<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 9, 1995
REGISTRATION NO. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM S-2
REGISTRATION STATEMENT
Under
The Securities Act of 1933
------------------------------------
UNO RESTAURANT CORPORATION
(Exact Name Of Registrant As Specified In Its Charter)
<TABLE>
<S> <C>
DELAWARE 04-2953702
(State Or Other Jurisdiction Of (I.R.S. Employer
Incorporation Or Organization) Identification Number)
</TABLE>
100 CHARLES PARK ROAD, WEST ROXBURY, MASSACHUSETTS 02132 (617) 323-9200
(Address, Including Zip Code, And Telephone Number, Including
Area Code, Of Registrant's Principal Executive Offices)
------------------------------------
CRAIG S. MILLER, PRESIDENT
Uno Restaurant Corporation
100 Charles Park Road
West Roxbury, Massachusetts 02132
(617) 323-9200
(Name, Address, Including Zip Code, And Telephone Number,
Including Area Code, Of Agent For Service)
------------------------------------
COPIES TO:
<TABLE>
<S> <C>
STEVEN R. LONDON, ESQUIRE MARK G. BORDEN, ESQUIRE
Brown, Rudnick, Freed & Gesmer Hale and Dorr
One Financial Center 60 State Street
Boston, Massachusetts 02111 Boston, Massachusetts 02109
(617) 330-9000 (617) 526-6000
</TABLE>
------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
------------------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. / /
<TABLE>
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE
- -------------------------------------------------------------------------------------------------
Common Stock, $.01 par
value...................... 2,300,000(2) $10.8125 $24,868,750 $8,575.43
- -------------------------------------------------------------------------------------------------
<FN>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457 under the Securities Act of 1933, and based upon the
average of the reported high and low prices of the Common Stock on the New
York Stock Exchange on May 5, 1995.
(2) Includes up to 300,000 shares of Common Stock which may be purchased by the
Underwriter to cover over-allotments, if any.
</TABLE>
------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
UNO RESTAURANT CORPORATION
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM S-2 ITEM NUMBER AND HEADING LOCATION IN PROSPECTUS
- -------------------------------------------------- --------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus.... Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus................................ Front Cover Page; Back Cover Page; Available
Information
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges.............. Prospectus Summary; The Company; Investment
Considerations
4. Use of Proceeds............................. Use of Proceeds
5. Determination of Offering Price............. Not Applicable
6. Dilution.................................... Not Applicable
7. Selling Security-Holders.................... Not Applicable
8. Plan of Distribution........................ Underwriting
9. Description of Securities to be
Registered................................ Description of Capital Stock and Other
Matters
10. Interests of Named Experts and Counsel...... Not Applicable
11. Information With Respect to the Registrant:
(b)(1) Description of Business.............. Business
(b)(2) Financial Statements................. Financial Statements
(b)(3) Industry Segments.................... Not Applicable
(b)(4) Market Price of and Dividends on the
Registrant's Common Equity and
Related Stockholder Matters.......... Dividend Policy; Price Range of Common Stock
(b)(5) Selected Financial Data.............. Selected Consolidated Financial Data
(b)(6) Supplementary Financial
Information........................ Financial Statements
(b)(7) Management's Discussion and Analysis
of Financial Condition and Results of
Operations........................... Management's Discussion and Analysis of
Financial Condition and Results of
Operations
(b)(8) Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure................. Not Applicable
12. Incorporation of Certain Information by
Reference................................. Incorporation of Certain Documents by
Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................... Not Applicable
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION
OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH JURISDICTION.
SUBJECT TO COMPLETION, DATED MAY 9, 1995
2,000,000 SHARES
COMMON STOCK
All of the shares of Common Stock offered hereby are being sold by Uno
Restaurant Corporation (the "Company"). The Company's Common Stock is traded on
the New York Stock Exchange under the symbol "UNO." On May 5, 1995, the last
reported sale price of the Common Stock on the New York Stock Exchange was
$10.75 per share. See "Price Range of Common Stock."
SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
==========================================================================================
<S> <C> <C> <C>
Price to Underwriting Proceeds to
Public Discount(1) Company(2)
- ------------------------------------------------------------------------------------------
Per Share........................... $ $ $
Total(3)............................ $ $ $
==========================================================================================
<FN>
(1) See "Underwriting" for information concerning indemnification of the
Underwriter and other matters.
(2) Before deducting expenses payable by the Company estimated at $255,000.
(3) The Company has granted the Underwriter a 30-day option to purchase up to
300,000 additional shares of Common Stock solely to cover over-allotments,
if any. If the Underwriter exercises this option in full, the Price to
Public will total $ , the Underwriting Discount will total
$ and the Proceeds to Company will total $ . See
"Underwriting."
</TABLE>
The shares of Common Stock are offered by the Underwriter named herein,
subject to receipt and acceptance by it and subject to its right to reject any
order in whole or in part. It is expected that delivery of the certificates
representing such shares will be made against payment therefor at the office of
Montgomery Securities on or about , 1995.
------------------------
MONTGOMERY SECURITIES
, 1995
<PAGE> 4
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE> 5
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, NW, Room 1024, Judiciary Plaza, Washington, D.C. 20549, and at the
Commission's Regional Offices at Citicorp Center, 500 West Madison, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, NW, Room 1024, Judiciary Plaza,
Washington, D.C. 20549, at prescribed rates. The Company's Common Stock is
listed on the New York Stock Exchange, and such reports, proxy statements and
certain other information can also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission in Washington, D.C., a
Registration Statement on Form S-2 under the Securities Act of 1933, as amended,
with respect to the Common Stock being offered hereby. This Prospectus does not
contain all of the information set forth in such Registration Statement and the
exhibits and schedules thereto to which reference is hereby made. The statements
in this Prospectus as to the contents of such Registration Statement are
qualified in their entirety by such reference. The Registration Statement,
together with its exhibits and schedules, may be inspected at the Public
Reference Section of the Commission in Washington, D.C. at the address noted
above, and copies of all or any part thereof may be obtained from the Commission
upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission pursuant to the Exchange
Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
October 2, 1994;
2. The Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended January 1, 1995 and April 2, 1995; and
3. The proxy statement for the Company's Annual Meeting of
Stockholders held on February 8, 1995.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
the documents referred to above, excluding exhibits thereto. Requests should be
made to: Investor Relations, Uno Restaurant Corporation, 100 Charles Park Road,
West Roxbury, Massachusetts 02132, telephone number (617) 323-9200
------------------------
UNO(R), PIZZERIA UNO(R) and PIZZERIA DUE(R) are registered trademarks of
Uno Restaurant Corporation.
3
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and Consolidated Financial Statements, including the Notes thereto,
appearing elsewhere in this Prospectus. Except as otherwise noted, all
information in this Prospectus assumes no exercise of the Underwriter's
over-allotment option. All share and per share data, including market prices, in
this Prospectus have been adjusted for the five-for-four Common Stock splits
effected on September 10, 1990 and February 28, 1995. "Fiscal 1992," "fiscal
1993," "fiscal 1994," "fiscal 1995" and "fiscal 1996" refer to the fiscal years
ended on September 27, 1992, October 3, 1993, October 2, 1994, October 1, 1995
and September 29, 1996, respectively.
THE COMPANY
Uno Restaurant Corporation (the "Company") owns and operates 73 and
franchises 58 casual dining, full-service restaurants under the name "Pizzeria
Uno...Chicago Bar & Grill." The restaurants offer a diverse, high-quality menu
at moderate prices in a casual, friendly atmosphere. The restaurants feature the
Company's signature Chicago-style deep-dish pizza and a selection of entrees,
including thin crust pizza, pasta, fajitas, ribs, steak and chicken, as well as
a variety of appetizers, salads, sandwiches and desserts. The Company's
restaurants average approximately 6,200 square feet with seating for an average
of approximately 180 guests. For the 52 weeks ended April 2, 1995, Company-owned
restaurants averaged $1,932,000 in sales. Company-owned restaurants are located
predominantly in the Northeast and Mid-Atlantic states, and franchised
restaurants are located throughout the United States.
In fiscal 1993, the Company began implementing strategic initiatives
intended to strengthen its position in casual dining and to distinguish its
restaurants from quick service pizza, pizza and pasta, and full-service Italian
restaurants. As part of this strategy, during fiscal 1994, the Company invested
approximately $2.5 million in new kitchen capabilities, including saute
stations, grills and fryers, for its Company-owned restaurants enabling the
Company to enhance the quality, breadth and appeal of its non-pizza menu items.
To better communicate its concept and broadened menu to consumers, the Company
refined the name of its restaurants to Pizzeria Uno . . . Chicago Bar & Grill
and upgraded the design and decor of its restaurants to be consistent with its
casual dining theme. In addition, in fiscal 1993, the Company increased the size
of its deep-dish pizzas to provide greater value, and added additional
restaurant managers in many of its higher volume units to improve overall
service. The Company believes these strategic initiatives directly contributed
to an increase in its average guest check and increases in comparable store
sales of 6.5% in fiscal 1994 and 6.6% for the 26 weeks ended April 2, 1995.
The Company recently has been expanding its channels of distribution to
capitalize on the Pizzeria Uno brand name and the appeal of its signature
Chicago-style deep-dish pizza. Currently, the Company is distributing
refrigerated and frozen Chicago-style deep-dish pizza to approximately 870
supermarkets, primarily in New England, for sale in their fresh deli counters
and frozen food sections. Since January 1993, the Company has also been
supplying frozen Pizzeria Uno brand, Chicago-style deep-dish pizza to American
Airlines for service on its flights. Approximately 1.6 million Pizzeria Uno
brand pizzas were served aboard American Airlines flights during fiscal 1994.
The Company is testing a similar pizza product at Pizzeria Uno kiosks in 14
General Cinema theaters. The Company also operates three neighborhood,
limited-seating take-out units under the name "Uno...Pizza Takery." These units
are located in strip centers, occupy approximately 2,000 square feet and offer
limited seating for up to 40 customers.
The Company acquired the rights to the name "Pizzeria Uno" from the late
Ike Sewell, who opened the original Pizzeria Uno restaurant in Chicago, Illinois
in 1943 and is considered the originator of Chicago-style deep-dish pizza. The
Company opened its first Pizzeria Uno restaurant in 1979. During fiscal 1995,
the Company expects to open approximately 18 restaurants, 11 of which were open
as of May 5, 1995, and during fiscal 1996, the Company expects to open
approximately 20 restaurants. During fiscal 1995, the Company expects
franchisees to open approximately six restaurants, three of which were open as
of May 5, 1995, and during fiscal 1996, the Company expects franchisees to open
approximately 10 restaurants.
4
<PAGE> 7
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company..................... 2,000,000 shares
Common Stock to be outstanding after the offering....... 13,374,699 shares(1)
Use of proceeds......................................... To repay indebtedness, to develop
additional restaurants and for
working capital
New York Stock Exchange symbol.......................... UNO
<FN>
- ---------------
(1) Excluding 996,610 shares issuable upon exercise of outstanding stock
options, of which stock options to acquire 426,017 shares were exercisable
as of April 2, 1995.
</TABLE>
SUMMARY CONSOLIDATED FINANCIAL AND STATISTICAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA AND NUMBER OF RESTAURANTS)
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
FISCAL YEAR ENDED ENDED
---------------------------------------------------- -------------------
SEP 30 SEP 29 SEP 27 OCT 3 OCT 2 APR 3 APR 2
1990 1991 1992(1) 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
(53 WKS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues................................ $54,691 $71,325 $84,113 $108,945 $124,065 $ 55,812 $73,127
Operating income........................ 6,994 5,979 3,052 8,085 10,291 3,540 5,341
Income before taxes..................... 6,666 5,492 2,902 7,000 9,446 3,263 4,387
Net income.............................. 3,820 3,155 1,762 4,163 5,756 1,941 2,763
Earnings per share...................... $ .38 $ .29 $ .16 $ .37 $ .51 $ .17 $ .24
======= ======= ======= ======= ======== ======== =======
OPERATING DATA:
Average annualized restaurant
sales(2).............................. $ 2,037 $ 1,874 $ 1,787 $ 1,807 $ 1,886 $ 1,756 $ 1,866
Number of restaurants at end of period:
Company-owned Pizzeria Uno(3)......... 31 39 50 56 65 58 74
Other Company-owned(4)................ 2 1 1 1 1 1 4
Franchised(5)......................... 47 55 59 58 61 61 60
------- ------- ------- ------- -------- -------- -------
Total................................. 80 95 110 115 127 120 138
======= ======= ======= ======= ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
APRIL 2, 1995
---------------------------
ACTUAL AS ADJUSTED(6)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Total assets....................................................................... $113,147 $113,147
Long-term debt and capital lease obligations, including current portions........... 37,538 17,475
Shareholders' equity............................................................... 58,961 79,024
<FN>
- ---------------
(1) Fiscal 1992 results include a pre-tax expense of $2,500,000 ($1,518,000, or
$.13 per share, after tax) in connection with the closing of two
restaurants.
(2) Full-service Company-owned Pizzeria Uno restaurants open for all or part of
period. See "Management's Discussion and Analysis of Financial Condition and
Results of Operation -- General." For a discussion of estimated average
annualized restaurant sales for franchisees, see "Business -- Franchise
Program."
(3) Includes three limited service Pizzeria Uno units as of April 2, 1995; two
limited service Pizzeria Uno units in fiscal 1994 and 1990; and one limited
service Pizzeria Uno unit in fiscal 1993 and 1992.
(4) Includes one Mexican restaurant and three Bay Street Grill restaurants as of
April 2, 1995; one Mexican restaurant in fiscal 1994, 1993 and 1992, one
steakhouse restaurant in fiscal 1991; and two steakhouse restaurants in
fiscal 1990. See "Business -- Other Business Development."
(5) Includes two limited service Pizzeria Uno units as of April 2, 1995, two in
fiscal 1994 and one in fiscal 1991.
(6) Adjusted to reflect the sale of 2,000,000 shares by the Company at an
assumed public offering price of $10.75 per share and the application of the
estimated net proceeds therefrom. See "Use of Proceeds" and
"Capitalization."
</TABLE>
5
<PAGE> 8
THE COMPANY
The original "Pizzeria Uno" restaurant was founded in 1943 by the late Ike
Sewell, who is considered the originator of Chicago-style deep-dish pizza. In
1955, Mr. Sewell opened a second restaurant, called "Pizzeria Due," across the
street from his original Pizzeria Uno restaurant.
In 1979, the Company acquired from Mr. Sewell the worldwide rights to
certain names, including "Uno," "Pizzeria Uno," "Pizzeria Due" and "Ike Sewell's
Original Chicago Pizza" (with the exception of the right to use the names in
Illinois) for the purpose of developing and expanding the concept. The Company
opened its first Pizzeria Uno restaurant in 1979 and licensed its first
franchisee for the operation of a Pizzeria Uno restaurant in 1980. In fiscal
1992, the Company purchased the original Pizzeria Uno and Pizzeria Due
restaurants in Chicago, Illinois and the rights to develop additional
restaurants in Illinois.
The Company is a Delaware corporation organized in August 1986 as a holding
company for the Pizzeria Uno business. Unless otherwise indicated, the term
"Company," as used in this Prospectus, refers to Uno Restaurant Corporation, its
predecessors and its subsidiaries. The Company's principal offices are located
at 100 Charles Park Road, West Roxbury, Massachusetts 02132, and its telephone
number is (617) 323-9200.
INVESTMENT CONSIDERATIONS
In addition to the other information in this Prospectus or incorporated
herein by reference, prospective investors should carefully consider the
following factors in evaluating an investment in the Common Stock offered
hereby.
GROWTH
The Company's continued growth depends on its ability to open new
restaurants and to operate such restaurants profitably. Prior to fiscal 1995,
the Company did not open more than nine restaurants in any fiscal year. However,
the Company plans to open approximately 18 restaurants in fiscal 1995 (of which
11 were open as of May 5, 1995), and approximately 20 restaurants in fiscal
1996. Many of its new restaurants will be opened in geographic markets in which
the Company has limited or no previous operating experience. There can be no
assurance that the Company will be successful in opening the number of
restaurants anticipated in a timely manner, if at all, or that, if opened, those
restaurants will be operated profitably. The Company's ability to expand the
number of its restaurants will depend upon a number of factors, including the
selection and availability of suitable restaurant sites, the negotiation of
acceptable lease or purchase terms, the securing of required governmental
permits and approvals, the hiring, training and retaining of skilled management
and other personnel and the availability of adequate financing, many of which
are beyond the control of the Company. See "Business -- Restaurant Expansion."
GEOGRAPHIC CONCENTRATION
Of the Company's existing 73 full-service Pizzeria Uno restaurants as of
May 5, 1995, 52 are located in the Northeast, including 21 in Massachusetts and
17 in New York. Accordingly, the Company's results of operations may be more
affected by adverse economic conditions in such areas than more geographically
diverse restaurant companies. See "Business -- Restaurant Locations."
FRANCHISING
The Company's success and continued growth are partially dependent upon its
franchisees and the manner in which they operate and develop their Pizzeria Uno
restaurants to promote and develop the Pizzeria Uno concept and its reputation
for quality and value. Although the Company has established criteria to evaluate
prospective franchisees, there can be no assurance that the Company's existing
or future franchisees will have the business abilities or access to financial
resources necessary to open Pizzeria Uno restaurants or will successfully
develop or operate Pizzeria
6
<PAGE> 9
Uno restaurants in their franchise areas in a manner consistent with the
Company's standards. In addition, there can be no assurance that the Company
will be able to identify and attract new franchisees necessary to meet the
Company's expansion plans. See "Business -- Restaurant Expansion" and
"Business -- Franchise Program."
