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 16, 2000
---------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
-----------------------------
Commission file number 0-12343
-------
VICORP Restaurants, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
COLORADO 84-0511072
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 West 48th Avenue, Denver, Colorado 80216
--------------------------------------------
(Address of principal executive offices)
(Zip Code)
(303) 296-2121
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
--------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
The registrant had 6,745,890 shares of its $.05 par value
Common Stock outstanding as of May 25, 2000.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VICORP Restaurants, Inc.
BALANCE SHEETS
<TABLE>
<CAPTION>
(in thousands) April 16, October 31,
2000 1999
--------- -----------
(unaudited)
ASSETS
Current assets
<S> <C> <C>
Cash $ 5,820 $ 33,187
Receivables 2,781 5,801
Inventory (Note 3) 6,238 9,989
Deferred income taxes 7,059 7,059
Prepaid expenses and other 1,790 1,253
-------- --------
Total current assets 23,688 57,289
-------- --------
Property and equipment, net 130,530 128,753
Deferred income taxes 29,988 33,303
Long-term receivables 852 1,204
Other assets 7,826 7,722
-------- --------
Total assets $ 192,884 $ 228,271
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt
and capitalized lease obligations $ 1,497 $ 1,582
Accounts payable, trade 16,719 18,054
Accrued compensation 7,225 7,616
Accrued taxes 9,229 11,008
Accrued insurance 2,155 2,246
Other accrued expenses 5,645 6,528
-------- --------
Total current liabilities 42,470 47,034
-------- --------
Long-term debt 3,501 40
Capitalized lease obligations 3,651 4,548
Non-current accrued insurance 2,375 2,757
Other non-current liabilities and credits 21,562 22,044
Commitments and contingencies
Shareholders' equity
Common stock, $.05 par value,20,000,000
shares authorized, 6,745,890 and 8,845,581
shares issued and outstanding 339 444
Paid-in capital 40,868 80,673
Retained earnings 78,118 70,731
------- -------
Total shareholders' equity 119,325 151,848
------- -------
Total liabilities and shareholders' equity $ 192,884 $ 228,271
======== ========
</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 Twelve Twenty-four Twenty-four
weeks weeks weeks weeks
ended ended ended ended
--------- --------- --------- ---------
April 16, April 18, April 16, April 18,
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues
Restaurant operations $ 84,376 $ 81,090 $ 170,959 $ 164,467
Franchise operations 924 764 1,536 1,480
--------- --------- --------- ---------
Total revenues 85,300 81,854 172,495 165,947
--------- --------- --------- ---------
Costs and expenses
Restaurant operations
Food 24,373 24,611 51,365 50,999
Labor 27,990 26,585 55,489 52,953
Other operating 20,599 20,120 41,062 40,306
General and administrative 6,457 6,739 12,897 12,957
--------- --------- --------- ---------
Operating Profit 5,881 3,799 11,682 8,732
Interest expense 247 235 434 474
Other income, net (132) (104) (385) (185)
--------- --------- --------- ---------
Income before income tax expense 5,766 3,668 11,633 8,443
Income tax expense 2,104 1,339 4,246 3,082
--------- --------- --------- ---------
Net income $ 3,662 $ 2,329 $ 7,387 $ 5,361
========= ========= ========= =========
Basic earnings per share $ .54 $ .26 $ .99 $ .59
========= ========= ========= =========
Diluted earnings per share $ .54 $ .26 $ .98 $ .59
========= ========= ========= =========
Weighted average common shares 6,743 9,001 7,481 9,046
========= ========= ========= =========
Weighted average common shares and
dilutive common share equivalents 6,806 9,025 7,531 9,064
========= ========= ========= =========
</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 Twenty-four
weeks weeks
ended ended
----------- -----------
April 16, April 18,
2000 1999
----------- -----------
<S> <C> <C>
Operations
Net income $ 7,387 $ 5,361
Reconciliation of net income
to cash provided by operations
Depreciation and amortization 8,201 8,799
Deferred income tax provision 3,315 2,574
Loss on disposition of assets 14 28
Other, net (792) (280)
Change in assets and liabilities:
Receivables 3,020 669
Inventory 3,751 2,408
Accounts payable, trade (1,335) 196
Other current assets and liabilities (3,681) (1,499)
Non-current accrued insurance (382) (701)
-------- --------
Cash provided by operations 19,498 17,555
-------- --------
Investing activities
Purchase of property and equipment (11,342) (14,706)
Purchase of other assets (359) (789)
Proceeds from disposition of property 1,239 512
Collection of non-trade receivables 352 981
Other, net 676 --
-------- --------
Cash used for investing activities (9,434) (14,002)
-------- --------
Financing activities
Proceeds from issuance of debt 10,750 --
Payment of debt and capitalized
lease obligations (8,188) (837)
Purchase of common stock (40,151) (2,557)
Issuance of common stock 241 86
Other, net (83) 373
-------- --------
Cash used for financing activities (37,431) (2,935)
-------- --------
Increase (decrease) in cash (27,367) 618
Cash at beginning of period 33,187 10,262
-------- --------
Cash at end of period $ 5,820 $ 10,880
======== ========
Supplemental information:
Cash paid during the period for
Interest (net of amount capitalized) $ 412 $ 484
Income taxes 426 597
</TABLE>
The accompanying notes are an integral part of the financial statements.
VICORP Restaurants, Inc.
NOTES TO FINANCIAL STATEMENTS (unaudited)
1. Basis of Presentation
---------------------
The accompanying unaudited financial statements of VICORP
Restaurants, Inc. (the "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial
statements and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. In the opinion of management, all adjustments
considered necessary (which are of a normal and recurring nature)
for fair presentation have been included. These financial
statements should be read in conjunction with the audited financial
statements and notes thereto for the year ended October 31, 1999,
filed with the Securities and Exchange Commission in the Company's
Annual Report on Form 10-K.
2. Debt
----
As of April 16, 2000, the Company had borrowings outstanding of
$3,501,000 and letters of credit of $700,000 placed in connection
with its insurance programs under its bank credit facility. The
bank credit facility was amended effective April 14, 2000 to extend
the maturity date to February 28, 2003, as well as amend certain
fee calculations and debt covenants.
