a message / to our stockholders:
Your Company has just completed a year of
extensive expansion. During fiscal 1956, we have
opened sixteen new restaurant operations, bringing the
total operating units to 66. Our sales volume has risen
to $29,170,667 for an increase of 24% over 1955.
This $5,619,046 sales increase was derived
from old and new locations alike, with our new restaurants accounting for some three-fourths of the total
increase. The sixteen new units were open for only a
portion of the year, and consequently their normal
sales contribution to our business can be expected to
be greater than the total realized in fiscal 1956.
Net profits before taxes in 1956 were
$1,845,830 as compared to $1,829,248 in 1955. This
stability of earnings in the face of increased sales is
attributed to the expenses incurred in opening the new
operations. Expansion programs impose heavy burdens
on a company's managerial and financial resources,
and the planning and absorbing of new units always
involve certain non-recurring expenses on both the
administrative and operating levels. Operating profits
at locations open during the previous year have been
satisfactory. We did, however, suffer some loss of
profits when our drive-in restaurant at 4110 Wisconsin
Ave., N.W., Washington, D. C, was destroyed by fire.
A new service restaurant will be built at this location.
Federal and state income taxes in 1956 of
$997,843 compared with $993,945 in 1955. 1956
net profits after taxes totaled $847,987 and again
closely approximated 1955's net of $835,303.
Dividends paid in 1956 totaled $299,413, or
35% of 1956 earnings. These dividends represent a
continuation of the established quarterly rate of 150
per share of Common Stock.
Our current asset position remains strong. Cash
of $3,677,922 exceeds by some one-half million dollars our total current liabilities of $3,160,497, and Hot
Shoppes' current ratio of 1.9 to 1 in 1956 compares
well to that of 2.1 to 1 in 1955 in spite of sizeable
expenditures for fixed assets.
The Statement of Consolidated Financial Condition shows that the Company has invested a substantial sum in buildings, improvements, furniture and
fixtures; and we have acquired several additional sites
for further expansion. In addition, we have over
$2,500,000 invested in the construction of the Marriott
Motor Hotel. This project has been financed temporarily through a construction loan from the Riggs
National Bank. Permanent financing for the Marriott
Motor Hotel has been arranged with the Equitable Life
Assurance Society of the United States.
The past year saw a number of organizational
changes in your Company. At a special meeting of
the Board of Directors in March, the position of Executive Vice President was created, and our former Vice
President and Treasurer, Mr. Milton A. Barlow, was elected to this position. This senior executive position was
created to reduce the operating load which the President has been carrying, enabling him thereby to devote
his time and efforts to broad policy plans and programs.
Another major change was the election, by the
Board of Directors, of Mr. Woodrow D. Marriott to
the position of Vice President in charge of Store
Operations. Mr. Marriott succeeded Mr. John S. Daniels, who has been elevated to the position of Vice