COMPETITION
Competition in the restaurant industry is increasingly intense. The Company
competes principally with mid-priced, full-service restaurants primarily on the
basis of the quality of food offered, menu selection, price, service and decor.
There is also intense competition for real estate sites, personnel and qualified
franchisees. The Company has many well-established competitors, some with
substantially greater financial resources and longer histories of operation than
the Company, including competitors already established in regions into which the
Company is planning to expand, as well as competitors planning to expand in the
same regions. The Company's competitors also include regional and local chains
as well as local owner-operated restaurants. See "Business -- Competition."
RISKS OF RESTAURANT INDUSTRY
The restaurant business is affected by many factors, including changes in
consumer tastes and eating habits, changes in local, regional and national
economic conditions, inclement weather, demographic trends and traffic patterns
and the types, number and location of competing restaurants. In addition,
factors such as inflation, increased food, labor and employee benefit costs and
the availability of experienced management and hourly employees may also
adversely affect the Company's restaurants.
INCREASES IN FOOD AND OTHER COSTS
The Company's profitability is dependent on its ability to anticipate and
react to increases in food, labor, employee benefits and similar costs over
which the Company has very limited control. In the past, the Company has been
able to anticipate and minimize any adverse effect on the Company's
profitability due to increasing costs through its purchasing practices and menu
price adjustments, but there can be no assurance that it will be able to do so
in the future.
GOVERNMENT REGULATION
The Company, its franchisees and each of their restaurants are subject to
licensing and regulation by a number of government authorities, including
alcoholic beverage control, health, safety, sanitation, building and fire
agencies in the state or municipality in which the restaurant is located.
Restaurant operating costs are affected by increases in the minimum hourly wage,
unemployment tax rates, sales taxes, compliance with the Americans with
Disabilities Act, and similar matters. The Company is also subject to federal
regulation and certain state laws which govern the offer and sale of franchises.
Many state franchise laws impose substantive requirements on the franchise
agreement, including limitations on noncompetition provisions and the
termination or nonrenewal of a franchise. Difficulties in obtaining, or the
failure of the Company to obtain or retain, food or liquor licenses or approval
to sell franchises could have a material adverse effect on the Company's
business and its plans for expansion. See "Business -- Government Regulation."
DRAM SHOP LIABILITY
The Company is subject to "dram shop" statutes, which generally provide
that an individual injured by an intoxicated person has the right to recover
damages from an establishment that wrongfully served alcoholic beverages to the
intoxicated person. While the Company currently maintains dram shop insurance,
there can be no assurance that dram shop insurance will continue to be available
to the Company at commercially reasonable prices, if at all, or that such
insurance, if
7
<PAGE> 10
maintained, will be sufficient to cover any claims against the Company for dram
shop liability for which it may be held liable. See "Business -- Government
Regulation."
DEPENDENCE ON KEY PERSONNEL
The Company believes that the development of its business has been, and
will continue to be, dependent on Aaron D. Spencer, its Chairman and Chief
Executive Officer, Craig S. Miller, its President and Chief Operating Officer,
and other key executive employees. The loss of Mr. Spencer's or Mr. Miller's
services could have a material adverse effect upon the Company's business and
development, and there can be no assurance that qualified replacements would be
available. The Company's continued growth will also depend on its ability to
attract and retain additional skilled management personnel. See
"Business -- Restaurant Management" and "Management."
CONTROL BY MANAGEMENT AND PRINCIPAL SHAREHOLDER
Following the completion of this offering, Mr. Spencer, the principal
shareholder of the Company, will beneficially own, in the aggregate,
approximately 41.3% of the outstanding Common Stock. As a result, in practical
effect he will continue to control the election of the Board of Directors of the
Company and the direction of the affairs of the Company. See "Management" and
"Principal Shareholders." If Mr. Spencer's record and beneficial ownership falls
below 33% of the outstanding Common Stock, there would be a default under the
Company's revolving credit facility 30 days following such event and in the
event he ceases to serve actively as a director and full time employee of the
Company for any reason, including his death, a default would be triggered 60
days following such event.
STOCK PRICE VOLATILITY
The Company's Common Stock has been traded on the New York Stock Exchange
since 1991. The market price of the Common Stock could fluctuate substantially
due to a variety of factors, including quarterly operating results of the
Company or other restaurant companies, changes in general conditions in the
economy, the financial markets or the restaurant industry, natural disasters or
other developments affecting the Company or its competitors. In addition, in
recent years the stock market has experienced extreme price and volume
fluctuations. This volatility has had a significant effect on the market prices
of securities issued by many companies for reasons unrelated to the operating
performance of these companies. See "Price Range of Common Stock."
ANTITAKEOVER PROVISIONS
The Company's Restated Certificate of Incorporation, as amended, contains
certain provisions which may render more difficult an unfriendly tender offer,
proxy contest, merger or change in control of the Company. This could limit the
price that certain investors might be willing to pay in the future for shares of
the Common Stock. See "Description of Capital Stock and Other Matters."
8
<PAGE> 11
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered by the Company hereby (at an assumed public offering price
of $10.75 per share) are estimated to be approximately $20,062,500 ($23,110,125
if the Underwriter's over-allotment option is exercised in full). The Company
intends to use the net proceeds for repayment of a portion of the principal
amount of $31,940,000 outstanding under the Company's unsecured revolving credit
facility as of May 5, 1995, which had been borrowed primarily for the
development of additional restaurants and for working capital. The revolving
credit facility bears interest at the lender's prime rate or alternatively at
125 basis points above LIBOR and will convert to a three year term loan in
December 1997. As of May 5, 1995, the weighted average interest rate on the
revolving credit facility was 7.45%. The Company anticipates using its revolving
credit facility in the future for repayment of all or a portion of the $6.7
million of principal outstanding under its senior, unsecured notes, for the
development of additional restaurants and for working capital.
DIVIDEND POLICY
The Company has never paid any cash dividends on its Common Stock and for
the foreseeable future intends to continue its policy of retaining earnings to
finance its development and growth. The Board of Directors may reconsider this
policy from time to time in light of conditions then existing, including the
Company's earnings performance, financial condition and capital requirements.
Pursuant to both the private placement in June 1990 of $10.0 million of senior,
unsecured notes with a major insurance company and a $50.0 million unsecured
revolving credit facility obtained in December 1994, the Company became subject
to various financial and operating covenants, including limitations on the
payments of cash dividends. The most restrictive limitations, in general,
restrict the Company from paying cash dividends, if such payment, when
aggregated with certain other payments, would exceed 35% of net income for the
then most recent four-quarter period, or would cause certain net tangible asset
and debt ratios to be exceeded. See Note 6 of Notes to Consolidated Financial
Statements.
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is traded on the New York Stock Exchange under
the symbol "UNO." The following table sets forth, for the periods indicated, the
high and low sales prices per share of Common Stock as reported by the New York
Stock Exchange.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL YEAR ENDED OCTOBER 3, 1993
First Quarter.......................................................... $ 8.20 $ 4.50
Second Quarter......................................................... 6.60 4.80
Third Quarter.......................................................... 6.50 5.30
Fourth Quarter......................................................... 7.70 5.80
FISCAL YEAR ENDED OCTOBER 2, 1994
First Quarter.......................................................... 8.70 7.00
Second Quarter......................................................... 8.50 6.50
Third Quarter.......................................................... 8.60 7.10
Fourth Quarter......................................................... 10.90 7.90
FISCAL YEAR ENDED OCTOBER 1, 1995
First Quarter.......................................................... 11.10 9.30
Second Quarter......................................................... 12.80 10.10
Third Quarter (through May 5, 1995).................................... 12.00 10.63
</TABLE>
The last reported sale price of the Common Stock on the New York Stock
Exchange on May 5, 1995 was $10.75 per share. As of May 5, 1995, the Company
believes there were approximately 3,700 beneficial owners of the Company's
Common Stock, represented by 496 holders of record.
9
<PAGE> 12
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of April 2, 1995, and as adjusted to reflect the issuance and sale of
2,000,000 shares of Common Stock offered by the Company hereby (at an assumed
public offering price of $10.75 per share) and the application of the estimated
net proceeds therefrom.
<TABLE>
<CAPTION>
APRIL 2, 1995
-----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Current portions of long-term debt and capital lease
obligations(1)(2)................................................ $ 3,402 $ 3,402
======= =======
Long-term debt and capital lease obligations(1)(2):
Revolving credit facility........................................ $30,024 $ 9,961
Senior notes..................................................... 3,334 3,334
Capital lease obligations........................................ 778 778
------- -------
Total long-term debt and capital lease obligations............ 34,136 14,073
------- -------
Shareholders' equity:
Preferred Stock, $1.00 par value, 1,000,000 shares authorized;
none issued................................................... -- --
Common Stock, $.01 par value, 25,000,000 shares authorized;
11,374,699 shares issued, 13,374,699 shares issued
as adjusted(3)................................................ 114 134
Additional paid-in capital....................................... 30,830 50,873
Retained earnings................................................ 28,017 28,017
------- -------
Total shareholders' equity.................................... 58,961 79,024
------- -------
Total capitalization........................................ $93,097 $93,097
======= =======
<FN>
- ---------------
(1) See Notes 6 and 13 of Notes to Consolidated Financial Statements.
(2) See Note 5 of Notes to Consolidated Financial Statements.
(3) Excludes 996,610 shares of Common Stock issuable upon exercise of
outstanding stock options, of which options to acquire 426,017 shares were
exercisable as of April 2, 1995.
</TABLE>
10
<PAGE> 13
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data of the Company for
fiscal 1994, fiscal 1993 and fiscal 1992 have been derived from the consolidated
financial statements of the Company, which have been audited by Ernst & Young
LLP, as indicated in their report included elsewhere herein. The selected
consolidated financial data of the Company for the fiscal years ended September
29, 1991 and September 30, 1990 have been derived from consolidated financial
statements of the Company audited by Ernst & Young LLP, which are not included
herein. The selected consolidated financial data for the twenty-six week periods
ended April 2, 1995 and April 3, 1994 are derived from unaudited financial
statements. Selected consolidated financial data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the financial statements and the related notes included
elsewhere in this Prospectus. Unaudited data for the twenty-six week periods
ended April 2, 1995 and April 3, 1994 include, in the opinion of management, all
adjustments (consisting only of normal, recurring accruals) necessary to state
fairly the information set forth therein. Operations for the twenty-six week
period ended April 2, 1995 are not necessarily indicative of the results that
may be expected for the entire year ending October 1, 1995.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED 26 WEEKS ENDED
--------------------------------------------------------- ---------------------
SEP 30 SEP 29 SEP 27 OCT 3 OCT 2 APR 3 APR 2
1990 1991 1992 1993 1994 1994 1995
------- ------- ------- -------- -------- -------- --------
(53 WKS)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Restaurant sales............... $50,593 $65,921 $77,500 $98,234 $112,674 $ 49,980 $ 66,767
Consumer product sales......... 1,136 1,996 3,106 7,073 7,418 3,896 4,353
Franchise income............... 2,962 3,408 3,507 3,638 3,973 1,936 2,007
------- ------- ------- -------- -------- -------- --------
54,691 71,325 84,113 108,945 124,065 55,812 73,127
Costs and expenses:
Cost of food and beverages..... 12,589 16,187 19,224 26,024 30,177 13,731 18,432
Labor and benefits............. 15,438 21,017 24,912 32,990 36,935 16,813 22,089
Occupancy costs................ 7,387 10,735 14,492 17,295 18,979 8,680 10,584
Other operating costs.......... 2,981 5,013 9,638(1) 9,166 10,751 5,049 6,189
General and administrative..... 5,886 7,298 7,022 8,233 9,277 4,390 5,621
Depreciation and amortization.. 3,416 5,096 5,773 7,152 7,655 3,609 4,871
------- ------- ------- -------- -------- -------- --------
47,697 65,346 81,061 100,860 113,774 52,272 67,786
------- ------- ------- -------- -------- -------- --------
Operating income................. 6,994 5,979 3,052 8,085 10,291 3,540 5,341
Other expense.................... (328) (487) (150) (1,085) (845) (277) (954)
------- ------- ------- -------- -------- -------- --------
Income before income taxes....... 6,666 5,492 2,902 7,000 9,446 3,263 4,387
Provision for income taxes....... 2,846 2,337 1,140 2,837 3,690 1,322 1,624
------- ------- ------- -------- -------- -------- --------
Net income....................... $ 3,820 $ 3,155 $ 1,762 $ 4,163 $ 5,756 $ 1,941 $ 2,763
======= ======= ======= ======= ======== ======== ========
Earnings per common share........ $ 0.38 $ 0.29 $ 0.16 $ 0.37 $ 0.51 $ 0.17 $ 0.24
======= ======= ======= ======= ======== ======== ========
Weighted average shares
outstanding.................... 10,023 10,738 11,313 11,291 11,360 11,377 11,684
BALANCE SHEET DATA:
Total assets..................... $43,299 $61,260 $68,117 $74,735 $ 92,221 $ 79,650 $113,147
Long-term debt and capital lease
obligations, including current
portions....................... 10,478 10,477 10,475 11,973 21,523 15,552 37,538
Shareholders' equity............. 26,141 43,131 45,090 49,375 55,958 51,364 58,961
<FN>
- ---------------
(1) Fiscal 1992 results include a pre-tax expense of $2,500,000 ($1,518,000, or
$.13 per share, after tax) in connection with the closing of two
restaurants.
</TABLE>
11
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's revenues are derived primarily from three sources:
Company-owned restaurant sales, consumer product sales and franchise income from
franchised restaurants. Franchise income includes both royalty income and
initial franchise fees. Certain expenses (cost of food and beverages, labor and
benefits, occupancy costs, other operating costs and depreciation and
amortization) relate directly to Company-owned restaurants and consumer product
sales, while general and administrative expenses relate to all operations.
The Company capitalizes certain costs relating to the opening of new
restaurants until they open, at which time the costs are amortized over 12
months on a straight line basis.
The Company analyzes its operations on the basis of operating weeks,
comparable store sales and average annualized restaurant sales. An operating
week is one week of operation for one full-service restaurant. A restaurant is
included in the comparable store sales base after it has completed 16 months of
operation, and it is included in the comparable store base for all subsequent
periods presented, including monthly, quarterly and annually, with appropriate
weighting for partial periods. A restaurant is included in the calculation of
average annualized restaurant sales from its first week of operation and for all
subsequent periods presented including monthly, quarterly and annually, with
appropriate weighting for partial periods.
The Company's fiscal year ends on the close of business on the Sunday
closest to September 30 in each year. The fiscal year ended October 3, 1993
included 53 weeks of operations.
RESULTS OF OPERATIONS
<TABLE>
The following table sets forth the percentage relationship to total
revenues, unless otherwise indicated, of certain items included in the Company's
income statements, as well as certain operating data, for the periods indicated:
<CAPTION>
FISCAL YEAR ENDED 26 WEEKS ENDED
---------------------------------- --------------------
SEP 27 OCT 3 OCT 2 APR 3 APR 2
1992 1993 1994 1994 1995
-------- -------- -------- ------- --------
(53 WKS)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues:
Restaurant sales...................................... 92.1% 90.2% 90.8% 89.6% 91.3%
Consumer product sales................................ 3.7 6.5 6.0 7.0 6.0
Franchise income...................................... 4.2 3.3 3.2 3.4 2.7
-------- -------- -------- ------- --------
Total............................................. 100.0 100.0 100.0 100.0 100.0
Costs and expenses:
Cost of food and beverages(1)......................... 23.9 24.7 25.1 25.5 25.9
Labor and benefits(1)................................. 30.9 31.3 30.8 31.2 31.1
Occupancy costs(1).................................... 18.0 16.4 15.8 16.1 14.9
Other operating costs(1).............................. 12.0(2) 8.7 9.0 9.4 8.7
General and administrative............................ 8.3 7.6 7.5 7.9 7.7
Depreciation and amortization(1)...................... 7.2 6.8 6.4 6.7 6.8
-------- -------- -------- ------- --------
Operating income........................................ 3.7 7.4 8.3 6.3 7.3
Other expense........................................... (.2) (1.0) (.7) (.5) (1.3)
-------- -------- -------- ------- --------
Income before taxes..................................... 3.5 6.4 7.6 5.8 6.0
Provision for income taxes.............................. 1.4 2.6 3.0 2.4 2.2
-------- -------- -------- ------- --------
Net income.............................................. 2.1% 3.8% 4.6% 3.4% 3.8%
======== ======== ======== ======= ========
OPERATING DATA:
Average annualized restaurant sales(3)................ $ 1,787 $ 1,807 $ 1,886 $ 1,756 $ 1,866
Number of restaurants at end of period:
Company-owned Pizzeria Uno(4)....................... 50 56 65 58 74
Other Company-owned(5).............................. 1 1 1 1 4
Franchised(6)....................................... 59 58 61 61 60
-------- -------- -------- ------- --------
Total............................................. 110 115 127 120 138
======== ======== ======== ======= ========
</TABLE>
12
<PAGE> 15
[FN]
- ---------------
(1) Percentage of restaurant and consumer product sales.
(2) Fiscal 1992 results include a pre-tax expense of $2,500,000 ($1,518,000, or
$.13 per share, after tax) in connection with the closing of two
restaurants.
(3) Full-service Company-owned Pizzeria Uno restaurants open for all or part of
period. See "-- General." For a discussion of estimated average annualized
restaurant sales for franchisees, see "Business -- Franchise Program."
(4) Includes three limited service Pizzeria Uno units as of April 2, 1995; two
limited service Pizzeria Uno units in fiscal 1994; and 1990; and one limited
service Pizzeria Uno unit in fiscal 1993 and 1992.