3. Inventory
---------
Inventory consisted of the following (in thousands):
<TABLE>
<CAPTION>
April 16, October 31,
2000 1999
--------- -----------
<S> <C> <C>
Inventory at production facilities
and third party storage locations:
Raw materials $2,394 $2,401
Finished goods 1,616 5,192
----- -----
4,010 7,593
Restaurant inventory 2,228 2,396
----- -----
$6,238 $9,989
===== =====
</TABLE>
4. Earnings per Share
------------------
Basic earnings per share is calculated using the average number
of common shares outstanding. Diluted earnings per share is computed
on the basis of the average number of common shares outstanding plus
the effect of potentially dilutive common stock equivalents using the
treasury stock method.
Weighted average common shares outstanding for the twelve
weeks ended April 16, 2000 and April 18, 1999 are as follows:
<TABLE>
<CAPTION>
Twelve Twelve
weeks ended weeks ended
April 16, 2000 April 18, 1999
-------------- --------------
<S> <C> <C>
Basic 6,743,902 9,001,262
Effect of dilutive common stock equivalents 61,924 23,820
--------- ---------
Diluted 6,805,826 9,025,082
========= =========
</TABLE>
Weighted average common shares outstanding for the twenty-four weeks ended
April 16, 2000 and April 18, 1999 are as follows:
<TABLE>
<CAPTION>
Twenty-four Twenty-four
weeks ended weeks ended
April 16, 2000 April 18, 1999
-------------- --------------
<S> <C> <C>
Basic 7,480,921 9,046,061
Effect of dilutive common stock equivalents 49,880 18,323
--------- ---------
Diluted 7,530,801 9,064,384
========= =========
</TABLE>
5. Tender Offer
------------
On November 23, 1999, the Company commenced a tender offer to
purchase up to 2,000,000 shares of the outstanding common stock
for $19.00 per share. The tender offer concluded on December 22,
1999, and the Company funded the transaction on December 29, 1999
whereby 2,000,000 shares were purchased.
6. Operating Segment
-----------------
The Company has three reportable segments; Village Inn, Bakers
Square and Franchising. All amounts not attributed to segments
relate to administrative functions and other non-reportable
segments. Certain asset balances at October 31, 1999 were
reclassified between the Company's segments. Summarized financial
information concerning the Company's reportable segments is shown
in the following table (in thousands).
<TABLE>
<CAPTION>
Bakers Square Village Inn Franchising Other Total
------------- ----------- ----------- ----- -----
<S> <C> <C> <C> <C> <C>
Twelve weeks ended April 16, 2000
Net Sales $ 49,104 $ 35,272 $ -- $ -- $ 84,376
Operating profit/(loss) 5,178 6,236 924 (6,457) 5,881
Twelve weeks ended April 18, 1999
Net Sales $ 48,752 $ 32,338 $ -- $ -- $ 81,090
Operating profit/(loss) 4,313 5,461 764 (6,739) 3,799
Twenty-four weeks ended April 16, 2000
Net Sales $102,129 $ 68,830 $ -- $ -- $170,959
Operating profit/(loss) 11,207 11,836 1,536 (12,897) 11,682
Twenty-four weeks ended April 18, 1999
Net Sales $ 99,801 $ 64,666 $ -- $ -- $164,467
Operating profit/(loss) 9,247 10,962 1,480 (12,957) 8,732
Total assets
April 16, 2000 $ 80,711 $ 46,317 $ 3,753 $ 62,103 $192,884
October 31, 1999 85,758 43,099 5,137 94,277 228,271
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
- --------
VICORP Restaurant, Inc. operates family style restaurants under the
names "Bakers Square" and "Village Inn," and franchises restaurants
under the Village Inn brandname. At April 16, 2000, the Company
operated two hundred fifty-five Company-owned restaurants in thirteen
states. Of the two hundred fifty-five Company-owned restaurants, one
hundred forty-nine were Bakers Squares and one hundred six were Village
Inns, with an additional one hundred fifteen franchised Village Inn
restaurants in twenty-one states. The Company-owned and franchised
restaurants are concentrated in Arizona, California, Florida, the Rocky
Mountain region and the Midwest. The Company operates a pie
manufacturing division to support Bakers Square, which operates under
the name "VICOM". VICOM has three production facilities located in
Santa Fe Springs, California, Oak Forest, Illinois and the recently
acquired Chaska, Minnesota plant. The Company operated the Chaska,
Minnesota production facility under an agreement with Pies, Inc. for a
term of five months and purchased the facility at the completion of the
operating term on February 1, 2000 for $2,600,000.
Results of Operations
- ---------------------
The Company's quarterly financial information is subject to seasonal
fluctuation and may not be indicative of annual results.
The following table sets forth selected operating statistics by
concept (in thousands, except restaurants at quarter-end).
<TABLE>
<CAPTION>
Second Quarter Year-to-Date
-------------------------- ----------------------------
Twelve Twelve Twenty-four Twenty-four
weeks ended weeks ended weeks ended weeks ended
----------- ----------- ----------- -----------
April 16, April 18, April 16, April 18,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Bakers Square
Restaurant sales $ 49,104 $ 48,752 $ 102,129 $ 99,801
Restaurant operating profit 5,178 4,313 11,207 9,247
Restaurant operating profit % 10.5% 8.8% 11.0% 9.3%
Divisional administrative costs<F1> 1,126 1,329 2,226 2,803
Divisional operating profit 4,052 2,984 8,981 6,444
Company operated restaurants 149 150
Village Inn
Restaurant sales $ 35,272 $ 32,338 $ 68,830 $ 64,666
Restaurant operating profit 6,236 5,461 11,836 10,962
Restaurant operating profit % 17.7% 16.9% 17.2% 17.0%
Franchise income 924 764 1,536 1,480
Divisional administrative costs 1,051 980 2,137 2,073
Divisional operating profit 6,109 5,245 11,235 10,369
Company operated restaurants 106 100
Franchise operated restaurants 115 110
Consolidated
Restaurant sales $ 84,376 $ 81,090 $ 170,959 $ 164,467
Food cost % 28.9% 30.4% 30.0% 31.0%
Labor cost % 33.2% 32.8% 32.5% 32.2%
Other operating cost % 24.4% 24.8% 24.0% 24.5%
Restaurant operating profit % 13.5% 12.0% 13.5% 12.3%
Restaurant operating profit 11,414 9,774 23,043 20,209
Franchise income 924 764 1,536 1,480
Divisional general and
administrative costs 2,177 2,309 4,363 4,876
---------- --------- -------- ---------
Divisional operating profit 10,161 8,229 20,216 16,813
---------- --------- -------- ---------
Unallocated general and
administrative costs<F1> 4,280 4,430 8,534 8,081
---------- --------- -------- ---------
Operating profit $ 5,881 $ 3,799 $ 11,682 $ 8,732
=========== ========== ========== ==========
</TABLE>
<F1> Certain executive compensation, which had been accounted for as
Bakers Square divisional administrative costs in fiscal 1999, is
accounted for as unallocated general and administrative costs in fiscal
2000.
