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 18, 1999
---------------------------
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
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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 8,907,824 shares of its $.05 par value Common
Stock outstanding as of May 19, 1999.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VICORP Restaurants, Inc.
BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
April 18, November 1,
1999 1998
---------- -----------
(unaudited)
ASSETS
<S> <C> <C>
Current assets
Cash $ 10,880 $ 10,262
Receivables 2,086 3,655
Inventories 5,093 7,501
Deferred income taxes 3,617 3,617
Prepaid expenses and other 2,018 2,192
-------- --------
Total current assets 23,694 27,227
-------- --------
Property and equipment, net 133,909 128,648
Deferred income taxes 32,973 35,547
Long-term receivables 756 869
Other assets 7,804 7,379
-------- --------
Total assets $ 199,136 $ 199,670
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt
and capitalized lease obligations $ 1,469 $ 1,711
Accounts payable, trade 22,043 21,847
Accrued compensation 3,732 6,013
Accrued taxes 9,436 8,629
Accrued insurance 3,585 3,354
Other accrued expenses 4,876 5,208
-------- --------
Total current liabilities 45,141 46,762
-------- --------
Long-term debt (Note 3) 36 87
Capitalized lease obligations 4,900 5,696
Non-current accrued insurance 2,498 3,199
Other non-current liabilities and credits 5,664 5,919
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, 9,063,321 and 9,067,699
shares issued and outstanding 447 455
Paid-in capital 81,685 84,148
Retained earnings 58,765 53,404
-------- --------
Total shareholders' equity 140,897 138,007
-------- --------
Total liabilities and shareholders'
equity $ 199,136 $ 199,670
======== ========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
VICORP Restaurants, Inc.
STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Twelve Three Twenty-four Six
weeks months weeks months
ended ended ended ended
-------- -------- -------- --------
April 18, April 30, April 18, April 30,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues
Restaurant operations $ 81,090 $ 82,041 $ 164,467 $ 168,568
Franchise operations 764 905 1,480 1,755
------- ------- -------- --------
Total revenues 81,854 82,946 165,947 170,323
------- ------- -------- --------
Costs and expenses
Restaurant operations
Food 24,611 24,971 50,999 52,784
Labor 26,585 27,007 52,953 54,869
Other operating 20,120 21,404 40,306 42,940
General and administrative 6,739 6,333 12,957 12,477
------- ------- ------- -------
Operating Profit 3,799 3,231 8,732 7,253
Interest expense 235 403 474 892
Other (income), net (104) (141) (185) (187)
------- ------- ------- -------
Income before income tax expense 3,668 2,969 8,443 6,548
Income tax expense 1,339 1,070 3,082 2,358
------- ------- ------- -------
Net income $ 2,329 $ 1,899 $ 5,361 $ 4,190
======= ======= ======= =======
Basic earnings per share $ .26 $ .21 $ .59 $ .46
======= ======= ======= =======
Diluted earnings per share $ .26 $ .21 $ .59 $ .45
======= ======= ======= =======
Weighted average common shares and
dilutive common share equivalents 9,025 9,263 9,064 9,249
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
VICORP Restaurants, Inc.
STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Twenty-four Six
Weeks Months
ended ended
April 18, April 30,
1999 1998
---------- --------
<S> <C> <C>
Operations
Net income $ 5,361 $ 4,190
Reconciliation to cash provided by operations
Depreciation and amortization 8,799 9,874
Deferred income tax provision 2,574 2,090
Loss on disposition of assets 28 173
Other, net (280) (397)
Change in assets and liabilities
Trade receivables 669 1,554
Inventories 2,408 1,514
Accounts payable, trade 196 (2,664)
Other current assets and liabilities (1,499) 997
Non-current accrued insurance (701) (496)
------- -------
Cash provided by operations 17,555 16,835
------- -------
Investing activities
Purchase of property and equipment (14,706) (7,228)
Purchase of other assets (789) (177)
Disposition of property 512 2,036
Collection of non-trade receivables 981 232
------- ------
Cash (used for) investing activities (14,002) (5,137)
------- ------
Financing activities
Issuance of debt -- --
Payment of debt and capitalized lease obligations (837) (11,247)
Purchase of common stock (2,557) --
Issuance of common stock 86 134
Other, net 373 56
------- ------
Cash used for financing activities (2,935) (11,057)
------- ------
Increase in cash 618 641
Cash at beginning of period 10,262 1,464
------- ------
Cash at end of period $ 10,880 $ 2,105
======= ======
Supplemental information
Cash paid during the period for
Interest (net of amount capitalized) $ 484 $ 940
Income taxes 597 144
</TABLE>
The accompanying notes are an integral part of the financial statements.
