-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, WZ1WDW2Pvcrhh/sDLmHkhSW+/wW6ren9E6eCnzPZ/hjMYT9fEqpZXmC44ll6qFl/ 3ogWTDQ7VI5LVr/CyYzEjg== 0000703799-94-000010.txt : 19940922 0000703799-94-000010.hdr.sgml : 19940922 ACCESSION NUMBER: 0000703799-94-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940807 FILED AS OF DATE: 19940916 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VICORP RESTAURANTS INC CENTRAL INDEX KEY: 0000703799 STANDARD INDUSTRIAL CLASSIFICATION: 5812 IRS NUMBER: 840511072 STATE OF INCORPORATION: CO FISCAL YEAR END: 1026 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12343 FILM NUMBER: 94549322 BUSINESS ADDRESS: STREET 1: 400 W 48TH AVE CITY: DENVER STATE: CO ZIP: 80216 BUSINESS PHONE: 3032962121 10-Q 1 THIRD QUARTER 10-Q FISCAL 1994 UNITED STATES SECURITIES & EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 7, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from Commission file number 0-12343 VICORP Restaurants, Inc. (Exact name of registrant as specified in its charter) COLORADO 84-0511072 (State or other jurisdiction of (I.R.S.Employer incorporation or organization) Identification No.) 400 West 48th Avenue, Denver, Colorado 80216 (Address of principal executive offices) (Zip Code) (303) 296-2121 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The registrant had 9,548,326 shares of its $.05 par value Common Stock outstanding as of September 13, 1994. PART I - FINANCIAL INFORMATION Item 1. Financial Statements VICORP Restaurants, Inc. CONSOLIDATED BALANCE SHEETS (in thousands) August 7, October 31, 1994 1993 __________ __________ (unaudited) ASSETS Current assets Cash $ 6,503 $ 5,288 Receivables 2,835 4,326 Inventories 8,149 10,873 Deferred income taxes 6,700 8,059 Prepaid expenses and other 3,461 3,110 __________ __________ Total current assets 27,648 31,656 __________ __________ Property and equipment, net of accumulated depreciation of $ 118,942 and $ 105,714 175,752 177,720 Deferred income taxes 23,867 26,077 Long-term receivables (Note 4) 7,613 7,150 Other assets 11,346 11,428 __________ __________ Total assets $ 246,226 $ 254,031 ========== ========== The accompanying notes are an integral part of the financial statements. VICORP Restaurants, Inc. CONSOLIDATED BALANCE SHEETS (in thousands) August 7, October 31, 1994 1993 __________ __________ (unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current maturities of long-term debt and capitalized lease obligations $ 1,650 $ 1,738 Accounts payable, trade 13,667 20,669 Accrued compensation 7,339 6,229 Accrued taxes 11,291 9,212 Accrued insurance 5,854 6,830 Other accrued expenses 4,127 5,566 _________ _________ Total current liabilities 43,928 50,244 _________ _________ Long-term debt (Note 2) 22,823 23,643 Capitalized lease obligations 14,706 16,365 Non-current accrued insurance 8,690 8,433 Other non-current liabilities and credits 6,647 7,028 Commitments and contingencies (Note 4) Shareholders' equity (Note 3) Series A Junior Participating Preferred Stock, $.10 par value, 200,000 shares authorized, no shares issued --- --- Common stock, $.05 par value, 20,000,000 shares authorized, 10,450,364 and 10,433,751 shares issued 523 522 Paid-in capital 109,040 108,864 Retained earnings 57,046 49,484 Treasury stock, at cost (924,938 and 522,188 common shares) (17,177) (10,552) __________ __________ Total shareholders' equity 149,432 148,318 __________ __________ Total liabilities and shareholders' equity $ 246,226 $ 254,031 ========== ========== The accompanying notes are an integral part of the financial statements. VICORP Restaurants, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data)
Twelve Forty weeks ended weeks ended _______________________ ______________________ August 7, August 1, August 7, August 1, 1994 1993 1994 1993 __________ ___________ __________ _________ (unaudited) Revenues Restaurant operations $ 92,827 $ 96,190 $ 319,066 $ 324,707 Franchise operations 690 645 2,126 2,069 __________ __________ __________ _________ Total revenues 93,517 96,835 321,192 326,776 __________ __________ __________ _________ Costs and expenses Restaurant operations Food 27,274 29,215 94,692 96,589 Labor 29,129 28,810 98,851 96,506 Other operating 27,931 27,315 93,450 90,502 General and administrative 6,262 5,316 19,760 18,684 Interest 817 926 2,940 2,983 Other (income) expense, net (321) (109) (600) (467) __________ __________ _________ _________ Total costs and expenses 91,092 91,473 309,093 304,797 __________ __________ _________ _________ Income before income tax expense 2,425 5,362 12,099 21,979 Income tax expense 910 2,118 4,537 8,682 __________ __________ _________ _________ Net income $ 1,515 $ 3,244 $ 7,562 $ 13,297 ========== ========== ========= ========= Earnings per common and dilutive common equivalent share $ .16 $ .32 $ .77 $ 1.29 ========== ========== ========= ========= Weighted average common shares and dilutive common share equivalents 9,687 10,254 9,869 10,347 ========== ========== ========= ========= The accompanying notes are an integral part of the financial statements.