Twelve Weeks Ended April 16, 2000 Compared to the Twelve Weeks Ended
April 18, 1999
Restaurant Sales
- ----------------
Consolidated restaurant sales increased 4.1% or $3,286,000 for the
quarter compared to the quarter ended April 18, 1999. The Company
experienced an overall same store sales increase of 1.4% over the prior
year quarter. This increase is notable in light of the fact that the
Easter holiday, which fell in the second quarter of 1999, will fall in
the third quarter of fiscal 2000. The Company's stores experience a
significant increase in volume over this holiday weekend.
During the second quarter of fiscal 2000, the Bakers Square concept
captured an additional $352,000 or .7% in sales compared to the prior
year quarter. Same store sales and same store guest counts increased
1.0% and 1.5%, respectively.
Overall, Village Inn sales increased by 9.1% or $2,934,000. This is a
result of the Company operating six additional Village Inn restaurants
during the second quarter of 2000, compared to the second quarter of
1999 (subsequent to April 18, 1999, ten new restaurants were opened,
three Company-owned restaurants were converted to franchise operations
and one restaurant was closed). Village Inn same store sales increased
2.0% and same store customer counts decreased 1.0% over the prior year
quarter. The decrease in same store customer counts is partially
attributable to the initial impact of opening new stores in established
market areas. Of the ten new Village Inn restaurants opened since April
18, 1999, five were opened during the current fiscal year, including
four during the second quarter of fiscal 2000, and the Company expects
to open three additional units during the fourth quarter.
The following table sets forth selected quarterly statistics related to
Bakers Square and Village Inn operations:
<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>
2000:
1st Qtr 3.5% 1.6% 11.4% (0.2%) (3.5%) 16.7%
2nd Qtr 1.0% 1.5% 10.5% 2.0% (1.0%) 17.7%
1999:
1st Qtr 5.5% 0.5% 9.7% 2.0% (0.4%) 17.0%
2nd Qtr 4.7% 1.0% 8.8% 0.8% (0.8%) 16.9%
3rd Qtr 5.6% 2.6% 10.6% 0.5% (1.8%) 17.1%
4th Qtr 3.0% 1.3% 9.9% 0.1% (3.2%) 16.3%
</TABLE>
Restaurant Operating Profit
- ---------------------------
Consolidated restaurant operating profit increased 16.8% or $1,640,000
for the quarter compared to the quarter ended April 18, 1999.
Bakers Square restaurant operating profit increased 20.1% or $865,000
over the prior year quarter, while restaurant operating profit as a
percent of sales increased to 10.5% from 8.8% for the quarter ended
April 18, 1999. The significant operating profit expansion was due to
a 1.0% increase in same stores sales, as well as effective food cost
and other operating expense management at the store-level.
Village Inn restaurant operating profit increased 14.2% or $775,000 as
a result of the Company operating six additional stores in the second
quarter of 2000 versus the quarter ended April 18, 1999. Restaurant
operating profit as a percent of sales increased to 17.7% from 16.9%
due to a same store sales increase of 2.0% and a .8% decrease in food
costs as a percentage of restaurant sales.
Franchise Operations
- --------------------
Net franchise income increased 20.9% or $160,000 between the quarter
ended April 16, 2000 and the quarter ended April 18, 1999, primarily as
a result of increased royalties.
General and Administrative Expenses
- -----------------------------------
General and administrative expenses for the second quarter of 2000 were
$6,457,000 compared to $6,739,000 during the second quarter of 1999.
The $282,000 or 4.2% decrease is primarily attributable to the non-
reoccurrence of Year 2000 related expenditures. General and
administrative expense as a percent of restaurant sales declined
favorably to 7.7% compared to 8.3% for the prior year quarter.
Other Income
- ------------
Other income for the quarter ended April 16, 2000 increased $28,000
from the quarter ended April 16, 1999.
Interest Expense
- ----------------
Interest expense increased $12,000 due to the Company maintaining an
average draw on the line of credit of $5,323,000 compared to $0 for the
prior year quarter. The remaining interest expense represents interest
incurred on approximately fifty capital leases. Interest expense in the
amount of $15,000 was capitalized for the quarter ended April 16, 2000
under the requirements of Statement of Financial Accounting Standards
("SFAS") No. 34, "Capitalization of Interest Cost."
Effective Tax Rate
- ------------------
The Company's effective tax rate for the quarter ended April 16, 2000
and the quarter ended April 18, 1999 was 36.5%. A significant portion
of the provision for income taxes represents the non-cash utilization
of deferred tax assets established for remaining net operating loss
carryforwards. Taxes currently payable continue to be limited to
Federal alternative minimum taxes and state income taxes.
Twenty-four Weeks Ended April 16, 2000 Compared to the Twenty-four
Weeks Ended April 18, 1999
Restaurant Sales
- ----------------
Consolidated restaurant sales increased 4.0% or $6,492,000 for the
twenty-four weeks ended April 16, 2000 compared to the twenty-four
weeks ended April 18, 1999. The Company experienced an overall same
store sales increase of 1.8% over the prior year period. This increase
is notable in light of the fact that the Easter holiday, which fell in
the second quarter of 1999, will fall in the third quarter of fiscal
2000. The Company's stores experience a significant increase in volume
over this holiday weekend.
Bakers Square restaurant sales increased $2,328,000 or 2.3% as a result
of a 2.4% increase in same store sales for the twenty-four weeks ended
April 16, 2000 compared to the twenty-four weeks ended April 18, 1999.
The Company was successful in capturing an additional $1,975,000 in
sales during the key holiday pie season in the first quarter of 2000
compared to the first quarter of 1999. The year to date increase was
largely driven by a 1.6% increase in same store guest counts.
