-----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, GGzNo/yTFZw7sMyfBKAoopu+7CcL/S1JWfKCftw8wIWCcmjCiiK3W4PJAuUcnlqr q22LdbXe81PalypetCYgAg== 0000703799-98-000006.txt : 19980313 0000703799-98-000006.hdr.sgml : 19980313 ACCESSION NUMBER: 0000703799-98-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980131 FILED AS OF DATE: 19980312 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VICORP RESTAURANTS INC CENTRAL INDEX KEY: 0000703799 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 840511072 STATE OF INCORPORATION: CO FISCAL YEAR END: 1026 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-12343 FILM NUMBER: 98564595 BUSINESS ADDRESS: STREET 1: 400 W 48TH AVE CITY: DENVER STATE: CO ZIP: 80216 BUSINESS PHONE: 3032962121 10-Q 1 FIRST QUARTER 10-Q 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 January 31, 1998 ---------------- 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 9,138,304 shares of its $.05 par value Common Stock outstanding as of March 10, 1998. PART I - FINANCIAL INFORMATION Item 1. Financial Statements VICORP Restaurants, Inc. CONSOLIDATED BALANCE SHEETS (in thousands)
January 31, October 31, 1998 1997 ___________ ___________ (unaudited) ASSETS Current assets Cash $ 3,827 $ 1,464 Receivables 2,668 4,105 Inventories 5,133 6,751 Deferred income taxes 5,000 5,000 Prepaid expenses and other 1,363 1,190 -------- ------- Total current assets 17,991 18,510 -------- ------- Property and equipment, net 125,746 128,915 Deferred income taxes 37,553 38,619 Long-term receivables 1,310 1,342 Other assets 7,487 7,604 ________ ________ Total assets $190,087 $194,990 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current maturities of long-term debt and capitalized lease obligations $ 1,584 $ 1,585 Accounts payable, trade 12,289 14,083 Accrued compensation 4,377 4,119 Accrued taxes 8,763 8,276 Accrued insurance 4,220 4,429 Other accrued expenses 4,197 4,580 ______ ______ Total current liabilities 35,430 37,072 ______ ______ Long-term debt (Note 2) 7,577 12,172 Capitalized lease obligations 6,865 7,293 Non-current accrued insurance 2,093 2,327 Other non-current liabilities and credits 5,839 6,207 Commitments and contingencies Shareholders' equity 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, 9,138,304 and 9,132,786, shares issued and outstanding 458 458 Paid-in capital 85,250 85,177 Retained earnings 46,575 44,284 _______ _______ Total shareholders' equity 132,283 129,919 _______ _______ Total liabilities and shareholders' equity $190,087 $194,990 ======= =======
The accompanying notes are an integral part of the financial statements. VICORP Restaurants, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data)
Three Three Months Months Ended Ended ___________ ___________ January 31, January 31, 1998 1997 ___________ ___________ (unaudited) Revenues Restaurant operations $ 86,527 $ 83,102 Franchise operations 850 828 _______ _______ Total revenues 87,377 83,930 ------- ------- Costs and expenses Restaurant operations Food 27,813 27,287 Labor 27,862 25,829 Other operating 21,536 21,308 General and administrative 6,144 6,047 ________ _______ Operating profit 4,022 3,459 Interest expense 489 757 Other (income) expense, net (46) (151) ________ _______ Income before income tax expense 3,579 2,853 Income tax expense 1,288 1,027 ________ _______ Net income $ 2,291 $ 1,826 ======== ======= Basic and Diluted earnings per share $ .25 $ .20 ======== ======= Weighted average common shares and dilutive common share equivalents 9,236 9,159 ======== =======
The accompanying notes are an integral part of the financial statements. VICORP Restaurants, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Three Three Months Months Ended Ended ----------- ----------- January 31, January 31, 1998 1997 ----------- ----------- (unaudited) Operations Net income $ 2,291 $ 1,826 Reconciliation to cash from operations Depreciation and amortization 4,972 4,989 Deferred income tax provision 1,066 757 Loss on disposition of assets 76 32 Other, net (161) (120) ------- ------- 8,244 7,484 Change in assets and liabilities Trade receivables 1,362 1,464 Inventories 1,618 1,279 Accounts payable, trade (1,794) (2,144) Other current assets and liabilities (20) (1,087) Non-current accrued insurance (234) (478) ------- ------- Cash from operations 9,176 6,518 ------- ------- Investing activities Purchase of property and equipment (2,172) (1,370) Purchase of other assets (101) (37) Disposition of property 258 954 Collection of non-trade receivables 120 175 ------- ------- Cash from investing activities (1,895) (278) ------- ------- Financing activities Issuance of debt 0 0 Payment of debt and capitalized lease obligations (5,069) (5,969) Other, net 151 164 ------- ------- Cash from financing activities (4,918) (5,805) ------- ------- Change in cash 2,363 435 Cash at beginning of period 1,464 1,406 ------- ------- Cash at end of period $ 3,827 $ 1,841 ======= ======= Supplemental information Cash paid during the period for Interest (net of amount capitalized) $ 532 $ 451 Income taxes 23 35