VICORP Restaurants, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Forty weeks ended _______________________ August 7, August 1, 1994 1993 _________ _________ (unaudited) OPERATIONS Net income $ 7,562 $ 13,297 Reconciliation to cash provided by operations Depreciation and amortization 19,982 18,064 Deferred income tax provision 3,569 5,384 Loss on disposition of assets 1,359 1,091 Other, net (290) 1,595 _________ _________ 32,182 39,431 Change in assets and liabilities Trade receivables 918 487 Inventories 2,724 1,014 Accounts payable, trade (7,002) (2,932) Other current assets and liabilities 49 (3,157) Non-current accrued insurance 257 1,277 _________ _________ Cash provided by operations 29,128 36,120 _________ _________ INVESTING ACTIVITIES Purchase of property and equipment (19,186) (25,695) Purchase of other assets (534) (530) Disposition of property (9) (333) Additions to long-term receivables (1,088) --- Collections of non-trade receivables 1,239 449 _________ _________ Cash used for investing activities (19,578) (26,109) _________ _________ FINANCING ACTIVITIES Issuance of debt 7,750 5,000 Payment of debt and capitalized lease obligations (9,834) (8,217) Purchase of treasury shares (6,625) (4,543) Other, net 374 347 _________ _________ Cash used for financing activities (8,335) (7,413) _________ _________ Increase in cash 1,215 2,598 Cash at beginning of period 5,288 4,840 _________ _________ Cash at end of period $ 6,503 $ 7,438 ========= ========= SUPPLEMENTAL INFORMATION Cash paid during the period for Interest (net of amount capitalized) $ 2,962 $ 2,907 Income taxes 1,126 1,942 The accompanying notes are an integral part of the financial statements. VICORP Restaurants, Inc. NOTES TO FINANCIAL STATEMENTS (unaudited) 1. The consolidated financial statements should be read in conjunction with the annual report to shareholders for the year ended October 31, 1993. The unaudited financial statements for the twelve and forty weeks ended August 7, 1994 and August 1, 1993 contain all adjustments which, in the opinion of management, were necessary for a fair statement of the results for the interim periods presented. All of the adjustments included were of a normal and recurring nature. 2. As of August 7, 1994, the Company had $ 22,500,000 of borrowings and $ 13,500,000 of letters of credit placed under its bank credit facility. 3. During the first three quarters of 1994, the Company purchased 402,600 shares of its common stock for $6,625,000 pursuant to authorization from its Board of Directors. On June 24, 1994, the Board authorized acquisition of an additional 500,000 common shares and at September 12, 1994 authorization to purchase an additional 547,400 common shares was available. 4. The Company's insurance carriers are disputing the extent of coverage in regard to a $6,500,000 lawsuit settlement made in June 1992. The Company has undertaken legal action against the carriers to recover actual and exemplary damages, costs and attorneys' fees. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company's quarterly financial information is subject to seasonal fluctuation. Also, the quarterly periods ended February 20, 1994 and February 14, 1993 were comprised of sixteen weeks each, while the remainder of the Company's quarterly periods are comprised of twelve weeks, except for the fourth quarter of 1993 which was thirteen weeks. As a result, the financial information for the periods presented is not indicative of results that may be achieved on an annual basis. RESTAURANT OPERATIONS The following table sets forth certain operating information for the Company's primary restaurant groups. It does not include the results of operations of certain other restaurants not within the primary groups.