During the twenty-four weeks ended April 16, 2000 compared to the
twenty-four weeks ended April 18, 1999, Village Inn sales increased by
6.4% or $4,164,000 due to the Company operating six additional Village
Inn restaurants in the current period (subsequent to April 18, 1999,
ten new restaurants were opened, three Company-owned restaurants were
converted to franchise operations and one restaurant was closed).
Village Inn same store sales increased .9% and same store customer
counts decreased 2.2% over the prior year period. The decrease in same
store customer counts is partially attributable to the initial impact
of opening new stores in established market areas. Of the ten new
Village Inn restaurants opened since April 18, 1999, five were opened
during the current fiscal year, including four during the second
quarter of fiscal 2000, and the Company expects to open three
additional units during the fourth quarter.
The following table sets forth selected year-to-date statistics related
to Bakers Square and Village Inn operations:
<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>
2000: 2.4% 1.6% 11.0% .9% (2.2%) 17.2%
1999: 5.1% .8% 9.3% 1.4% (.6%) 17.0%
</TABLE>
Restaurant Operating Profit
- ---------------------------
Consolidated restaurant operating profit increased 14.0% or $2,834,000
for the twenty-four weeks ended April 16, 2000 compared to the twenty-
four weeks ended April 18, 1999.
Bakers Square restaurant operating profit for the twenty-four weeks
ended April 16, 2000 increased 21.2% or $1,960,000 over the twenty-four
weeks ended April 18, 1999, while restaurant operating profit as a
percent of sales increased to 11.0% from 9.3%. The significant
improvement of Bakers Square restaurant operating profit was driven by
a 2.4% increase in same stores sales, improved execution during the
first quarter's key holiday pie season and effective food cost and
other operating expense management at the store-level.
Village Inn restaurant operating profit for the twenty-four weeks ended
April 16, 2000 increased 8.0% or $874,000 due to the Company operating
six additional restaurants in fiscal 2000 and improved cost management
at the store-level. Restaurant operating profit as a percent of sales
increased to 17.2% from 17.0% for the twenty-four weeks ended April 16,
2000 versus the twenty-four weeks ended April 18, 1999.
Franchise Operations
- --------------------
Net franchise income increased 3.8% or $56,000 between the twenty-four
weeks ended April 16, 2000 and the twenty-four weeks ended April 18,
1999 primarily as a result of the overall addition of five franchisee
restaurants (subsequent to April 18, 1999, five new franchisee
operations were opened, three Company-owned restaurants were converted
to franchisee operations and three franchisee operations were terminated).
General and Administrative Expenses
- -----------------------------------
General and administrative expenses for the twenty-four weeks ended
April 16, 2000 were $12,897,000 compared to $12,957,000 during the
twenty-four weeks ended April 18, 1999. The $60,000 or .5% decrease is
primarily attributable to the non-reoccurrence of Year 2000 related
expenditures. Overall, general and administrative expenses decreased
favorably as a percent of restaurant sales to 7.5% for the twenty-four
weeks ended April 16, 2000 compared to 7.9% for the same period in
fiscal 1999.
Other Income
- ------------
Other income for the twenty-four weeks ended April 16, 2000 increased
$200,000 or 108.1% from the prior year period, due primarily to
interest earned on the $28,700,000 in net proceeds received from the
sale leaseback transaction completed on October 28, 1999. The proceeds
were used to fund the tender offer for 2,000,000 shares at $19.00 per
share on December 29, 1999.
Interest Expense
- ----------------
Interest expense declined 8.4%, or $40,000 between the twenty-four
weeks ended April 16, 2000 and the twenty-four weeks ended April 18,
1999 primarily due to twelve capital leases being paid in full during
1999, offset by interest incurred on line of credit draws and
capitalized interest. The average line of credit draw for the twenty-
four week period of fiscal 2000 was $3,423,000 compared to $0 for the
same period of the prior year. Interest expense in the amount of
$37,000 was capitalized during the current period under the
requirements of SFAS 34, "Capitalization of Interest Cost."
Effective Tax Rate
- ------------------
The Company's effective tax rate for the twenty-four weeks ended April
16, 2000 and the twenty-four weeks ended April 18, 1999 was 36.5%. A
significant portion of the provision for income taxes represents the
non-cash utilization of deferred tax assets established for remaining
net operating loss carryforwards. Taxes currently payable continue to
be limited to Federal alternative minimum taxes and state income taxes.
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operating activities for the twenty-four weeks
ended April 16, 2000 was $19,498,000 compared with $17,555,000 for the
twenty-four weeks ended April 18, 1999. The $1,943,000 increase was
primarily due to a $2,026,000 or 37.8% increase in net income, as well
as effective working capital management.
The Company's investing activities for the twenty-four weeks ended
April 16, 2000 utilized $9,434,000 compared with $14,002,000 for the
twenty-four weeks ended April 18, 1999. The $4,568,000 decrease was
primarily attributable to a $3,364,000 reduction in capital
expenditures. Management expects to invest approximately $29,600,000
during fiscal 2000 in developing eight to ten Company-operated
locations (including five Bakers Square locations in the Chicago area)
and completing several remodel projects on existing restaurants.
During the twenty-four weeks ending April 16, 2000, five new Village
Inn restaurants were opened; one in Colorado, two in Arizona, one in
Nebraska, and one in Iowa. The Company also purchased the Chaska
facility for $2.6 million as previously noted.
The Company's financing activities for the twenty-four weeks ended
April 16, 2000 utilized $37,431,000 compared with $2,935,000 for the
twenty-four weeks ended April 18, 1999. The $34,496,000 increase was
as a result of the tender offer commenced on November 23, 1999 to
purchase up to 2,000,000 shares of the outstanding common stock at
$19.00 per share. The tender offer concluded on December 22, 1999, and
the Company funded the transaction on December 29, 1999 whereby
2,000,000 shares were purchased. The transaction was funded using the
$28,700,000 in net proceeds received from the sale leaseback
transaction completed on October 28, 1999, as well as a $4,000,000 draw
on the credit facility. An additional 115,000 shares were repurchased
subsequent to the tender offer under the Company's share repurchase
plan. As of April 16, 2000, 338,375 common shares remained available
for purchase under the Board of Directors authorizations. Future
purchases under the authorizations may be made from time to time in the
open market or through privately negotiated transactions and will be
dependent upon various business and financial considerations.