(5) Includes one Mexican restaurant and three Bay Street Grill restaurants as of
April 2, 1995; one Mexican restaurant in fiscal 1994, 1993 and 1992; one
steakhouse restaurant in fiscal 1991; and two steakhouse restaurants in
fiscal 1990. See "Business -- Other Business Development."
(6) Includes two limited service Pizzeria Uno units as of April 2, 1995, two in
fiscal 1994 and one in fiscal 1991.
TWENTY-SIX WEEKS ENDED APRIL 2, 1995 COMPARED TO TWENTY-SIX WEEKS ENDED APRIL 3,
1994
Total revenues increased 31.0% to $73.1 million for the 26 weeks ended
April 2, 1995 from $55.8 million in the comparable period in 1994. Company-owned
restaurant sales increased 33.6% to $66.8 million for the 26 weeks ended April
2, 1995 due primarily to a 19.8% increase in operating weeks of full-service
Pizzeria Uno restaurants resulting from the addition of 14 restaurants during
the past four quarters, as well as the purchase of three Bay Street Grill
restaurants in December 1994. See "Business -- Other Business Development." The
increase in restaurant sales was also due to a 6.6% increase in comparable store
sales for the 26 weeks ended April 2, 1995.
Consumer product sales increased 11.7% to $4.4 million for the 26 weeks
ended April 2, 1995 from $3.9 million in the comparable period in 1994 due to
higher sales of Pizzeria Uno brand and private label refrigerated pizza, as well
as increased shipments of frozen pizza for tests by customers outside New
England.
Franchise income increased 3.7% to $2.0 million for the 26 weeks ended
April 2, 1995 from $1.9 million in the comparable period in 1994. Royalty income
increased 7.8% to $2.0 million for the 26 weeks ended April 2, 1995 generally
due to an increase in franchise restaurant sales. Initial franchise fees totaled
$55,000 for the 26 weeks ended April 2, 1995 compared to $125,000 in the
comparable period in 1994.
Cost of food and beverages as a percentage of restaurant and consumer
product sales increased to 25.9% for the 26 weeks ended April 2, 1995 from 25.5%
in the comparable period in 1994. This percentage cost increase primarily
reflected changes in sales mix toward a larger percentage of higher-cost
non-pizza menu items.
Labor and benefits as a percentage of restaurant and consumer product sales
decreased slightly to 31.1% for the 26 weeks ended April 2, 1995 from 31.2% in
the comparable period in 1994, principally due to the leverage of higher
comparable store sales.
Occupancy costs as a percentage of restaurant and consumer product sales
declined to 14.9% for the 26 weeks ended April 2, 1995 from 16.1% in the
comparable period in 1994, primarily due to an increased number of owned
restaurant properties and the operating leverage provided by the increase in
comparable store sales noted above.
Other operating costs declined as a percentage of restaurant and consumer
product sales to 8.7% for the 26 weeks ended April 2, 1995 from 9.4% in the
comparable period in 1994. The primary reasons for this improvement were lower
advertising expenses as a percentage of restaurant and consumer product sales
and the operating leverage provided by the increase in comparable store sales.
General and administrative expenses decreased as a percentage of total
revenues to 7.7% for the 26 weeks ended April 2, 1995 from 7.9% in the
comparable period in 1994 as a result of allocating certain fixed expenses over
a larger revenue base.
Depreciation and amortization expenses as a percentage of restaurant and
consumer product sales increased slightly to 6.8% for the 26 weeks ended April
2, 1995 from 6.7% in the comparable
13
<PAGE> 16
period in 1994, principally due to increased amortization of pre-opening costs
associated with the higher rate of unit growth.
Operating income increased 50.9% to $5.3 million for the 26 weeks ended
April 2, 1995 compared to $3.5 million in the comparable period in 1994. The
operating profit margin improved to 7.3% from 6.3%, primarily as a result of the
increase in Company-owned restaurants and comparable store sales.
Other expense increased to $954,000 or 1.3% of total revenues for the 26
weeks ended April 2, 1995 from $277,000 or .5% of total revenues in the
comparable period in 1994. This increase was due to higher interest expense
associated with the increased level of debt used to fund the Company's
accelerated expansion plan and its ownership of an increasing number of
restaurant properties. In addition, other expense in the comparable period in
1994 was favorably affected by a $312,000 gain on the sale of a restaurant to a
franchisee.
The effective income tax rate declined to 37.0% for the 26 weeks ended
April 2, 1995 from 40.5% in the comparable period in 1994. The effective income
tax rate for the 26 weeks ended April 2, 1995 was lower primarily due to the
effect of the FICA tip tax credit which became effective on January 1, 1994 and
generally lower state income taxes.
FISCAL 1994 COMPARED TO FISCAL 1993 (53 WEEKS)
Total revenue increased 13.9% to $124.1 million in fiscal 1994 from $108.9
million in the prior year. Company-owned restaurant sales increased 14.7% to
$112.7 million in fiscal 1994 due primarily to a 9.4% increase in operating
weeks of full-service restaurants resulting from the addition of eight new
restaurants, and a 6.5% increase in comparable store sales.
Consumer product sales increased 4.9% to $7.4 million in fiscal 1994 from
$7.1 million in the prior year primarily due to expanded sales of private label,
thin-crust pizzas to several supermarket chains in New England. Initial
shipments of both refrigerated and frozen Pizzeria Uno brand pizzas commenced in
fiscal 1994 to new customers in New York, New Jersey, Pennsylvania and Ohio in
order to expand the Company's regional presence beyond New England.
Franchise income increased 9.2% to $4.0 million in fiscal 1994 from $3.6
million in the prior year. Royalty income increased 9.5% to $3.8 million in
fiscal 1994 from $3.5 million in the prior year primarily due to an increase of
7.1% in average unit sales. Initial franchise fees totaled $150,000 in fiscal
1994 compared to $147,500 in fiscal 1993.
Cost of food and beverages as a percentage of restaurant and consumer
product sales increased to 25.1% in fiscal 1994 from 24.7% in the prior year,
reflecting primarily changes in sales mix toward a larger percentage of higher
cost non-pizza menu items.
Labor and benefits as a percentage of restaurant and consumer product sales
decreased slightly to 30.8% in fiscal 1994 from 31.3% in the prior year,
principally due to the leverage of higher comparable store sales.
Occupancy costs as a percentage of restaurant and consumer product sales
declined to 15.8% in fiscal 1994 from 16.4% in the prior year, resulting from
the Company's purchase of the real estate for several restaurants since fiscal
1992, and the operating leverage provided by the increase in comparable store
sales.
Other operating costs as a percentage of restaurant and consumer product
sales were 9.0% for fiscal 1994, remaining relatively unchanged from 8.7% in the
prior year.
14
<PAGE> 17
General and administrative expenses decreased as a percentage of total
revenues to 7.5% in fiscal 1994 from 7.6% in the prior year, principally due to
the allocation of certain fixed expenses over a larger revenue base.
Depreciation and amortization expenses as a percentage of restaurant and
consumer product sales decreased to 6.4% in fiscal 1994 from 6.8% in the prior
year principally due to the increase in comparable store sales.
Operating income increased 27.3% to $10.3 million in fiscal 1994 from $8.1
million for the prior year. The operating profit margin increased to 8.3% in
fiscal 1994 from 7.4% in the prior year, principally due to an increase in
Company-owned restaurants and comparable store sales.
Other expense declined to $845,000 in fiscal 1994 from $1.1 million in the
prior year, principally due to a $312,000 gain on the sale of a restaurant to a
franchisee in fiscal 1994.
The effective income tax rate declined to 39.1% in fiscal 1994 from 40.5%
in fiscal 1993, primarily due to the FICA tip credit, which became effective on
January 1, 1994.
FISCAL 1993 (53 WEEKS) COMPARED TO FISCAL 1992
Total revenue increased 29.5% to $108.9 million in fiscal 1993 from $84.1
million in the prior year. Company-owned restaurant sales increased 26.8% to
$98.2 million in fiscal 1993 due to a 23.6% increase in operating weeks of
full-service restaurants resulting from the addition of six new restaurants.
Comparable-store sales declined slightly by .4%.
Consumer product sales increased 127.7% to $7.1 million in fiscal 1993 from
$3.1 million in the prior year. This growth was due principally to new channels
of distribution. Specifically, significant sales to American Airlines, and
penetration into the New York metropolitan area were responsible for the rapid
expansion of this business. Also, shipments were initiated to new customers in
Pennsylvania and New Jersey. A new production facility opened in January 1993,
and additional capacity was added in fiscal 1993 to support this growth.
Franchise income increased 3.7% to $3.6 million in fiscal 1993 from $3.5
million in the prior year. Royalty income increased 6.2% to $3.5 million in
fiscal 1993 from $3.3 million in the prior year due to a 3.6% increase in
operating weeks resulting from the opening of three new restaurants. Initial
franchise fees totaled $147,500 in fiscal 1993 compared to $220,000 in fiscal
1992 due to fewer new franchise openings.
Cost of food and beverages as a percentage of restaurant and consumer
product sales increased to 24.7% in fiscal 1993 from 23.9% in the prior year,
primarily as a result of the Company's decision to increase the size of its
deep-dish pizzas in fiscal 1993.
Labor and benefits as a percentage of restaurant and consumer product sales
increased slightly to 31.3% in fiscal 1993 from 30.9% in the prior year,
primarily as a result of the Company's decision to add additional managers in
many of its high-volume restaurants in fiscal 1993.
Occupancy costs as a percentage of restaurant and consumer product sales
declined to 16.4% in fiscal 1993 from 18.0% in the prior year, principally due
to the Company's purchase of several restaurants in fiscal 1992 and 1993, and
the operating leverage provided by the sales growth of the consumer products
business.
Other operating costs as a percentage of restaurant and consumer product
sales decreased to 8.7% in fiscal 1993 from 12.0% in the prior year, primarily
due to a pre-tax charge of $2.5 million in fiscal 1992 related to the closing of
two restaurants.
General and administrative expenses decreased as a percentage of total
revenues to 7.6% in fiscal 1993 from 8.3% in the prior year, principally due to
the allocation of certain fixed expenses over a larger revenue base.
15
<PAGE> 18
Depreciation and amortization expenses as a percentage of restaurant and
consumer product sales decreased to 6.8% in fiscal 1993 from 7.2% in the prior
year, principally due to the increase in comparable store sales.
Operating income increased 164.9% to $8.1 million in fiscal 1993 compared
to $3.1 million in the prior year. Fiscal 1992 results included a pre-tax charge
of $2.5 million discussed above. The operating profit margin improved to 7.4% in
fiscal 1993 from 6.6% in the prior year excluding the $2.5 million pre-tax
charge in fiscal 1992.
Other expense increased to $1.1 million in fiscal 1993 from $150,000 in the
prior year. The principal factors for this increase were higher interest costs
and a decline in investment income as the Company financed its growth in 1993
through the use of its available cash and its revolving credit facility.
The effective income tax rate was 40.5% in fiscal 1993 compared to 39.3% in
the prior year due to the benefit of tax-exempt interest income received in
fiscal 1992.
LIQUIDITY AND SOURCES OF CAPITAL
The following table presents a summary of the Company's cash flows for the
fiscal years 1992, 1993 and 1994 and for the 26 weeks ended April 2, 1995.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED 26 WEEKS
---------------------------------------- ENDED
SEPTEMBER 27 OCTOBER 3 OCTOBER 2 APRIL 2
1992 1993 1994 1995
------------ ----------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net cash provided by operating
activities.............................. $ 9,028 $ 10,987 $ 14,462 $ 5,930
Net cash used in investing activities..... (9,890) (11,869) (24,441) (22,932)
Net cash provided by financing
activities.............................. 375 1,440 9,942 16,255
-------- --------- --------- ---------
Increase (Decrease) in cash and cash
equivalents............................. $ (487) $ 558 $ (37) $ (747)
======== ========= ========= =========
</TABLE>
Historically, the Company has leased most of its restaurant locations and
pursued a strategy of controlled growth, financing its expansion principally
from operating cash flow, equity offerings and from the sale of senior,
unsecured notes and short-term borrowing under revolving lines of credit. During
fiscal 1992, 1993 and 1994, the Company's investment in property, equipment and
leasehold improvements was $18.7 million, $12.5 million and $22.2 million,
respectively, and during the 26 week period ended April 2, 1995, such investment
was $22.6 million.
The Company currently plans to open approximately 38 restaurants during
fiscal 1995 and fiscal 1996, 11 of which were open as of May 5, 1995. The
Company expects that the average cash investment required to open a full-service
Pizzeria Uno restaurant, excluding land and preopening costs, will be
approximately $1.5 million. For the balance of fiscal 1995, the Company has
planned $19.0 million in additional capital expenditures primarily for the
development of new restaurants.
As of April 2, 1995, the Company had outstanding indebtedness of $30.0
million under its unsecured, revolving line of credit, $6.7 million of senior,
unsecured notes and $847,000 in capital lease obligations. In December 1994, the
Company obtained a $50.0 million revolving credit facility to replace its then
existing $20.0 million revolving credit facility. The new revolving credit
facility will convert to a three year term loan in December 1997. Advances under
the revolving credit facility will accrue interest at the lender's prime rate,
or alternatively, 125 basis points above LIBOR. The Company intends to use the
proceeds of this offering to repay a portion of the principal amount outstanding
under its revolving credit facility. The Company anticipates using the revolving
credit facility in the future for repayment of all or a portion of the $6.7
million of principal outstanding under its senior, unsecured notes, for the
development of additional restaurants and for working capital.
16
<PAGE> 19
The Company believes that existing cash balances, the proceeds from this
offering, cash generated from operations and borrowings under its revolving line
of credit will be sufficient to satisfy the Company's working capital and
capital expenditure requirements through fiscal 1996.
IMPACT OF INFLATION
Inflation has not been a major factor in the Company's business for the
last several years. The Company believes it has historically been able to pass
on increased costs through menu price increases, but there can be no assurance
that it will be able to do so in the future. Future increases in local area
construction costs could adversely affect the Company's ability to expand.
SEASONALITY
The Company's business is seasonal in nature, with revenues and, to a
greater degree, operating income being lower in its first and second quarters
than its other quarters due to the Company's reduced winter volumes. See Note 12
of Notes to Consolidated Financial Statements.
17
<PAGE> 20
BUSINESS
GENERAL
The Company owns and operates 73 and franchises 58 casual dining,
full-service restaurants under the name "Pizzeria Uno...Chicago Bar & Grill."
The restaurants offer a diverse, high-quality menu at moderate prices in a
casual, friendly atmosphere. The restaurants feature the Company's signature
Chicago-style deep-dish pizza and a selection of entrees, including thin crust
pizza, pasta, fajitas, ribs, steak and chicken, as well as a variety of
appetizers, salads, sandwiches and desserts. The Company's restaurants average
approximately 6,200 square feet with seating for an average of approximately 180
guests. For the 52 weeks ended April 2, 1995, Company-owned restaurants averaged
$1,932,000 in sales. Company-owned restaurants are located predominantly in the
Northeast and Mid-Atlantic states, and franchised restaurants are located
throughout the United States.
In fiscal 1993, the Company began implementing strategic initiatives
intended to strengthen its position in casual dining and to distinguish its
restaurants from quick service pizza, pizza and pasta, and full-service Italian
restaurants. As part of this strategy, during fiscal 1994, the Company invested
approximately $2.5 million in new kitchen capabilities, including saute
stations, grills and fryers, for its Company-owned restaurants enabling the
Company to enhance the quality, breadth and appeal of its non-pizza menu items.
To better communicate its concept and broadened menu to consumers, the Company
refined the name of its restaurants to Pizzeria Uno . . . Chicago Bar & Grill
and upgraded the design and decor of its restaurants to be consistent with its
casual dining theme. In addition, in fiscal 1993, the Company increased the size
of its deep-dish pizzas to provide greater value and added additional restaurant
managers in many of its higher volume units to improve overall service. The
Company believes these strategic initiatives directly contributed to an increase
in its average guest check and increases in comparable store sales of 6.5% in
fiscal 1994 and 6.6% for the 26 weeks ended April 2, 1995.
The Company recently has been expanding its channels of distribution to
capitalize on the Pizzeria Uno brand name and the appeal of its signature
Chicago-style deep-dish pizza. Currently, the Company is distributing
refrigerated and frozen Chicago-style deep-dish pizza to approximately 870
supermarkets, primarily in New England, for sale in their fresh deli counters
and frozen food sections. Since January 1993, the Company has also been
supplying frozen Pizzeria Uno brand, Chicago-style deep-dish pizza to American
Airlines for service on its flights. Approximately 1.6 million Pizzeria Uno
brand pizzas were served aboard American Airlines flights during fiscal 1994.
The Company is testing a similar pizza product at Pizzeria Uno kiosks in 14
General Cinema theaters. The Company also operates three neighborhood,
limited-seating take-out units under the name "Uno...Pizza Takery." These units
are located in strip centers, occupy approximately 2,000 square feet and offer
limited seating for up to 40 customers.
The Company acquired the rights to the name "Pizzeria Uno" from the late
Ike Sewell, who opened the original Pizzeria Uno restaurant in Chicago, Illinois
in 1943 and is considered the originator of Chicago-style deep-dish pizza. The
Company opened its first Pizzeria Uno restaurant in 1979. During fiscal 1995,
the Company expects to open approximately 18 restaurants, 11 of which were open
as of May 5, 1995, and during fiscal 1996, the Company expects to open
approximately 20 restaurants. During fiscal 1995, the Company expects
franchisees to open approximately six restaurants, three of which were open as
of May 5, 1995, and during fiscal 1996, the Company expects franchisees to open
approximately 10 restaurants.
