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 April 30, 1996
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 9,049,026 shares of its $.05 par value Common Stock
outstanding as of June 7, 1996.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VICORP Restaurants, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
April 30, October 31,
1996 1995
---------- -----------
(unaudited)
ASSETS
Current assets
Cash $ 2,475 $ 3,988
Receivables 2,902 3,149
Inventories 5,299 8,597
Deferred income taxes 5,000 5,000
Prepaid expenses and other 1,523 2,003
-------- --------
Total current assets 17,199 22,737
-------- --------
Property and equipment, net 143,836 152,592
Deferred income taxes 39,906 39,375
Other assets 12,896 13,457
-------- --------
Total assets $ 213,837 $ 228,161
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt (Note 3) $ 11,891 $ 4,480
Current maturities of capitalized lease obligations 1,496 1,636
Accounts payable, trade 12,012 16,526
Accrued compensation 5,337 5,542
Accrued taxes 6,859 7,998
Accrued insurance 5,493 5,656
Other accrued expenses 4,146 4,984
-------- --------
Total current liabilities 47,234 46,822
-------- --------
Long-term debt (Note 3) 19,823 31,094
Capitalized lease obligations 9,969 11,085
Non-current accrued insurance 6,265 6,092
Other non-current liabilities and credits 8,284 9,970
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, 9,049,026 and 9,044,026
shares issued and outstanding 452 452
Paid-in capital 84,367 84,332
Retained earnings 37,443 38,314
-------- --------
Total shareholders' equity 122,262 123,098
-------- --------
Total liabilities and shareholders' equity $ 213,837 $ 228,161
======== ========
The accompanying notes are an integral part of the financial statements.
VICORP Restaurants, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
Twenty-
Three Twelve Six eight
months weeks months weeks
ended ended ended ended
------------------- -------------------
April 30, May 14, April 30, May 14,
1996 1995 1996 1995
--------- ------- --------- --------
(unaudited)
<S> <C> <C> <C> <C>
Revenues
Restaurant operations $85,297 $84,433 $173,707 $207,474
Franchise operations 856 891 1,727 1,883
------ ------ ------- -------
Total revenues 86,153 85,324 175,434 209,357
------ ------ ------- -------
Costs and expenses
Restaurant operations
Food 27,585 27,303 59,513 66,954
Labor 27,168 27,956 56,091 65,833
Other operating 24,104 23,364 47,507 57,171
General and administrative 6,494 5,818 12,088 13,620
------ ------ ------- -------
Operating profit 802 883 235 5,779
Interest expense 984 811 2,114 1,979
Other (income) expense, net (253) (181) (485) (451)
------ ------ ------- -------
Income (loss) before income tax expense (benefit) 71 253 (1,394) 4,251
Income tax expense (benefit) 26 95 (523) 1,594
------ ------ ------- -------
Net income (loss) $ 45 $ 158 $ (871) $ 2,657
====== ====== ======= =======
Earnings (loss) per common and dilutive
common equivalent share $ .00 $ .02 $ (.10) $ .28
====== ====== ======= =======
Weighted average common shares and
dilutive common share equivalents 9,139 9,479 9,047 9,578
====== ====== ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
VICORP Restaurants, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Twenty-eight
Months weeks
ended ended
----------------------------
April 30, May 14,
1996 1995
--------- --------
(unaudited)
Operations
Net income (loss) $ (871) $ 2,657
Reconciliation to cash provided by operations
Depreciation and amortization 10,689 12,129
Deferred income tax provision (531) 1,231
Loss on disposition of assets 165 287
Other, net (120) (19)
-------- --------
9,332 16,285
Change in assets and liabilities
Trade receivables 193 457
Inventories 3,297 2,251
Accounts payable, trade (4,513) (4,950)
Other current assets and liabilities (2,012) (3,867)
Non-current accrued insurance 173 (635)
-------- -------
Cash provided by operations 6,470 9,541
-------- --------
Investing activities
Purchase of property and equipment (2,967) (3,550)
Purchase of other assets (3) (68)
Disposition of property (545) (590)
Collection of non-trade receivables 365 6,234
-------- --------
Cash provided by (used for) investing activities (3,150) 2,026
-------- --------
Financing activities
Issuance of debt 10,000 20,250
Payment of debt and capitalized lease obligations (14,635) (24,255)
Purchase of common stock -- (7,694)
Other, net (198) 43
------- --------
Cash used for financing activities (4,833) (11,656)
------- --------
Decrease in cash (1,513) (89)
Cash at beginning of period 3,988 6,123
------- --------
Cash at end of period $ 2,475 $ 6,034
======= ========
Supplemental information
Cash paid during the period for
Interest (net of amount capitalized) $ 1,992 $ 1,994
Income taxes 257 861
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, 1995. The
unaudited financial statements for the three and six months ended April 30,
1996 and the twelve and twenty-eight weeks ended May 14, 1995 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. In fiscal 1995, the Company switched its fiscal year to the last day in
October. Prior to that, the Company utilized a 52/53 week fiscal year which
ended on the last Sunday in October. In conjunction with that change,
fiscal quarters in 1996 and forward will consist of three months.