On December 19, 1997, the Company executed an amended and restated
credit agreement, which provides for an available credit limit of
$40,000,000 in the aggregate with a sublimit of $10,000,000 on
letters of credit. The bank credit facility was amended effective
April 14, 2000 to extend the maturity date to February 28, 2003,
as well as amend certain fee calculations and debt covenants.
As of April 16, 2000, the Company had $3,501,000 outstanding under
the Company's bank credit facility and $700,000 in letters of credit
issued in connection with its insurance programs.
Cash and cash equivalents at April 16, 2000 equaled $5,820,000. The
Company believes anticipated cash flow from operations, as well as the
availability of funds under the $40,000,000 line of credit, and other
financing sources will provide sufficient capital to meet current
foreseeable cash needs, including working capital and capital
expenditures.
At April 16, 2000, the Company had thirty properties which it was
seeking to dispose of, six of these were idle and twenty-four were
subleased. The Company owns five of the properties in fee and is the
prime lessee on twenty-five leases (four of the fee properties are
idle). The Company estimates potential proceeds of $938,000 on the
disposal of the fee properties. The two remaining idle properties will
be disposed of through lease terminations within a year. At April 16,
2000, loss reserves previously established for the disposal of these
properties had a remaining balance of $3,362,000, including $1,638,000
to reduce the properties to realizable value and $1,724,000 to provide
for carrying costs and sublease losses. During the twenty-four weeks
ended April 16, 2000, closure and carrying costs of $99,000 were
charged against the liability. At present, the Company anticipates the
reserves will be adequate to cover the future losses and operating
costs for these properties.
During the first quarter of 2000, the Company sold its Denver bakery
facility yielding cash proceeds of $690,000. A resulting loss of
$614,000 was applied against the property disposal reserve previously
established for this purpose.
The Company guaranteed certain leases for twenty-five restaurant
properties sold in 1986 and sixteen restaurant leases of certain
franchisees. Minimum future rental payments remaining under these
leases were $5,300,000 as of October 31, 1999. These guarantees are
included in the definition of financial instruments with off-balance-
sheet risk of accounting loss. The Company has no reason to believe
that any material liability exists and believes it is impracticable to
estimate the fair value of these financial guarantees (e.g., amounts
the Company could pay to remove the guarantees).
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 and Bakers Square restaurant
properties, repurchase of common stock, and acquisition of restaurant
concerns in the family style segment.
Forward-Looking Statements
- --------------------------
Certain matters discussed in this report are "forward-looking
statements" intended to qualify for the safe harbors from liability
established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such
because the context of the statement will include words such as the
Company "believes," "anticipates," "expects" or words of similar
import. Similarly, statements that describe the Company's future
plans, objectives or goals are also forward-looking statements. Such
forward-looking statements are subject to 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.
New Accounting Pronouncements
- -----------------------------
In June 1999, the Financial Accounting Standards Board issued SFAS No.
137 which delayed the effective date of SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", until fiscal quarters
of fiscal years beginning after June 15, 2000. SFAS 133 requires all
derivatives to be recognized as assets or liabilities on the balance
sheet and measured at fair value. Changes in the fair value of
derivatives should be recognized in either net income or other
comprehensive income, depending on the designated purpose of the
derivative. At present the Company is investigating the effect the
adoption of this statement will have on the Company's results of
operations, financial position and cash flows, if any.
Item 1. Legal Proceedings
With respect to Kirk v. VICORP Restaurants, Inc., Case No. BC-198202
commenced in the Superior Court of Los Angeles County, California,
reported in the Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1999, on February 16, 2000, Kirk's motion for
class certification was denied. Kirk filed an appeal of the denial on
April 14, 2000. The case has been stayed pending the appeal.
With respect to Ontiveros v. VICORP Restaurants, Inc., Case No. BC-
202962 commenced in the Superior Court of Los Angeles County,
California, reported in the Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1999, on January 3, 2000, the Court
issued an order staying the case under the primary jurisdiction
doctrine.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Material contracts
Fourth Amendment to Amended and Restated Credit Agreement
Stock Option Agreement for Joseph F. Trungale dated May 8, 2000
(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 26, 2000 By: /s/ Joseph F. Trungale
-----------------------
Joseph F. Trungale
Chief Executive Officer and President
May 26, 2000 By: /s/ Richard E. Sabourin
-----------------------
Richard E. Sabourin
Executive Vice President and
Chief Financial Officer
April 14, 2000
VICORP Restaurants, Inc.
400 West 48th Avenue
Denver, Colorado 80216
Attention: Stanley Ereckson, Jr.
Re: Fourth Amendment to Amended and Restated Credit Agreement
---------------------------------------------------------
Ladies and Gentlemen:
Reference is made to that certain $40,000,000 Amended and
Restated Credit Agreement dated as of December 19, 1997 (as
amended, the "Agreement"), among VICORP Restaurants, Inc. (the
"Borrower"), the financial institutions named therein as lenders
(the "Lenders"), and Bank of America, N.A., as Agent for the
Lenders (the "Agent"). Unless otherwise indicated, all
capitalized terms herein are used as defined in the Agreement.
Whereas, the Borrower has requested various modifications to
the Agreement; and
Whereas, the Lenders are willing to make such modifications,
subject to the terms and conditions set forth herein;
Now, therefore and for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the
Borrower, the Agent and the Lenders agree as follows:
1. Commitment Fee. The definition of "Applicable
Commitment Fee" in Section 1.01 of the Agreement is hereby
amended to read in its entirety as follows:
"Applicable Commitment Fee" means, on any day, the
commitment fee percentage based on the ratio of Adjusted
Debt to Adjusted Consolidated EBITDAR, calculated as set
forth in the definition of "Applicable Margin", as follows:
<TABLE>
<CAPTION>
Applicable
Ratio of Adjusted Debt to Commitment
Adjusted Consolidated EBITDAR Fee
Percentage
-------------------------------- ----------
<S> <C>
Less than 2.00 to 1.00 0.225%
Greater than or equal to 2.00 to 0.250%
1.00, but less than 2.75 to 1.00
Greater than or equal to 2.75 to 0.350%
1.00, but less than 3.25 to 1.00
Greater than or equal to 3.25 to 0.400%
1.00
</TABLE>
2. Applicable Margin. The definition of "Applicable Margin" in
Section 1.01 of the Agreement is hereby amended to read in its
entirety as follows:
"Applicable Margin" means, on any day, the interest margin
over the Eurodollar Rate, based on a ratio of Adjusted Debt to
Adjusted Consolidated EBITDAR, as follows:
<TABLE>
<CAPTION>
Applicable
Margin for
Ratio of Adjusted Debt to Eurodollar
Adjusted Consolidated EBITDAR Rate
Advances
-------------------------------- ----------
<S> <C>
Less than 2.00 to 1.00 0.75%
Greater than or equal to 2.00 to 1.00%
1.00, but less than 2.75 to 1.00
Greater than or equal to 2.75 to 1.25%
1.00, but less than 3.25 to 1.00
Greater than or equal to 3.25 to 1.50%
1.00
</TABLE>
For purposes of determining the Applicable Margin, the ratio
shall be calculated quarterly as of the last day of the fiscal
quarter for which the most recent quarterly financial statements
have been delivered pursuant to Section 7.01(b), and shall apply
to all Advances made on or after the date such financial
statements are delivered, until recalculated in accordance with
this paragraph. If Borrower fails to furnish Agent any such
financial statements (or the related compliance certificate) when
required pursuant to Section 7.02(b), then the highest applicable
margin identified above shall apply to all subsequent Advances
until Borrower furnishes the required financial statements and
compliance certificate.