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, 1997. The unaudited financial statements for the three months ended January 31, 1998 and 1997 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 January 31, 1998, the Company had $7,500,000 of borrowings outstanding and $4,300,000 of letters of credit placed under its bank credit facility. On December 19, 1997, the Company accepted an amended and restated credit agreement which provides for both an increase in the available credit and an extension of the maturity of the existing agreement. The available credit limit has been restored to $40,000,000 in the aggregate while retaining the sublimit of $10,000,000 on letters of credit. The maturity date of the amended agreement is February 28, 2001. 3. 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 outstanding stock options using the "treasury stock" method.
Three Three Months Months Ended Ended ----------- ----------- January 31, January 31, 1998 1997 ----------- ----------- (in thousands, except per share data) Net income available to common shareholders(A) $ 2,291 $ 1,826 ======== ======== Average outstanding: Common Stock (B) 9,161 9,064 Stock options 75 95 -------- -------- Common stock and common stock equivalents (C) 9,236 9,159 ======== ======== Earnings per share: Basic (A/B) $ 0.25 $ 0.20 ======== ======== Diluted (A/C) $ 0.25 $ 0.20 ======== ========
4. The Company has stock option plans which generally provide for the granting of options to all employees and non- employee directors of the Company at exercise prices not less than the market value of the common stock on the date of the grant. The options generally vest over three years and expire ten years after the date of grant or three months after employment termination, whichever occurs first. The following table summarizes information about the stock options outstanding and exercisable as of January 31, 1998:
Options Outstanding Options Exercisable ------------------- ------------------- Weighted Number Average Weighted Exercisable Weighted Remaining Average At Average Range of Options Contractual Exercise January 31, Exercise Exercise Prices Outstanding Life Price 1998 Price - ---------------- ----------- ---- ----- ---- ----- $ 8.50-$11.50 140,000 6.23 years $11.12 65,000 $10.68 $12.25-$12.75 24,000 5.66 years $12.46 24,000 $12.46 $13.00 300,000 8.55 years $13.00 100,000 $13.00 $13.25-$17.00 131,017 4.14 years $15.98 125,017 $16.05 $20.00-$26.00 42,000 3.93 years $25.14 42,000 $25.14 ------ ------ $ 8.50-$26.00 637,017 6.72 years $13.98 356,017 $15.04 ======= =======
5. In the fourth quarter of 1994, the Company adopted a plan to dispose of 50 restaurant locations in trade areas that are no longer considered appropriate for the Company's existing concepts. As part of the disposal plan, the carrying value of those restaurants' assets were written down to net realizable values. The Company also accrued for expected carrying costs pending disposition and sublease disposition losses. In the third quarter of fiscal 1996, the Company recorded an asset disposal charge related to a decision to close and dispose of six of its Angel's Diners. As of the end of fiscal 1996, the Company had closed all the restaurants related to both disposal plans. Consequently, operating results for the first quarter of fiscal 1997 and 1998 did not include any amounts for these units. Forty-eight stores have been disposed through sublease, assignment, lease termination or sale. During the first quarter of 1998, $230,000 of closure and carrying related costs were charged against the liability established for such costs. As of January 31, 1998, the Company had $4,794,000 of reserves remaining to provide for the disposal of 14 closed properties and 14 subleased properties. Units classified as subleased may return to closed status upon sublease termination. The reserves consisted of $3,311,000 to reduce the disposal property to net realizable value and $1,483,000 to provide for expected carrying costs and sublease losses. 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. Restaurant operations The following table sets forth certain operating information for the Company's operating concepts and the Company as a whole.