Previously, the Company's first fiscal quarter consisted of sixteen weeks
and all other quarters consisted of twelve weeks.
Restaurant sales in 1995 restated to a comparable time frame basis as
1996 were as follows:
Restated Reported
Fiscal 1995 Fiscal 1995
----------- -----------
1st Quarter $103,133,000 $123,041,000
2nd Quarter 89,893,000 84,433,000
3rd Quarter 90,492,000 82,275,000
4th Quarter 86,598,000 80,367,000
----------- -----------
$370,116,000 $370,116,000
=========== ===========
The Company determined that a significant amount of estimation would be
required to restate quarterly 1995 operating results to correspond with
the three month quarterly reporting. Therefore, restatements of results
were not made and the interim results for 1996 and 1995 are not comparable.
The following table highlights the differences in time periods:
<TABLE>
<CAPTION>
Fiscal 1996 Fiscal 1995
------------------------------- ------------------------------------
Time Period Days Time Period Days
----------- ---- ----------- ----
<S> <C> <C> <C> <C>
1st Quarter Nov. 1, 1995 - Jan. 31, 1996 92 Oct. 31, 1994 - Feb. 19, 1995 112
2nd Quarter Feb. 1, 1996 - Apr. 30, 1996 90 Feb. 20, 1995 - May 14, 1995 84
3rd Quarter May 1, 1996 - Jul. 31, 1996 92 May 15, 1995 - Aug. 6, 1995 84
4th Quarter Aug. 1, 1996 - Oct. 31, 1996 92 Aug. 7, 1995 - Oct. 31, 1995 86
--- ---
366 366
=== ===
</TABLE>
3. As of April 30, 1996, the Company had $31,500,000 of borrowings and
$9,308,000 of letters of credit placed under its bank credit facility.
The Company's bank credit agreement, as amended, expires on September 30,
1996 when it converts to a term facility payable in eight equal quarterly
installments through June 30, 1998. The Company is currently pursuing a
new revolving credit facility with certain lenders.
4. 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. As of April 30, 1996,
the Company had closed 48 of those locations, of which 33 stores were
disposed through sublease, lease termination or sale. Additionally, in
the second quarter of 1996, the Company closed two restaurants which
were not included in the 1994 disposition plan. Both properties are
owned in fee and neither property is expected to have material closure
costs or disposition losses. However, the Company expects to realize
$2.3 million in proceeds from their sale. Operating results for the 52
locations were as follows:
<TABLE>
<CAPTION>
Twenty-
Three Twelve Six eight
months weeks months weeks
ended ended ended ended
----------------------- ------------------------
April 30, May 14, April 30, May 14,
1996 1995 1996 1995
--------- ------- --------- -------
<S> <C> <C> <C> <C>
Sales $767,000 $6,257,000 $1,866,000 $17,095,000
Store operating profit (loss) (70,000) (388,000) (221,000) (497,000)
</TABLE>
During the six months ended April 30, 1996, $1,248,000 of closure and
carrying related costs were charged against the liability established for
such costs. As of April 30, 1996, the Company had $9,510,000 of reserves
remaining to provide for the disposal of 27 properties, including eight
closed prior to 1994. The reserves consisted of $5,613,000 to reduce the
disposal properties to net realizable value and $3,897,000 to provide for
expected carrying costs and sublease costs.