RESTAURANT CONCEPT AND MENU
Pizzeria Uno restaurants are full-service, casual dining restaurants,
featuring the Company's signature Chicago-style deep-dish pizza and a diverse
menu of high quality, moderately-priced menu items. The Company's target market
is middle to upper-middle income individuals in the 17 to 49 year-old age group.
The restaurants are generally open from 11:00 a.m. to midnight, seven days per
week.
18
<PAGE> 21
The restaurants feature the Company's signature Chicago-style deep-dish
pizzas and a selection of entrees, including thin crust pizza, pastas, fajitas,
ribs, steak and chicken, as well as a variety of appetizers, salads, sandwiches
and desserts. The Company's signature product, its Chicago-style, deep-dish
pizza, filled with ingredients such as fresh meats, spices, vegetables and real
cheeses, is baked according to proprietary recipes. The Company believes that
its proprietary recipes produce a superior pizza that is difficult to duplicate.
In fiscal 1994, the Company invested approximately $2.5 million in new kitchen
capabilities, including saute stations, grills and fryers, for its Company-owned
restaurants enabling the Company to enhance the quality, breadth and appeal of
its non-pizza items. For the 26 weeks ended April 2, 1995 the Company's average
per guest check for full service Company-owned restaurants was approximately
$9.40. For fiscal 1994, sales of alcoholic beverages accounted for approximately
18% of total restaurant sales.
RESTAURANT DESIGN AND SITE SELECTION
The Company has recently upgraded the design and decor of its restaurants
to be consistent with its theme as "Pizzeria Uno...Chicago Bar & Grill."
Pizzeria Uno restaurants are designed and decorated to provide a friendly and
comfortable atmosphere expected of full-service, casual dining restaurants and
distinguished from typical pizza restaurants. The decor of each restaurant
emphasizes quality with wood, brick and brass. To ensure quality and compliance
with Company standards, preliminary exterior design and complete interior and
kitchen design for all Company-owned and franchised restaurants are prepared by
the Company. The Company's current prototype free-standing restaurant occupies
approximately 6,400 square feet, with a seating capacity of approximately 200
customers.
The Company considers the specific location of a restaurant to be critical
to its long-term success and devotes significant effort to the investigation and
evaluation of potential sites. One or more of the Company's executive officers
inspect and approve the site for each Company-owned and franchised restaurant.
Within each target market area, the Company evaluates population density and
demographics, major retail and office concentration and traffic patterns. In
addition, the Company evaluates visibility, accessibility, proximity to direct
competition and various other site specific factors. Pizzeria Uno restaurants
are located in both urban and suburban markets, in free-standing buildings,
strip centers and malls. Restaurant development is currently targeted at high
profile, free-standing locations.
Historically, the Company has leased most of its restaurants to minimize
investment costs. Since fiscal 1992, however, the Company began selectively
purchasing real estate to develop new restaurants where available and when the
expected long-term cost of owning the real estate is less than the cost of
leasing. Of the 18 Company-owned restaurants opened between October 4, 1993 and
May 5, 1995, 14 are located in leased facilities and four are fee owned
properties. See " -- Properties."
19
<PAGE> 22
RESTAURANT LOCATIONS
The following tables provide the locations for Company-owned and franchised
restaurants as of May 5, 1995.
COMPANY-OWNED RESTAURANTS(81)
COLORADO (1) Danvers Bay Ridge
Denver Dedham Forest Hills
Framingham Manhattan(5)
CONNECTICUT (5) Hanover Lynbrook
Danbury Hyannis Massapequa
Fairfield Kingston Rochester
Manchester Lynnfield Syracuse
Milford Newton(2)(c) Vestal
West Hartford Newtonville (d) Yonkers
Revere
FLORIDA (3) Shrewsbury(d) OHIO (1)
Daytona Beach Springfield Columbus
Orlando Waltham (d)
Ormond Beach Woburn PENNSYLVANIA (4)
Paoli
ILLINOIS (5) MISSOURI (1) Philadelphia(2)(e)
Aurora St. Louis Pittsburgh
Chicago(3)(a) Chesterfield Monroeville
Schaumburg(b)
NEW HAMPSHIRE(3) RHODE ISLAND (1)
MAINE (1) Concord Warwick
Portland Manchester
Nashua VIRGINIA (5)
MARYLAND (5) Balston
Baltimore NEW JERSEY (2) Fairfax
Bel Air Paramus Norfolk
Bethesda Woodbridge (b) Potomac Mills
Towson Reston
Waldorf NEW YORK (17)
Albany WASHINGTON, DC(2)
MASSACHUSETTS (25) Amherst Cleveland Park
Boston(5) Buffalo Union Station
Braintree New York City
Brockton Bayside
Burlington
Cambridge(2)
FRANCHISED RESTAURANTS(60)
ARIZONA (1) KENTUCKY (1) OHIO (6)
Tempe Lexington Cincinnati(2)
CALIFORNIA (9) MARYLAND (1) Cleveland(3)
Cupertino Deep Creek Dayton
Fremont MASSACHUSETTS (4) OKLAHOMA (1)
Los Angeles Holyoke Tulsa
San Diego(2) Marlborough PENNSYLVANIA (5)
San Francisco(3) Springfield(2)(c) King of Prussia
Santa Clara MICHIGAN (2) Langhorne
CANADA (1) Ann Arbor Media
Toronto Bloomfield Philadelphia(2)
FLORIDA (5) MINNESOTA (2) PUERTO RICO (2)
Miami Minnetonka San Juan(2)
Orlando(3) Edina TEXAS (5)
Tampa NEVADA (1) Addison
HAWAII (1) Las Vegas Arlington
Honolulu NEW JERSEY (4) Dallas
ILLINOIS (2) Cherry Hill Ft. Worth
Champaign Secaucus Houston
Chicago(d) South Plainfield WASHINGTON, DC(1)
INDIANA (2) Wayne Georgetown
Indianapolis NEW YORK (1) WISCONSIN (3)
Merrillville Poughkeepsie Milwaukee
Madison(2)
[FN]
- ---------------
(a) Includes one Mexican restaurant.
(b) Bay Street Grill.
(c) Includes one limited seating, take-out restaurant.
(d) Limited seating, take-out restaurant.
(e) Includes one Bay Street Grill.
20
<PAGE> 23
UNIT ECONOMICS
For the 12 month period ended April 2, 1995, the 57 Company-owned
restaurants opened prior to April 3, 1994 generated average restaurant sales of
approximately $1,927,000, average restaurant operating income of approximately
$274,000 (or 14.2% of sales) and average restaurant cash flow of approximately
$393,000 (or 20.4% of sales). The 18 Company-owned restaurants opened in fiscal
1994 and fiscal 1995 had an average cash investment of approximately $1,503,000
for building, leasehold improvements, furniture, fixtures and equipment, but
excluding land costs and pre-opening expenses. The Company expects that the
average cash investment required to open a full-service Pizzeria Uno restaurant
will be approximately $1.5 million, excluding land and pre-operating expenses.
In the future, the Company anticipates that it will continue to purchase a
portion of its new restaurant locations and expects that its total investment
for each fee owned unit will be approximately $2.0 to $2.5 million and its
overall average investment, including leased locations, will be approximately
$1.6 to $1.8 million per unit.
RESTAURANT EXPANSION
The Company intends to continue opening Company-owned restaurants in two of
its primary metropolitan markets, New York and Baltimore/Washington, D.C. The
Company is also engaged in site development efforts in Chicago, Orlando and
Denver. Due to its current concentration of restaurants in New England, future
expansion in this market will be more selective. In fiscal 1994, the Company
opened seven restaurants, acquired three restaurants, sold one restaurant and
closed one restaurant. The Company expects to open approximately 18 restaurants
in fiscal 1995 (11 of which were open as of May 5, 1995) and approximately 20
restaurants in fiscal 1996.
The Company will continue to grant franchisees the right to expand the
Pizzeria Uno restaurant business throughout the United States and, as
opportunities arise, outside the United States. In fiscal 1994, four franchised
restaurants were opened, one Company-owned restaurant was sold to a franchisee,
three franchised restaurants were sold to the Company and one franchised
restaurant was closed. During fiscal 1995, the Company expects franchisees to
open approximately six restaurants, three of which were open as of May 5, 1995,
and during fiscal 1996, the Company expects franchisees to open approximately 10
restaurants. As of May 5, 1995, three franchised restaurants have closed during
fiscal 1995. See "-- Franchise Program."
OTHER BUSINESS DEVELOPMENT
The Company has recently been expanding its consumer product business
principally through distribution of its deep-dish pizza in the fresh deli
counters and frozen food sections of approximately 870 supermarkets in New
England, New York, New Jersey, Pennsylvania and Ohio. Currently, Pizzeria Uno
deep-dish pizza is the leading brand of fresh, refrigerated pizza sold in New
England supermarkets. The Company also is currently supplying private-label
thin-crust pizza to selected New England supermarket chains. In addition, in
January 1993, the Company began supplying frozen deep-dish pizzas to American
Airlines for service on its flights. Approximately 1.6 million pizzas were
served aboard American Airlines flights during fiscal 1994. Finally, the Company
is testing the sale of frozen pizzas at Pizzeria Uno kiosks currently located in
14 General Cinema movie theaters. To support the growth of the Company's
consumer product business, a production facility in Brockton, Massachusetts
began operation in January 1993. The Company expanded the facility later in
fiscal 1993 and currently is further expanding the facility. See
"-- Properties."
The Company is continuing to test other traditional and non-traditional
distribution channels for its signature, deep-dish pizza product. The Company
currently operates three limited-seating take-out units with the name
"Uno...Pizza Takery." The units are located in strip centers, occupy
approximately 2,000 square feet and offer limited seating for up to 40
customers.
In December 1994, the Company purchased three Bay Street Grill restaurants
located in Schaumburg, Illinois, Woodbridge, New Jersey and Philadelphia,
Pennsylvania. The Bay Street Grill
21
<PAGE> 24
restaurants are full-service, casual dining restaurants, which specialize in
seafood. The Company is currently evaluating the Bay Street Grill concept for
potential expansion.
RESTAURANT MANAGEMENT
The staff for a typical Pizzeria Uno restaurant consists of one general
manager, two assistant managers and approximately 50 to 70 hourly employees,
many of whom are part-time personnel. Managers of Company-owned restaurants are
compensated with a salary plus a performance bonus based on restaurant sales and
profits. The Company believes that turnover among the Company's restaurant
managers is below the industry average.
The Company conducts an initial ten-week training program for all managers
and franchisees focusing on restaurant operations. There is continuing training
of Company-owned restaurant managers through specialized training programs and
regular meetings that emphasize the areas of leadership, quality of food
preparation and service. The Company requires its food handling personnel and
alcohol serving employees to participate in a training program to ensure the
sanitary and responsible service of food and alcohol. The training program is
conducted annually. The Company also holds quarterly regional meetings and an
annual national meeting of franchisees and Company managers which focus on
continuing training in marketing, new products, site selection and aspects of
business management.
Each Company-owned restaurant manager and franchisee is required to comply
with an extensive operations manual which contains detailed standards and
specifications for all elements of operations. The Company generally visits
franchisees on a quarterly basis, but continuing training of franchised
restaurant managers is the responsibility of the franchisees.
The Company employs 12 regional operations directors. The Company also
currently employs five field-service supervisors to monitor all franchised
restaurants. Their duties include quarterly visits and detailed, annual
inspections of quality, service and sanitation. As additional restaurants are
opened, the Company intends to add qualified supervisors in order to maintain
quality control.
PURCHASING
The Company negotiates directly with suppliers for all primary food
ingredients and beverage products to ensure adequate supplies and to obtain
competitive prices. The Company seeks competitive bids from suppliers on many of
its primary food ingredients on a periodic basis no less than annually for each
supplier. The Company approves suppliers of these ingredients and products and
requires its suppliers to adhere to product specifications established by the
Company. Several key ingredients are proprietary. They are manufactured for the
Company under private label and sold to authorized distributors for resale to
Company-owned restaurants and franchisees. The Company and its franchisees
purchase substantially all food and beverage products from authorized local or
national distributors. In some cases, franchisees find it more economical to
purchase most of these products from the same distributors servicing the
Company-owned restaurants in order to take advantage of volume discounts. The
Company does not derive any income from suppliers or distributors on sales to
franchisees. All essential food and beverage products are available, or upon
short notice can be made available, from alternative qualified suppliers.
ADVERTISING AND MARKETING
For fiscal 1994, the Company spent 2.7% of restaurant and consumer product
sales on advertising and marketing. The Company relies primarily on television,
radio, direct mail and print advertising. Through an advertising cooperative
fund, the Company prepares regional and local advertising materials and also
produces menus and promotional programs for both franchised and Company-owned
restaurants.
Franchisees are required to contribute a fee of up to 1.0% of franchised
restaurant sales to the advertising cooperative fund, and the Company
contributes an equal percentage of Company-owned
22
<PAGE> 25
restaurant sales. Except for the materials prepared and distributed by the
Company through the advertising cooperative fund, franchisees are responsible
for the implementation of advertising and marketing for their respective
restaurants, subject to adherence to Company-established guidelines. In
addition, the Company's franchise agreement requires franchisees to spend at
least 2% of franchised restaurant sales each year on local advertising and
public relations.
FRANCHISE PROGRAM
As of May 5, 1995, the Company had 60 franchised Pizzeria Uno restaurants
operated by 34 franchisees located in 19 states, the District of Columbia,
Puerto Rico and Canada. Historically, franchises were granted on a unit-by-unit
basis, rather than by territory. The Company is currently pursuing territory
development by entering into development agreements with franchisees for
construction of one or more restaurants over a certain period of time and within
a certain geographic area. The Company is in continual discussions with existing
and prospective franchisees for the development of certain geographic areas and
expects to grant additional franchises to qualified applicants with
restaurant-related operating experience and requisite financial resources.
New domestic franchisees are required to pay at the time the development
agreement is signed a nonrefundable fee of $10,000 per restaurant committed to
be developed. The Company's current franchise agreement also requires
franchisees to pay a unit franchisee fee of $30,000 per restaurant before
signing a franchise agreement for a specific location and a continuing monthly
royalty based on a percentage of restaurant sales. Royalties and franchise fees
for international franchises are negotiated on an individual basis. Royalties
received by the Company averaged 4.4% of franchised restaurant sales for the 26
weeks ended April 2, 1995. At the beginning of fiscal 1992, the Company
implemented a variable royalty plan that allows royalty rate reductions from
contractual rates for those franchised restaurants meeting certain criteria. It
is available only to those franchised restaurants that do not achieve minimum
sales levels during their first five years of operation in relation to their
overall capital investment, including capitalized lease obligations. The minimum
royalty rate under the variable royalty plan is 3% and ranges up to 5%. Seven
franchised restaurants currently qualify for some degree of royalty rate
reduction under the variable royalty plan.
The Company receives weekly and monthly sales reports from its franchisees
and in addition, conducts test sales audits of all franchisees on an annual
basis. Based upon these reports, the Company believes that the average
annualized sales for its franchised restaurants in fiscal 1994 was approximately
$1.4 million.
The franchise agreements generally prohibit the Company from granting
competing franchises or opening competing restaurants within three miles of a
franchised restaurant. The franchise agreements have an initial term of 20 years
with three successive ten-year renewal periods at the option of the franchisee,
provided that the agreement has not previously been terminated by either party.
Upon each renewal, the Company may require a franchisee to sign a revised
franchise agreement and to make capital expenditures to renovate the restaurant,
but may not increase the continuing monthly royalty or charge a renewal fee. The
Company retains the right to terminate a franchise agreement for a variety of
reasons, including significant and willful understatement of gross receipts,
failure to pay fees, material misrepresentation on an application for a
franchise, or material breach or default under the franchise agreement,
including failure to maintain Company operating standards. Many state franchise
laws limit the ability of a franchisor to terminate or refuse to renew a
franchise. The Company has the right to audit and receive certain monthly and
annual financial and other information from franchisees.
The Company's initial training program for franchisees is similar to its
training program for management trainees and employees in Company-owned
restaurants. See "-- Restaurant Management." In order to ensure uniform quality
standards, the Company requires franchisees to comply with Company
specifications as to space, design and decor, menu items, principal food
ingredients and day-to-day operations, as set forth in the Company's operations
manual. The Company's
23
<PAGE> 26
executives or field-service personnel generally visit each franchise location at
least four times per year.
The Company guarantees certain limited equipment and leasehold improvement
financing to qualified franchisees through an agreement with an unaffiliated
finance company. Under this agreement, the Company guarantees financing provided
by the finance company to qualified franchisees in the maximum aggregate amount
of $2.1 million for all franchisees combined. The Company has also guaranteed up
to a maximum of $447,000 of future lease payments in the event of default by
specific franchisees.
COMPETITION
The restaurant business is highly competitive with respect to price,
service and food quality, and is often affected by changes in consumer tastes,
economic conditions and population and traffic patterns. There is also intense
competition for real estate sites, personnel and qualified franchisees. The
Company competes within each market with locally-owned restaurants as well as
with national and regional restaurant chains, some of which operate more
restaurants and have greater financial resources and longer operating histories
than the Company.
EMPLOYEES
The Company employs approximately 5,537 persons, 115 of whom are corporate
personnel and 329 of whom are field service or restaurant managers or trainees.
The remaining employees are restaurant personnel, many of whom are part-time. Of
the 115 corporate employees, 60 are in management positions and 55 are general
office employees.