Twelve weeks ended Forty weeks ended ________________________ ________________________ August 7, August 1, August 7, August 1, 1994 1993 1994 1993 _____________ ______________ ____________ _____________ BAKERS SQUARE Midwest Restaurant sales $ 36,295,000 $ 37,514,000 $ 124,655,000 $ 124,328,000 Operating margin 11.9% 15.4% 12.8% 17.0% California Restaurant sales $ 22,190,000 $ 24,785,000 $ 78,618,000 $ 85,194,000 Operating margin 5.8% 4.7% 5.8% 7.7% VILLAGE INN West Restaurant sales $ 27,444,000 $ 27,887,000 $ 92,352,000 $ 92,916,000 Operating margin 11.5% 14.8% 12.3% 13.5% Florida Restaurant sales $ 5,279,000 $ 5,396,000 $ 20,291,000 $ 19,857,000 Operating margin (2.3)% (1.8)% 2.3% 5.2% COMBINED Restaurant sales $ 91,208,000 $ 95,582,000 $ 315,916,000 $ 322,295,000 Operating margin 9.5% 11.5% 10.3% 12.8%
Overall sales decreased 3.5% for the third quarter and 1.7% for the first three quarters of 1994 in comparison to the same prior year periods. The decreases occurred despite the addition of ten new restaurants since the third quarter of 1993 and the full period inclusion in 1994 of ten restaurants opened during the first forty weeks of 1993. Comparable restaurant sales decreased 7.3% and 6.4% in the quarter and first forty weeks, respectively, reflective of lower customer counts. The decreases were concentrated in the Bakers Square group, which had not effectively responded to competition and changing customer preferences. This led to significant organization changes during 1994 and a program to reposition the concept. The disruptive effects of these changes, coupled with differences in the timing and weights of media advertising, further exacerbated the declines. The changes however, are expected to reverse the negative customer counts and sales trends. The testing of Bakers Square's new "Bake Shop" format commenced late in the third quarter. Restaurant operating income decreased both in total and as a percentage of sales. The effect of lower comparable sales on labor and fixed costs was principally responsible for the lower restaurant operating income. Partially offsetting this was incremental profits from operating new restaurants, reduced insurance expense and lower marketing costs for Bakers Square. On June 27, 1994, Robert S. Benson resigned as President of the Company. On August 26, 1994, J. Michael Jenkins agreed to join the Company as President, Co-Chief Executive Officer and a member of the Board of Directors. Mr. Jenkins has over 25 years experience in the restaurant business and most recently served as Chairman of the Board and Chief Executive Officer for El Chico Restaurants, Inc. In addition to an initial annual salary of $350,000, Mr. Jenkins' five- year employment contract with VICORP provides for a sign-up bonus of $1,000,000, annual incentive pay tied to improvement in earnings before interest and taxes, and the option to purchase 300,000 common shares of the Company granted evenly over a five-year period at rising exercise prices and vesting in total in 1999. OTHER REVENUES AND EXPENSE General and administrative expense increased in the third quarter and first forty weeks in comparison to last year primarily due to severance expenses, insurance litigation costs and lower capitalization of overhead costs as a result of slowdown in construction activity. General and administrative costs in the Company's 1994 fourth quarter will include the sign-up bonus paid to the new president and additional costs related to the insurance litigation. The effective income tax rate used for financial reporting purposes was 37.5% in 1994 compared with 39.5% for the same periods last year. The 1994 rate was lower due primarily to the FICA tipped income tax credit which took effect January 1, 1994. This credit more than offset the effect of an increase in the top federal rate from 34% to 35% resulting from the Omnibus Budget Reconciliation Act of 1993 enacted in August of 1993. LIQUIDITY AND CAPITAL RESOURCES As a result of the decrease in net income, cash provided by operations decreased 19.4% from 