VICORP Restaurants, Inc.
NOTES TO FINANCIAL STATEMENTS (unaudited)
- -----------------------------------------
1. The financial statements should be read in conjunction with the annual
report to shareholders for the year ended November 1, 1998. The
unaudited financial statements for the twenty-four weeks ended April 18,
1999 and the six months ended April 30, 1998 contain all adjustments
which, in the opinion of management, are necessary for a fair statement
of the results for the interim periods presented. All of the
adjustments included are of a normal and recurring nature.
2. Effective fiscal 1999, the Company's fiscal year end will be the last
Sunday in October. The Company has decided to adopt reporting on a
52/53 week fiscal year. In conjunction with that change, the Company's
last fiscal quarter of 1999 will consist of sixteen weeks and all other
quarters will consist of twelve weeks. Prior to that, the Company
utilized a fiscal year which ended on the last day in October. Fiscal
quarters in 1998 consisted of three months.
The Company determined that a significant amount of estimation would be
required to restate quarterly 1998 operating results to correspond with
the twelve week quarterly reporting. Therefore, restatements of results
were not made and the quarterly results for 1999 and 1998 are not
comparable. The following table highlights the differences in time
periods:
<TABLE>
<CAPTION>
Fiscal 1999 Fiscal 1998
-------------------------------------- -------------------------------------
Time Period Days Time Period Days
----------- ---- ----------- ----
<S> <C> <C> <C> <C>
1st Quarter Nov. 2, 1998 - Jan. 24, 1999 84 Nov. 1, 1997 - Jan. 31, 1998 92
2nd Quarter Jan. 25, 1999 - Apr. 18, 1999 84 Feb. 1, 1998 - Apr. 30, 1998 89
3rd Quarter Apr. 19, 1999 - July 11, 1999 84 May 1, 1998 - July 31, 1998 92
4th Quarter July 12, 1999 - Oct. 31, 1999 112 Aug. 1, 1998 - Nov. 1, 1998 93
--- ---
364 366
=== ===
</TABLE>
3. As of April 18, 1999, the Company had no borrowings outstanding and
$1,850,000 of letters of credit placed under its bank credit facility.
The maturity date of the Company's bank credit agreement is February 28,
2001.
4. 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.
<TABLE>
<CAPTION>
Twelve Three Twenty-four Six
Weeks Months Weeks Months
Ended Ended Ended Ended
-------- -------- -------- --------
April 18, April 30, April 18, April 30,
1999 1998 1999 1998
-------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C>
Net income available to common shareholders (A) $ 2,329 $ 1,899 $ 5,361 $ 4,190
======= ======= ======= =======
Weighted average common shares outstanding:
Basic (B) 9,001 9,166 9,046 9,163
Dilutive stock options 24 97 18 86
----- ----- ----- -----
Diluted (C) 9,025 9,263 9,064 9,249
===== ===== ===== =====
Earnings per share:
Basic (A/B) $ 0.26 $ 0.21 $ 0.59 $ 0.46
===== ===== ===== =====
Diluted (A/C) $ 0.26 $ 0.21 $ 0.59 $ 0.45
===== ===== ===== =====
</TABLE>
5. 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 April 18, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------- ------------------------
Weighted Number
Average Weighted Exercisable Weighted
Remaining Average At Average
Range of Options Contractual Exercise April 18, Exercise
Exercise Prices Outstanding Life Price 1999 Price
--------------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$11.50-$11.50 100,000 7.34 years $11.50 50,000 $11.50
$12.25-$12.25 14,000 8.00 years $12.25 14,000 $12.25
$14.25-$14.25 100,000 9.46 years $14.25 -- $00.00
$14.50-$17.00 122,000 2.85 years $16.12 122,000 $16.12
$18.25-$26.00 106,000 6.50 years $20.98 81,000 $21.82
------- -------
$11.50-$26.00 442,000 6.40 years $15.69 267,000 $16.78
======= =======
</TABLE>
6. In the fourth quarter of 1994, the Company adopted a plan to dispose of 50
restaurant locations in trade areas that were 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 second quarter of
fiscal 1999 and 1998 did not include any amounts for these units.
Fifty-four stores have been disposed of through conversion, sublease,
assignment, lease termination or sale.
During the first half of 1999, $178,000 of closure and carrying related
costs were charged against the liability established for such costs. As of
April 18, 1999, the Company had $3,667,000 of reserves remaining to provide
for the disposal of three closed properties and eight subleased properties.