The Company considers its employee relations to be good. None of the
Company's employees is covered by collective bargaining agreements except for
employees of its restaurants in the urban Chicago area who are members of the
Hotel Employees and Restaurant Employees International Union of the AFL-CIO, and
who are subject to a collective bargaining agreement with the Company through
November 30, 1996.
TRADEMARKS
The Company regards its many trademarks and service marks as having
significant value and as being an important factor in the marketing of its
products. Its most significant marks include "Uno," "Pizzeria Uno" and "Pizzeria
Due." The Company's registrations of its significant marks expire at various
times from 1998 to 2005. However, the Company intends to renew its registration
of such marks prior to expiration. The Company has applied for federal
registration of the trademark "Pizzeria Uno . . . Chicago Bar & Grill." The
Company's policy is to pursue registration of its marks whenever possible and to
oppose strenuously any infringement of its marks.
GOVERNMENT REGULATION
The Company is subject to various federal, state and local laws affecting
its business. Each of the Company's restaurants is subject to licensing and
regulation by a number of governmental authorities, which may include alcoholic
beverage control, health and safety and fire agencies in the state or
municipality in which the restaurant is located. Difficulties or failures in
obtaining the required licenses or approvals could delay or prevent the
development of a new restaurant in a particular area.
Alcoholic beverage control regulations require each of the Company's
restaurants to apply to a state authority and, in certain locations, county and
municipal authorities for a license or permit to sell alcoholic beverages on the
premises. Typically, licenses must be renewed annually and may be revoked or
suspended for cause at any time. Alcoholic beverage control regulations relate
to numerous aspects of the daily operations of the Company's restaurants,
including minimum age of
24
<PAGE> 27
patrons and employees, hours of operation, advertising, wholesale purchasing,
inventory control, and handling, storage and dispensing of alcoholic beverages.
The Company may be subject in certain states to "dram-shop" statutes, which
generally provide a person injured by an intoxicated person the right to recover
damages from an establishment which wrongfully served alcoholic beverages to
such person. The Company carries liquor liability coverage as part of its
existing comprehensive general liability insurance.
The Company is also subject to federal and a substantial number of state
laws regulating the offer and sale of franchises. Such laws impose registration
and disclosure requirements on franchisors in the offer and sale of franchises.
These laws often also apply substantive standards to the relationship between
franchisor and franchisee and limit the ability of a franchisor to terminate or
refuse to renew a franchise.
The Company is subject to the rules and regulations of various federal,
state and local health agencies, including the United States Food and Drug
Administration (the "FDA") and the United States Department of Agriculture. The
FDA specifies standards for nutrition content claims and health claims made in
connection with food items offered in the Company's restaurants. The FDA also
prescribes the format and content of nutrition information required to appear on
labels of certain products, including the Company's line of fresh and frozen
items sold through supermarkets.
PROPERTIES
As of May 5, 1995, the Company leased 69 and owned 12 of the locations for
its restaurants. The leases for Company-owned restaurants typically have initial
terms of 20 years with certain renewal options and provide for a base rent plus
real estate taxes, insurance and other expenses, plus additional percentage
rents based on revenues of the restaurant. All of the Company's franchised
restaurants are in space leased from parties unaffiliated with the Company, with
the exception of one franchised restaurant which is subleased from the Company.
Franchised restaurant leases typically have lease terms through the initial term
of the franchise agreements. See "-- Restaurant Design and Site Selection" and
"-- Restaurant Locations."
The Company's executive offices are located in two adjacent buildings,
consisting of approximately 25,000 square feet, in West Roxbury, Massachusetts.
These buildings house the Company's executive, administrative and clerical
offices, as well as certain training facilities. The Company believes that it
has sufficient executive office space for the foreseeable future. See Note 4 of
Notes to Consolidated Financial Statements.
In January 1993, the Company purchased a 30,000 square foot production
plant in Brockton, Massachusetts that produces fresh and frozen pizzas. See
"-- Other Business Development."
25
<PAGE> 28
MANAGEMENT
The directors and executive officers of the Company and their ages are as
follows:
<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
Aaron D. Spencer.............. 64 Chairman, Chief Executive Officer and Director
Craig S. Miller............... 45 President, Chief Operating Officer and Director
Robert M. Brown............... 47 Senior Vice President -- Finance, Chief Financial
Officer, Treasurer and Director
Alan M. Fox................... 48 Senior Vice President -- Purchasing, President Uno
Foods Inc.
William A. Gallucci........... 63 Senior Vice President -- Franchising
Thomas W. Gathers............. 39 Senior Vice President -- Human Resources and Training
Eugene I. Lee................. 34 Senior Vice President -- Operations
Damon M. Liever............... 40 Senior Vice President -- Marketing
S. James Coppersmith.......... 62 Director
John T. Gerlach............... 62 Director
E. Robert Kinney.............. 78 Director
Stephen J. Sweeney............ 66 Director
</TABLE>
The following is certain additional information concerning each director
and executive officer of the Company. When used below, positions held with the
Company include positions held with the Company's predecessors and subsidiaries.
Mr. Spencer, the founder and Chief Executive Officer of the Company, has
been Chairman since 1986 and previously served as the Company's President until
1986. Mr. Spencer has 29 years of experience in the restaurant industry and was
the founder and owner of the predecessor of the Company which operated a chain
of 24 Kentucky Fried Chicken franchised restaurants at the time the restaurants
were sold.
Mr. Miller has been President and Chief Operating Officer since 1986. From
1984 to 1986, he served as a Vice President and then Executive Vice President of
the Company. Prior to joining the Company, Mr. Miller spent eleven years with
the General Mills Inc. restaurant subsidiary, including four years in various
executive capacities with Casa Gallardo Mexican restaurants and six years with
the Red Lobster restaurant chain. Mr. Miller has a total of 27 years of
experience in the restaurant industry.
Mr. Brown has been Senior Vice President-Finance since 1988 and has served
as Chief Financial Officer and Treasurer since 1987. From 1987 to 1988, he
served as Vice President-Finance of the Company. From 1984 to 1987, Mr. Brown
served as vice president, treasurer and chief financial officer of the waste
management subsidiary of Genstar Corporation, and was employed by SCA Services,
Inc. from 1980 to 1984, most recently as assistant controller. Mr. Brown is a
certified public accountant and has worked in accounting and finance since 1969.
Mr. Fox has been Senior Vice President-Purchasing since October 1990. Also,
since 1990, Mr. Fox has been President of Uno Foods Inc., the Company's
subsidiary responsible for retail pizza distribution. Mr. Fox served as Senior
Vice President-Purchasing and Development from 1989 to October 1990, and served
as Vice President of Purchasing from 1988 to 1989. Prior to joining the Company,
from 1971 to 1988, Mr. Fox served as vice president-purchasing at Worcester
Quality Foods, Inc. a wholesale food service distributor. Mr. Fox has a total of
23 years of experience in the restaurant and food service industries.
26
<PAGE> 29
Mr. Gallucci has been Senior Vice President-Franchising since 1994. From
1988 to 1994 he served as Senior Vice President-Operations and from 1985 to
1988, he served as Vice President-Operations of the Company. Prior to joining
the Company, Mr. Gallucci served for twelve years with Magic Pan International,
Inc. as a division operations vice president, and prior to that he was employed
by Stouffer Corporation for 16 years. Mr. Gallucci has a total of 37 years of
experience in the restaurant industry.
Mr. Gathers has been Senior Vice President-Human Resources and Training
since November 1992. Mr. Gathers served as Vice President-Human Resources and
Training since August 1990. Prior to joining the Company, Mr. Gathers served in
several senior training and development functions with the General Mills Inc.
restaurant subsidiary from 1981 to 1990. Mr. Gathers has a total of 18 years of
experience in the restaurant industry.
Mr. Lee has been Senior Vice President-Operations since October 1994. From
1992 to 1994, he served as Vice President-Operations of the Company. From 1988,
when he joined the Company, to 1992, Mr. Lee held several operations management
positions. Prior to joining the Company, Mr. Lee served for 10 years with the
York Steak House division of General Mills Inc. as an area supervisor. Mr. Lee
has a total of 16 years of experience in the restaurant industry.
Mr. Liever has been Senior Vice President-Marketing since January 1994.
From 1993 to 1994, he served as Vice President-Marketing of the Company. Prior
to joining the Company, Mr. Liever served as vice president-marketing for the
Black-Eyed Pea restaurant division of Unigate PLC from 1991 to 1993. From 1981
to 1991 Mr. Liever held several senior marketing positions with PepsiCo
subsidiaries, including Frito-Lay and Taco Bell.
Mr. Coppersmith was President and General Manager of WCVB-TV, a division of
The Hearst Corporation, in Boston from September 1990 until his retirement in
June 1994. From 1982 to September 1990, Mr. Coppersmith was Vice President and
General Manager of WCVB-TV. From 1981 to 1982, he served as president of the
Television Division of Hubbard Broadcasting Inc., as general manager of its
Tampa/St. Petersburg station, WTOG-TV, and as president of F&F Productions, a
subsidiary of Hubbard Broadcasting Inc. From 1977 to 1981, Mr. Coppersmith was
vice president and general manager of WNEW-TV, Metromedia in New York. Mr.
Coppersmith has worked in the television broadcasting field since 1965. He is
presently a director of Waban Inc. and trustee of a number of investment
companies for which Sun America Asset Management Corp. is the investment
adviser. He is also Chairman of the Board of Trustees of Emerson College and a
member of the Board of Governors of the Boston Stock Exchange Incorporated.
Mr. Gerlach has been the Director of the Graduate Business Program of
Sacred Heart University since July 1992. He has also been the Director of the
Center for Policy Issues of Sacred Heart University since January 1990. From
1988 to January 1990, he was an Adjunct Professor of Finance in the Graduate
School of Business at Drexel University. From 1986 to 1988, he was associate
director of Bear, Stearns & Co. From 1985 to 1986, he was a consultant for The
Horn & Hardart Co., and from 1982 to 1985, he was the president and chief
operating officer of The Horn & Hardart Co. Prior to that time, he was a vice
president of General Mills Inc. He is presently a director of American Woodmark
Corp., and Security American Financial Enterprises, Inc.
Mr. Kinney is currently a Director and was President, Director and Chief
Executive Officer of all the funds in the IDS Mutual Fund Group, a division of
American Express, from 1982 to 1987. Prior to that time, he was chairman and
chief executive officer of General Mills Inc. Mr. Kinney is also a director of
IDEXX Laboratories, Inc. and UNUM Life Limited.
Mr. Sweeney was Chairman of the Board of Boston Edison Company from 1986 to
1992. He was chief executive officer of Boston Edison Company from 1984 to 1990,
and president of Boston Edison Company from 1983 to 1987. Mr. Sweeney is a
director of Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance
Company, Liberty Financial Services, the Boston Stock Exchange Incorporated and
Microscript, Inc.
The Company's Restated Certificate of Incorporation and Bylaws provide for
a Board of Directors consisting of seven directors who are elected at the annual
meeting of shareholders and are
27
<PAGE> 30
divided into three classes with each class being elected for a staggered
three-year term. Any director may be removed from office for cause by the
affirmative vote of the holders of at least 60% of the outstanding shares of the
Company's Common Stock entitled to vote in the election of directors. Directors
may also be removed from office upon the vote of a majority of Continuing
Directors (as defined in the Restated Certificate of Incorporation).
For a description of provisions of the Company's Restated Certificate of
Incorporation that provide for elimination of directors' liability under certain
circumstances and of the provisions of indemnity agreements between the Company
and each of the Directors, see "Description of Capital Stock and Other
Matters -- Limitation of Directors' and Officers' Liability; Indemnification
Agreements."
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of April 2, 1995,
concerning the beneficial ownership of Common Stock by each director, certain
executive officers, all executive officers and directors as a group, and each
person known by the Company to be the beneficial owner of 5% or more of the
Company's Common Stock. This information is based upon information received from
or on behalf of the named individuals.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OF OUTSTANDING SHARES
COMMON STOCK ----------------------
BENEFICIALLY BEFORE AFTER
NAME OWNED(1) OFFERING OFFERING(2)
---- ------------ -------- -----------
<S> <C> <C> <C>
Robert M. Brown(3)(4)(5)(6)............................. 37,131 * *
S. James Coppersmith(3)................................. 19,592 * *
Alan M. Fox(3)(5)(6).................................... 48,845 * *
William A. Gallucci(3)(5)(6)............................ 34,630 * *
John T. Gerlach(3)...................................... 14,542 * *
E. Robert Kinney(3)(7).................................. 34,806 * *
Craig S. Miller(3)(5)(6)(8)............................. 249,567 2.2% 1.9%
Aaron D. Spencer(3)(5)(9)............................... 5,563,064 48.5% 41.3%
Stephen J. Sweeney(3)................................... 13,753 * *
FMR Corp.(10)........................................... 835,375 7.3% 6.2%
Gardner Lewis Asset Management(11)...................... 595,250 5.2% 4.5%
Executive Officers and Directors
as a Group (12 Persons)(12)........................... 6,048,340 51.6% 44.1%
<FN>
- ---------------
* Represents less than 1%
(1) Unless otherwise noted, the beneficial owners listed have sole voting and
investment power over the shares listed.
(2) Assumes the Underwriter does not exercise its over-allotment option.
(3) Includes the following shares subject to options exercisable within 60 days
after April 2, 1995: Mr. Brown -- 29,689; Mr. Coppersmith -- 12,114; Mr.
Fox -- 30,821; Mr. Gallucci -- 28,642; Mr. Gerlach -- 6,410; Mr.
Kinney -- 2,346; Mr. Miller -- 116,250; Mr. Spencer -- 85,000; Mr.
Sweeney -- 9,378.
(4) Includes 1,625 shares held by Mr. Brown's spouse.
(5) Includes the following shares held in participant accounts under the
employee stock ownership provision of the Employee Stock Ownership Plan:
Mr. Brown -- 746; Mr. Fox -- 453; Mr. Gallucci -- 372; Mr. Miller -- 1,408;
Mr. Spencer -- 795.
(6) Includes the following shares held in participant accounts under the 401(k)
savings provision of the Employee Stock Ownership Plan: Mr. Brown -- 71;
Mr. Fox -- 71; Mr. Gallucci -- 71; and Mr. Miller -- 112.
(7) Includes 156 shares held by Mr. Kinney's spouse and 4,125 shares held by a
trust created by Mr. Kinney.
(8) Includes 9,375 shares held by a trust created by Mr. Miller.
(9) Includes 4,192,707 shares held by Uno Associates, a partnership owned 80%
by Mr. Spencer and 10% each by his two adult children, Lisa S. Cohen and
Mark Spencer. Also includes 176,562 shares held by a charitable foundation
of which Mr. Spencer is a trustee. The mailing address of Uno Associates
and Mr. Spencer is 100 Charles Park Road, West Roxbury, Massachusetts
02132.
</TABLE>
28
<PAGE> 31
(10) Based on a Schedule 13G filed in February 1995. FMR Corp. ("FMR") is a
parent holding company of Fidelity Management & Research Company
("Fidelity"), which acts as an investment advisor to several investment
companies. Fidelity is the beneficial owner of 755,000 shares of Common
Stock. Edward C. Johnson 3d ("Johnson"), Chairman of FMR, and FMR Corp.
through control of Fidelity, each has sole power to dispose of 755,000
shares of Common Stock, but neither Johnson nor FMR have sole power to vote
or direct the voting of the shares of Common Stock owned by Fidelity's
funds (the "Funds"), which power resides with the Funds' boards of
trustees. Fidelity Management Trust Company ("Fidelity Trust"), also a
wholly-owned subsidiary of FMR, is the beneficial owner of 80,375 shares of
Common Stock as a result of its serving as investment manager of
institutional accounts. Johnson and FMR, through control of Fidelity Trust,
have sole voting and dispositive power over such 80,375 shares. The address
of FMR, Fidelity and Fidelity Trust is 82 Devonshire Street, Boston,
Massachusetts 02109.
(11) Based on a Schedule 13G filed in February 1995, Gardner Lewis Asset
Management ("Gardner") has the sole investment power over the 595,250
shares of Common Stock. It has sole voting power with respect to 525,250
shares and shared voting power with respect to 5,250 shares. The address of
Gardner is 285 Wilmington-West Chester Pike, Chadds Ford, Pennsylvania
19317.
(12) Includes all shares beneficially owned and options exercisable within 60
days after April 2, 1995 by the executive officers and directors named and
as described above, 9,375 shares beneficially owned and 22,188 shares
subject to options exercisable within 60 days after April 2, 1995, held by
three executive officers not specifically named above, and an aggregate of
124 shares held in participant accounts under the 401(k) savings and
employee stock ownership provisions of the Employee Stock Ownership Plan
for three executive officers not specifically named above.
29
<PAGE> 32
DESCRIPTION OF CAPITAL STOCK AND OTHER MATTERS
The authorized capital stock of the Company consists of 1,000,000 shares of
Preferred Stock, $1.00 par value per share, and 25,000,000 shares of Common
Stock, $.01 par value per share. Only Common Stock is issued and outstanding.
The following descriptions of the capital stock, certain additional charter
provisions relating to changes in control and directors' liability, Change in
Control Protection Agreements and certain Indemnification Agreements are
qualified in all respects by reference to the Restated Certificate of
Incorporation and By-Laws of the Company and the form of Change in Control
Protection Agreements and Indemnification Agreements, copies of which are
incorporated by reference as exhibits to the Registration Statement of which
this Prospectus is a part.
PREFERRED STOCK
No shares of the Preferred Stock have been issued, and the Company has no
present plans to issue any such shares. The Board of Directors has the
authority, without action by the shareholders, to create one or more series of
Preferred Stock and determine the number of shares, designation, price,
redemption terms, conversion and voting rights with respect to any such series.
