1962 A RECORD YEAR
We are pleased to report that during the fiscal year ended July 29, 1962 your
Company established all-time highs in both sales and profits. Sales of $71.5 million
were 22% greater than the $58.9 million volume of 1961. 1962 profits after taxes
of $1.14 per share registered a 33% gain over the 86* earned in the prior year,
and total profits after taxes of $2.2 million marked a record achievement in this
our Thirty-Fifth Anniversary Year. Profits before taxes also increased to $3.9
million or $800,000 above the $3.1 million for 1961.
These high sales and profits were made possible by the outstanding support
we have continued to receive from our customers, our stockholders and our
employees. We are grateful to each group.
The 16 new units opened in 1961 provided a full year's revenue and profit in
1962, and the five operations opened this year also contributed to these revenues.
Our constant expansion, while an essential part of our business philosophy, continued to involve heavy expenses which have been fully absorbed in the 1962
operating results. The Eastern Airlines strike, which started on June 24, also
exerted an adverse effect on the sales and earnings of our Airline Catering Division
for the last 5 weeks of fiscal 1962.
Cash flow (profits plus depreciation and deferred taxes) increased in 1962 by
20% to $4.9 million, and this flow of funds is reflected in our cash balance of $7.9
million. This strong current position is further evidenced in our 1962 current
ratio of 2.2 to 1 vs. 1.8 to 1 in 1961. Our cash balances alone exceed our total
current liabilities, and provide a reservoir of financial strength to the Company
as well as flexibility in expansion which enables us to proceed in the selective
acceptance of good opportunities as they arise. These cash balances are kept fully
invested during the year in short term securities, and have contributed to our
Stock dividends equivalent to 4% or 74,400 shares, having a market value of
some $2.1 million, were distributed to our stockholders in 1962. We are again,
pleased to note the substantial increase in the number of investors holding Hot
Shoppes stock. Total shareholders in 1962 of 5,812 represent a 25% increase over
the 4,660 in 1961 and a 53% increase over the total of 3,807 shareholders in 1960.
EXPANSION AND RENOVATION
New units in 1962 included drive-in restaurants in Springfield, Virginia, and
North Miami Beach, Florida. The Miami restaurant is our second unit of this
type in that area. In addition, a new public cafeteria was opened near Baltimore
in the Reisterstown Plaza Shopping Center; and new airline feeding units catering
to overseas flights were opened at the Idlewild International Airport in New York
and at the Los Angeles International Airport. We also constructed and opened
a new flight kitchen near Chicago, Illinois. Our restaurant at 3130 Lee Highway,
Arlington, Virginia, was completely remodeled in 1962 and another unit at 4th &
Florida Avenue, N. E., Washington, D. C. is currently closed for complete renovation. A new dining room was added to the Hot Shoppe at 4110 Wisconsin Avenue,
N. W.F Washington, D. C, and the Baltimore Friendship Airport flight kitchen
was substantially enlarged.
The Marriott Motor Hotels in Dallas and Washington, D. C. (Twin Bridges)
have improved their facilities with large convention room additions. The new
Twin Bridges Persian Room seats 950 persons, and typifies our increasing interest
in convention business. The Twin Bridges, Philadelphia and Dallas motor hotels
will add still further exhibition hall facilities in 1963, and the sales and promotion
staffs have been strengthened throughout the Motor Hotel Division. In 1962, the
Marriott Motor Hotels put into operation their own credit card system, and our
guest services have been supplemented in Washington, D. C. with the opening
of the exclusive Windjammer Club at the Twin Bridges Marriott.
Other plans for 1963 include the 200 room and exhibition hall enlargement
of the Dallas Marriott, 7 new public restaurants and cafeterias already under