SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: July 25, 1997
NPC INTERNATIONAL, INC.
(Exact name of registrant is specified in its charter)
Kansas
(State of incorporation)
0-13007 48-0817298
(Commission Identification No.) (IRS Employer Identification
No.)
720 West 20th Street, Pittsburg, Kansas 66762
(Address of principal executive office Zip Code)
Registrant's telephone number: (316/231-3390)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
This filing amends Form 8-K filed May 29, 1997 pertaining to the acquisition of
certain Pizza Hut units from Jamie B. Coulter. Financial statements related to
the acquired assets were not available at the time Form 8-K was filed. However,
in accordance with Rule 3-05(b) of regulation S-X, the applicable statements are
included herein.
(a.) Financial statements of business acquired
The financial statements of the acquired business are presented in Exhibit
99-A to this filing and are incorporated herein by reference.
(b.) Pro forma financial information
The pro forma financial information required by Article 11 of Regulation S-
X, related to this acquisition is presented in Exhibit 99-B to this filing
and is incorporated herein by reference.
(c.) Exhibits
The exhibits set forth on the Index to Exhibits on page 3 are incorporated
herein by reference.
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.
NPC INTERNATIONAL, INC.
DATED: July 25, 1997
Troy D. Cook
Vice President Finance
Chief Financial Officer
Principal Financial Officer
INDEX TO EXHIBITS
PAGE NO.
IN THIS
EXHIBIT DESCRIPTION FILING
23 Consent of Independent Auditors 4
99-A Financial statements of business acquired 5
99-B Pro Forma Financial Information 20
Exhibit 23
Consent of Independent Auditors
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Form S-8, No. 33-2233 and Form S-8 No. 33-37354) pertaining to the NPC
International, Inc. 1984 Non-Qualified Stock Option Plan, as amended, and the
Registration Statement (Form S-8 No. 33-56399) pertaining to the NPC
International, Inc. 1994 Non-Qualified Stock Option Plan of our report dated
July 1, 1997, with respect to the combined financial statements of The Coulter
Pizza Huts included in NPC International, Inc.'s current report on Form 8-K/A
dated July 23, 1997, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Wichita, Kansas
July 21, 1997
Exhibit 99-A
Financial Statements of Business Acquired
Combined Financial Statements
The Coulter Pizza Huts
Year ended December 31, 1996
with Report of Independent Auditors
The Coulter Pizza Huts
Combined Financial Statements
Year ended December 31, 1996
Contents
Report of Independent Auditors 1
Audited Combined Financial Statements
Combined Balance Sheet 2
Combined Statement of Income 4
Combined Statement of Shareholder's Deficit 5
Combined Statement of Cash Flows 6
Notes to Combined Financial Statements 8
Report of Independent Auditors
The Board of Directors and Shareholder
The Coulter Pizza Huts
We have audited the accompanying combined balance sheet of The Coulter Pizza
Huts (Corporations) as of December 31, 1996, and the related combined statements
of income, shareholder's deficit and cash flows for the year then ended. These
financial statements are the responsibility of the CorporationsO management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of The Coulter Pizza Huts
at December 31, 1996, and their combined results of operations and cash flows
for the year then ended, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Wichita, Kansas
July 1, 1997
The Coulter Pizza Huts
Combined Balance Sheet
December 31,
1996
Assets
Current assets:
Cash $1,716,498
Accounts receivable 271,018
Due from affiliates (Note 2) 182,540
Inventories 351,077
Prepaid expenses 614,397
Total current assets 3,135,530
Property and equipment, at cost (Note 4):
Land 292,000
Buildings 385,243
Leasehold and land improvements 3,652,938
Furniture and equipment 3,121,974
Real property under capital lease 11,538,527
18,990,682
Less accumulated depreciation
and amortization 11,138,911
7,851,771
Due from shareholder (Note 2) 1,950,000
Other assets:
Franchise rights, net of
accumulated amortization 418,277
of $393,325
Deposits 50,913
Other 26,217
Total other assets 495,407
Total assets $13,432,708
December 31,
1996
Liabilities and shareholderOs deficit
Current liabilities:
Accounts payable $1,912,386
Due to affiliates (Note 2) 511,931
Accrued payroll and benefits 690,185
Accrued management fees - affiliates (Note 2) 460,109
Accrued rent and real estate taxes 313,455
Other accrued liabilities 400,785
Current portion of long-term debt - affiliates 27,735
(Note 5)
Current portion of obligation under capital lease 161,788
- - affiliates (Note 4)
Total current liabilities 4,478,374
Long-term debt - affiliates (Note 5) 341,089
Obligation under capital lease - affiliates 10,618,557
(Note 4)
Shareholder's deficit:
Common stocks:
$1 par value, 81,500 shares
authorized and issued 81,500
$10 par value, 400 shares
authorized and issued 4,000
Additional paid-in capital 9,226,449
Accumulated deficit (10,900,153)
(1,588,204)
Less treasury stock, 4,765 shares at cost 417,108
Total shareholder's deficit (2,005,312)
Total liabilities and shareholder's deficit $13,432,708
See accompanying notes.