Units classified as subleased may return to closed status upon sublease
termination. The reserves consisted of $2,751,000 to reduce the disposal
property to net realizable value and $916,000 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. Also, the second quarters of 1998 and 1999 are not comparable
because of differences in time periods presented (see Note 2 of Notes to the
Financial Statements). The second quarter of 1998 consisted of three months or
89 days, while the second quarter of 1999 consisted of twelve weeks, or 84 days.
The fiscal first half of 1998 consisted of six months, or 181 days while the
fiscal first half of 1999 consisted of twenty-four weeks, or 168 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
---------------------------- ---------------------------
Twelve Three Twenty-four Six
weeks ended months ended weeks ended months ended
----------- ------------ ----------- ------------
April 18, April 30, April 18, April 30,
1999 1998 1999 1998
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Bakers Square
Restaurant sales $ 48,752,000 $ 49,057,000 $ 99,801,000 $101,977,000
Restaurant operating profit 4,313,000 2,869,000 9,247,000 6,469,000
Restaurant operating profit % 8.8% 5.8% 9.3% 6.3%
Divisional administrative costs 1,329,000 1,268,000 2,803,000 2,427,000
Divisional operating profit 2,984,000 1,601,000 6,444,000 4,042,000
Restaurants at quarter-end 150 150
Village Inn
Restaurant sales $ 32,338,000 $ 32,984,000 $ 64,666,000 $ 66,591,000
Restaurant operating profit 5,461,000 5,790,000 10,962,000 11,506,000
Restaurant operating profit % 16.9% 17.6% 17.0% 17.3%
Franchise income 764,000 905,000 1,480,000 1,755,000
Divisional administrative costs 980,000 1,182,000 2,073,000 2,290,000
Divisional operating profit 5,245,000 5,513,000 10,369,000 10,971,000
Restaurants at quarter-end 100 97
Consolidated
Restaurant sales $ 81,090,000 $ 82,041,000 $164,467,000 $168,568,000
Food cost % 30.4% 30.4% 31.0% 31.3%
Labor cost % 32.8% 32.9% 32.2% 32.6%
Other operating cost % 24.8% 26.1% 24.5% 25.5%
Restaurant operating profit % 12.1% 10.6% 12.3% 10.7%
Restaurant operating profit 9,774,000 8,659,000 20,209,000 17,975,000
Franchise income 764,000 905,000 1,480,000 1,755,000
Divisional general and
administrative costs 2,309,000 2,450,000 4,876,000 4,717,000
---------- ---------- ---------- ----------
Divisional operating profit 8,229,000 7,114,000 16,813,000 15,013,000
---------- ---------- ---------- ----------
Unallocated general and
administrative costs 4,430,000 3,883,000 8,081,000 7,760,000
---------- ---------- ---------- ----------
Operating profit $ 3,799,000 $ 3,231,000 $ 8,732,000 $ 7,253,000
========== ========== ========== ==========
</TABLE>
Consolidated restaurant sales decreased $950,000, or 1.2%, during the second
fiscal quarter and decreased $4.1 million, or 2.4% for the first two quarters
of fiscal 1999 compared to last year. The sales decrease was largely
attributable to five and thirteen fewer days in the second quarter and first two
quarters of 1999, respectively.
During the second quarter of fiscal 1999, sales increased 3.1% and guest counts
increased .2% on a comparable same store basis. Same store sales for Village
Inn increased .8% and Bakers Square's same store sales increased by 4.7%.
Comparable guest counts for Village Inn decreased .8% and Bakers Square
improved 1.0%. Modest menu price increases, restaurant remodel programs, and
continued improved execution at Bakers Square contributed to the improvement
in sales.
For the first half of fiscal 1999, comparable total store sales increased 3.7%,
reflective of a 5.1% increase for Bakers Square and a 1.4% increase for Village
Inn. Comparable total guest counts increased .1%, reflective of .8% increase
for Bakers Square and .6% decrease for Village Inn.
Consolidated restaurant operating profit increased by $1.1 million, or 12.9%,
and increased as a percentage of restaurant sales from 10.6% to 12.1% in the
second quarter of 1999 versus the second quarter of 1998. The second quarter
of fiscal 1999 had five fewer days than the second quarter of fiscal 1998.
Bakers Square contributed to the improvement with its percentage improving
from 5.8% to 8.8%, while Village Inn decreased by .7 percentage points over
the same quarter of 1998. The improved operating profit was due to higher
sales and increased operating efficiencies.
Consolidated restaurant operating profit increased by $2.2 million, or 12.4%
and increased as a percentage of restaurant sales from 10.7% to 12.3% for the
first two quarters of fiscal 1999 compared to 1998's first two quarters.