3. Maturity Date. The definition of "Maturity Date" in
Section 1.01 of the Agreement is hereby amended to read in its
entirety as follows:
"Maturity Date" means February 28, 2003.
4. Rate Adjustment Periods. Section 3.06(d) of the
Agreement and the definitions of "Rate Adjustment Period" and
"Required Rate Adjustment Level" in Section 1.01 of the Agreement
are hereby deleted.
5. Schedule of Capital Expenditures. Section 7.01(b)(ii)
of the Agreement is hereby amended by adding the following
language at the end of such Section:
", together with a Schedule of Consolidated Capital
Expenditures for such fiscal year satisfactory to Agent,
detailing the breakdown between (A) maintenance capital
expenditures in connection with the replacement or
restoration of assets used in calculating the minimum fixed
charge coverage ratio under Section 7.03(d), and (B) non-
maintenance capital expenditures for Permitted Asset
Acquisitions and other expenditures; provided that the
Schedule of Consolidated Capital Expenditures for fiscal
year 1999 shall not be due until May 31, 2000;"
6. Use of Proceeds. Section 7.01(j) of the Agreement is
hereby amended to read in its entirety as follows:
(j) Use of Proceeds. The Borrower will use the
proceeds of the Advances only to repay its obligations under
the NationsBank Agreement, for working capital, capital
expenditures and other general corporate purposes (including
the purchase of shares of the Borrower's capital stock
pursuant to the Tender Offer or as otherwise permitted under
this Agreement), and for Permitted Asset Acquisitions.
7. Restricted Payments. Section 7.02(c) of the Agreement
is hereby amended by adding the following to the end of the last
sentence of such Section:
", or if, immediately after giving effect to such proposed
action, the ratio of Adjusted Debt to Adjusted Consolidated
EBITDAR would exceed 3.25 to 1.00."
8. Dispositions of Assets.
(a) Section 7.02(h)(i) of the Agreement is hereby
amended by adding the phrase underlined below, so that such
subsection shall read in its entirety as follows:
"(i) Sell, lease, assign, transfer or otherwise
dispose of any real property (or enter into an
agreement to do any of the foregoing), or permit any of
its subsidiaries to sell, lease, assign, transfer or
otherwise dispose of any real property (or enter into
an agreement to do any of the foregoing), except for
the properties described on Schedule 7.02(h) (listing
properties held for sale as of December 19, 1997) and
up to six additional non-operating properties in any
fiscal year, without the prior written consent of all
of the Lenders; or"
(b) Section 7.02(h) of the Agreement is hereby further
amended by adding the following to the end of such Section:
"The foregoing limitations on dispositions of assets
shall not be deemed to restrict the sale and leaseback
by Borrower of the 12 properties developed or acquired
in 1998 and 1999 which are listed on Schedule 7.02(h)-A
and new properties developed or acquired in 2000 and
thereafter."
(c) The Agreement is hereby further amended by adding
a new Schedule 7.02(h)-A (listing new properties developed
in 1998, 1999 and 2000 which are eligible for sale-leaseback
transactions) in the form attached to this Amendment.
9. Restrictions on Operating Leases. Section 7.02(j) of
the Agreement is hereby amended by replacing "$20,000,000" with
"$25,000,000."
10. Loans, Advances, Investments. The final clause of
Section 7.02(k) of the Agreement is hereby amended to read in its
entirety as follows:
"and (xi) repurchases of the Borrower's capital stock
pursuant to the Tender Offer or as otherwise permitted under
this Agreement."
11. Minimum Consolidated Tangible Net Worth. Section
7.03(b) of the Agreement is hereby deleted in its entirety and
replaced with "[Reserved]."
12. Minimum Fixed Charge Coverage Ratio. Section 7.03(d)
of the Agreement is hereby amended to read in its entirety as
follows:
(d) Minimum Fixed Charge Coverage Ratio. Commencing
with the Borrower's fiscal year 2000, maintain a ratio of
(i) Adjusted Consolidated EBITDAR minus cash income tax
payments and minus maintenance capital expenditures made by
the Borrower and its subsidiaries in connection with the
replacement or restoration of assets to (ii) the sum of
Consolidated Fixed Charges plus the cash value of any
dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on
account of any shares of capital stock of the Borrower made
by the Borrower or any of its subsidiaries, determined in
each case as of the last day of each fiscal quarter, of at
least 1.25 to 1. For the first, second and third fiscal
quarters of the Borrower's fiscal year 2000, such ratio
shall be calculated for the quarter, two quarters, or three
quarters of fiscal year 2000 ending on such date.
Thereafter, such ratio shall be calculated for the four
quarters ending on such date.
13. Conditions. This letter shall not be effective if a
material adverse change has occurred and until each of the
following items have occurred or been delivered to the Agent:
(a) this letter signed by the Borrower and each
Lender;
(b) satisfactory review by the Lenders of the
Borrower's 1999 audited financial statements, current long-
range plan and such other information as the Lenders may
reasonably request;
(c) payment by the Borrower to the Agent for the
benefit of the Lenders, in accordance with their respective
Pro Rata Shares, of an amendment fee in the amount of
$18,000;
(d) payment by the Borrower to the Agent of all other
amounts due under theexisting Fee Letter between the
Borrower and the Agent; and
(e) such other documents, if any, as the Agent may
reasonably request.
