-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DKX6/eBXy5cdtKVvI9fCULkUWByEj4L3oGGQyaDhFeIIenbWRkmnlM3Y638hHpG2 PYeBDEzPJ0yvB3/ERB1q2Q== /in/edgar/work/20000822/0000703799-00-000020/0000703799-00-000020.txt : 20000922 0000703799-00-000020.hdr.sgml : 20000922 ACCESSION NUMBER: 0000703799-00-000020 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000709 FILED AS OF DATE: 20000822 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/A SEC ACT: SEC FILE NUMBER: 000-12343 FILM NUMBER: 707885 BUSINESS ADDRESS: STREET 1: 400 W 48TH AVE CITY: DENVER STATE: CO ZIP: 80216 BUSINESS PHONE: 3032962121 10-Q/A 1 0001.txt THIRD QUARTER 10-Q AMENDED UNITED STATES SECURITIES & EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 9, 2000 -------------------------------------- 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) Not Applicable ---------------------------------------------- (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 6,749,114 shares of its $.05 par value Common Stock outstanding as of August 21, 2000. PART I - FINANCIAL INFORMATION Item 1. Financial Statements VICORP Restaurants, Inc. CONSOLIDATED BALANCE SHEETS (in thousands)
July 9, October 31, 2000 1999 -------- ----------- (unaudited) ASSETS Current assets Cash $ 6,097 $ 33,187 Receivables 2,639 5,801 Inventory (Note 3) 6,465 9,989 Deferred income taxes 7,059 7,059 Prepaid expenses and other 2,145 1,253 ---------- ---------- Total current assets 24,405 57,289 ---------- ---------- Property and equipment, net 132,661 128,753 Deferred income taxes 28,306 33,303 Long-term receivables 713 1,204 Other non-current assets 7,776 7,722 ---------- ---------- Total assets $ 193,861 $ 228,271 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current maturities of long-term debt and capitalized lease obligations $ 1,462 $ 1,582 Accounts payable, trade 17,782 18,054 Accrued compensation 7,431 7,616 Accrued taxes 10,530 11,008 Accrued insurance 1,759 2,246 Other accrued expenses 5,443 6,528 ---------- ---------- Total current liabilities 44,407 47,034 ---------- ---------- Long-term debt -- 40 Capitalized lease obligations 3,296 4,548 Non-current accrued insurance 1,807 2,757 Other non-current liabilities and credits 21,254 22,044 Commitments and contingencies Shareholders' equity Common stock, $.05 par value, 20,000,000 shares authorized, 6,748,244 and 8,845,581 shares issued and outstanding 339 444 Paid-in capital 40,893 80,673 Retained earnings 81,865 70,731 ---------- ---------- Total shareholders' equity 123,097 151,848 ---------- ---------- Total liabilities and shareholders' equity $ 193,861 $ 228,271 ========== ==========
The accompanying notes are an integral part of the consolidated financial statements. VICORP Restaurants, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share data)
Twelve Twelve Thirty-six Thirty-six weeks weeks weeks weeks ended ended ended ended -------- --------- ---------- ---------- July 9, July 11, July 9, July 11, 2000 1999 2000 1999 -------- --------- ---------- ---------- Revenues Restaurant operations $ 86,192 $ 83,030 $257,150 $247,497 Franchise operations 685 679 2,222 2,159 -------- -------- -------- -------- Total revenues 86,877 83,709 259,372 249,656 Costs and expenses Restaurant operations Food 25,895 24,528 77,260 75,527 Labor 28,396 27,254 83,885 80,207 Other operating 20,442 20,345 61,504 60,651 General and administrative 6,148 6,559 19,047 19,516 -------- -------- -------- -------- Operating Profit 5,996 5,023 17,676 13,755 Interest expense 184 230 618 704 Other income, net (89) (162) (475) (347) -------- -------- -------- -------- Income before income tax expense 5,901 4,955 17,533 13,398 Income tax expense 2,154 1,808 6,399 4,890 -------- -------- -------- -------- Net income $ 3,747 $ 3,147 $ 11,134 $ 8,508 ======== ======== ======== ======== Basic earnings per share $ .56 $ .35 $ 1.54 $ .95 ======== ======== ======== ======== Diluted earnings per share $ .55 $ .35 $ 1.53 $ .94 ======== ======== ======== ======== Weighted average common shares 6,746 8,890 7,236 8,994 ======== ======== ======== ======== Weighted average common shares and dilutive common share equivalents 6,813 8,921 7,291 9,017 ======== ======== ======== ========
The accompanying notes are an integral part of the consolidated financial statements. VICORP Restaurants, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
Thirty-six Thirty-six weeks weeks ended ended ---------- ---------- July 9, July 11, 2000 1999 ---------- ---------- Operations Net income $ 11,134 $ 8,508 Reconciliation of net income to cash provided by operations: Depreciation and amortization 12,280 13,345 Deferred income tax provision 4,997 4,085 (Gain)/loss on disposition of assets 35 (70) Other, net (1,162) (538) Change in assets and liabilities: Receivables 3,123 253 Inventory 3,524 1,390 Accounts payable, trade (272) (3,669) Other current assets and liabilities (3,127) 3,502 Non-current accrued insurance (950) (866) --------- --------- Cash provided by operations 29,582 25,940 --------- --------- Investing activities Purchase of property and equipment (17,055) (20,220) Purchase of other assets (461) (1,002) Proceeds from disposition of property 1,239 514 Collection of non-trade receivables 388 1,019 Other, net 514 -- --------- --------- Cash used for investing activities (15,375) (19,689) --------- --------- Financing activities Proceeds from issuance of debt 14,950 -- Payment of debt and capitalized lease obligations (16,280) (1,217) Purchase of common stock (40,163) (3,637) Issuance of common stock 278 115 Other, net (82) 164 --------- --------- Cash used for financing activities (41,297) (4,575) --------- --------- Increase (decrease) in cash (27,090) 1,676 Cash at beginning of period 33,187 10,262 --------- --------- Cash at end of period $ 6,097 $ 11,938 ========= ========= Supplemental information: Cash paid during the period for Interest (net of amount capitalized) $ 624 $ 718 Income taxes 531 773