The Coulter Pizza Huts
Combined Statement of Income
Year ended
December 31,
1996
Net sales $60,119,261
Cost of sales 14,585,625
Direct labor costs 17,595,521
Operating expenses:
Related party (Note 2) 2,043,626
Other 13,049,503
47,274,275
Income from restaurant operations 12,844,986
General and administrative expenses:
Related party (Note 2) 5,107,382
Other 3,103,788
Total general and administrative expenses 8,211,170
Operating income 4,633,816
Interest expense:
Affiliate (Note 2) (2,189,047)
Other (2,729)
Interest income - affiliate 214,416
Other expense, net (13,485)
Net income before income taxes 2,642,971
Provision for income taxes (Note 3) 92,481
Net income $2,550,490
See accompanying notes.
The Coulter Pizza Huts
Combined Statement of Shareholder's Deficit
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1 Par Value $10 Par Value
Common Stock Common Stock Additional
Number Number Paid-in Accumulated Treasury
of Amount of Amount Capital Deficit Stock Total
Shares Shares
Balance at
December 26, 1995 81,500 $81,500 400 $4,000 $8,710,288 $(10,384,182) $(417,108)$(2,005,502)
Net income - - - - - 2,550,490 - 2,550,490
Capital contributions - - - - 629,700 - - 629,700
Return of capital - - - - (113,539) - - (113,539)
Dividends - - - - - (3,066,461) - (3,066,461)
Balance at
December 31, 1996 81,500 $81,500 400 $4,000 $9,226,449 $(10,900,153) $(417,108)$(2,005,312)
</TABLE>
See accompanying notes.
The Coulter Pizza Huts
Combined Statement of Cash Flows
Increase (Decrease) in Cash
Year ended
December 31, 1996
Operating activities
Net income $2,550,490
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,010,753
Loss on closed restaurant 37,105
Net change in operating assets and liabilities:
Accounts receivable (43,029)
Inventories 40,942
Prepaid expenses (75,784)
Accounts payable 334,346
Accrued payroll and benefits (190,687)
Accrued liabilities 38,869
Net cash provided by operating activities 3,703,005
Investing activities
Purchases of property and equipment (763,192)
Purchase of franchise rights (25,000)
Deposits (5,251)
Net cash used by investing activities (793,443)
Financing activities
Net change in due to/from affiliates (206,891)
Repayment of long-term debt (24,492)
Repayment of capital leases (161,538)
Capital contributions 629,700
Payment of dividends and return of capital (3,180,000)
Net cash used by financing activities (2,943,221)
Net decrease in cash (33,659)
Cash at beginning of year 1,750,157
Cash at end of year $1,716,498
The Coulter Pizza Huts
Combined Statement of Cash Flows (continued)
Increase (Decrease) in Cash
Year ended
December 31,
1996
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $2,191,776
Income taxes 126,695
Supplemental schedule of noncash investing and financing activities:
During 1996, the Corporations acquired property under capital lease of
$539,462.