1993. Cash from operations was still adequate to fund all capital expenditures, stock repurchases and pay down debt by $ 2,084,000. As of August 7, 1994, $22,500,000 was outstanding under the Company's bank credit facility and approximately $39,000,000 was available for additional direct advances, subject to limitations on combined direct advances and letters of credit. Net repayments of $750,000 were made under this line during the first forty weeks of 1994. Through the first three quarters of 1994, the Company purchased 402,600 shares of its common stock for $6,625,000 under authorizations granted by its Board. On June 24, 1994, the Board authorized acquisition of an additional 500,000 common shares and total authorization for the purchase of 547,400 common shares remains available. Future purchases with respect to this authorization may be made from time to time in the open market or through privately negotiated transactions and will be dependent upon various business and financial considerations. Capital expenditures approximating $8,000,000 are expected during the remainder of the fiscal year. Cash provided by operations and the unused portion of the Company's bank credit facility are expected to be adequate to fund these expenditures and any cash outlays for the purchase of the Company's common stock as authorized by the Board. PART II ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits (15) Letter regarding unaudited interim financial information. (27) Financial data schedule. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Shareholders of VICORP Restaurants, Inc. : We have reviewed the accompanying condensed consolidated balance sheet of VICORP Restaurants, Inc. (a Colorado corporation) and subsidiary as of August 7, 1994, and the related condensed consolidated statements of operations for the twelve and forty week periods ended August 7, 1994 and August 1, 1993, and the condensed consolidated statements of cash flows for the forty week periods ended August 7, 1994 and August 1, 1993. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of VICORP Restaurants, Inc. and subsidiary as of October 31, 1993, (not presented herein), and, in our report dated December 9, 1993, we expressed an unqualified opinion on that statement. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of October 31, 1993, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. ARTHUR ANDERSEN LLP Denver, Colorado, September 2, 1994. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. VICORP Restaurants, Inc. ________________________ (Registant) September 16, 1994 s/s Charles R. Frederickson Charles R. Frederickson, Chairman of the Board and Chief Executive Officer September 16, 1994 s/s Dennis L. Kuper Dennis L. Kuper, Executive Vice President of Finance EX-15 2 LETTER REGARDING UNAUDITED INTERIM FINANCIAL INFORMATION EXHIBIT 15 September 13, 1994 VICORP Restaurants, Inc. : We are aware that VICORP Restaurants, Inc. has incorporated by reference into the Company's previously filed Registration Statements File No. 33-26650, 33-32608, 33-34447, 33-48205 and 33-49166, its Form 10-Q for the quarter ended August 7, 1994, which includes our report dated September 2, 1994, covering the unaudited interim financial information contained therein. Pursuant to Regulation C of the Securities Act of 1933, that report is not considered a part of the registration statement prepared or certified by our firm or a report prepared or certified by our firm within the meaning of Sections 7 and 11 of the Act. Very truly yours, ARTHUR ANDERSEN LLP EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VICORP RESTAURANTS, INC. CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS AS OF AUGUST 7, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 703799 VICORP RESTAURANTS, INC. 1,000 QTR-3 OCT-31-1993 AUG-07-1994 6,503 0 2,835 0 8,149 27,648 294,694 118,942 246,226 43,928 37,529 523 0 0 148,909 246,226 319,066 321,192 94,692 94,692 192,301 0 2,940 12,099 4,537 7,562 0 0 0 7,562 .77 .77
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