Noncash transactions: During the thirty-six weeks ended July 9, 2000, the Company settled a franchisee receivable in the amount of $210,000 in exchange for property and equipment with a fair market value of $210,000. The accompanying notes are an integral part of the consolidated financial statements. VICORP Restaurants, Inc. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited) - ---------------------------------------------------------- 1. Basis of Presentation --------------------- The accompanying unaudited consolidated financial statements of VICORP Restaurants, Inc. (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments considered necessary (which are of a normal and recurring nature) for fair presentation have been included. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended October 31, 1999, filed with the Securities and Exchange Commission in the Company's Annual Report on Form 10-K. 2. Debt ---- As of July 9, 2000, the Company had no outstanding borrowings under its bank credit facility, while letters of credit placed in connection with its insurance programs totaled $700,000. The bank credit facility was amended effective April 14, 2000 to extend the maturity date to February 28, 2003, as well as amend certain fee calculations and debt covenants. 3. Inventory --------- Inventory consisted of the following (in thousands):
July 9, October 31, 2000 1999 ------- ----------- Inventory at production facilities and third party storage locations: Raw materials $2,722 $2,401 Finished goods 1,444 5,192 ------ ------ 4,166 7,593 Restaurant inventory 2,299 2,396 ------ ------ $6,465 $9,989 ====== ======
4. Earnings per Share ------------------ Basic earnings per share is calculated using the average number of common shares outstanding. Diluted earnings per share is computed on the basis of the average number of common shares outstanding plus the effect of potentially dilutive common stock equivalents using the treasury stock method. 5. Tender Offer ------------ On November 23, 1999, the Company commenced a tender offer to purchase up to 2,000,000 shares of the outstanding common stock for $19.00 per share. The tender offer concluded on December 22, 1999, and the Company funded the transaction on December 29, 1999 whereby 2,000,000 shares were purchased. 6. Operating Segment ----------------- The Company has three reportable segments; Village Inn, Bakers Square and Franchising. Amounts not attributed to these segments consist of general and administrative expenses and non-operating assets. Certain asset balances at October 31, 1999 were reclassified between the Company's segments. Summarized financial information concerning the Company's reportable segments is shown in the following table (in thousands).
Bakers Square Village Inn Franchising Other Total ------------- ----------- ----------- ----- ----- Twelve weeks ended July 9, 2000 Net sales $ 51,439 $ 34,753 $ -- $ -- $ 86,192 Operating profit/(loss) 5,918 5,541 685 (6,148) 5,996 Twelve weeks ended July 11, 1999 Net sales $ 50,463 $ 32,567 $ -- $ -- $ 83,030 Operating profit/(loss) 5,336 5,567 679 (6,559) 5,023 Thirty-six weeks ended July 9, 2000 Net sales $153,567 $103,583 $ -- $ -- $257,150 Operating profit/(loss) 17,124 17,377 2,222 (19,047) 17,676 Thirty-six weeks ended July 11, 1999 Net sales $150,264 $ 97,233 $ -- $ -- $247,497 Operating profit/(loss) 14,583 16,529 2,159 (19,516) 13,755 Total assets July 9, 2000 $ 81,335 $ 48,733 $ 3,266 $ 60,527 $193,861 October 31, 1999 85,758 43,099 5,137 94,277 228,271
Item 2. Management's Discussion and Analysis of Financial Condition and Consolidated Results of Operations Overview - -------- VICORP Restaurant, Inc. operates family style restaurants under the names "Bakers Square" and "Village Inn," and franchises restaurants under the Village Inn brandname. At July 9, 2000, the Company operated two hundred fifty-five restaurants in fourteen states. Of the two hundred fifty-five Company-operated restaurants, one hundred forty- nine were Bakers Squares and one hundred six were Village Inns, with an additional one hundred fourteen franchised Village Inn restaurants in twenty-one states. The Company-operated and franchised restaurants are concentrated in Arizona, California, Florida, the Rocky Mountain region and the Midwest. The Company operates a pie manufacturing division to support Bakers Square, which operates under the name "VICOM". VICOM has three production facilities located in Santa Fe Springs, California, Oak Forest, Illinois and the recently acquired Chaska, Minnesota plant. The Company operated the Chaska, Minnesota production facility under an agreement with Pies, Inc. for a term of five months and purchased the facility at the completion of the operating term on February 1, 2000 for $2,600,000. Consolidated Results of Operations - ---------------------------------- The Company's quarterly financial information is subject to seasonal fluctuation and may not be indicative of annual results. The following table sets forth selected operating statistics by concept (in thousands, except restaurants at quarter-end).