The first two quarters of fiscal 1999 had thirteen fewer days than the
first two quarters of fiscal 1998. Bakers Square contributed to the
improvement with its percentage improving from 6.3% to 9.3%, while
Village Inn decreased by .3 percentage points over the same quarter of 1998.
This was largely due to higher sales and increased operating efficiencies
in food, labor and other costs.
The following presents select quarterly trend data related to the operations of
Bakers Square and Village Inn:
<TABLE>
<CAPTION>
Bakers Square Village Inn
-------------------------------------- ---------------------------------------
Comparable Comparable
Comparable Store Store Comparable Store Store
Store Guest Operating Store Guest Operating
Sales Counts Margin Sales Counts Margin
---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
1998:
1st Qtr 6.5% 4.0% 6.8% 5.1% 4.9% 17.0%
2nd Qtr 7.3% 4.8% 5.8% 3.7% 2.0% 17.6%
3rd Qtr 9.9% 4.8% 8.2% 5.1% 2.0% 17.6%
4th Qtr 9.7% 4.3% 7.1% 3.4% 1.6% 17.2%
1999:
1st Qtr 5.5% .5% 9.7% 2.0% (.4%) 17.0%
2nd Qtr 4.7% 1.0% 8.8% 0.8% (.8%) 16.9%
</TABLE>
Other revenues and expense
- --------------------------
Compared to 1998's second quarter, franchise revenue in 1999's second quarter
decreased by $141,000. For the first two quarters of fiscal 1999, franchise
revenue decreased by $275,000 compared to the first two quarters of 1998.
Average daily franchise revenue decreased 10.6% in the second quarter of 1999
versus the same quarter last year largely due to increased franchise
development costs. For the first half of 1999, average daily franchise
revenue decreased 9.1%.
As a percent of sales, general and administrative expense increased slightly in
the second quarter of 1999 from the comparable 1998 second quarter. Actual
general and administrative expense increased $406,000 during the second quarter
and $480,000 year-to-date over the corresponding 1998 periods, due to higher
divisional administrative costs, higher incentive compensation, increased head
count and fees associated with the Company's Y2K system implementation
and store manager training program investment. Year-to-date, general and
administrative expense as a percent of revenues was 7.8% and 7.3% for 1999
and 1998, respectively.
Interest expense declined 41.7%, or $168,000, for the second quarter and 46.9%,
or $418,000, for the first two quarters of 1999 as compared to fiscal 1998 due
to a substantial reduction in long-term debt. Average daily interest expense
decreased 38.2% and 42.7% for the second quarter and year-to-date,
respectively, over last year due to reduced credit line borrowings.
The Company's effective tax rate for the second quarter and first half of 1999
was 36.5% representing statutory tax rates offset somewhat by the effect of
FICA tax credits.
Liquidity and capital resources
- -------------------------------
Operating cash flows increased $720,000 in the first two quarters of 1999
versus the first two quarters of 1998. The increase resulted primarily from
improved operating results and decreased working capital requirements.
As of April 18, 1999, no advances were outstanding under the Company's bank
credit facility and approximately $38.2 million was available for additional
direct advances, subject to limitations on combined balances of direct advances
and letters of credit. 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 two quarters of 1999, the Company disposed of seven
properties, one through sale, two through sublease, four through lease
termination. Also during that time, closure and carrying costs of $178,000
were charged against the liability established for such, and cash proceeds
of $690,000 were realized from the disposition of properties.
At April 18, 1999, the Company had ten closed properties remaining 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 twelve subleased properties. The
Company hopes to sell the fee properties over the next year and $1.3 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 subleased
over the next twelve to eighteen months. Cash carrying costs of approximately
$900,000 are expected to be incurred over that period. The Company expects to
sublease four 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 18, 1999, authorizations granted by the Board of Directors for the
purchase of 520,075 common shares of the Company's common stock remained
available. During the first half of fiscal 1999, 166,225 shares were
purchased. 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 $17.3 million are expected during the
remainder of the fiscal year. The level of planned expenditures may be reduced
as a result of operating conditions. 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.
The Company completed a review of its computer systems during fiscal 1997,
resulting in a decision to replace a large portion of the existing systems at a
cost of approximately $12.5 million. Approximately $7.5 million of this amount
was spent in fiscal 1998. The Company believes the new systems are Year 2000
compliant.
As of January 4, 1999, the Company implemented systems which the Company
believes are Year 2000 compliant at its corporate headquarters. These new ERP
(Enterprise Resource Planning) systems have been designed to provide the
infrastructure to support corporate and field-based systems.