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 second quarter of 1996 and 1995 are not comparable
because of differences in time periods presented (see Note 2 of Notes to the
Financial Statements). The second quarter of 1996 consisted of three months,
or 90 days, while the second quarter of 1995 consisted of twelve weeks, or
84 days. The fiscal first half of 1996 consisted of six months, or 182 days,
while the fiscal first half of 1995 consisted of twenty-eight weeks, or 196
days.
Restaurant operations
The following table sets forth certain operating information for the
Company's operating concepts and the Company as a whole.
<TABLE>
<CAPTION>
Second Quarter Year-to-Date
--------------------------- -------------------------
Three Twelve Six Twenty-eight
months ended weeks ended months ended weeks ended
------------ ----------- ------------ ------------
April 30, May 14, April 30, May 14,
1996 1995 1996 1995
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Bakers Square
Restaurant sales $50,684,000 $51,488,000 $104,825,000 $128,718,000
Restaurant operating profit 2,043,000 958,000 2,097,000 6,972,000
Restaurant operating profit % 4.0% 1.9% 2.0% 5.4%
Divisional administrative costs 1,018,000 1,291,000 1,872,000 3,039,000
Divisional operating profit (loss) 1,025,000 (333,000) 225,000 3,933,000
Restaurants at quarter-end 156 180
Village Inn
Restaurant sales $32,938,000 $30,525,000 $ 65,472,000 $ 72,420,000
Restaurant operating profit 4,512,000 5,060,000 8,904,000 10,855,000
Restaurant operating profit % 13.7% 16.6% 13.6% 15.0%
Franchise income 856,000 891,000 1,727,000 1,883,000
Divisional administrative costs 653,000 737,000 1,246,000 1,741,000
Divisional operating profit 4,715,000 5,214,000 9,385,000 10,997,000
Restaurants at quarter-end 99 105
Angel's
Restaurant sales $ 1,675,000 $ 2,420,000 $ 3,410,000 $ 6,336,000
Restaurant operating profit (loss) (115,000) (208,000) (405,000) (311,000)
Restaurant operating profit % (6.9%) (8.6%) (11.9%) (4.9%)
Divisional administrative costs 69,000 193,000 179,000 487,000
Divisional operating profit (loss) (184,000) (401,000) (584,000) (798,000)
Restaurants at quarter-end 5 7
Consolidated
Restaurant sales $85,297,000 $84,433,000 $173,707,000 $207,474,000
Food cost % 32.3% 32.3% 34.3% 32.3%
Labor cost % 31.9% 33.1% 32.3% 31.7%
Other operating cost % 28.3% 27.7% 27.3% 27.6%
Restaurant operating profit % 7.6% 6.9% 6.1% 8.4%
Restaurant operating profit 6,440,000 5,810,000 10,596,000 17,516,000
Franchise income 856,000 891,000 1,727,000 1,883,000
Divisional general and
administrative costs 1,740,000 2,221,000 3,297,000 5,267,000
--------------------------------------------------------
Divisional operating profit 5,556,000 4,480,000 9,026,000 14,132,000
--------------------------------------------------------
Unallocated general and
administrative costs 4,754,000 3,597,000 8,791,000 8,353,000
--------------------------------------------------------
Operating profit 802,000 883,000 235,000 5,779,000
========================================================
</TABLE>
Consolidated restaurant sales increased 1%, or $864,000, during the second
quarter and decreased 16%, or $33.8 million, for the fiscal first half of
1996 in comparison to last year. $5.5 million of the quarter increase was
attributable to six more operating days in 1996's second quarter versus
1995's second quarter. $14.4 million of the first half decrease was
attributable to 14 fewer operating days in 1996's first half versus 1995's
first half. Also affecting the sales comparison was the reduced number of
operating restaurants in 1996 compared to 1995 due to store closures. The
Company operated approximately 31 and 37 fewer restaurants in the second
quarter and fiscal first half, respectively, compared to the prior year.
For the second quarter, comparable total store sales increased 2.4%.
Same store sales for Village Inn increased 4.4% due largely to increased
comparable customer counts of 3.1%. Bakers Square's same store sales
increased 1.1% due to a 2.9% increase in comparable customer counts.