Three months Three months ended ended January 31, 1998 January 31, 1997 ---------------- ---------------- Bakers Square Restaurant sales $ 52,920,000 $ 50,435,000 Restaurant operating profit 3,600,000 3,354,000 Restaurant operating profit % 6.8% 6.7% Divisional administrative costs 1,159,000 1,131,000 Divisional operating profit (loss) 2,441,000 2,223,000 Restaurants at quarter-end 150 152 Village Inn Restaurant sales $ 33,607,000 $ 32,285,000 Restaurant operating profit 5,716,000 5,350,000 Restaurant operating profit % 17.0% 16.6% Franchise income 850,000 828,000 Divisional administrative costs 1,108,000 776,000 Divisional operating profit 5,458,000 5,402,000 Restaurants at quarter-end 97 98 Angel's Restaurant sales $ -- $ 382,000 Restaurant operating profit (loss) -- (26,000) Restaurant operating profit % -- (6.8%) Divisional administrative costs -- 7,000 Divisional operating profit (loss) -- (33,000) Restaurants at quarter-end -- 1 Consolidated Restaurant sales $ 86,527,000 $ 83,102,000 Food cost % 32.1% 32.8% Labor cost % 32.2% 31.1% Other operating cost % 24.9% 25.6% Restaurant operating profit % 10.8% 10.4% Restaurant operating profit 9,316,000 8,678,000 Franchise income 850,000 828,000 Divisional general and administrative costs 2,267,000 1,914,000 ------------ ------------ Divisional operating profit 7,899,000 7,592,000 ------------ ------------ Unallocated general and administrative costs 3,877,000 4,133,000 ------------ ------------ Operating profit (loss) $ 4,022,000 $ 3,459,000 ============ ============
Consolidated restaurant sales increased $3.4 million, or 4.1%, in the first quarter of fiscal 1998 compared to the first quarter of 1997. The sales increase resulted from strong year-to-year comparable store sales and guest count comparisons. During the first quarter of fiscal 1998, sales increased 6.0% and guest counts increased 4.4% on a comparable same store basis. Same store sales for Village Inn increased 5.1% and Bakers Square's same store sales increased by 6.5%. Comparable guest counts for Village Inn improved 4.9% and Bakers Square improved 4.0%. Restaurant remodel programs, advertising in key markets and mild winter weather contributed to the growth. Consolidated restaurant operating profit increased $.7 million, or 7.4%, and increased as a percentage of restaurant sales from 10.4% to 10.8% in the first quarter of 1998 versus the first quarter of 1997. Both Village Inn and Bakers Square contributed to the improvement, with Bakers Square's percentage improving from 6.7% to 6.8% and Village Inn's from 16.6% to 17.0%. The improved operating profit was due to increased sales and operating efficiencies. The following presents select quarterly trend data related to the operations of Bakers Square and Village Inn:
Bakers Square Village Inn ------------- ----------- Comparable Comparable Comparable Store Store Comparable Store Store Store Guest Operating Store Guest Operating Sales Counts Margin Sales Counts Margin ----------------------------------- -------------------------------- 1997: 1st Qtr (4.6%) (2.4%) 6.7% (0.2%) (0.2%) 16.6% 2nd Qtr (5.6%) (3.3%) 6.1% (1.5%) (1.0%) 16.8% 3rd Qtr (3.7%) (0.9%) 6.4% (0.1%) 1.5% 16.7% 4th Qtr 0.5% 0.9% 5.2% 3.1% 3.1% 17.0% 1998: 1st Qtr 6.5% 4.0% 6.8% 5.1% 4.9% 17.0%
Other revenues and expense __________________________ Franchise revenue increased in 1998's first quarter by $22,000. The increase was largely the result of an expansion in the number of operating stores plus a growth in royalties as a result of higher franchise sales income. General and administration expense decreased to 7.1% of revenues in the first quarter of 1998 from 7.2% last year. The percentage decrease results from increased revenues and implementing cost containment measures. Interest expense declined 35% or $268,000 for the first quarter of 1998 due to reduced credit line borrowings. The Company's effective tax rate for the first quarter of 1998 was 36% representing statutory tax rates offset somewhat by the effect of FICA tax credits. Liquidity and capital resources _______________________________ Operating cash flows increased $2.7 million in the first quarter of 1998 versus 1997 first quarter. The increase resulted primarily from improved operating results and reduced working capital requirements. As of January 31, 1998, $7,500,000 of advances were outstanding under the Company's bank credit facility and approximately $28,000,000 was available for additional direct advances, subject to limitations on combined direct advances and letters of credit. In the first quarter of 1998, the Company reduced its outstanding borrowings by $4.6 million. On December 19, 1997, the Company accepted an amended and restated credit agreement which provided an available credit limit of $40,000,000. The agreement expires on February 28, 2001. During the first quarter of 1998, the Company disposed of two properties, one through lease termination and one through sublease. Also in that quarter, closure and carrying costs of $230,000 were charged against the liability established for such, and cash proceeds of $488,000 were realized from the disposition of properties. At January 31, 1998, the Company had 16 closed properties which it was trying to sell or sublease. Four of those properties were owned in fee and the rest were leased. The Company also had 15 subleased properties. The Company hopes to sell the fee properties over the next year and $2.9 million of proceeds are expected to be realized from their sale. The Company does not anticipate significant proceeds from the disposition of the leased properties. It is expected that the majority of the remaining leased properties will be subleased over the next four to eighteen months. Cash carrying costs of approximately $1,483,000 are expected to be incurred through final disposition of those units. The Company expects to sublease seven of the properties at rentals lower than the Company's obligations under the prime leases. Those sublease losses will be incurred over the remaining years of the leases and the Company does not anticipate that the losses will materially affect the Company's liquidity. As of January 31, 1998, authorizations granted by the Board of Directors for the purchase of 300,500 common shares of the Company's common stock remained available. No shares were purchased in the first quarter of 1998. Future purchases with respect to 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. Capital expenditures approximating $16.1 million are expected during the remainder of the fiscal year. The level of planned expenditures may be adjusted as circumstances indicate. Cash provided by operations, the unused portion of the Company's bank credit facility and other financing sources 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. VICORP has guaranteed certain leases for approximately twenty-five restaurant properties sold to others in 1986 and approximately twenty restaurant leases of certain franchisees and others. Minimum future rental payments remaining under these leases were approximately $9.5 million as of October 31, 1997. These guarantees are included in the definition of financial instruments with off-balance-sheet risk of accounting loss; however, the Company has not been required to make any payments with respect to these guarantees and presently has no reason to believe any payments will be required in the future. The Company believes it is impracticable to estimate the fair value of these financial guarantees (e.g., amounts the Company could pay to remove the guarantees) because the Company has no present intention or need to attempt settlement of any of the guarantees. Outlook _______ The minimum wage in California is scheduled to increase to $5.75 per hour in March 1998, and a number of other states have indicated that they are considering raising their minimum wage rate above the federal level. In addition, Congress is considering raising the federal minimum wage over the next two years. In order to partially offset this labor cost inflation, some menu price increases are contemplated at this time. The Company is evaluating various alternative investment strategies for utilizing cash flow from operations. These alternatives include, but may not be limited to, new Village Inn restaurant properties, paydown of credit facility debt, repurchase of common stock, and acquisition of restaurant concerns in the family style segment. 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 certain risk and uncertainties which are described in close proximity to such statements and 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. PART II - OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K. (a) Exhibits (10)Material Contracts. (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) March 12, 1998 By: /s/ J. Michael Jenkins _________________________________ J. Michael Jenkins, President and Chief Executive Officer March 12, 1998 By: /s/ Richard E. Sabourin ______________________________ Richard E. Sabourin, Executive Vice Preisdent/CFO EX-27 2 FINANCIAL DATA SCHEDULE - 1ST QTR
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VICORP RESTAURANTS, INC. CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS AS OF JANUARY 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS OCT-31-1998 JAN-31-1998 3,827 0 2,668 0 5,133 17,991 282,668 156,922 190,087 35,430 14,442 0 0 458 131,825 190,087 86,527 87,377 27,813 27,813 49,398 0 489 3,579 1,288 2,291 0 0 0 2,291 .25 .25
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