Third Quarter Year-to-Date ---------------------------- ------------------------- Twelve Twelve Thirty-six Thirty-six weeks ended weeks ended weeks ended weeks ended ----------- ----------- ----------- ----------- July 9, July 11, July 9, July 11, 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Bakers Square Restaurant sales $ 51,439 $ 50,463 $ 153,567 $ 150,264 Restaurant operating profit 5,918 5,336 17,124 14,583 Restaurant operating profit % 11.5% 10.6% 11.2% 9.7% Divisional administrative costs 1,056 1,152 3,283 3,955 Divisional operating profit 4,862 4,184 13,841 10,628 Company operated restaurants 149 150 Village Inn Restaurant sales $ 34,753 $ 32,567 $ 103,583 $ 97,233 Restaurant operating profit 5,541 5,567 17,377 16,529 Restaurant operating profit % 15.9% 17.1% 16.8% 17.0% Franchise income 685 679 2,222 2,159 Divisional administrative costs 972 1,098 3,109 3,170 Divisional operating profit 5,254 5,148 16,490 15,518 Company operated restaurants 106 102 Franchise operated restaurants 114 113 Consolidated Restaurant sales $ 86,192 $ 83,030 $ 257,150 $247,497 Food cost % 30.0% 29.6% 30.0% 30.5% Labor cost % 33.0% 32.8% 32.6% 32.4% Other operating cost % 23.7% 24.5% 23.9% 24.5% Restaurant operating profit % 13.3% 13.1% 13.5% 12.6% Restaurant operating profit 11,459 10,903 34,501 31,112 Franchise income 685 679 2,222 2,159 Divisional administrative costs 2,028 2,250 6,392 7,125 --------- --------- -------- -------- Divisional operating profit 10,116 9,332 30,331 26,146 --------- --------- -------- -------- Unallocated general and administrative costs 4,120 4,309 12,655 12,391 --------- --------- -------- -------- Operating profit $ 5,996 $ 5,023 $ 17,676 $ 13,755 ========= ========= ======== ========
Certain executive compensation, which had been accounted for as Bakers Square divisional administrative costs in fiscal 1999, is accounted for as unallocated general and administrative costs in fiscal 2000. Twelve Weeks Ended July 9, 2000 Compared to the Twelve Weeks Ended July 11, 1999 Restaurant Sales - ---------------- Consolidated restaurant sales increased 3.8% or $3,162,000 for the quarter compared to the quarter ended July 11, 1999. The Company experienced an overall same store sales increase of 2.4% over the prior year quarter. This increase is primarily due to the Easter holiday falling in the third quarter of fiscal 2000 versus the second quarter of 1999. The Company's stores experience a significant increase in volume over this holiday weekend. The following table sets forth the percent change over the prior year quarter by concept for comparable store sales and comparable store guest counts, as well as quarterly store operating margin:
Bakers Square Village Inn ------------- ----------- Comparable Comparable Comparable Store Store Comparable Store Store Store Guest Operating Store Guest Operating Sales Counts Margin Sales Counts Margin ------------------------------------ --------------------------------- 2000: 1st Qtr 3.5% 1.6% 11.4% (0.2%) (3.5%) 16.7% 2nd Qtr 1.0% 1.5% 10.5% 2.0% (1.0%) 17.7% 3rd Qtr 2.5% (0.1%) 11.5% 2.1% 0.5% 15.9% 1999: 1st Qtr 5.5% 0.5% 9.7% 2.0% (0.4%) 17.0% 2nd Qtr 4.7% 1.0% 8.8% 0.8% (0.8%) 16.9% 3rd Qtr 5.6% 2.6% 10.6% 0.5% (1.8%) 17.1% 4th Qtr 3.0% 1.3% 9.9% 0.1% (3.2%) 16.3%
During the third quarter of fiscal 2000, the Bakers Square concept captured an additional $976,000 or 1.9% in sales compared to the prior year quarter. Same store sales increased 2.5%, while same store guest counts decreased slightly. Overall, Village Inn sales increased by 6.7% or $2,186,000. This is a result of the Company operating four additional Village Inn restaurants during the third quarter of 2000, compared to the third quarter of 1999 (subsequent to July 11, 1999, six new restaurants were opened, one Company-operated restaurant was converted to a franchise operation, two restaurants were closed due to lease termination and one restaurant was converted from a franchise operation to a Company-operated restaurant). Village Inn same store sales and same store customer counts increased over the prior year quarter 2.1% and .5%, respectively. Of the six new Village Inn restaurants opened since July 11, 1999, five were opened during the current fiscal year, including one during the first quarter and four during the second quarter of fiscal 2000. The Company expects to open up to three additional units during the fourth quarter. Restaurant Operating Profit - --------------------------- Consolidated restaurant operating profit increased 5.1% or $556,000 for the quarter compared to the quarter ended July 11, 1999. Bakers Square restaurant operating profit increased 10.9% or $582,000 over the prior year quarter, while restaurant operating profit as a percent of sales increased to 11.5% from 10.6% for the quarter ended July 11, 1999. The significant increase in operating profit was due to a 2.5% increase in same stores sales, as well as effective operating expense management at the store-level. Village Inn restaurant operating profit decreased .5% or $26,000, and restaurant operating profit as a percent of sales decreased to 15.9% from 17.1% over the prior year quarter. The decline was a result of increased food costs driven by a distributor delivery price increase and increased marketing expenses. Food costs and marketing expenses as a percent of sales increased by 1.2% and 1.0%, respectively. Franchise Operations - -------------------- Net franchise income increased .9% or $6,000 between the quarter ended July 9, 2000 and the quarter ended July 11, 1999, primarily as a result of increased royalties. General and Administrative Expenses - ----------------------------------- General and administrative expenses for the third quarter of 2000 were $6,148,000 