The issuance of any such series of Preferred Stock could be used to render more
difficult an unfriendly tender offer, proxy contest, merger or other change in
control of the Company.
COMMON STOCK
The Common Stock offered hereby, when issued and sold as contemplated by
this Prospectus, will be validly issued, fully paid and non-assessable. Subject
to the prior rights of any series of Preferred Stock which may, from time to
time, be outstanding, the holders of Common Stock are entitled to receive
dividends out of assets legally available therefor at such times and in such
amounts as the Board of Directors may determine. See "Dividend Policy."
The shares of Common Stock are neither redeemable nor convertible, and the
holders thereof have no preemptive or subscription rights to purchase any
securities of the Company. Upon liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to receive pro rata the assets
of the Company which are legally available for distribution, after payment of
all debts and other liabilities and subject to the prior rights of the holders
of the Preferred Stock, if any.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar of the Company's shares of Common Stock is
Mellon Securities Transfer Services, East Hartford, Connecticut.
ADDITIONAL CHARTER PROVISIONS
In addition to the Preferred Stock, the Company's Restated Certificate of
Incorporation includes several additional provisions which may render more
difficult an unfriendly tender offer, proxy contest, merger or change in control
of the Company.
Fair Price Provision. The so-called "Fair Price Provision," is intended to
protect shareholders who do not tender their shares in a takeover bid by
guaranteeing them a minimum price for their shares in any subsequent attempt to
purchase such remaining shares at a price lower than the acquiror's original
acquisition price. The Fair Price Provision requires the affirmative vote of the
holders of 60% of the Company's outstanding Common Stock for certain business
combinations with a Related Person unless specified price criteria and
procedural requirements are met or the business combination is approved by a
majority of the Continuing Directors. A Related Person is any person who was not
a stockholder of the Company as of March 30, 1987 and who acquires more than 5%
of the Company's Common Stock after March 30, 1987.
Anti-Greenmail Provision. The Company's Restated Certificate of
Incorporation also contains a so-called "Anti-Greenmail Provision." The
provision is intended to discourage speculators who accumulate beneficial
ownership of a significant block of stock and then seek to have the corporation
repurchase the shares at a premium price. This tactic has become known as
greenmail. The Anti-
30
<PAGE> 33
Greenmail Provision precludes the Company from purchasing any shares of Common
Stock from a Related Person who has beneficially owned such shares for less than
two years prior to the date of such purchase, at a per share price in excess of
the highest closing sale price of the Common Stock during the 30-day period
immediately preceding the date of such purchase, unless the purchase is approved
by a majority of the holders of the outstanding shares of Common Stock,
excluding any votes cast by the Related Person. Shareholder approval is not
required for such purchases when the offer is made available on the same terms
to all holders of shares of Common Stock, when the purchases are effected
pursuant to an open-market purchase program conducted in accordance with Rule
10b-18 promulgated under the Exchange Act, or when the purchases are approved by
a majority of Continuing Directors.
Other. Another provision included in the Company's Restated Certificate of
Incorporation requires the Board of Directors to consider social, economic and
other factors in evaluating whether certain types of corporate transactions
proposed by another party are in the best interests of the Company and its
shareholders.
In addition, the Company's Restated Certificate of Incorporation provides
for a classified Board of Directors. See "Management" above. The Company's
Bylaws may be amended or repealed by a majority of Continuing Directors or by
the affirmative vote of the holders of 60% of the outstanding Common Stock;
provided however, any such amendment or repeal which is approved by a majority
of the Continuing Directors and thereafter submitted to the shareholders for
ratification, may be so ratified by the affirmative vote of the holders of a
majority of the outstanding Common Stock.
As a result of the foregoing provisions in the Company's Restated
Certificate of Incorporation and Bylaws requiring the approval of the holders of
60% of the Company's Common Stock, certain transactions which may be beneficial
to shareholders could be rendered more difficult to approve. Since Aaron Spencer
will be the beneficial owner of approximately 41.3% of the outstanding Common
Stock immediately after the sale of shares offered hereby, Mr. Spencer will have
the ability to prevent the consummation of any such transactions requiring
shareholder approval. In addition, Mr. Spencer will have the practical ability
to elect all of the members of the Board of Directors. See "Principal
Shareholders."
CHANGE IN CONTROL PROTECTION AGREEMENTS
The Company has entered into Change in Control Protection Agreements with
each of its officers that provide for the continued employment of such officers
for periods ranging from between 12 and 24 months upon a change in control of
the Company or the occurrence of certain specified events. The agreements
provide for severance payments that are, in general, the equivalent of salary
and benefits for the balance of the employment period if such officers are
terminated, other than for cause, or resign under specified circumstances,
within up to two years of such occurrence.
LIMITATION OF OFFICERS' AND DIRECTORS' LIABILITY; INDEMNIFICATION AGREEMENTS
The Company's Restated Certificate of Incorporation and Bylaws include
provisions (i) to eliminate the personal liability of the Company's directors
for monetary damages resulting from breaches of their fiduciary duty and (ii) to
require the Company to indemnify its directors and officers to the fullest
extent permitted by Delaware law. The Company has entered into indemnification
agreements with each of its directors and anticipates that it will enter into
similar agreements with any future directors. The Company may also enter into
similar agreements with certain of the Company's officers who are not also
directors. Generally, the indemnification agreements attempt to provide the
maximum protection permitted by Delaware law with respect to indemnification of
directors.
The Company does not have directors' and officers' liability insurance.
However, in the future, the Company may determine that it is appropriate to
secure such insurance.
31
<PAGE> 34
UNDERWRITING
Montgomery Securities (the "Underwriter") has agreed, subject to the terms
and conditions set forth in the underwriting agreement (the "Underwriting
Agreement"), to purchase from the Company 2,000,000 shares of Common Stock at
the public offering price less the underwriting discount set forth on the cover
page of this Prospectus. The Underwriting Agreement provides that the
obligations of the Underwriter are subject to certain conditions precedent and
that the Underwriter is committed to purchase all of such shares if any are
purchased.
The Underwriter has advised the Company that the Underwriter proposes
initially to offer the shares of Common Stock to the public on the terms set
forth on the cover page of this Prospectus. The Underwriter may allow to
selected dealers a concession of not more than $ per share, and the
Underwriter may allow, and such dealers may reallow, a concession of not more
than $ per share to certain other dealers. After the offering, the
offering price and other selling terms may be changed by the Underwriter. The
Common Stock is offered subject to receipt and acceptance by the Underwriter and
to certain other conditions, including the right to reject orders in whole or in
part.
The Company has granted an option to the Underwriter, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of 300,000 additional shares of Common Stock to cover over-allotments, if any,
at the same price per share as the 2,000,000 shares to be purchased by the
Underwriter. The Underwriter may purchase such shares only to cover over-
allotments made in connection with this offering.
The Underwriting Agreement provides that the Company will indemnify the
Underwriter against certain liabilities, including civil liabilities under the
Securities Act of 1933, as amended (the "Securities Act"), or will contribute to
payments the Underwriter may be required to make in respect thereof.
All of the Company's executive officers and directors have agreed that, for
a period of 90 days after the date of this Prospectus, they will not, without
the prior written consent of the Underwriter, directly or indirectly offer to
sell, sell or otherwise dispose of any shares of Common Stock or any securities
convertible or exchangeable for shares of Common Stock. In addition, the Company
has agreed that for a period of 90 days after the date of this Prospectus, it
will not, without the prior written consent of the Underwriter, directly or
indirectly offer to sell, issue, distribute or otherwise dispose of any equity
securities or securities convertible into or exchangeable for equity securities
or any options, rights or warrants with respect to any equity securities except
(i) for the shares of Common Stock offered by the Company hereby or (ii) for
shares of Common Stock issued pursuant to exercise of outstanding options
disclosed in this Prospectus or (iii) for options or shares granted after the
date of this Prospectus under the Company's 1987 Stock Option Plan, 1989
Non-Qualified Stock Option Plan for Non-Employee Directors, 1993 Non-Qualified
Stock Option Plan for Non-Employee Directors or Employee Stock Ownership Plan.
LEGAL MATTERS
The validity of the securities offered by the Company hereby has been
passed upon for the Company by Brown, Rudnick, Freed & Gesmer, Boston,
Massachusetts. Certain legal matters in connection with the Common Stock offered
hereby will be passed upon for the Underwriter by Hale and Dorr, Boston,
Massachusetts.
EXPERTS
The consolidated financial statements of the Company at October 2, 1994 and
October 3, 1993, and for each of the three years in the period ended October 2,
1994, appearing in this Prospectus and Registration Statement have been audited
by Ernst & Young LLP, independent auditors, as set forth in their reports
thereon appearing herein and in the Registration Statement and are included in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
32
<PAGE> 35
UNO RESTAURANT CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Auditors........................................................ F-2
Consolidated Balance Sheets -- October 2, 1994 and October 3, 1993 and unaudited at
April 2, 1995....................................................................... F-3
Statements of Consolidated Income -- Years ended October 2, 1994, October 3, 1993 and
September 27, 1992, and unaudited for the twenty-six weeks ended April 2, 1995 and
April 3, 1994....................................................................... F-4
Statements of Consolidated Shareholders' Equity -- Years ended October 2, 1994,
October 3, 1993, September 27, 1992, and unaudited for the twenty-six weeks ended
April 2, 1995 and April 3, 1994..................................................... F-5
Statements of Consolidated Cash Flows -- Years ended October 2, 1994, October 3, 1993
and September 27, 1992 and unaudited for the twenty-six weeks ended April 2, 1995
and April 3, 1994................................................................... F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE> 36
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Uno Restaurant Corporation
We have audited the accompanying consolidated balance sheets of Uno
Restaurant Corporation and subsidiaries as of October 2, 1994 and October 3,
1993, and the related consolidated statements of income, shareholders' equity,
and cash flows for each of the three years in the period ended October 2, 1994.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Uno Restaurant
Corporation and subsidiaries at October 2, 1994 and October 3, 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended October 2, 1994, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Boston, Massachusetts
November 1, 1994, except for
Note 13, as to which the date is
February 8, 1995
F-2
<PAGE> 37
UNO RESTAURANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
OCTOBER 3 OCTOBER 2 APRIL 2
1993 1994 1995
--------- --------- -----------
(UNAUDITED)
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 998 $ 961 $ 214
Royalties receivable................................... 476 553 597
Consumer product receivable............................ 496 473 682
Inventory.............................................. 1,315 1,744 1,936
Deferred pre-opening costs............................. 483 568 1,180
Deferred income taxes.................................. 807 139 238
Prepaid expenses and other current assets.............. 1,722 1,600 3,184
------- ------- ---------
Total current assets..................................... 6,297 6,038 8,031
Property, equipment and leasehold improvements, net...... 65,509 80,057 100,051
Deferred income taxes.................................... 1,182 1,303 1,435
Other assets:
Deposit (Note 2)....................................... -- 3,000 --
Liquor licenses and other assets....................... 1,179 1,336 3,184
Royalty fee, net....................................... 568 487 446
------- ------- ---------
1,747 4,823 3,630
------- ------- ---------
$74,735 $92,221 $ 113,147
======= ======= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................... $ 4,600 $ 5,006 $ 6,619
Accrued expenses....................................... 4,167 4,064 4,620
Accrued compensation and taxes......................... 1,541 2,357 2,319
Income taxes payable................................... 883 654 138
Current portions of long-term debt and capital lease
obligations......................................... 3,333 3,400 3,402
------- ------- ---------
Total current liabilities................................ 14,524 15,481 17,098
Long-term debt, net of current portion................... 8,167 17,303 33,358
Capital lease obligations, net of current portion........ 472 820 778
Deferred rent............................................ 2,197 2,659 2,952
Shareholders' equity:
Preferred Stock, $1.00 par value, 1,000,000 shares
authorized, no shares issued or outstanding......... -- -- --
Common Stock, $.01 par value, 12,000,000 shares in 1993
and 1994 and 25,000,000 shares in 1995 authorized,
8,976,418 shares in 1993, 9,072,499 shares in 1994
and 11,374,699 shares in 1995 issued and
outstanding......................................... 90 91 114
Additional paid-in capital............................. 29,787 30,613 30,830
Retained earnings...................................... 19,498 25,254 28,017
------- ------- ---------
Total shareholders' equity............................... 49,375 55,958 58,961
------- ------- ---------
$74,735 $92,221 $ 113,147
======= ======= =========
</TABLE>
See accompanying notes.
F-3
<PAGE> 38
UNO RESTAURANT CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
FISCAL YEAR ENDED ENDED
----------------------------------------- -----------------
SEPTEMBER 27 OCTOBER 3 OCTOBER 2 APRIL 3 APRIL 2
1992 1993 1994 1994 1995
------------ ---------- --------- ------- -------
(53 WEEKS) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues:
Restaurant sales............... $ 77,500 $ 98,234 $ 112,674 $49,980 $66,767
Consumer product sales......... 3,106 7,073 7,418 3,896 4,353
Franchise income............... 3,507 3,638 3,973 1,936 2,007
-------- -------- --------- ------- -------
84,113 108,945 124,065 55,812 73,127
Costs and expenses:
Cost of food and beverages..... 19,224 26,024 30,177 13,731 18,432
Labor and benefits............. 24,912 32,990 36,935 16,813 22,089
Occupancy costs................ 14,492 17,295 18,979 8,680 10,584
Other operating costs.......... 9,638 9,166 10,751 5,049 6,189
General and administrative..... 7,022 8,233 9,277 4,390 5,621
Depreciation and
amortization................ 5,773 7,152 7,655 3,609 4,871
-------- -------- --------- ------- -------
81,061 100,860 113,774 52,272 67,786
-------- -------- --------- ------- -------
Operating income................. 3,052 8,085 10,291 3,540 5,341
Other income (expense):
Interest expense............... (783) (1,077) (1,147) (546) (937)
Other income (expense)......... 633 (8) 302 269 (17)
-------- -------- --------- ------- -------
(150) (1,085) (845) (277) (954)
-------- -------- --------- ------- -------
Income before income taxes....... 2,902 7,000 9,446 3,263 4,387
Provision for income taxes....... 1,140 2,837 3,690 1,322 1,624
-------- -------- --------- ------- -------
Net income....................... $ 1,762 $ 4,163 $ 5,756 $ 1,941 $ 2,763
======== ======== ========= ======= =======
Earnings per common share........ $ .16 $ .37 $ .51 $ .17 $ .24
======== ======== ========= ======= =======
Weighted average number of common
shares......................... 11,313 11,291 11,360 11,377 11,684
</TABLE>
See accompanying notes.
F-4
<PAGE> 39
UNO RESTAURANT CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
--------------- PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
------ ------ ---------- --------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1991............... 8,939 $ 89 $ 29,548 $13,573 $(79) $43,131
Net income................................ -- -- -- 1,762 -- 1,762
Exercise of stock options................. 25 1 129 -- -- 130
Tax benefit from exercise of non-qualified
stock options........................... -- -- 67 -- -- 67
------ ---- -------- ------- ---- -------
Balance at September 27, 1992............... 8,964 90 29,744 15,335 (79) 45,090
Net income................................ -- -- -- 4,163 -- 4,163
Exercise of stock options................. 12 -- 20 -- 79 99
Tax benefit from exercise of non-qualified
stock options........................... -- -- 23 -- -- 23
------ ---- -------- ------- ---- -------
Balance at October 3, 1993.................. 8,976 90 29,787 19,498 -- 49,375
Net income................................ -- -- -- 5,756 -- 5,756
Exercise of stock options................. 96 1 712 -- -- 713
Tax benefit from exercise of non-qualified
stock options........................... -- -- 114 -- -- 114
------ ---- -------- ------- ---- -------
Balance at October 2, 1994.................. 9,072 91 30,613 25,254 -- 55,958
Net income for twenty-six weeks........... -- -- -- 2,763 -- 2,763
5-for-4 stock split....................... 2,275 23 (23) -- --
Exercise of stock options................. 28 -- 174 -- -- 174
Tax benefit from exercise of non-qualified
stock options........................... -- -- 66 -- -- 66
------ ---- -------- ------- ---- -------
Balance at April 2, 1995 (Unaudited)........ 11,375 $114 $ 30,830 $28,017 $ -- $58,961
====== ==== ======== ======= ==== =======
</TABLE>
See accompanying notes.