A system-wide rollout to all restaurants of a new back-of-house point-of-sale
(POS) system, as well as a modification of front-of-house systems which the
Company believes to be Year 2000 compliant, began in March 1999 with a targeted
completion date of September 1, 1999. A pilot store test began in February,
1999. The Company is in the process of developing a contingency plan for
restaurant operations should the initial store testing and the rollout fall
behind schedule.
The Company is currently conducting a review of its physical facilities in
order to identify potential areas of embedded technology (heating, lighting,
fixtures, and equipment, communications systems, waste treatment, emergency
backup systems, etc.) that may not be Year 2000 compliant. The Company
believes its exposure is limited in this area and is formulating plans to
address any issues that may surface.
With respect to third parties, the Company has been in contact with and is
preparing written communications to send to all third parties considered
critical to the Company's ongoing operations. Written communication will
request written confirmation from mission critical third parties of reasonable
assurance that plans are being developed to ensure Year 2000 readiness.
Reasonable assurance will include verification that critical third-party vendors
have a plan in place for review of Year 2000 readiness for their supplier base.
To the extent that critical third-party vendors do not provide the Company with
satisfactory evidence of readiness, contingency plans will be developed and
implemented by the Company by December 31, 1999.
The Company has sent written notice to franchisees regarding the need for Year
2000 readiness. Approximately one-half of the Company's franchise restaurants
have plans in place to replace non-compliant restaurant-based systems with the
Company's new Year 2000 ready POS system. All installations are targeted to be
completed by October 1, 1999.
The Company does not believe the costs related to the Year 2000 readiness
project will be material to its financial position or results of operations.
However, the cost of the project and the date on which the Company plans to
complete the Year 2000 modifications are based on management's best estimates,
which were made utilizing numerous assumptions including the continued
availability of certain resources, third-party modification plans, and other
factors. Unanticipated failures by vendors and franchisees, as well as the
failure by the Company to execute its own remediation efforts, could have a
material adverse effect on the cost of the project and its completion date. In
addition, any such unforeseen occurrences, if combined with failures of other
third parties or public services beyond the Company's control, could have a
material adverse effect on the Company's financial condition or results of
operations. Consequently, there can be no assurance that the forward-looking
estimates contained herein will be achieved and the actual cost could differ
materially from the projections contained herein.
In the event they are needed, the Company's contingency plans, in management's
estimate, will be in place by December 31, 1999.
VICORP has guaranteed certain leases for approximately twenty-one restaurant
properties sold to others in 1986 and approximately eighteen restaurant leases
of certain franchisees and others. Certain of these guarantees may or may not
continue to be in force. Minimum future rental payments remaining under these
leases were approximately $7.3 million as of November 1, 1998. These
guarantees are included in the definition of financial instruments with
off-balance-sheet risk of accounting loss. Although the Company has been
required to take possession of one of these properties, which has since been
subleased, the Company has no reason to believe that any material liability
exists, or will exist, regarding these guarantees. 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 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, acquisition of
new computer systems, 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.
Item 5. Other Information.
Item 6: Exhibits and Reports on Form 8-K.
(a) Exhibits
(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)
May 21, 1999 By: /s/ Charles R. Frederickson
---------------------------
Charles R. Frederickson
Chairman of the Board,
President and Chief Executive Officer
May 21, 1999 By: /s/ Richard E. Sabourin
-----------------------
Richard E. Sabourin
Executive Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VICORP
RESTAURANTS, INC. BALANCE SHEETS AND STATEMENTS OF OPERATIONS AS OF APRIL 18,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> APR-18-1999
<CASH> 10,880
<SECURITIES> 0
<RECEIVABLES> 2,086
<ALLOWANCES> 0
<INVENTORY> 5,093
<CURRENT-ASSETS> 23,694
<PP&E> 305,926
<DEPRECIATION> 172,017
<TOTAL-ASSETS> 199,136
<CURRENT-LIABILITIES> 45,141
<BONDS> 4,936
0
0
<COMMON> 447
<OTHER-SE> 140,450
<TOTAL-LIABILITY-AND-EQUITY> 199,136
<SALES> 164,467
<TOTAL-REVENUES> 165,947
<CGS> 50,999
<TOTAL-COSTS> 50,999
<OTHER-EXPENSES> 93,259
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 474
<INCOME-PRETAX> 8,443
<INCOME-TAX> 3,082
<INCOME-CONTINUING> 5,361
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,361
<EPS-PRIMARY> .59
<EPS-DILUTED> .59
</TABLE>