compared to $6,559,000 during the third quarter of 1999. The $411,000 or 6.3% decrease is attributable to various general and administrative expense reductions, including a reduction of Year 2000 related expenditures. General and administrative expense as a percent of restaurant sales declined favorably to 7.1% from 7.9% in the prior year quarter. Other Income - ------------ Other income for the quarter ended July 9, 2000 decreased $73,000 from the quarter ended July 9, 1999. Interest Expense - ---------------- Interest expense decreased 20% or $46,000 between the quarter ended July 9, 2000 and the quarter ended July 11, 1999. The decrease was primarily due to twelve capital leases being paid in full during 1999 and capitalization of $13,000 of interest expense under the requirements of Statement of Financial Accounting Standards ("SFAS") No. 34, "Capitalization of Interest Cost", offset by interest incurred on line of credit draws. The Company maintained an average draw on the line of credit for the quarter ended July 9, 2000 of $959,000 compared to $0 for the prior year quarter. Effective Tax Rate - ------------------ The Company's effective tax rate for the quarter ended July 9, 2000 and the quarter ended July 11, 1999 was 36.5%. A significant portion of the provision for income taxes represents the non-cash utilization of deferred tax assets established for remaining net operating loss carryforwards. Taxes currently payable continue to be limited to Federal alternative minimum taxes and state income taxes. Thirty-six Weeks Ended July 9, 2000 Compared to the Thirty-six Weeks Ended July 11, 1999 Restaurant Sales - ---------------- Consolidated restaurant sales increased 3.9% or $9,653,000 for the thirty-six weeks ended July 9, 2000 compared to the thirty-six weeks ended July 11, 1999. The Company experienced an overall same store sales increase of 2.0% over the prior year period. The following table sets forth the percent change over the prior year by concept for comparable store sales and comparable store guest counts, as well as year to date store operating margin:
Bakers Square Village Inn ------------- ----------- Comparable Comparable Comparable Store Store Comparable Store Store Store Guest Operating Store Guest Operating Sales Counts Margin Sales Counts Margin -------------------------------------- ---------------------------------- 2000: 2.4% 1.0% 11.2% 1.4% (1.2%) 16.8% 1999: 5.3% 1.4% 9.7% 1.2% (0.8%) 17.0%
Bakers Square restaurant sales increased $3,303,000 or 2.2% as a result of a 2.4% increase in same store sales for the thirty-six weeks ended July 9, 2000 compared to the thirty-six weeks ended July 11, 1999. The Company was successful in capturing an additional $1,975,000 in sales during the key holiday pie season in the first quarter of 2000 compared to the first quarter of 1999. The year to date increase was also driven by a 1.0% increase in same store guest counts. During the thirty-six weeks ended July 9, 2000 compared to the thirty- six weeks ended July 11, 1999, Village Inn sales increased by 6.5% or $6,350,000 due to the Company operating four additional Village Inn restaurants in the current period (subsequent to July 11, 1999, six new restaurants were opened, one Company-operated restaurant was converted to a franchise operation, two restaurants were closed due to lease termination and one restaurant was converted from a franchise operation to a Company-operated restaurant). Village Inn same store sales increased 1.4%, while same store customer counts decreased 1.2% over the prior year period. The decrease in same store customer counts is partially attributable to the initial impact of opening new stores in established market areas. Of the six new Village Inn restaurants opened since July 11, 1999, five were opened during the current fiscal year, including one during the first quarter and four during the second quarter of fiscal 2000. The Company expects to open up to three additional units during the fourth quarter. Restaurant Operating Profit - --------------------------- Consolidated restaurant operating profit increased 10.9% or $3,389,000 for the thirty-six weeks ended July 9, 2000 compared to the thirty-six weeks ended July 11, 1999. Bakers Square restaurant operating profit for the thirty-six weeks ended July 9, 2000 increased 17.4% or $2,541,000 over the thirty-six weeks ended July 11, 1999, while restaurant operating profit as a percent of sales increased to 11.2% from 9.7%. The significant improvement of Bakers Square restaurant operating profit was driven by a 2.4% increase in same stores sales, improved execution during the first quarter's key holiday pie season and effective food cost and other operating expense management at the store-level. Village Inn restaurant operating profit for the thirty-six weeks ended July 9, 2000 increased 5.1% or $848,000 due primarily to the Company operating four additional restaurants in fiscal 2000. Restaurant operating profit as a percent of sales decreased slightly to 16.8% from 17.0% for the thirty-six weeks ended July 9, 2000 versus the thirty-six weeks ended July 11, 1999 primarily as a result of increased marketing expenses. Marketing expenses as a percent of sales increased to 2.4% compared to 1.5% in the prior year. Franchise Operations - -------------------- Net franchise income increased 2.9% or $63,000 between the thirty-six weeks ended July 9, 2000 and the thirty-six weeks ended July 11, 1999 primarily as a result of increased royalties. General and Administrative Expenses - ----------------------------------- General and administrative expenses for the thirty-six weeks ended July 9, 2000 were $19,047,000 compared to $19,516,000 during the thirty-six weeks ended July 11, 1999. The $469,000 or 