F-5
<PAGE> 40
UNO RESTAURANT CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
FISCAL YEAR ENDED ENDED
-------------------------------------- -------------------
SEPTEMBER 27 OCTOBER 3 OCTOBER 2 APRIL 3 APRIL 2
1992 1993 1994 1994 1995
------------ ----------- --------- -------- --------
(53 WEEKS) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income........................ $ 1,762 $ 4,163 $ 5,756 $ 1,941 $ 2,763
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization... 5,874 7,235 7,765 3,658 4,921
Deferred income taxes........... (1,968) (424) 547 10 (231)
Provision for deferred rent..... 1,050 735 462 379 293
Gain on disposal of equipment... (47) (82) (321) (332) (9)
Loss on closure of
restaurants.................. 2,500 -- -- -- --
Changes in operating assets and
liabilities, net of effects
of purchase of business:
Royalties receivable....... 139 (55) (77) (86) (44)
Consumer product
receivable.............. 116 (330) 23 117 (209)
Inventory.................. (283) (127) (429) (36) (192)
Prepaid expenses and other
assets.................. (1,224) (1,299) (983) (998) (2,977)
Accounts payable and
accrued expenses........ 1,041 794 1,948 572 2,131
Income taxes payable....... 68 377 (229) (638) (516)
-------- --------- --------- -------- --------
Net cash provided by
operating
activities............ 9,028 10,987 14,462 4,587 5,930
-------- --------- --------- -------- --------
INVESTING ACTIVITIES
Additions to property, equipment
and leasehold improvements...... (18,731) (12,460) (22,170) (9,477) (22,625)
Proceeds from sale of fixed
assets.......................... 303 483 2,529 2,517 9
Increase in deposit............... -- -- (3,000) (1,800) --
Purchase of business, net of cash
acquired and deposit............ (2,744) 108 (1,800) -- (316)
Sale of marketable securities..... 11,829 -- -- -- --
Net advances to unconsolidated
subsidiary...................... (547) -- -- -- --
-------- --------- --------- -------- --------
Net cash used in
investing
activities............ (9,890) (11,869) (24,441) (8,760) (22,932)
-------- --------- --------- -------- --------
FINANCING ACTIVITIES
Proceeds from long-term debt...... 11,595 31,735 39,895 15,135 31,075
Principal payments on long-term
debt and capital lease
obligations..................... (11,417) (30,417) (30,780) (11,556) (15,060)
Exercise of stock options......... 197 122 827 48 240
-------- --------- --------- -------- --------
Net cash provided by
financing
activities............ 375 1,440 9,942 3,627 16,255
-------- --------- --------- -------- --------
Increase (decrease) in cash and
cash equivalents................ (487) 558 (37) (546) (747)
Cash and cash equivalents at
beginning of year............... 927 440 998 998 961
-------- --------- --------- -------- --------
Cash and cash equivalents at end
of period....................... $ 440 $ 998 $ 961 $ 452 $ 214
======== ========= ========= ======== ========
</TABLE>
See accompanying notes.
F-6
<PAGE> 41
UNO RESTAURANT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of Uno
Restaurant Corporation and its wholly-owned subsidiaries (the "Company"). All
intercompany accounts and transactions have been eliminated in consolidation.
Company-owned restaurants are located predominantly in the Northeast and
Mid-Atlantic states, and franchised restaurants are located throughout the
United States.
Fiscal Year
The Company's fiscal year ends on the close of business on the Sunday
closest to September 30 in each year. The fiscal year ended October 3, 1993
included 53 weeks of operations.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less at the date of purchase to be cash equivalents.
Inventory
Inventory, which consists of food, beverages and store supplies, is stated
at the lower of cost (first-in, first-out method) or market.
Property, Equipment and Leasehold Improvements
Property, equipment and leasehold improvements are recorded at cost. The
Company provides for depreciation of buildings and equipment over their
estimated useful lives using the straight-line method. Leasehold improvements
are amortized over the shorter of their estimated useful lives or the term of
the lease using the straight-line method.
Revenue Recognition -- Franchise Fees
The Company defers franchise fees until the franchisee opens the restaurant
and all services have been substantially performed; at that time, the entire
amount of the fee is recorded as income. Royalty income is recorded as earned
based on rates provided by the respective franchise agreements. Expenses related
to franchise activities amounted to approximately $1,506,000, $1,210,000 and
$1,427,000, $732,000 and $737,000 in fiscal years 1992, 1993 and 1994 and the
twenty-six week period ended April 3, 1994 and April 2, 1995, respectively.
A summary of full-service franchise unit activity is as follows:
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
FISCAL YEAR ENDED ENDED
------------------------------------ -----------------
SEPTEMBER 27 OCTOBER 3 OCTOBER 2 APRIL 3 APRIL 2
1992 1993 1994 1994 1995
------------ --------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Units operating at beginning of year......... 55 59 58 58 59
Units opened................................. 8 3 5 5 2
Units closed................................. (4) (2) (1) (1) (3)
Units purchased by the Company............... -- (2) (3) (3) --
--- --- --- --- ---
Units operating at end of period............. 59 58 59 59 58
=== === === === ===
</TABLE>
F-7
<PAGE> 42
UNO RESTAURANT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Pre-opening Costs
Costs relating to the opening of new restaurants are deferred until the
restaurants open and are amortized over 12 months from that point using the
straight-line method.
Income Taxes
In fiscal year 1994 and the twenty-six week periods ended April 2, 1995 and
April 3, 1994, deferred income taxes are recognized for temporary differences
between financial statement and income tax bases of assets and liabilities for
which income tax benefits and obligations will be realized in future years. In
fiscal years 1993 and 1992, the provision for deferred income taxes represents
the tax effect of differences in the timing of income and expense recognition
for tax and financial statement purposes (See Note 10).
Earnings Per Share
Earnings per share amounts are calculated based upon the weighted average
number of shares outstanding, giving effect to the dilutive effect of stock
options. Average shares outstanding and all per share amounts included in the
accompanying consolidated financial statements and notes are based on the
increased numbers of shares giving retroactive effect to the five-for-four stock
split discussed in Note 13.
Reclassifications
Certain amounts in the accompanying 1993 and 1992 financial statements have
been reclassified to permit comparison with 1994.
Unaudited Interim Consolidated Financial Statements
The consolidated balance sheet as of April 2, 1995 and the statements of
consolidated income, shareholders' equity and cash flows for the twenty-six week
periods ended April 3, 1994 and April 2, 1995 are unaudited and in the opinion
of management, include all adjustments, consisting of normal recurring accruals,
necessary for a fair presentation of the Company's consolidated financial
position, consolidated results of operations and cash flows.
2. BUSINESS ACQUISITIONS AND DISPOSITIONS
Effective August 1, 1992, the Company purchased all of the outstanding
shares of the original Pizzeria Uno, Pizzeria Due and Su Casa restaurants and
properties in Chicago. The agreement also includes the rights to future
development in the Illinois market. Effective December 10, 1993, the Company
acquired the leasehold improvements and equipment of three franchised
restaurants in Connecticut.
These acquisitions have been accounted for under the purchase method of
accounting. The results of operations of the acquired companies prior to the
dates of acquisition would not have a material impact on the consolidated
results of operations in fiscal years 1994, 1993 and 1992.
In September 1994, the Company entered into an agreement with Bay Street
Restaurants, Inc. to purchase the net assets of three restaurants located in
Illinois, New Jersey and Pennsylvania. The arrangement was subject to the
satisfaction of certain governmental licensing requirements, and accordingly,
the aggregate purchase price has been recorded as a refundable deposit as of
October 2, 1994. The transaction was consummated in December 1994.
F-8
<PAGE> 43
UNO RESTAURANT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. BUSINESS ACQUISITIONS AND DISPOSITIONS -- (CONTINUED)
On November 8, 1993, the Company sold to a franchisee for $2,500,000 a
Pizzeria Uno restaurant in Lake Buena Vista, Florida and recorded a gain of
$312,000, which has been included in other income. The Company acquired full
ownership of its previous joint venture during fiscal year 1993 by paying cash
of $45,000 and assuming liabilities in the amount of $2,500,000.
3. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
<TABLE>
Property, equipment and leasehold improvements consist of the following:
<CAPTION>
OCTOBER 3 OCTOBER 2 APRIL 2
1993 1994 1995
--------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Land............................................. $ 5,030 $ 7,601 $ 9,166
Buildings........................................ 6,954 9,729 11,502
Equipment........................................ 24,410 31,797 37,789
Leasehold improvements........................... 50,019 55,657 66,868
Construction in progress......................... 690 2,870 6,518
------- -------- --------
87,103 107,654 131,843
Less allowances for depreciation and
amortization................................... 21,594 27,597 31,792
------- -------- --------
$65,509 $ 80,057 $100,051
======= ======== ========
</TABLE>
4. RELATED-PARTY TRANSACTIONS
The Company leases three buildings from its principal shareholder for a
restaurant and for corporate office space. Rent expense in the amounts of
$436,000, $446,000, $442,000, $221,000 and $218,000 was charged to operations in
fiscal years 1992, 1993 and 1994 and the twenty-six week periods ended April 3,
1994 and April 2, 1995, respectively. The Company believes that the terms of
these leases approximate fair rental value.
The Company's President and his brother own and operate three franchised
restaurants. Additionally, the Chairman of the Company owns a 50% interest in a
franchised limited service pizza restaurant, and one of the directors of the
Company has a partnership interest in a franchised restaurant. These franchisees
pay royalties to the Company under standard franchise agreements, with the
exception of the pizza bakery, which is being operated as a test concept, and as
a result, is not currently being charged royalties. Royalties waived for the
pizza bakery were $3,000, $14,000, $7,000 and $7,000 in fiscal years 1993, 1994
and the twenty-six week periods ended April 3, 1994 and April 2, 1995,
respectively.
5. LEASES
The Company conducts the majority of its operations in leased facilities,
which are accounted for as capital or operating leases. The leases typically
provide for a base rent plus real estate taxes, insurance and other expenses,
plus additional contingent rent based upon revenues of the restaurant.
Contingent rent amounted to $916,000, $842,000, $981,000, $332,000 and $391,000
in fiscal years 1992, 1993 and 1994 and the twenty-six week periods ended April
3, 1994 and April 2, 1995, respectively.
F-9
<PAGE> 44
UNO RESTAURANT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. LEASES -- (CONTINUED)
<TABLE>
At October 2, 1994, the minimum rental commitments under all noncancelable
capital and operating leases with initial or remaining terms of more than one
year are as follows:
<CAPTION>
OPERATING CAPITAL
FISCAL YEAR LEASES LEASES
----------- --------- -------
(IN THOUSANDS)
<S> <C> <C>
1995........................................................... $ 7,485 $ 130
1996........................................................... 7,569 130
1997........................................................... 7,769 130
1998........................................................... 7,671 130
1999........................................................... 7,479 130
Thereafter..................................................... 73,801 1,385
--------- -------
$ 111,774 2,035
=========
Less amount representing interest.............................. 1,148
-------
Present value of net minimum lease payments.................... 887
Less current portion of obligation under capital leases........ 67
-------
Long-term obligation under capital leases...................... $ 820
=======
</TABLE>
<TABLE>
Total expenses for all leases were as follows:
<CAPTION>
CAPITAL
CAPITAL LEASE LEASE ASSET OPERATING LEASE
INTEREST AMORTIZATION RENTALS
------------- ------------ ---------------
(IN THOUSANDS)
<S> <C> <C> <C>
Fiscal years ended:
September 27, 1992..................... $40 $ 44 $ 8,149
October 3, 1993........................ 41 44 9,337
October 2, 1994........................ 51 58 10,193
Twenty-six weeks ended:
April 3, 1994.......................... 20 22 4,643
April 2, 1995.......................... 32 36 5,480
</TABLE>
Certain operating lease agreements contain free rent inducements and
scheduled rent increases which are being amortized over the terms of the
agreements, ranging from 15 to 20 years, using the straight-line method.
F-10
<PAGE> 45
UNO RESTAURANT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. FINANCING ARRANGEMENTS
<TABLE>
Long-term debt consists of the following:
<CAPTION>
OCTOBER 3 OCTOBER 2 APRIL 2
1993 1994 1995
---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
10.22% senior notes payable to Cigna Insurance
Company in three annual installments of $3,333,
beginning June 1, 1994.......................... $ 10,000 $ 6,667 $ 6,667
Revolving credit and note agreement............... 1,500 13,969 30,024
-------- -------- --------
11,500 20,636 36,691
Less current portion.............................. 3,333 3,333 3,333
-------- -------- --------
$ 8,167 $ 17,303 $ 33,358
======== ======== ========
</TABLE>
The note agreements contain certain financial and operating covenants,
including maintenance of certain levels of net worth and income.
During 1994, the Company expanded its $10,000,000 unsecured revolving
line of credit and note agreement to $20,000,000, expiring on June 1, 1997. The
Company is entitled to borrow at its discretion amounts which accrue interest at
the LIBOR rate plus 125 basis points or at the prime rate plus 1/4%. At October
2, 1994, borrowings of $8,500,000 accrue interest at 6.125% (LIBOR rate plus 125
basis points) and borrowings of $5,469,000 accrue interest at 8% (prime rate
plus 1/4%) and are payable on June 1, 1997. At October 2, 1994, $6,031,000 was
available to the Company for borrowing under this agreement. A commitment fee,
which ranges from .375% to .5%, is accrued on unused borrowings under the credit
agreement.t
<TABLE>
Annual principal maturities of long-term debt are as follows (in
thousands):
<CAPTION>
FISCAL YEAR
-----------
<S> <C>
1995.............................................. $3,333
1996.............................................. 3,334
1997.............................................. 13,969
-------
$20,636
=======
</TABLE>
The Company made cash payments of interest of $1,091,000, $1,219,000,
$1,465,000, $673,000 and $887,000 during fiscal years 1992, 1993 and 1994 and
twenty-six week periods ended April 3, 1994 and April 2, 1995, respectively. The
Company capitalized interest during the construction period of newly constructed
restaurants amounting to $329,000, $186,000, $228,000, $97,000 and $278,000 in
fiscal year 1994, 1993, 1992 and the twenty-six week periods ended April 3, 1994
and April 2, 1995, respectively, and included those amounts in leasehold
improvements.
The Company provides certain limited lease financing to qualified
franchisees through an agreement with an unaffiliated finance company. The
Company's maximum guarantee under the agreement was $2,100,000 at October 2,
1994.
The Company has also guaranteed up to a maximum of $447,000 of future lease
payments in the event of default by specific franchisees.
The Company has an outstanding letter of credit in the amount of $150,000
at October 2, 1994, which expires in fiscal year 1996.
F-11
<PAGE> 46
UNO RESTAURANT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. PREPAID EXPENSES AND OTHER CURRENT ASSETS
<TABLE>
Prepaid expenses and other current assets consist of the following:
<CAPTION>
OCTOBER 3 OCTOBER 2
1993 1994
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Prepaid expenses....................................... $ 434 $ 694
Insurance refunds receivable........................... 730 296
Other accounts receivable.............................. 558 610
------- -------
$ 1,722 $ 1,600
======= =======
</TABLE>
8. ACCRUED EXPENSES
<TABLE>
Accrued expenses consist of the following:
<CAPTION>
OCTOBER 3 OCTOBER 2
1993 1994
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Accrued rent........................................... $ 1,136 $ 1,380
Accrued utilities...................................... 289 486
Accrual for loss on closure of restaurants............. 1,418 588
Accrued group insurance................................ 209 252
Accrued interest....................................... 333 223
Other.................................................. 782 1,135
------- -------
$ 4,167 $ 4,064
======= =======
</TABLE>
9. EMPLOYEE BENEFIT PLANS
The Company maintains an Employee Stock Ownership Plan ("ESOP") and a
401(k) Savings Plan ("Savings Plan") for all of its eligible employees.
Contributions to the ESOP are discretionary and are allocated among all
employees based upon the participants' compensation. The Savings Plan is
maintained in accordance with the provisions of Section 401(k) of the Internal
Revenue Code and allows all employees with at least six months of service to
make annual tax-deferred voluntary contributions up to 15% of their salary. The
Company may match 25% of the first 2% and 10% of the next 4% of the employees'
contributions. Total contributions made to the plans were $25,000, $25,000,
$110,000, $74,000 and $114,000 in fiscal years 1992, 1993, 1994 and the
twenty-six week periods ended April 3, 1994 and April 2, 1995, respectively.
Effective October 1, 1994, the Company adopted a Deferred Compensation Plan
which allows officers to defer a portion of their compensation. Annual deferral
amounts are limited to 20% of the participant's income. Deferred compensation
expense in the amounts of $265,000 and $36,000 were recorded in fiscal year 1994
and the twenty-six week period ended April 2, 1995, respectively.
10. INCOME TAXES
Effective October 4, 1993, the Company adopted Financial Accounting
Standards Board ("FASB") Statement No. 109 ("Statement 109"). Under Statement
109, the liability method is used in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on the
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.
F-12
<PAGE> 47
UNO RESTAURANT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. INCOME TAXES -- (CONTINUED)
As permitted by Statement 109, the Company has elected not to restate the
financial statements of any prior years. The effect of the change on net income
for fiscal 1993, as well as the cumulative effect, was not material.