For the first half of fiscal 1996, comparable total store sales decreased
1.3%, reflective of a 3.5% decrease for Bakers Square and a 2.1% increase
for Village Inn. The comparable sales decrease in Bakers Square was due to
lower prices as comparable customer counts increased 1.6%. In the middle of
fiscal 1995, the Company reduced menu prices in its Baker Square group which
decreased average customer expenditures approximately 10 to 12% in an effort
to reverse its four-year customer count decline. However, in September 1995,
Bakers Square refined its menu to include a "Manager's Daily Specials" section
for which restaurant managers choose six to eight menu items each day from
approximately 80 alternatives. Besides allowing for locality appeal, the
specials generally have higher menu prices than other menu items. This
change, combined with a price increase on whole pies in early January 1996,
partially mitigated the price decrease taken in the middle of 1995. Village
Inn's year-to-date comparable sales increase was largely due to higher average
customer expenditures from menu mix changes as comparable customer counts
marginally increased by .2%.
Consolidated restaurant operating profit increased both in total and as a
percentage of sales for the second quarter of 1996 compared to last year's
second quarter. Bakers Square accounted for all of the improvement as a
result of certain programs to control waste and gain efficiencies without
compromising the experience to the customer. Also, more pronounced costs
of programs to improve customer counts in 1995's second quarter contributed
to the improvement. This increase was partially offset by decreased
restaurant operating profits for Village Inn due to higher labor, insurance
and advertising costs.
Consolidated restaurant operating profit decreased for the fiscal first half
of 1996 compared to 1995's first half due primarily to lower Bakers Square
restaurant operating profits, largely from the effect of reduced comparable
sales on fixed occupancy and labor costs in 1996's first quarter. Also,
Village Inn's operating profits decreased due to the reduced number of
operating days and higher labor and insurance costs.
Angel's, the Company's experimental concept, continued to show losses in the
second quarter of 1996, although less than those reported a year earlier.
The following presents select quarterly trend data related to the
operations of Bakers Square and Village Inn:
Bakers Square Village Inn
------------- -----------
Comparable Comparable Store Comparable Comparable Store
Store Customer Operating Store Customer Operating
Sales Counts Margin Sales Counts * Margin
---------------------------------- ---------------------------------
1995:
1st Qtr -5.4% -8.5% 7.8% 0.3% -4.0% 13.8%
2nd Qtr -11.2% -7.5% 1.9% -2.4% -6.7% 16.6%
3rd Qtr -10.1% -1.0% -8.7% -2.1% -5.3% 12.7%
4th Qtr -8.6% -0.8% -5.5% -1.4% -3.9% 11.0%
1996:
1st Qtr -7.6% 0.5% 0.1% 0.0% -2.6% 13.5%
2nd Qtr 1.1% 2.9% 4.0% 4.4% 3.1% 13.7%
* The Company believes that the reduced customer counts for Village Inn in
1995 were largely due to increased specialty coffee shop competition, which
did not overly affect sales but reduced customer counts and increased average
customer expenditures.
Asset disposals
As of April 30, 1996, the Company had closed 48 of the 50 restaurants
scheduled for disposition under a plan adopted in fiscal 1994. Thirty-
three of the closed units have been disposed of through sublease or sale
arrangements. In the second quarter of 1996, the Company closed two
additional restaurants that were not included in the 1994 disposition plan.
No additional charges were recorded for these closures as the Company does
not expect material carrying costs or disposition losses from these
properties. The following table details sales and operating results for the
52 restaurants.
Second quarter ended: April 30, 1996 May 14, 1995
-------------- ------------
Operating Operating
Sales Profit (Loss) Sales Profit (Loss)
----- ------------- ----- -------------
Bakers Square $545,000 $(50,000) $4,500,000 $(358,000)
Village Inn 222,000 (20,000) 1,300,000 68,000
Angel's -- -- 457,000 (98,000)
- --------------------------------------------------------------------------------
Total $767,000 $(70,000) $6,257,000 $ (388,000)
================================================================================
Year-to-date ended: April 30, 1996 May 14, 1995
-------------- ------------
Operating Operating
Sales Profit (Loss) Sales Profit (Loss)
----- ------------- ----- -------------
Bakers Square $1,423,000 $(195,000) $12,241,000 $(397,000)
Village Inn 443,000 (26,000) 3,540,000 55,000
Angel's -- -- 1,314,000 (155,000)
- --------------------------------------------------------------------------------
Total $1,866,000 $(221,000) $17,095,000 $(497,000)
==============================================================================
Other revenues and expense
- --------------------------
Average daily franchise revenue decreased 10.3% in the second quarter of 1996
versus the same quarter last year due to costs incurred to resume growth in
that group. For the first half of 1996, average daily franchise revenue
decreased 1.2%.