2.4% decrease is partially attributable to a reduction of Year 2000 related expenditures. Overall, general and administrative expenses decreased favorably as a percent of restaurant sales to 7.4% for the thirty-six weeks ended July 9, 2000 compared to 7.9% for the same period in fiscal 1999. Other Income - ------------ Other income for the thirty-six weeks ended July 9, 2000 increased $128,000 or 36.9% from the prior year period, due primarily to interest earned on the $28,700,000 in net proceeds received from the sale leaseback transaction completed on October 28, 1999. The proceeds were used to fund the tender offer for 2,000,000 shares at $19.00 per share on December 29, 1999. Interest Expense - ---------------- Interest expense declined 12.2% or $86,000 between the thirty-six weeks ended July 9, 2000 and the thirty-six weeks ended July 11, 1999. The decrease was primarily due to twelve capital leases being paid in full during 1999 and $50,000 of interest expense capitalized under the requirements of SFAS No. 34, offset by interest incurred on line of credit draws. The Company maintained an average draw on the line of credit for the thirty-six weeks ended July 9, 2000 of $2,602,000 compared to $0 for the prior year. Effective Tax Rate - ------------------ The Company's effective tax rate for the thirty-six weeks ended July 9, 2000 and the thirty-six weeks ended July 11, 1999 was 36.5%. A significant portion of the provision for income taxes represents the non-cash utilization of deferred tax assets established for remaining net operating loss carryforwards. Taxes currently payable continue to be limited to Federal alternative minimum taxes and state income taxes. Liquidity and Capital Resources - ------------------------------- Net cash provided by operating activities for the thirty-six weeks ended July 9, 2000 was $29,582,000 compared with $25,940,000 for the thirty-six weeks ended July 11, 1999. The $3,642,000 increase was primarily due to a $2,626,000 or 30.9% increase in net income, as well as effective working capital management. The Company's investing activities for the thirty-six weeks ended July 9, 2000 utilized $15,375,000 compared with $19,689,000 for the thirty- six weeks ended July 11, 1999. The $4,314,000 decrease was primarily attributable to a $3,165,000 reduction in capital expenditures. Management expects to invest approximately $29,600,000 during fiscal 2000 in developing up to eight to ten Company-operated locations (including up to five Bakers Square locations in the Chicago area), completing several remodel projects on existing restaurants, as well as enhancing production capabilities at VICOM. During the thirty-six weeks ending July 9, 2000, five new Village Inn restaurants were opened (one in Colorado, two in Arizona, one in Nebraska and one in Iowa) and the Chaska facility was purchased as previously noted. The Company's financing activities for the thirty-six weeks ended July 9, 2000 utilized $41,297,000 compared with $4,575,000 for the thirty- six weeks ended July 11, 1999. The $36,722,000 increase was as a result of the tender offer commenced on November 23, 1999 to purchase up to 2,000,000 shares of the outstanding common stock at $19.00 per share. The tender offer concluded on December 22, 1999, and the Company funded the transaction on December 29, 1999 whereby 2,000,000 shares were purchased. The transaction was funded using the $28,700,000 in net proceeds received from the sale leaseback transaction completed on October 28, 1999, as well as a $4,000,000 draw on the Company's credit facility. An additional 115,000 shares were repurchased subsequent to the tender offer under the Company's share repurchase plan. As of July 9, 2000, 338,375 common shares remained available for purchase under the Board of Directors authorizations. Future purchases under the authorizations 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. On December 19, 1997, the Company executed an amended and restated credit agreement, which provides for an available credit limit of $40,000,000 in the aggregate with a sublimit of $10,000,000 on letters of credit. The bank credit facility was amended effective April 14, 2000 to extend the maturity date to February 28, 2003, as well as amend certain fee calculations and debt covenants. As of July 9, 2000, the Company had no outstanding debt under the Company's bank credit facility and $700,000 in letters of credit issued in connection with its insurance programs. Cash and cash equivalents at July 9, 2000 equaled $6,097,000. The Company believes anticipated cash flow from operations, as well as the availability of funds under the $40,000,000 line of credit, and other financing sources will provide sufficient capital to meet current foreseeable cash needs, including working capital and capital expenditures. At July 9, 2000, the Company had twenty-eight properties which it was seeking to dispose of, six of these were idle and twenty-two were subleased. The Company owns five of the properties in fee and is the prime lessee on twenty-three leases (four of the fee properties are idle). The Company estimates potential proceeds of $938,000 on the disposal of the fee properties. The two remaining idle properties will be disposed of through lease terminations within a year. At July 9, 2000, loss reserves previously established for the disposal of these properties had a remaining balance of $3,283,000, including $1,566,000 to reduce the properties to realizable value and $1,717,000 to provide for carrying costs and sublease losses. During the thirty-six weeks ended July 9, 2000, closure and carrying costs of $137,000 were charged against the liability. At present, the Company anticipates the reserves will be adequate to cover