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 February 20, 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 9,616,563 shares of its $.05 par value Common Stock
outstanding as of March 28, 1994.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VICORP Restaurants, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
February 20, October 31,
1994 1993
____________ ___________
(unaudited)
ASSETS
Current assets
Cash $ 5,868 $ 5,288
Receivables 4,104 4,326
Inventories 7,056 10,873
Deferred income taxes 8,059 8,059
Prepaid expenses and other 3,065 3,110
__________ __________
Total current assets 28,152 31,656
__________ __________
Property and equipment, net 179,867 177,720
Deferred income taxes 24,369 26,077
Long-term receivables (Note 4) 7,822 7,150
Other assets 11,876 11,428
__________ __________
Total assets $ 252,086 $ 254,031
========== ==========
The accompanying notes are an integral part of the financial statements.
VICORP Restaurants, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
February 20, October 31,
1994 1993
___________ __________
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt
and capitalized lease obligations $ 1,708 $ 1,738
Accounts payable, trade 14,384 20,669
Accrued compensation 5,774 6,229
Accrued taxes 9,009 9,212
Accrued insurance 6,687 6,830
Other accrued expenses 3,400 5,566
__________ __________
Total current liabilities 40,962 50,244
__________ __________
Long-term debt (Note 2) 31,323 23,643
Capitalized lease obligations 15,440 16,365
Non-current accrued insurance 8,362 8,433
Other non-current liabilities and credits 6,916 7,028
Commitments and contingencies
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, 10,433,751 shares
issued 522 522
Paid-in capital 108,864 108,864
Retained earnings 53,104 49,484
Treasury stock, at cost (677,188 and
522,188 common shares) (13,407) (10,552)
__________ __________
Total shareholders' equity 149,083 148,318
__________ __________
Total liabilities and shareholders'
equity $ 252,086 $ 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)
Sixteen weeks ended
_____________________________
February 20, February 14,
1994 1993
___________ ___________
(unaudited)
Revenues
Restaurant operations $ 129,959 $ 129,537
Franchise operations 734 823
_________ _________
130,693 130,360
_________ _________
Costs and expenses
Restaurant operations
Food 39,178 38,164
Labor 39,959 38,480
Other operating 37,260 35,709
General and administrative 7,473 8,050
Interest 1,204 1,129
Other (income) expense, net (172) (142)
_________ _________
124,902 121,390
_________ _________
Income before income taxes 5,791 8,970
Provision for income taxes 2,171 3,543
_________ _________
Net income $ 3,620 $ 5,427
========= =========
Earnings per common and dilutive
common equivalent share
Net income $ .36 $ .52
========= =========
Weighted average common shares
and dilutive common share
equivalents 10,049 10,417
========= =========
The accompanying notes are an integral part of the financial statements.
VICORP Restaurants, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Sixteen weeks ended
______________________________
February 20, February 14,
1994 1993
___________ ___________
(unaudited)
OPERATIONS
Net income $ 3,620 $ 5,427
Reconcilation to cash provided by operations
Depreciation and amortization 7,838 6,844
Deferred income tax provision 1,708 1,419
Loss on disposition of assets 508 460
Other, net (65) 1,602
_________ _________
13,609 15,752
Change in assets and liabilities
Trade receivables (62) 637
Inventories 3,817 1,098
Accounts payable, trade (6,285) (2,840)
Other current assets and liabilities (3,293) (3,132)
Non-current accrued insurance (70) 606
_________ _________
Cash provided by operations 7,716 12,121
_________ _________
INVESTING ACTIVITIES
Purchase of property and equipment (10,319) (12,391)
Purchase of other assets (376) (305)
Disposition of property (384) 228
Additions to long-term receivables (1,088) --
Collection of non-trade receivables 674 198
_________ _________
Cash used for investing activities (11,493) (12,270)
_________ _________
FINANCING ACTIVITIES
Issuance of debt 7,750 4,250
Payment of debt and capitalized lease
obligations (574) (1,971)
Purchase of treasury shares (2,855) (1,409)
Other, net 36 68
_________ _________
Cash provided by financing activities 4,357 938
_________ _________
Increase in cash 580 789
Cash at beginning of period 5,288 4,840
_________ _________
Cash at end of period $ 5,868 $ 5,629
========= =========
SUPPLEMENTAL INFORMATION
Cash paid during the period for
Interest (net of amount capitalized) $ 1,127 $ 1,104
Income taxes 560 862
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 sixteen weeks ended February 20, 1994
and February 14, 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 February 20, 1994, the Company had $31,000,000 of borrowings and
$11,995,000 of letters of credit placed under its bank credit facility.
