----------
Net property and equipment 482,069 462,919
Deferred tax asset (net of current portion) 11,802,637 11,256,928
Other assets including long-term portion of
notes receivable - net 1,752,102 1,771,329
----------- -----------
Total assets $17,278,440 $16,992,548
----------- -----------
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term note payable $1,500,000 $1,500,000
Accounts payable and accrued expenses 1,191,116 826,229
----------- -----------
Total current liabilities 2,691,116 2,326,229
----------- -----------
Long-term obligations:
Note payable to bank (net of current
portion) 5,625,000 4,875,000
----------- -----------
Total long-term liabilities 5,625,000 4,875,000
----------- -----------
Stockholders' equity
Common stock - no par value (25,000,000
shares authorized, 19,412,499
issued and outstanding as of
December 31, 2008 and June 30, 2009) 23,023,250 23,053,160
Preferred stock (5,000,000 shares
authorized and 20,625 issued and
outstanding as of December 31, 2008
and June 30, 2009) 800,250 800,250
Accumulated deficit (14,861,176) (14,062,091)
----------- -----------
Total stockholders' equity 8,962,324 9,791,319
----------- -----------
Total liabilities
and stockholders'
equity $17,278,440 $16,992,548
----------- -----------
Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2009 2008 2009
---- ---- ---- ----
Royalties and fees $1,986,932 $1,739,821 $3,935,085 $3,499,434
Administrative fees and
other 20,431 24,993 33,872 37,555
Restaurant revenue 414,679 138,742 803,520 257,635
--------- --------- --------- ---------
Total revenue 2,422,042 1,903,556 4,772,477 3,794,624
Operating expenses:
Salaries and wages 349,007 269,581 730,099 543,730
Trade show expense 121,311 76,611 244,784 152,228
Travel expense 109,051 33,601 222,632 78,133
Sales commissions 12,425 - 44,113 3,627
Other operating
expenses 235,057 196,314 472,531 388,263
Restaurant expenses 389,794 132,802 764,219 250,825
Depreciation and
amortization 23,886 20,561 49,205 39,899
General and administrative 420,550 369,357 842,853 722,759
--------- --------- --------- ---------
Total expenses 1,661,081 1,098,827 3,370,436 2,179,464
--------- --------- --------- ---------
Operating income 760,961 804,729 1,402,041 1,615,160
Interest and other expense 162,011 117,141 316,075 237,456
--------- --------- --------- ---------
Income before income
taxes 598,950 687,588 1,085,966 1,377,704
Income tax expense 203,643 272,354 369,229 545,709
--------- --------- --------- ---------
Net income 395,307 415,234 716,737 831,995
Cumulative preferred
dividends 16,455 16,274 33,090 32,910
--------- --------- --------- ---------
Net income available
to common
stockholders $378,852 $398,960 $683,647 $799,085
--------- --------- --------- ---------
Earnings per share - basic:
Net income $.02 $.02 $.04 $.04
Net income available
to common stockholders $.02 $.02 $.04 $.04
Weighted average number of
common shares
outstanding 19,201,950 19,412,499 19,199,172 19,412,499
Diluted earnings per share:
Net income $.02 $.02 $.04 $.04
Weighted average number of
common shares
outstanding 20,350,049 19,909,365 20,347,271 19,909,365
SOURCE Noble Roman's, Inc.
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