the future losses and operating costs for these properties. During the first quarter of 2000, the Company sold its Denver bakery facility yielding cash proceeds of $690,000. A resulting loss of $614,000 was applied against the property disposal reserve previously established for this purpose. The Company guaranteed certain leases for twenty-five restaurant properties sold in 1986 and sixteen restaurant leases of certain franchisees. Minimum future rental payments remaining under these leases were $5,300,000 as of October 31, 1999. These guarantees are included in the definition of financial instruments with off-balance- sheet risk of accounting loss. The Company has no reason to believe that any material liability exists and believes it is impracticable to estimate the fair value of these financial guarantees (e.g., amounts the Company could pay to remove the guarantees). Management Outlook - ------------------ The Board of Directors appointed an independent committee of Directors to evaluate various strategic alternatives to enhance shareholder value. The independent committee has retained Salomon Smith Barney as its financial advisor to assist in the evaluation. Forward-Looking Statements - -------------------------- Certain matters discussed in this report are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as the Company "believes," "anticipates," "expects" or words of similar import. Similarly, statements that describe the Company's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward- looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this report and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. New Accounting Pronouncements - ----------------------------- In June 1999, the Financial Accounting Standards Board issued SFAS No. 137 which delayed the effective date of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", until fiscal quarters of fiscal years beginning after June 15, 2000. SFAS 133 requires all derivatives to be recognized as assets or liabilities on the balance sheet and measured at fair value. Changes in the fair value of derivatives should be recognized in either net income or other comprehensive income, depending on the designated purpose of the derivative. At present the Company is investigating the effect the adoption of this statement will have on the Company's results of operations, financial position and cash flows, if any. In March 2000, the Financial Accounting Standards Board issued Interpretation No. 44 (FIN 44), "Accounting for Certain Transactions involving Stock Compensation - an interpretation of APB Opinion No. 25," with an effective date of July 1, 2000. The interpretation clarifies the application of Opinion 25 for certain issues, including the definition of employee for purposes of applying Opinion 25, the criteria for determining whether a plan qualifies as a noncompensatory plan, the accounting consequence of various modifications to the terms of a previously fixed stock option or award and the accounting for an exchange of stock compensation awards in a business combination, among others. The application of FIN 44 is not expected to have a material effect on the Company's consolidated financial statements. Item 1. Legal Proceedings With respect to Kirk v. VICORP Restaurants, Inc., Case No. BC-198202 commenced in the Superior Court of Los Angeles County, California, reported in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1999, on February 16, 2000, Kirk's motion for class certification was denied. Kirk filed an appeal of the denial on April 14, 2000. The case has been stayed pending the appeal. With respect to Ontiveros v. VICORP Restaurants, Inc., Case No. BC- 202962 commenced in the Superior Court of Los Angeles County, California, reported in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1999, on January 3, 2000, the Court issued an order staying the case under the primary jurisdiction doctrine. Item 5. Other Information The Company normally holds its Annual Meeting of Shareholders in late April or early May each year. The 2000 Annual Meeting of Shareholders was deferred. The Company presently expects to hold its 2000 Annual Meeting of Shareholders on October 27, 2000. Any shareholder proposal to be considered for presentation at the 2000 Annual Meeting of Shareholders must be received by the Company in writing at its executive offices on or before September 15, 2000, to be considered for inclusion in the Company's proxy materials. If a shareholder desires to present a proposal for consideration at the 2000 Annual Meeting of Shareholders which is not timely submitted for inclusion in the Company's proxy materials and the shareholder fails to notify the Company by October 2, 2000, of such proposal, the management proxies may use their discretionary voting authority when the proposal is raised at the Annual Meeting without any discussion of the matter in the Proxy Statement. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (10) Material Contracts Indemnification Agreement (27) Financial data schedule (b) Reports on Form 8-K None. 