Incremental net borrowing of $7,750,000 were incurred during the first
quarter of 1994.
3. During the first quarter of 1994, the Company purchased 155,000 shares of
its common stock for $2,855,000 pursuant to authorization from its Board of
Directors. On March 28, 1994, subsequent to the end of the first quarter,
an additional 140,000 shares of the Company's common stock was purchased for
$2,240,000. At March 28, 1994, authorization to purchase an additional
155,000 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 of 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 each, 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.
Sixteen weeks ended
_____________________________________
February 20, February 14,
1994 1993
___________ ___________
BAKERS SQUARE
Midwest
Restaurant sales $ 50,597,000 $ 48,419,000
Operating margin 13.3% 18.0%
California
Restaurant sales $ 33,169,000 $ 34,877,000
Operating margin 6.2% 9.9%
VILLAGE INN
West
Restaurant sales $ 36,804,000 $ 37,076,000
Operating margin 12.2% 12.2%
Florida
Restaurant sales $ 8,584,000 $ 8,143,000
Operating margin 4.8% 6.8%
COMBINED
Restaurant sales $ 129,154,000 $ 128,515,000
Operating margin 10.6% 13.4%
Overall restaurant sales increased slightly during the first quarter of 1994
compared to the first quarter of 1993. Sales increased due to the net addition
of eleven restaurants since the first quarter of 1993; however, comparable
restaurant sales decreased 5.5%. Severe winter weather in the Midwest and the
earthquake and rains in California which occurred in the first quarter of 1994
adversely affected the sales comparison. Customer counts were down in the first
quarter of 1994 prior to the occurrence of the external phenomena and management
believes the trend continued even after discounting the impact of the severe
weather and earthquake. The Company has made certain senior management changes
and has instituted certain programs it believes will be instrumental in
reversing the trend of decreased customer counts.
Restaurant operating income decreased both in total and as a percent of sales.
Rising food costs and the effects of lower comparable sales on labor and fixed
costs were principally responsible for the lower restaurant operating income.
Partially offsetting this was incremental profits from operating new restaurants
and reduced insurance expense.
OTHER REVENUES AND EXPENSE
General and administrative expense decreased largely as the result of lower
insurance expense and incentive compensation.
The effective income tax rate used for financial reporting purposes was 37.5% in
the first quarter of 1994 compared with 39.5% for the same period 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 and changes in working capital
elements resulting from the timing and amount of certain short-term obligations,
cash provided by operations decreased 36.3% from 1993. Absent changes in
working capital elements, operating cash flow decreased 13.6% from 1993 levels.
As of February 20, 1994, $31,000,000 was outstanding under the Company's bank
credit facility and approximately $32,000,000 was available for additional
direct advances, subject to limitations on combined direct advances and letters
of credit. Incremental net borrowings of $7,750,000 were incurred during the
quarter to supplement cash flow from operations.
In the first quarter of 1994, the Company purchased 155,000 shares of its common
stock for $2,855,000 under authorization granted by its Board. On March 28,
1994, subsequent to the end of the first quarter, an additional 140,000 shares
of the Company's common stock was purchased for $2,240,000. Authorization
for the purchase of an additional 155,000 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 $22,000,000 are expected during the remainder
of the fiscal year. This level of spending reflects a planned slowdown of the
Company's expansion program from previously indicated levels. 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
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of VICORP Restaurants, Inc.:
We have made a review of the accompanying condensed consolidated balance
sheet of VICORP Restaurants, Inc. (a Colorado corporation) and subsidiary
as of February 20, 1994, and the related condensed consolidated statements
of operations and cash flows for the sixteen week period then ended. 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 Certain Public Accountants. A review of interim
financial information consists primarily of applying analytical review
procedures to the 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 balance sheet of VICORP Restaurants, Inc. 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 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 & CO
Denver, Colorado,
March 14, 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 under-
signed thereunto duly authorized.
VICORP Restaurants, Inc.
________________________
(Registrant)
March 30, 1994 By: /s/ Robert S. Benson
____________________________
Robert S. Benson, President
March 30, 1994 By: /s/ Dennis L. Kuper
__________________________________
Dennis L. Kuper, Executive Vice
President of Finance
EXHIBIT 15
March 30, 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 February 20, 1994, which includes our report dated March 14,
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 & CO