As a percent of revenues, general and administrative costs increased to 7.5%
in the second quarter of 1996 from 6.8% last year. The higher relative costs
were largely due to higher legal expenses. Year-to-date, general and
administrative expense as a percent of revenues was 6.9% and 6.5% for 1996
and 1995, respectively.
Average daily interest expense increased 13.3% and 15.0% for the second
quarter and year-to-date, respectively, over last year due to higher
borrowing levels.
Liquidity and capital resources
- -------------------------------
Cash provided by operations decreased 32% in the first half of 1996
compared to the same period in 1995 primarily due to lower operating
income.
As of April 30, 1996, $31,500,000 of advances were outstanding under
the Company's bank credit facility and approximately $14,200,000 was
available for additional direct advances, subject to limitations on
combined direct advances and letters of credit. The Company's bank
credit agreement, as amended, expires on September 30, 1996 when it
converts to a term facility payable in eight equal installments through
June 30, 1998. The Company is currently pursuing a new revolving credit
facility with certain lenders and is optimistic that a new facility will
be in place prior to the current revolving facility's expiration.
During the first half of 1996, the Company disposed of twelve properties,
one through sale, ten through lease termination and one through sublease.
Also during that time frame, closure and carrying costs of $1,248,000 were
charged against the liability established for such and cash proceeds of
$703,000 were realized from the disposition of properties.
At April 30, 1996, the Company had 27 properties remaining which it was
trying to dispose of. Six of these properties were owned in fee and the
rest were leased. The Company hopes to sell the fee properties over the
next year and $5.1 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 leased properties will be disposed of through sublease over the next
fifteen months. Cash carrying costs of approximately $2.2 million are
expected to be incurred over that period. 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 April 30, 1996, authorizations granted by the Board for the purchase
of 300,500 common shares of the Company's common stock remained available.
No shares were purchased in the first half of 1996. 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 $9,000,000 are expected during the
remainder of the fiscal year. The level of planned expenditures may be
reduced if expected operating improvements do not occur. 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.
Outlook
- -------
Except for the historical information contained herein, the matters discussed
in this discussion are forward looking statements that involve risks and
uncertainties. Such factors that could influence future performance include,
but are not limited to, the effect of economic conditions, government
initiatives, food commodity prices and availability, competition, labor
availability and the weather.
Recently, Congress has discussed the possibility of raising the federal
mandated minimum wage. Also, a number of states have additionally indicated
that they are considering raising their minimum wage rates above the proposed
federal level. Depending upon the final provisions of any bill, the
restaurant industry could be one of the most affected industries of such
increases due to the composition of its workforce. At present, the Company
believes that such increases are likely, but due to the uncertainty of the final
legislation and competitive response it is not possible to quantify.
ARTHUR ANDERSEN LLP
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) as of April 30, 1996, and the
related condensed consolidated statements of operations for the 3-month period
ended April 30, 1996, the 12-week period ended May 14, 1995, the 6-month period
ended April 30, 1996 and the 28-week period ended May 14, 1995, and the
condensed consolidated statements of cash flows for the 6-month period ended
April 30, 1996 and the 28-week period ended May 14, 1995. 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 inquires 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.
as of October 31, 1995 (not presented herein) and, in our report
dated December 12, 1995, 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, 1995, is fairly
stated, in all material respects, in relation to the balance sheet from
which it has been derived.
/s/ Arthur Andersen LLP
-------------------
ARTHUR ANDERSEN LLP
Denver, Colorado,
May 31, 1996.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securities Holders.
On April 5, 1996, the Registrant held its Annual Meeting of
Shareholders. At that meeting, two proposals were submitted to the
shareholders for approval. Those proposals related to the election of
directors and ratification of the appointment of the Company's independent
auditors for VICORP's 1996 fiscal year.