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. (Registrant) August 22, 2000 By: /s/Joseph F. Trungale ---------------------- Joseph F. Trungale Chief Executive Officer and President August 22, 2000 By: /s/Richard E. Sabourin ----------------------- Richard E. Sabourin Executive Vice President and Chief Financial Officer EX-10 2 0002.txt IDEMNIFICATION AGEEMENT Since approval by the shareholders in 1989, the Company has entered into indemnification agreements with each of its Directors. This is the form of those indemnification agreements. INDEMNIFICATION AGREEMENT This Agreement is entered into this __________ day of _________________ _____, by and between VICORP Restaurants, Inc., a Colorado corporation, (hereinafter "VICORP") and _____________________________, (hereinafter "DIRECTOR"). RECITALS A. DIRECTOR is a member of the Board of Directors of VICORP performing valuable services for it and VICORP is desirous of having DIRECTOR continue to serve in that capacity. B. VICORP has provided through adopted Bylaws for the indemnification of its directors to the maximum extent authorized by law. C. VICORP, at present, maintains at its expense Directors and Officers Liability Insurance ("D&O Insurance") for the purpose of protecting its directors and officers in connection with the services performed by them as directors and officers. D. Developments with respect to the terms and availability of D&O Insurance and with respect to the application, amendment and enforcement of statutory and bylaw indemnification provisions generally have raised questions concerning the adequacy and reliability of the protection afforded to directors thereby. E. DIRECTOR has expressed concern that the indemnities available under VICORP's Bylaws and D&O Insurance may be inadequate to protect him against risks associated with his service to VICORP. VICORP and DIRECTOR both recognize that the Bylaws are subject to change and that the D&O Insurance that VICORP has obtained is subject to change or cancellation. DIRECTOR may not be willing to continue in office in the absence of the benefits to be accorded to DIRECTOR under this Agreement. F. In order to induce DIRECTOR to continue to serve as a director of VICORP and in consideration of his continued service, VICORP has determined and agreed to enter into this contract and indemnify DIRECTOR as follows: AGREEMENT 1. Indemnification: Subject only to the exclusions set forth in Section 2, VICORP hereby agrees to hold harmless and indemnify DIRECTOR: (a) Against any and all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by DIRECTOR in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of VICORP) to which DIRECTOR is, was at the date hereof or at any time becomes a party, or is threatened to be made a party, by reason of the fact that DIRECTOR is, was or at any time becomes a director, officer, employee or agent of VICORP, or is or was serving or at any time serves at the request of VICORP as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise or any employee benefit plan, except with respect to actions instituted by the DIRECTOR unless approved by the Board; and (b) Otherwise, to the full extent provided by (i) the Colorado Business Corporation Act or any amendment thereof or any other statutory provision authorizing or permitting such indemnification that is adopted after the date of this Agreement and (ii) VICORP's Bylaws. 2. Exclusions: No indemnity shall be paid by VICORP pursuant this Agreement: (a) if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful; (b) for which payment is actually made to DIRECTOR under any D&O Insurance purchased and maintained by VICORP; (c) with respect to remuneration paid to DIRECTOR, if it shall be determined by a final judgment or other final adjudication, that such remuneration was in violation of law; (d) on account of DIRECTOR's conduct that is finally adjudged to have been knowingly fraudulent or deliberately dishonest, which conduct was material to the cause of action so adjudicated; (e) on account of any suit in which judgment is rendered against DIRECTOR for an accounting of profits made from the purchase or sale by DIRECTOR of securities of VICORP within the meaning of Section 16(b) of the Securities and Exchange Act of 1934 and amendments thereto or similar provisions of any other statutory or common law; or (f) on account of any suit in which the DIRECTOR is finally adjudged to have obtained, in fact, a personal profit or advantage to which he was not legally entitled. 3. Settlement and Costs: VICORP shall not be liable to indemnify DIRECTOR under this Agreement for any costs, charges or expenses incurred or amounts paid in settlement of any action or claim effected without its written consent. VICORP shall not settle any action or claim in any manner which would impose any penalty or limitation on DIRECTOR without DIRECTOR's written consent. Neither VICORP nor DIRECTOR will unreasonably withhold their consent. 4. D&O Insurance: VICORP agrees that it shall use reasonable efforts to maintain in effect for the benefit of DIRECTOR a binding and enforceable policy of D&O Insurance with coverages comparable to the policy of insurance which is in effect as of the date of this Agreement. Notwithstanding the above, however, VICORP shall not be required to obtain or maintain such D&O Insurance if said insurance is not reasonably available or if in the reasonable businessjudgment of the then directors of VICORP, either (i) the premium cost of such insurance is substantially disproportionate to the amount of coverage, or (ii) the coverage provided by such insurance is so limited by exclusions that there is insufficient benefit from such insurance. 5. Continuation of Indemnity: All agreements and obligations of VICORP contained herein shall continue during the period DIRECTOR is a director, officer, employee or agent of VICORP (or is or was serving at the request of VICORP as a director, officer, trustee, employee or agent for another corporation, partnership, joint venture, trust or other enterprise or any employee benefit plan) and shall continue thereafter so long as DIRECTOR shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal or investigative, by reason of the fact that DIRECTOR was a Director of VICORP or serving in any other capacity referred to herein. 