Disclosure of accounting policy:
For purposes of the combined statement of cash flows, the Corporations
consider cash to include currency on hand, demand deposits and short-term
investments with maturities of three months or less.
See accompanying notes.
1. Significant Accounting Policies
Basis of Presentation and Principles of Combination
The combined financial statements include all of the Pizza Hut restaurant
operations of Jamie B. Coulter. These operations are conducted in corporations,
all of which are owned and controlled by Jamie B. Coulter (the Corporations).
All significant intercompany accounts and transactions have been eliminated. The
Corporations have ongoing transactions with an affiliated company, Coulter
Enterprises, Inc. (Coulter Enterprises). This affiliated company owns certain
other affiliated entities that provide management and accounting services for
the Pizza Hut restaurants.
Operations
All of the restaurants are operated under a franchise agreement with Pizza Hut,
Inc., franchisor. The agreement grants the Corporations exclusive rights to
develop and operate restaurants in certain franchise territories. The
Corporations operate approximately 100 restaurants in Texas, Tennessee, North
Carolina, Illinois, Colorado, Delaware, Nevada, Utah, Arizona, Washington, and
Oregon.
Fiscal Year
The Corporations' fiscal year end is the Tuesday closest to December 31. The
fiscal year ended December 31, 1996, includes 53 weeks of operations.
Inventories
Inventories consist of food and supplies and are valued at the lower of cost
(first-in, first-out method) or market.
Property and Equipment
Property and equipment are recorded at cost. Maintenance, repairs and renewals
which do not enhance the value of or increase the life of the assets are
expensed as incurred. Depreciation is provided using the straight-line basis for
buildings, furniture and equipment. Leasehold improvements are amortized on the
straight-line method over the
1. Significant Accounting Policies (continued)
life of the lease or the life of the improvements, whichever is shorter. Useful
lives are as follows:
Buildings 18 to 39 years
Leasehold and land improvements 3 to 18 years
Furniture and equipment 5 to 15 years
Real property under capital lease 18 years
Effective in fiscal 1996, the Corporations adopted Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of. The majority of the Corporations'
long-lived assets held for continuing use are evaluated for potential impairment
on a store-by-store basis. Implementation of this standard did not have a
material impact on the Corporations' financial statements.
Franchise Rights
Agreements with the franchisor provide franchise rights for a period of 20
years, and are renewable at the option of the Corporations for an additional 15
years, subject to approval by the franchisor. Initial franchise fees are
capitalized and amortized over 20 years on a straight-line basis. Periodic
franchise royalty fees, which are based on a percent of sales, are charged to
operating expense as incurred.
Advertising Costs
Advertising costs are expensed as incurred. The Corporations incurred $3,326,237
of such costs in fiscal 1996.
Income Taxes
All of the Corporations included in these combined financial statements have
elected to be taxed under Subchapter S of the Internal Revenue Code and,
therefore, do not have a federal tax liability at the corporate level as such
taxes are the liability of the individual shareholder. Accordingly, the
accompanying combined financial statements do not include a provision for
federal income taxes.
1. Significant Accounting Policies (continued)
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. Related-Party Transactions
The Corporations have significant transactions with related parties, including
borrowing and lending transactions, payment of management and accounting fees
and leasing of facilities and equipment from entities that are owned and
controlled by the shareholder.
Transactions between such parties for the year ended December 31, 1996, are
summarized as follows:
1996
Amount Related Party
Equipment lease $1,448,044 Summit Leasing
expense
Management fee 4,780,132 Coulter Enterprises,
expense Inc.
Accounting fee 327,250 Coulter Enterprises,
expense Inc.
Real estate 517,737 Coulter Properties
lease expense
Real estate 77,845 Other affiliates
lease expense
Interest income (214,416) Shareholder
Interest 1,912,850 Coulter Properties
expense
Interest 276,197 Other affiliates
expense
Amounts due to affiliates at December 31, 1996, were as follows:
1996
Payable to Coulter Enterprises, $ 505,000
Inc.