14. No Waiver of Defaults. Except as expressly set forth
above, the Borrower agrees that this letter does not constitute a
waiver of, or a consent to, any present or future violation of or
noncompliance with any provision of any Loan Document, or a
waiver of the Agent's and the Lenders' right to insist upon
future compliance with each term, covenant, condition and
provision of the Loan Documents, and the Loan Documents shall
continue to be binding upon, and inure to the benefit of, the
Borrower, the Agent and the Lenders and their respective
successors and assigns.
15. Representations and Warranties. The Borrower
represents and warrants to the Agent and the Lenders that (a) the
execution and delivery of this letter have been authorized by all
requisite corporate action on its part and will not violate its
organizational documents, (b) the representations and warranties
in each Loan Document to which it is a party are true and correct
in all material respects on and as of the date hereof as though
made on and as of the date hereof (except to the extent that (i)
such representations and warranties speak to a specific date or
(ii) the facts on which such representations and warranties are
based have been changed by transactions contemplated by the Loan
Documents or this letter), and (c) it is in full compliance with
all covenants and agreements contained in each Loan Document to
which it is a party.
16. Loan Document; Effect. This letter is a Loan Document,
and, therefore, this letter is subject to the applicable
provisions of Article IX of the Agreement, all of which
applicable provisions are incorporated herein by reference the
same as if set forth herein verbatim. Except as affected by this
letter, the Loan Documents are unchanged and continue in full
force and effect. The Borrower agrees that all Loan Documents to
which it is a party remain in full force and effect and continue
to evidence its legal, valid, and binding obligations enforceable
in accordance with their terms (as the same are affected by this
letter). The Borrower hereby releases the Agent and the Lenders
from any liability for actions or failures to act in connection
with the Loan Documents prior to the date hereof. This letter
shall be binding upon and inure to the benefit of each of the
undersigned and their respective successors and permitted
assigns.
17. Multiple Counterparts. This letter may be executed in
more than one counterpart, each of which when so executed shall
be deemed to be an original, but all of which when taken together
shall constitute one and the same instrument.
18. Fees and Expenses. The Borrower agrees to pay the
reasonable fees and expenses of counsel to the Agent rendered in
connection with the preparation, negotiation and execution of
this letter.
19. Final Agreement. THE LOAN DOCUMENTS, AS AMENDED
HEREBY, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL
AGREEMENTS BETWEEN THE PARTIES.
If you are in agreement with the foregoing, please so
indicate by executing the enclosed counterparts of this letter in
the spaces provided below and returning them to the Agent to the
attention of the officer named below.
Very truly yours,
BANK OF AMERICA, N.A. U.S. BANK NATIONAL ASSOCIATION
By:/s/ Richard G. Parkhurst By:/s/ Andrea C. Koeneke
------------------------ ---------------------
Richard G. Parkhurst, Jr. Andrea C. Koeneke
Managing Director Vice President
AGREED AND ACCEPTED:
VICORP RESTAURANTS, INC.
By:/s/ Michael R. Kinnen
---------------------
Michael R. Kinnen
Treasurer
SCHEDULE 7.02(h)-A
PROPERTIES DEVELOPED OR ACQUIRED IN 1998 AND 1999
WHICH ARE ELIGIBLE FOR SALE-LEASEBACK TRANSACTIONS
--------------------------------------------------
Village Inn Restaurants
- -----------------------
9050 E. Hampden Ave.
Denver, CO 80231
1430 Harrison Road
Colorado Springs, Colorado 80906
6370 South Parker Road
Aurora, Colorado 80016
5239 Elmore Avenue
Davenport, Iowa 52807
1780 West 5600 South
Roy, Utah 84067
1906 Rue Street
Council Bluffs, Iowa 51503
7837 Dodge Street
Omaha, Nebraska 68114
7101 S. 27th Street
Lincoln, Nebraska 68114
12622 W. Ken Caryl
Littleton, CO 80127
Bakers Square Restaurants
- -------------------------
1881 West Highway 36
Roseville, Minnesota 55113
12608 Wayzata Boulevard
Minnetonka, Minnesota 55305
2110 S. Harbor Blvd.
Anaheim, CA 92802
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Option Agreement")
dated as of May 8, 2000, provides for the grant of stock options
by VICORP Restaurants, Inc., a Colorado corporation (the
"Company"), to Joseph F. Trungale, an employee of the Company
(the "Optionee").
The Company has determined that the Optionee is to be
granted options to buy shares of the Company's common stock, par
value $.05 per share ("Common Stock"), on the terms and subject
to the conditions hereinafter provided.
I. NUMBER OF SHARES, OPTION PRICE, AND VESTING.
-------------------------------------------
A. The Company hereby grants to the Optionee non-
qualified options (the "Options") to purchase 100,000 shares of
Common Stock for the exercise price of $20.00 per share. The
Optionee shall not have any rights as a shareholder with respect
to the shares unless and until one or more certificates for such
shares are delivered to him upon the exercise of one or more of
the Options.
B. The options shall vest and become exercisable
according to the following schedule:
33,333 shares vest on May 8, 2000
33,333 shares vest on May 8, 2001
33,334 shares vest on May 8, 2002
C. In the event that the outstanding shares of the
Company's common stock are increased or decreased or changed into
or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation, through
reorganization, merger, consolidation, liquidation,
recapitalization, stock split up, or a combination of shares or
dividends payable in stock of the class which is subject to this
Option Agreement, appropriate adjustment in the number of shares
subject to the Options shall be made so that the proportionate
number of shares subject to the Options shall be maintained as
before the occurrence of such event and an appropriate adjustment
shall be made to the exercise price.
D. Upon a change of control of the Company, all of
the Options shall immediately vest and become exercisable in
full. Change in control for purposes of this Agreement shall be
deemed to have occurred if:
1. Any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended) becomes the beneficial owner, directly
or indirectly, of securities of the Company representing
greater than or equal to fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities;
2. During any period of twelve (12) months,
individuals who at the beginning of such period constitute
the Board of Directors of the Company cease for any reason
to constitute a majority thereof unless the election, or the
nomination for election by the Company's shareholders of
each new director was approved by a vote of at least a
majority of the directors then still in office who were
directors at the beginning of the period; or
3. A person (as defined in clause (1) above)
acquires (or, during the twelve (12) month period ending on
the date of the most recent acquisition by such person or
group of persons, has acquired) gross assets of the Company
that have an aggregate fair market value greater than or
equal to over fifty percent (50%) of the fair market value
of all of the gross assets of the Company immediately prior
to such acquisition or acquisitions.
