Pink Sheets

I had looked at this in the past, but when I looked at the end of last year, it became clear that it's a reasonably well-run business from a shareholder perspective. It generates a reasonable amount of cash. I'm still working on sifting through the pink sheets again, but it's not showing up here very often (except for CEDA and CFRI).

Big Apple Bagels (chart, sec, yahoo, website)

They've been dumping their [apparently bad] company owned stores and the financials have been improving, even though revenues declined.

Let's check data across several years from the 10-K filed in 2003 and the 10-K filed in 2005 and the amended 10-K filed in 2006 and the latest 10-Q for Q3 2006 (period ending August 31, 2006).

Net sales by company owned stores
2001: $6.3 million
2002: $4.1 million
2003: $3.0 million
2004: $1.8 million
2005: $1.4 million
9 months 2006: $385K vs $1.1 million for same period 2005

Royalty fees from franchised stores
2001: $2.8 million
2002: $2.8 million
2003: $2.5 million
2004: $2.4 million
2005: $2.3 million
9 months 2006: $1.7 million vs $1.7 million for same period 2005

Franchise and area development fees
2001: $0.3 million
2002: $0.5 million
2003: $0.4 million
2004: $0.4 million
2005: $0.2 million
9 months 2006: $226K vs $148K for same period 2005

Licensing fees and other income
2001: $1.1 million
2002: $1.1 million
2003: $1.2 million
2004: $1.1 million
2005: $1.2 million
9 months 2006: $644K vs $947K same period 2005

Operating income
2001: ($781K)
2002: $387K
2003: $734K
2004: $709K
2005: $726K
9 months 2006: $624K vs $558K same period 2005

Total operating costs
2001: $11.3 million
2002: $8.2 million
2003: $6.4 million
2004: $5.0 million
2005: $4.4 million
9 months 2006: $2.3 million vs $3.4 million same period 2005
There isn't any one category responsible for the long decline. Payroll has declined over the years, food/beverage/paper costs have declined, so have most other categories.

Net income ....... net cash provided by operations minus capex
2001: ($1.1 million) ........ ($163K)
2002: $326K ............ $1.09 million
2003: $640K ............ $1.57 million
2004: $652K ............ $728K
2005: $693K ............ $943K
9 months 2006: $635K .... $601, vs $530K .... $627 same period 2005
Interest expenses have been declining steadily over the years.

Dividends paid + purchase of treasury stock =
2001: none + none = none
2002: none + none = none
2003: $136K + $212K = $348K
2004: $278K + $11K = $289K
2005: $717K + none = $717K
9 months 2006: $866K vs $717K same period 2005 (no treasury stock repurchased either time)

Diluted share count
2001: 8.8 million
2002: 8.7 million
2003: 7.4 million
2004: 7.2 million
2005: 7.2 million
Q3 2006: 7.3 million

Based on just this information, it looks like they generate about $800K per year in free cash flow on perhaps 7.5 million totally diluted shares, making the stock worth about $1.60. The numbers are very indicative of a business that is well run for the benefit of shareholders. Nothing fancy, no growth for its own sake.

The stock is currently selling for about a dollar. Not enough to get all excited about [wow, I'm getting spoiled big time], but enough for someone to probably find it as a good investment.