Payable to other affiliated
entities 6,931
$ 511,931
2. Related-Party Transactions (continued)
Amounts due from affiliates at December 31, 1996, were as follows:
1996
Receivable from Coulter Properties $ 2,400
Receivable from Shareholder 142,242
Receivable from Coulter 21,451
Enterprises, Inc.
Receivable from other affiliated 16,447
entities
$182,540
During 1996, funds were transferred to/from Coulter Enterprises, Inc. to fund
cash operating requirements. At December 31, 1996, $505,000 was due to Coulter
Enterprises, Inc. relating to such transactions and the majority was paid
shortly after year-end.
Advances to or from affiliates are periodically made as working capital is
available or needed. The advances are receivable or payable on demand and, for
the majority of the affiliated balances, bear no interest.
The due from shareholder of $1,950,000 is payable on demand and bears interest
at 11% annually. It is classified as noncurrent in the accompanying balance
sheet as the Corporations do not intend to demand payment within the next fiscal
year.
3. Income Taxes
The provision for income taxes consists of various state income and franchise
taxes which are based on taxable income. These taxes are payable by the
corporations which are doing business in that state and are not an obligation of
the shareholder.
4. Lease Commitments
The Corporations lease various restaurant facilities from related parties and
unrelated third parties under noncancelable operating leases and capital leases.
The leases expire at various dates through DecemberE31, 2015, and a majority of
the leases contain renewal options for 5 to 15 years. Generally, the leases
require the Corporations to pay all taxes, insurance, and maintenance. The lease
arrangements generally provide for additional rentals which are based on
percentages of the CorporationsO sales. Lease expense under long-term operating
leases for the year ended December 31, 1996, was $2,319,319, including
contingent rental payments of $176,743. Contingent rental payments under capital
leases amounted to $215,773.
4. Lease Commitments (continued)
The future annual minimum lease payments for the next five years and thereafter
under capital leases and noncancelable operating leases with initial terms of
one year or more in effect at DecemberE31, 1996, are as follows:
Operating Leases
Related- Related Unrelated
Fiscal Year Party Parties Parties Total
Capital
Leases
1997 $ 2,321,452 $ 597,313 $1,187,206 $ 1,784,519
1998 2,321,452 597,513 1,061,502 1,658,815
1999 2,321,452 597,513 795,828 1,393,141
2000 2,321,452 597,313 688,829 1,286,142
2001 2,321,452 597,313 358,755 956,068
Thereafter 22,260,891 5,989,134 1,413,561 7,402,695
Total minimum lease payments 33,868,151 $8,975,699 $5,505,681 $14,481,380
Less imputed interest 23,087,806
Present value of capital
lease obligations 10,780,345
Less current portion 161,788
Long-term portion $10,618,557
The Corporations lease various restaurant equipment and vehicles under monthly
operating leases with related parties. Lease expense under short-term operating
leases for the years ended December 31, 1996, was $1,448,044.
Property and equipment include the following property under capital leases by
major classes:
December 31,
1996
Real property under capital lease $11,538,527
Less accumulated depreciation (5,960,363)
$ 5,578,164
Depreciation expense for the property under capital leases for the year ended
December 31, 1996, was $571,901 and was included in depreciation and
amortization expense.
5. Long-Term Debt
Long-term debt at December 31, 1996, consisted of the following:
1996
Installment loans to Coulter Properties, payable in varying
monthly installments including interest at 12.5%, due at varying
dates through April 2005 $368,824
Less current portion 27,735
$341,089
Future annual long-term debt maturities over the next five years and thereafter
are as follows at December 31, 1996:
1997 $ 27,735
1998 31,408
1999 35,566
2000 40,276
2001 45,609
Thereafter 188,230
$368,824
6. Subsequent Event
Effective May 15, 1997, the sole shareholder of the Corporations entered into an
Asset Purchase Agreement with NPC International, Inc. and certain of its
affiliates to sell substantially all of the operating assets and operations of
the Corporations' individual Pizza Hut restaurants. Accordingly, upon the
effectiveness of this agreement, the Corporations no longer have operations.