As to the first proposal, each of the nominees for directors
were elected based upon the following vote:
Director For Against Abstain Broker Non-
Votes
- -------------------------------------------------------------------------------
Carole Lewis Anderson 6,807,690 31,032 -- --
Bruce B. Brundage 6,808,090 30,632 -- --
Charles R. Frederickson 6,807,770 30,952 -- --
John C. Hoyt 6,808,090 30,632 -- --
J. Michael Jenkins 6,807,890 30,832 -- --
Robert T. Marto 6,808,658 30,064 -- --
Dudley C. Mecum 6,808,090 30,632 -- --
Dennis B. Robertson 6,808,090 30,632 -- --
Arthur Zankel 6,808,090 30,632 -- --
The selection of Arthur Andersen LLP to serve as the Company's
independent accountants for fiscal 1996 was ratified. The vote was 6,819,330
for; 14,142 against; 5,250 abstained; and no broker non-votes.
Item 5. Other Information.
On April 15, 1996, Messrs. Craig Held and Hunter Yager were appointed
to the Company's board of directors.
Mr. Held has been the President and Chief Operating Officer of Paramount
Farms, Inc. since 1994. Paramount Farms, Inc. produces and markets
pistachios and almonds. From 1986 to 1994, Mr. Held held various positions
with Taco Bell Corp., a Pepsico company, including Vice President/New
Concepts, Senior Director/Field Marketing and Mall Prospects and Director of
Marketing.
Mr. Yager retired from Grey Advertising, Inc. in 1985 where he was an
Executive Vice President. Since his retirement, he has been a private
consultant in marketing and advertising.
There is no family relationship between Messrs. Held and Yager or with
any current director or executive officer of the Company.
Item 6: Exhibits and Reports on Form 8-K.
(a) Exhibits
(10) Amendment No. 5 Dated as of April 30, 1996 to Second Amendment
and Restated Credit Agreement Dated as of June 18, 1993.
(15) Letter regarding unaudited interim financial information.
(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)
June 12, 1996 By:/s/ J. Michael Jenkins
----------------------------
J. Michael Jenkins, President
and Co-Chief Executive Officer
June 12, 1996 By:/s/ David D. Womack
----------------------------
David D. Womack, Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VICORP
RESTAURANTS, INC. CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS
AS OF APRIL 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 703799
<NAME> VICORP RESTAURANTS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> APR-30-1996
<CASH> 2,475
<SECURITIES> 0
<RECEIVABLES> 2,902
<ALLOWANCES> 0
<INVENTORY> 5,299
<CURRENT-ASSETS> 17,199
<PP&E> 281,353
<DEPRECIATION> 137,517
<TOTAL-ASSETS> 213,837
<CURRENT-LIABILITIES> 47,234
<BONDS> 29,792
0
0
<COMMON> 452
<OTHER-SE> 121,810
<TOTAL-LIABILITY-AND-EQUITY> 213,837
<SALES> 173,707
<TOTAL-REVENUES> 175,434
<CGS> 59,513
<TOTAL-COSTS> 59,513
<OTHER-EXPENSES> 103,598
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,114
<INCOME-PRETAX> (1,394)
<INCOME-TAX> (523)
<INCOME-CONTINUING> (871)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (871)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
ARTHUR ANDERSEN LLP
EXHIBIT 15: LETTER REGARDING UNAUDITED INTERIM
FINANCIAL INFORMATION
June 12, 1996
To VICORP Restaurants, Inc.:
We are aware that VICORP Restaurants, Inc. has incorporated
by reference into the Company's previously filed Registration
Statement File Nos. 33-26650, 33-32608, 33-34447,
33-48205 and 33-49166, its Form 10-Q for the quarter
ended April 30, 1996, which includes our report dated May 31,
1996, 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 statements 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,
/s/ Arthur Andersen LLP
Amendment No. 5
Dated as of April 30, 1996
to
Second Amendment and Restated Credit Agreement
Dated as of June 18, 1993
This AMENDMENT No. 5 ("Amendment") dated as of April
30, 1996 is entered into by and among VICORP Restaurants,
Inc., a Colorado corporation (the "Borrower"), Citibank,
N.A. and NationsBank of Texas, N.A., as lenders (the
"Lenders"), and Citibank, N.A., as agent for the Lenders (in
such capacity, the "Agent").
RECITALS
A. The Borrower, the Lenders and the Agent are
parties to that certain Second Amended and Restated Credit
Agreement dated as of June 18, 1993 (as amended, the "Loan
Agreement"). Terms defined in the Loan Agreement and not
otherwise defined herein are used herein as defined in the
Loan Agreement.