6. Payment of Claims: If an obligation under this Agreement is not paid by VICORP, or on its behalf, within ninety (90) days after written notice has been received by VICORP, DIRECTOR may at any time thereafter bring suit against VICORP to recover the unpaid amount of the obligation. 7. Subrogation: In the event of payment by or on behalf of VICORP under this Agreement, VICORP shall be subrogated to the extent of such payment to all of the rights of recovery of the DIRECTOR, who shall execute all papers required and shall do everything that may be necessary to secure such rights including the execution of such documents necessary to enable VICORP effectively to bring suit to enforce such rights. 8. Notice: DIRECTOR, as a condition precedent to his right to be indemnified under this Agreement, shall give to VICORP notice in writing as soon as practicable of any claim made for which indemnity will or could be sought under this Agreement. Notice to VICORP shall be directed to VICORP Restaurants, Inc., 400 West 48th Avenue, Denver, Colorado 80216, attention: Corporate Secretary (or such other address as VICORP shall designate in writing to DIRECTOR); notice shall be deemed received if sent by prepaid mail properly addressed, the date of such notice being the date postmarked. In addition, the DIRECTOR shall give VICORP such information and cooperation as it may reasonably require and as shall be within DIRECTOR's power. 9. Defense of Claims: With respect to any action, suit or proceeding as to which DIRECTOR is seeking indemnification under this Agreement and as to which DIRECTOR notifies VICORP pursuant to the provisions hereof: (a) VICORP will be entitled to participate therein at its own expense; and (b) Except as otherwise provided below, to the extent that it may wish, VICORP jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel satisfactory to DIRECTOR. After notice from VICORP to DIRECTOR of its election so to assume the defense thereof, VICORP will not be liable to DIRECTOR under this Agreement for any legal or other expenses subsequently incurred by DIRECTOR in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. DIRECTOR shall have the right to employ his counsel in such action, suit or proceeding but the fees and expenses of such counsel incurred after notice from VICORP of its assumption of the defense thereof shall be at the expense of DIRECTOR unless (i) the employment of counsel by DIRECTOR has been authorized by VICORP, (ii) DIRECTOR shall have reasonably concluded that there may be a conflict of interest between VICORP and DIRECTOR in the conduct of the defense of such action or (iii) VICORP shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel shall be at the expense of VICORP. VICORP shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of VICORP or as to which DIRECTOR shall have made the conclusion that there may be a conflict of interest between VICORP and DIRECTOR in the conduct of the defense of such action. 10. Advances and Repayment of Expenses: All reasonable expenses (including attorneys' fees) incurred by DIRECTOR in defending or investigating any civil or criminal action, suit or proceeding shall be paid in advance of the final disposition of such action, suit, proceeding or investigation. DIRECTOR agrees that DIRECTOR will, upon demand, reimburse VICORP for all such expenses so advanced by VICORP in defending any civil or criminal action, suit or proceeding against DIRECTOR in the event and only to the extent that it shall be ultimately determined that DIRECTOR is not entitled to be indemnified by VICORP for such expenses under the provisions of applicable law, the Bylaws, this Agreement or otherwise. 11. Separability: Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be invalid or unenforceable for any reason, either generally or only in particular circumstances, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof, any provision held to be invalid or unenforceable in a particular circumstance shall be valid and enforceable in all other circumstances to the extent permitted by law. 12. Enforcement: In any action between the parties seeking enforcement of any of the terms and provisions of this Agreement, the prevailing party in that action shall be entitled to its reasonable costs and expenses, including court costs and reasonable attorney's fees in addition to such other relief as may be granted. 13. Non-Exclusivity: Nothing in this Agreement shall diminish or otherwise restrict any right of DIRECTOR to be indemnified under any provision of the Articles of Incorporation or Bylaws of VICORP or any of its subsidiaries, any insurance policy, any applicable law, any other agreement or otherwise. 14. Governing Law; Binding Effect; Amendment and Termination: (a) This Agreement shall be interpreted and enforced in accordance with the laws of the State of Colorado. (b) This Agreement shall be binding upon DIRECTOR and upon VICORP, its successors and assigns, and shall inure to the benefit of DIRECTOR, his heirs, personal representatives and assigns and to the benefit of VICORP, its successors and assigns. (c) No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above-written. VICORP Restaurants, Inc. By:____________________________________ Charles R. Frederickson, Chairman _______________________________________ ________________________, Director EX-27 3 0003.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VICORP RESTAURANTS, INC. BALANCE SHEETS AND STATEMENTS OF OPERATIONS AS OF JULY 9, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANACIAL STATEMENTS. 9-MOS OCT-29-2000 NOV-1-1999 JUL-9-2000 6,097 0 3,151 512 6,465 24,405 303,854 171,193 193,861 44,407 3,296 0 0 339 122,758 193,861 257,150 259,372 77,260 77,260 145,389 0 618 17,533 6,399 11,134 0 0 0 11,134 1.54 1.53
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