Exhibit 99-B
Pro Forma Financial Information
These pro forma statements combine the effects of two unrelated, but significant
acquisitions by NPC International, Inc. (the Company). The first transaction
consisted of the acquisition of 122 Pizza Hut Units from Pizza Hut, Inc. (the
Pizza Hut Acquisition), which was completed in two Phases. Phase I consisted of
60 units and closed on March 6, 1997. Phase II consisted of 62 units and closed
on March 27, 1997 subsequent to the Company's fiscal year-end. This transaction
is discussed in Form 8-K and Form 8-K/A dated April 14, 1997 and June 9, 1997
respectively. The net pro forma effect on the Company's year-end financial
statements is presented below. For a more complete discussion of these amounts
see the notes to the pro forma statements filed with the June 9, 1997 Form 8-
K/A.
The second transaction consisted of the acquisition of 100 Pizza Hut Units from
Jamie B. Coulter (the Coulter Pizza Huts). The Coulter Pizza Hut transaction
terms are set fourth in an asset sale agreement dated May 14, 1997 which was
filed on Form 8-K on May 29, 1997.
The condensed pro forma financial information presented below combines the net
Pizza Hut Acquisition presented in Form 8-K/A filed June 9, 1997 with historical
information related to the Coulter Pizza Huts, and pro forma adjustments related
to the Company's acquisition of the Coulter Pizza Huts.
The combined pro forma statement is intended to show how both the Pizza Hut
Acquisition and the Coulter Pizza Hut Acquisition might have affected the
Company's historical financial statements if the transactions had been
consummated at the beginning of the Company's fiscal year-ended March 25, 1997.
Pro Forma Balance Sheet
NPC International, Inc. and Subsidiaries
Acquisitions from Pizza Hut, Inc. and Jamie B. Coulter
At March 25, 1997
Dollars in thousands
Net Pro As Pro Forma
Forma Effect Reported Adjustments Combined
As Reported Pizza Hut Coulter Coulter Pro Forma
The Company Acquisition Pizza Huts Pizza Huts Statement
Assets
Total current assets $ 13,751 $ 608 $ 3,136 $(1,068) $16,427
Facilities and
equipment, net of
$77,037 accumulated
depreciation 126,461 4,156 7,852 (5,116) 133,353
Intangible assets,
net of $16,276
accumulated
amortization 110,546 24,389 418 57,645 192,998
Other assets 9,149 2,027 (2,027) 9,149
Total assets $259,907 $ 29,153 $13,433 $49,434 $351,927
Liabilities
Total current
liabilities $ 29,156 $ 4,478 $(4,478) $ 29,156
Long-term debt 116,777 29,153 10,960 49,079 205,969
Other liabilities 18,181 2,828 21,009
Total equity 95,793 (2,005) 2,005 95,793
Total liabilities
and equity $259,907 $ 29,153 $13,433 $49,434 $351,927
See notes to financial statements
Pro Forma Income Statement
NPC International, Inc. and Subsidiaries
Acquisitions from Pizza Hut, Inc. and Jamie B. Coulter
For the 52 weeks ended March 25, 1997
Dollars in thousands, except share data
Net Pro As Pro Forma
Forma Effect Reported Adjustments Combined
As Reported Pizza Hut Coulter Coulter Pro Forma
The Company Acquisition Pizza Huts Pizza Huts Statement
Net sales $295,285 $ 69,580 $ 60,119 $ 424,984
Cost of sales 80,618 19,610 14,586 114,814
Direct labor 81,086 20,758 17,596 119,440
Other 75,523 22,549 15,092 (288) 112,876
Total operating
expenses 237,227 62,917 47,274 347,130
Income from restaurant
operations 58,058 6,663 12,845 77,854
General and
administrative
expenses 17,710 4,707 8,170 (5,107) 25,480
Depreciation and
amortization 6,121 1,381 41 2,033 9,576
Operating income 34,227 575 4,634 42,798
Interest and other
income/(expense) (5,144) (4,293) (1,991) (2,461) (13,889)
Income before taxes 29,083 (3,718) 2,643 28,909
Provision for
income taxes 11,272 (1,441) 92 1,282 11,205
Net income $17,811 $(2,277) $ 2,551 $ 17,704
Earnings per share $ 0.71 $ 0.71
Weighted average
shares outstanding 25,021,020 25,021,020