B. The Borrower has requested that the Lenders and
the Agent amend, and the Lenders and the Agent have agreed
to amend, certain provisions of the Loan Agreement as set
forth below.
NOW, THEREFORE, the Borrower, the Lenders and the Agent
agree as follows:
SECTION 1. Amendment. Subject to the conditions
set forth in Section 2 herein, the Borrower, the Lenders and
the Agent hereby amend the Loan Agreement as follows:
(a) Section 1.01 of the Loan Agreement is amended by
deleting "June 30, 1996" in the definition of "Amortization
Date" and substituting "September 30, 1996" therefor;
(b) Section 7.03(c) of the Loan Agreement is amended
to provide that clause (i) will be "$124,600,000" for the
fiscal quarter ended April 30, 1996, and that clause (i)
will be "$125,000,000" for each fiscal quarter thereafter;
and
(c) Section 7.03(e) of the Loan Agreement is amended
to provide that the Borrower is required to maintain a fixed
charge coverage ratio (as set forth in such Section 7.03(e))
greater than or equal to .64 to 1 for the fiscal quarter
ending on April 30, 1996; and to maintain a fixed charge
coverage ratio greater than or equal to 1.75 to 1 as of the
last day of each fiscal quarter thereafter.
SECTION 2. Conditions Precedent to Amendment. This
Amendment shall be deemed to be effective as of April 30,
1996 upon the satisfaction of each of the following
conditions precedent: (a) the receipt by the Agent of four
(4) original copies of this Amendment duly executed and
delivered by a duly authorized officer of the Borrower and
of each Lender; and (b) the absence of any Default or Event
of Default under the Loan Agreement after giving effect to
this Amendment.
SECTION 3. Representations and Warranties of the
Borrower. (a) Upon the effectiveness of this Amendment, the
Borrower hereby reaffirms all covenants, representations and
warranties made in the Loan Agreement and agrees that all
such covenants, representations and warranties shall be
deemed to have been re-made as of the effective date of this
Amendment.
(b) The Borrower hereby represents and warrants that
this Amendment constitutes the legal, valid and binding
obligation of the Borrower enforceable against the Borrower
in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors' rights generally, and general principles of
equity which may limit the availability of equitable
remedies.
SECTION 4. Reference to and Effect on the Loan
Agreement. (a) The execution, delivery and effectiveness of
this Amendment shall not operate as a waiver of any right,
power or remedy of the Lenders and the Agent under the Loan
Agreement or any other document, instrument or agreement
executed in connection therewith, nor constitute a waiver of
any provision contained therein, except as specifically set
forth herein.
(b) Upon the effectiveness of this Amendment, each
reference in the Loan Agreement to "this Agreement,"
"hereunder," "hereof," "herein," or words of like import
shall mean and be a reference to the Loan Agreement as
amended hereby, and each reference to the Loan Agreement in
any other document, instrument or agreement executed and/or
delivered in connection with the Loan Agreement shall mean
and be a reference to the Loan Agreement as amended hereby.
(c) Except as specifically amended hereby, the Loan
Agreement and any other document, instrument or agreement
executed in connection therewith shall remain in full force
and effect and are hereby ratified and confirmed.
SECTION 5. Governing Law. This Amendment shall be
governed by and construed in accordance with the other
remaining terms of the Loan Agreement and the internal laws
(as opposed to conflict of law provisions) of the State of
New York.
SECTION 6. Section Titles. The section titles
contained in this Amendment are and shall be without
substance, meaning or content of any kind whatsoever and are
not a part of the agreement between the parties hereto.
SECTION 7. Counterparts. This Amendment may be
executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers
thereunto duly authorized, as of the date first above
written.
VICORP RESTAURANTS, INC.
By: /s/ Charles R. Frederickson
---------------------------
Name: Charles R. Frederickson
---------------------------
Title: Chairman of the Board
--------------------------
By: /s/ Jack A. Baldwin
---------------------------
Name: Jack A. Baldwin
---------------------------
Title: Assistant Treasurer
--------------------------
CITIBANK, N.A.
By: /s/ James J. Sheridan
---------------------------
Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Gloria M. Holland
---------------------------
Vice President
CITIBANK, N.A., as Agent
By: /s/ James J. Sheridan
---------------------------
Vice President