E. Optionee acknowledges that the shares which are to
be reserved for issuance upon the exercise of the Options are not
at this time registered in accordance with applicable securities
laws. The Company agrees that upon receipt of a written request
by Optionee, it will, consistent with applicable securities laws
and regulations, promptly prepare and file with the Securities
and Exchange Commission an appropriate registration statement on
Form S-8 and/or Form S-3, depending upon whether the Options have
then been exercised (or any successor forms to such form
subsequently promulgated by the Securities and Exchange
Commission) pertaining to the shares covered by the Options and
will use its reasonable good faith efforts to cause such
registration statement to be declared effective as soon as
practical thereafter. The Company will bear the expense to
prepare and file such registration statement.
II. TERM.
----
Each option granted shall expire ten years from the
date of grant, unless canceled or terminated earlier in
accordance with the terms of this Agreement.
III. EXERCISE OF OPTIONS.
-------------------
Only options which are vested may be exercised.
IV. MANNER OF EXERCISE.
------------------
A. Notice to the Company: Each exercise of an option
shall be made by the delivery by the Optionee of written notice
of such election to the Corporation, either in person or by mail,
stating the number of shares with respect to which the option is
being exercised and specifying a date on which the shares will be
taken and payment made therefor. The date shall be at least
fifteen (15) days after the giving of such notice.
B. Issuance of Stock: Subject to any law or
regulation of the Securities and Exchange Commission or other
body having jurisdiction requiring an action to be taken in
connection with the shares specified in a notice of election
before the shares can be delivered to the Optionee, on the date
specified in the notice of election, the Company shall deliver,
or cause to be delivered to the Optionee stock certificates for
the number of shares with respect to which the option is being
exercised, against payment therefor. In the event of any failure
to take and pay, on the date stated, for the full number of
shares specified in the notice of election, the option shall
become inoperative only as to those shares which are not taken,
but shall continue with respect to any remaining shares subject
to the option as to which exercise has not yet been made.
V. ASSIGNMENT.
----------
Any option granted under the Plan shall not be
assigned, pledged, or hypothecated in any way, shall not be
subject to execution, and shall not be transferable other than by
will or the laws of descent and distribution. Any attempted
assignment or other prohibited disposition shall be null and
void.
VI. TERMINATION.
-----------
A. Termination Other Than At Death Or Disability: If
the Optionee terminates his position as an Employee of the
Corporation for any reason other than death or disability, any
unexercised options (whether vested or unvested) shall be
canceled three (3) months after the effective date of the
Optionee's termination. No options shall vest subsequent to the
date of termination of employment.
B. Termination At Death Or Disability: In the event
of the death of the Optionee, any option held by him at the time
of his death shall be transferred as provided in his will or by
the laws of descent and distribution, and may be exercised by
such transferee at any time within twelve months after the date
of death, to the extent the option is exercisable on the date of
death, and provided it is exercised within the time prescribed in
Article II hereof. In the event of the disability of the
Optionee, any option held by him may be exercised in whole or in
part, by the Optionee or his personal representative at any time
within twelve months after the date of disability, to the extent
the option is exercisable on the date of disability, and provided
that it is exercised within the time prescribed in Article II
hereof. Disability and time of disability shall be determined by
the Board.
VII. FAILURE TO ENFORCE NOT A WAIVER.
-------------------------------
The failure of the Company to enforce at any time any
provision of this Option Agreement shall in no way be construed
to be a waiver of such provision or of any other provision
hereof.
VIII. SEVERABILITY.
------------
If any provision of this Option Agreement shall be held
to be illegal, invalid, or unenforceable under any applicable
law, then such contravention or invalidity shall not invalidate
the entire Option Agreement. Such provision shall be deemed to
be modified to the extent necessary to render it legal, valid,
and enforceable, and if no such modification shall render it
legal, valid, and enforceable, then this Option Agreement shall
be construed as if not containing the provision held to be
invalid, and the rights and obligations of the parties shall be
construed and enforced accordingly.
IX. COMPLETE AGREEMENT.
------------------
This Option Agreement between Optionee and the Company
embodies the complete agreement and understandings with respect
to the subject matter hereof between the parties and supersede
and preempt any prior understandings, agreements, or
representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.
X. GOVERNING LAW.
-------------
This Option Agreement shall be governed by and
construed according to the laws of the State of Colorado.
IN WITNESS WHEREOF, the Company has executed this
Option on the day and year first above-written.
VICORP Restaurants, Inc.
a Colorado corporation
By /s/ Charles R. Frederickson
----------------------------
Charles R. Frederickson, Chairman
The undersigned hereby accepts and agrees to all terms
and provisions of the foregoing Option Agreement.
/s/ Joseph F. Trungale
----------------------
Joseph F. Trungale, Optionee
This is Page 4 of a 4-page Option Agreement between VICORP
Restaurants, Inc. and Joseph F. Trungale dated May 8, 2000.
<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 16,
2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-29-2000
<PERIOD-END> APR-16-2000
<CASH> 5,820
<SECURITIES> 0
<RECEIVABLES> 3,273
<ALLOWANCES> 492
<INVENTORY> 6,238
<CURRENT-ASSETS> 23,688
<PP&E> 300,072
<DEPRECIATION> 169,542
<TOTAL-ASSETS> 192,884
<CURRENT-LIABILITIES> 42,470
<BONDS> 7,152
0
0
<COMMON> 339
<OTHER-SE> 118,986
<TOTAL-LIABILITY-AND-EQUITY> 192,884
<SALES> 84,376
<TOTAL-REVENUES> 85,300
<CGS> 24,373
<TOTAL-COSTS> 24,373
<OTHER-EXPENSES> 55,046
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 247
<INCOME-PRETAX> 5,766
<INCOME-TAX> 2,104
<INCOME-CONTINUING> 3,662
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,662
<EPS-BASIC> .54
<EPS-DILUTED> .54
</TABLE>