See notes to financial statements
Notes to pro forma statements
1. Basis of presentation - The pro forma financial statements include the
accounts and results of operation for NPC International, Inc. and
subsidiaries (the Company), 122 Pizza Hut units acquired from Pizza Hut,
Inc., (The Pizza Hut Acquisition), and 100 Pizza Hut units (the Coulter
Pizza Huts) owned and operated by Jamie B. Coulter , through Coulter
Enterprises, Inc., and related entities, (Coulter). The statements of the
Company are as of and for the 52 weeks ended March 25, 1997. The statements
related to the Pizza Hut Acquisition are for the 52 weeks ended December
25, 1996, and the statements of the Coulter Pizza Huts are as of and for
the 53 weeks ended December 31, 1996. These statements have been prepared
in accordance with Article 11 of the Securities & Exchange Commission
Regulation S-X.
2. Description of transaction - A detailed description of the Pizza Hut
Acquisition was filed on Form 8-K/A dated June 9, 1997. The Coulter Pizza Huts
were acquired by the Company pursuant to an Asset Purchase Agreement Dated May
14, 1997. The consideration for the purchase of 74 of the units and the
operations of eight other units was $47 million. The Company will manage 18
units in North Carolina under a management agreement and will record the results
of these unit's operations as if owned, less a management fee to be paid to
Coulter. Upon resolution of certain contingencies, the Company anticipates
paying approximately $10 million additional consideration, $5.8 of which was
paid on July 16,1997, for these restaurants. These statements present the
financial position and results of operations as if the Company owned all 100
units constituting the Coulter Pizza Huts.
The net pro forma effect of the Pizza Hut Acquisition combines the historical
financial information related to the Pizza Hut Acquisition units with the pro
forma effects of the transaction described in the Form 8-K/A dated June 9, 1997.
The pro forma adjustments presented herein pertain only to the Coulter Pizza
Huts Acquisition.
3. Balance Sheet - The balance sheet adjustments reflect the purchase of
$2,068,000 in cash and inventory, $2,736,000 in facilities and equipment, and
$58,063,000 in franchise rights. The Company also recorded $2,828,000 in
unfavorable lease obligations related to transaction. The transaction was
funded through the Company's line of credit which is reflected in the pro
forma adjustment to long-term debt.
4. Statement of Operations
a) The pro forma adjustments for other operating expenses include rentals
which the Company would have paid Coulter of $1,937,000 and depreciation
expense on the acquired facilities and equipment of $391,000. These
charges are net of the reversal of $2,044,000 in related party rent and
$572,000 depreciation expense on related party capital leases, reflected in
the Coulter Pizza Hut statements.
Depreciation and amortization expense includes a pro forma adjustment to
increase expense $2,074,000 related to the amortization of franchise rights over
an estimated remaining life of 28 years based on the remaining portion of the
existing franchise agreement plus one 15 year renewal option.
b) General and administrative expense has been reduced by $5,107,000 which the
Coulter Pizza Huts paid to related parties for management and accounting fees.
c) Interest expense has been computed using an average annual borrowing rate,
as of the beginning of the fiscal year, of 7.7%. The pro forma adjustment for
interest expense is $4,437,000 net of $1,976,000 which was paid by Coulter to
related parties, primarily in conjunction with capital lease arrangements which
will not be assumed by the Company.
d) The Company's effective tax rate for the fiscal year ended March 25, 1997
was 38.76%, which has been used to compute the pro forma tax adjustment.