<TABLE>
Deferred taxes are attributable to the following temporary differences at
October 2, 1994 (in thousands):
<S> <C>
DEFERRED TAX ASSETS:
Deferred rent........................................................... $1,087
Depreciation............................................................ 350
Accrued expenses........................................................ 277
Franchise fees.......................................................... 101
Other................................................................... 473
------
Total deferred tax assets................................................. 2,288
DEFERRED TAX LIABILITIES:
Deferred pre-opening costs.............................................. 313
Prepaid insurance....................................................... 172
Royalty fee............................................................. 92
Other................................................................... 269
------
Total deferred tax liabilities............................................ 846
------
NET DEFERRED TAX ASSETS................................................... $1,442
======
</TABLE>
<TABLE>
The provision (credit) for income taxes consisted of the following:
<CAPTION>
DEFERRED METHOD LIABILITY METHOD
------------------------- ------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED TWENTY-SIX TWENTY-SIX
SEPTEMBER 27 OCTOBER 3 OCTOBER 2 WEEKS ENDED WEEKS ENDED
1992 1993 1994 APRIL 3, 1994 APRIL 2, 1995
------------ ---------- ---------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Current:
Federal................ $ 2,052 $2,490 $2,536 $ 1,008 $ 1,508
State.................. 1,056 771 607 304 347
-------- ------ ------ ------- -------
3,108 3,261 3,143 1,312 1,855
Deferred:
Federal................ (1,298) (370) 243 8 (195)
State.................. (670) (54) 304 2 (36)
-------- ------ ------ ------- -------
(1,968) (424) 547 10 (231)
-------- ------ ------ ------- -------
Income tax expense....... $ 1,140 $2,837 $3,690 $ 1,322 $ 1,624
======== ====== ====== ======= =======
</TABLE>
F-13
<PAGE> 48
UNO RESTAURANT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. INCOME TAXES -- (CONTINUED)
<TABLE>
Components of the provision (credit) for deferred income taxes were as
follows:
<CAPTION>
FISCAL YEAR ENDED
--------------------------
SEPTEMBER 27 OCTOBER 3
1992 1993
------------ ---------
(IN THOUSANDS)
<S> <C> <C>
Reserve for store closings.................................. $ (932) $ 396
Provision for deferred rent................................. (432) (344)
Pre-opening costs........................................... (11) (275)
Depreciation................................................ (79) (203)
Other....................................................... (514) 2
-------- -----
$ (1,968) $(424)
======== =====
</TABLE>
<TABLE>
A reconciliation of the effective tax rates with the federal statutory
rates is as follows:
<CAPTION>
LIABILITY METHOD
DEFERRED METHOD --------------------------------------
------------------------- TWENTY-SIX TWENTY-SIX
YEAR ENDED YEAR ENDED YEAR ENDED WEEKS ENDED WEEKS ENDED
SEPTEMBER 27 OCTOBER 3 OCTOBER 2 APRIL 3, APRIL 2,
1992 1993 1994 1994 1995
------------ ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Federal statutory rate... 34.0% 34.0% 34.0% 34.0% 34.0%
State income taxes, net
of federal income tax
benefit................ 8.8 6.7 6.0 6.2 4.5
Tax credits.............. -- -- (1.8) -- (2.1)
Other.................... (3.5) (.2) .9 .3 .6
----- ---- ---- ---- ----
Effective income tax
rate................... 39.3% 40.5% 39.1% 40.5% 37.0%
==== ==== ==== ==== ====
</TABLE>
The Company made income tax payments of $2,970,000, $2,826,000, $3,779,000,
$2,427,000 and $2,595,000 during fiscal years 1992, 1993, 1994 and the twenty
six week periods ended April 3, 1994 and April 2, 1995 respectively.
11. STOCK OPTION PLANS
The 1987 Employee Stock Option Plan (the "Plan") provides for up to
1,875,000 shares of common stock issuable upon exercise of options granted under
the Plan. Options may be granted at an exercise price not less than fair market
value on the date of grant. All options vest at a rate of 20% per year beginning
one year after the date of grant, with the exception of 93,750 and 62,500
options granted to the President and Chairman of the Company, respectively,
which vest immediately at the date of grant. All options terminate ten years
after the date of grant, with the exception of the 175,000 options granted to
the Chairman, which terminate five years after the date of grant. Options
outstanding at October 2, 1994 are non-qualified stock options.
The 1989 and 1993 Non-Qualified Stock Option Plans for Non-Employee
Directors (the "Directors Plans") provide for up to 101,563 shares of Common
Stock issuable upon exercise of options granted under the Directors Plans. The
1989 and 1993 Directors Plans terminate on November 10, 1999 and August 17,
2002, respectively, but such termination shall not affect the validity of
options granted prior to the dates of termination. Options are to be granted at
an exercise price equal to the fair market value of the shares of Common Stock
at the date of grant. Options granted under the Directors Plans may be exercised
commencing one year after the date of grant and ending ten years from the date
of grant.
F-14
<PAGE> 49
UNO RESTAURANT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. STOCK OPTION PLANS -- (CONTINUED)
<TABLE>
Information regarding the Company's stock option plans, updated to reflect
the five-for-four stock split described in Note 13, is summarized below:
<CAPTION>
TWENTY-SIX
FISCAL YEAR ENDED WEEKS ENDED
-------------------------------------- -----------
SEPTEMBER 27 OCTOBER 3 OCTOBER 2 APRIL 2
1992 1993 1994 1995
------------ ----------- --------- -----------
<S> <C> <C> <C> <C>
Options outstanding at beginning of
fiscal year................................ 563,655 713,013 960,483 1,043,735
Granted...................................... 206,875 334,966 257,298 24,628
Exercised (at $4.07 to $8.64 per share)...... (30,413) (24,313) (120,101) (33,839)
Canceled..................................... (27,104) (63,183) (53,945) (37,914)
------- ------- --------- ---------
Options outstanding at close of fiscal
year....................................... 713,013 960,483 1,043,735 996,610
======= ======= ========= =========
Option price range at close of fiscal $4.07 $4.07 $4.07 $4.07
period..................................... to $11.40 to $11.40 to $11.40 to $11.80
Options exercisable at close of fiscal
period..................................... 406,913 444,126 430,249 426,017
Options available for grant at close of
fiscal period.............................. 76,889 -- 679,448 692,734
</TABLE>
12. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of unaudited quarterly consolidated results of
operations (in thousands, except per share data):
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------
DECEMBER 27 MARCH 28 JUNE 27 OCTOBER 3
1992 1993 1993 1993
----------- -------- ------- ----------
(14 WEEKS)
<S> <C> <C> <C> <C>
Revenue................................. $23,788 $ 24,767 $28,432 $ 31,958
Gross profit(1)......................... 5,018 5,116 5,813 7,060
Operating income........................ 1,600 1,415 2,030 3,040
Income before income taxes.............. 1,407 1,108 1,740 2,745
Net income.............................. 815 643 1,014 1,691
Earnings per share...................... .07 .06 .09 .15
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------
JANUARY 2 APRIL 3 JULY 3 OCTOBER 2
1994 1994 1994 1994
--------- ------- ------- ---------
<S> <C> <C> <C> <C>
Revenue...................................... $27,567 $28,028 $32,259 $36,211
Gross profit(1).............................. 4,736 4,843 5,956 7,450
Operating income............................. 1,755 1,771 2,639 4,126
Income before income taxes................... 1,780 1,483 2,362 3,821
Net income................................... 1,059 882 1,490 2,325
Earnings per share........................... .09 .08 .13 .21
</TABLE>
F-15
<PAGE> 50
UNO RESTAURANT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. QUARTERLY FINANCIAL DATA (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------
JANUARY 1 APRIL 2
1995 1995
--------- -------
<S> <C> <C>
Revenue.............................................. $35,976 $37,151
Gross profit(1)...................................... 7,773 7,771
Operating income..................................... 2,786 2,555
Income before income taxes........................... 2,415 1,972
Net income........................................... 1,520 1,243
Earnings per share................................... .13 .11
<FN>
- ---------------
(1) Restaurant and consumer product sales, less cost of food and beverages,
labor and benefits, occupancy, and other operating expenses, excluding
advertising expenses.
</TABLE>
13. SUBSEQUENT EVENTS
On November 15, 1994, the Board of Directors of the Company voted a
five-for-four split of the Company's common stock, to be effected in the form of
a stock dividend, payable to shareholders on February 28, 1995. The stock split
was approved by the shareholders on February 8, 1995 in connection with approval
to increase the number of authorized shares of common stock from 12,000,000 to
25,000,000.
In December 1994, the Company obtained a $50 million revolving credit
facility to replace its existing $20 million revolving credit facility. This new
facility will convert to a three-year term loan in December 1997.
F-16
<PAGE> 51
[INSERT PICTURE]
[ADD CAPTION]
[LOGO]
<PAGE> 52
=========================================================
No dealer, salesman or any other person has been
authorized to give any information or make any
representations other than those contained in this
Prospectus in connection with the offering described
herein, and, if given or made, such information or
representations must not be relied upon as having been
authorized by the Company or any Underwriter. This
Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities other
than those specifically offered hereby or of any
securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make an offer or
solicitation in such jurisdiction. Neither the
delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances create an implication
that the information herein is correct as of any time
subsequent to its date.
- ---------------------------------------------------------
TABLE OF CONTENTS
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information....................... 3
Incorporation of Certain Documents by
Reference................................. 3
Prospectus Summary.......................... 4
The Company................................. 6
Investment Considerations................... 6
Use of Proceeds............................. 9
Dividend Policy............................. 9
Price Range of Common Stock................. 9
Capitalization.............................. 10
Selected Consolidated Financial Data........ 11
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 12
Business.................................... 18
Management.................................. 26
Principal Shareholders...................... 28
Description of Capital Stock and Other
Matters................................... 30
Underwriting................................ 32
Legal Matters............................... 32
Experts..................................... 32
Index to Consolidated Financial
Statements................................ F-1
=========================================================
</TABLE>
=========================================================
2,000,000 SHARES
[UNO LOGO]
COMMON STOCK
-------------------
PROSPECTUS
-------------------
MONTGOMERY SECURITIES
, 1995
=========================================================
<PAGE> 53
Appendix
Description of Photographs Pursuant to 17 CFR 232.304
1. Front Cover: The Company's logo is centered at the top of the page between
"2,000,000 Shares" and "Common Stock."
2. Cover 2: Collage consisting of five color photographs and the "Pizzeria
Uno...Chicago Bar & Grill" service mark. The photographs depict the
following:
a. Exterior view of free-standing Pizzeria Uno restaurant in a
landscaped setting;
b. Various foods including fresh tomatoes, grated cheese, garlic, two
of the Company's deep-dish pizzas, a salad and two pasta dishes; a single slice
is pulled away from the deep-dish pizza in the foreground;
c. In a casual setting, two women and a man sit together at a
restaurant table with plates of food, a breadbasket and a "table-tent";
d. A deep-dish pizza, with a single slice pulled slightly away from
the pizza; pizza appears beside fresh tomatoes, cheese and garlic; and
e. A composite image including a saute pan filled with vegetables, a
dish of pasta and a woman wearing a baseball-style cap.
3. Cover 3: A collage of eight photographs portraying the following:
a. An interior view of a full service Pizzeria Uno restaurant;
b. Photographs of two separate couples dining;
c. A family dining at a table;
d. A chef holding a plate of food;
e. A waitress delivering food orders; and
f. Three photographs of a variety of pizzas, pasta dishes, salads and
other dishes.
4. Cover 4: A single page Pizzeria Uno menu.
<PAGE> 54
5. Cover 5: A collage consisting of seven photographs with superimposed
headings "American Airlines," "The Takery," "General Cinema Theaters," and
"Consumer Products." The images depict the following:
a. An American Airlines jet;
b. A General Cinema marquee;
c. An exterior and an interior view of an "Uno...Pizza Takery";
d. A deep-dish pizza;
e. The Company's refrigerated pizzas and calzones beside other
consumer products; and
f. Uno's patented cardboard "Lunch Box" beside a deep-dish pizza and
bowl of soup.
6. Back Cover: The Company's logo is centered at the top of the page between
"2,000,000 Shares" and "Common Stock."
<PAGE> 55
000
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<CAPTION>
TOTAL EXPENSES
--------------
<S> <C>
SEC Registration Fee.................................................. $ 8,575
NASD Filing Fees...................................................... 2,987
New York Stock Exchange Listing Fee................................... 8,050
Blue Sky Fees and Expenses............................................ 12,000*
Transfer Agent Fees................................................... 1,500*
Accounting Fees and Expenses.......................................... 75,000*
Legal Fees and Expenses............................................... 80,000*
Printing and Engraving................................................ 50,000*
Miscellaneous......................................................... 16,888*
----------
Total............................................................... $ 255,000
==========
<FN>
- ---------------
* Estimated.
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Eighth Section of the Company's Restated Certificate of Incorporation,
as amended, eliminates the personal liability of directors to the Company or its
stockholders for monetary damages for breach of fiduciary duty to the extent
permitted by Delaware law. Article VII of the Company's Bylaws provides that the
Company shall indemnify its officers and directors to the extent permitted by
the General Corporation Law of the State of Delaware. Section 145 of the General
Corporation Law of the State of Delaware authorizes a corporation to indemnify
its directors, officers, employees or agents unless such party has been
adjudicated in any proceedings not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Corporation.
Reference is hereby made to the caption "Description of Capital Stock and
Other Matters -- Limitation of Directors' and Officers' Liability;
Indemnification Agreements" in the Prospectus which is a part of this
Registration Statement and the form of Indemnification Agreement between the
Company and its directors, previously filed as Exhibit 10.6 (incorporated herein
by reference) to the Company's Registration Statement on Form S-1 (Registration
No. 33-13100) for a description of additional indemnification arrangements
between the Company and its directors.
The effect of these provisions would be to permit such indemnification by
the Company for liabilities arising under the Securities Act of 1933, as
amended.
Reference is hereby made to Section 10 of the Underwriting Agreement
between the Company and the Underwriter, filed as Exhibit 1.1 to this
Registration Statement, for a description of indemnification arrangements
between the Company and the Underwriter.
ITEM 16. EXHIBITS
See Exhibit Index on page II-5.
II-1
<PAGE> 56
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-2
<PAGE> 57
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, Commonwealth of Massachusetts, on May 9,
1995.
UNO RESTAURANT CORPORATION
By: /s/ CRAIG S. MILLER
................................
CRAIG S. MILLER
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ AARON D. SPENCER Chairman, Chief Executive Officer May 9, 1995
..................................... and Director (Principal Executive
AARON D. SPENCER Officer)
/s/ CRAIG S. MILLER President, Chief Operating Officer May 9, 1995
..................................... and Director
CRAIG S. MILLER
/s/ ROBERT M. BROWN Treasurer, Senior Vice President -- May 9, 1995
..................................... Finance, Chief Financial Officer
ROBERT M. BROWN and Director (Principal Financial
and Accounting Officer)
/s/ JOHN T. GERLACH Director May 9, 1995
.....................................
JOHN T. GERLACH
/s/ E. ROBERT KINNEY Director May 9, 1995
.....................................
E. ROBERT KINNEY
/s/ S. JAMES COPPERSMITH Director May 9, 1995
.....................................
S. JAMES COPPERSMITH
/s/ STEPHEN J. SWEENEY Director May 9, 1995
.....................................
STEPHEN J. SWEENEY
</TABLE>
II-3
<PAGE> 58
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Aaron D. Spencer, Craig S. Miller and Robert M.
Brown, and each of them (with full power to each of them to act alone), his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ AARON D. SPENCER Chairman, Chief Executive Officer May 9, 1995
..................................... and Director (Principal Executive
AARON D. SPENCER Officer)
/s/ CRAIG S. MILLER President, Chief Operating Officer May 9, 1995
..................................... and Director
CRAIG S. MILLER
/s/ ROBERT M. BROWN Treasurer, Senior Vice President -- May 9, 1995
..................................... Finance, Chief Financial Officer
ROBERT M. BROWN and Director (Principal Financial
and Accounting Officer)
/s/ JOHN T. GERLACH Director May 9, 1995
.....................................
JOHN T. GERLACH
/s/ E. ROBERT KINNEY Director May 9, 1995
.....................................
E. ROBERT KINNEY
/s/ S. JAMES COPPERSMITH Director May 9, 1995
.....................................
S. JAMES COPPERSMITH
/s/ STEPHEN J. SWEENEY Director May 9, 1995
.....................................
STEPHEN J. SWEENEY
</TABLE>
II-4
<PAGE> 59
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. PAGE NO.
- ----------- ----------
<C> <S> <C>
1.1 Form of Underwriting Agreement
3.1 Restated Certificate of Incorporation, as amended, of the Company,
filed as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended April 2, 1995 (the "April 2, 1995 Form 10-Q")*
3.2 Amended and Restated Bylaws of the Company, filed as Exhibit 3.2 to the
April 2, 1995 Form 10-Q*
4.1 Note Purchase Agreement dated as of June 1, 1990 between the Company,
Uno Restaurants, Inc., Connecticut General Life Insurance Company,
CIGNA Property and Casualty Insurance Company on behalf of one or more
separate accounts, Insurance Company of North America and Life
Insurance Company of North America, filed as Exhibit 4 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended July 1,
1990,* and First Amendment to Note Purchase Agreement dated as of July
31, 1991, filed as Exhibit 4(b) to the Company's Annual Report on Form
10-K for the fiscal year ended September 29, 1991 (the "1991 Annual
Report on Form 10-K"),* and Second Amendment to Note Purchase Agreement
dated as of April 30, 1992, filed as Exhibit 4(b) to the Company's
Annual Report on Form 10-K for the fiscal year ended September 27,
1992 (the "1992 Annual Report on Form 10-K"),* and Third Amendment to
Note Purchase Agreement dated as of February 15, 1993, filed as Exhibit
4(b) to the Company's Annual Report on Form 10-K for the fiscal year
ended October 3, 1993 (the "1993 Annual Report on Form 10-K")*
5.1 Legal Opinion of Brown, Rudnick, Freed & Gesmer
10.1 Lease between the Company and Aaron D. Spencer dated March 30, 1987 for
premises in West Roxbury, Massachusetts, filed as Exhibit 10.2 to the
Registration Statement on Form S-1 (Registration No. 33-13100) (the
"1987 Registration Statement")*
10.2 Lease between the Company and Aaron D. Spencer dated March 30, 1987 for
premises in Boston, Massachusetts, filed as Exhibit 10.3 to the 1987
Registration Statement*
10.3 Lease between Uno Restaurants, Inc. and Lisa S. Cohen and Mark N.
Spencer dated February 1, 1990 for premises in West Roxbury,
Massachusetts, filed as Exhibit 10(d) to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1990 (the "1990
Annual Report on Form 10-K")*
10.4 Form of Franchise Agreement and Area Franchise Agreement, filed as
Exhibit 10.5 to the Registration Statement on Form S-2 (Registration
No. 33-38944) (the "1991 Registration Statement")*
10.5 Uno Restaurant Corporation 1987 Employee Stock Option Plan, As Amended,
filed as Exhibit A to the Company's Proxy Statement for the Annual
Meeting of Stockholders held on February 22, 1994*
10.6 Uno Restaurant Corporation 1989 Non-Qualified Stock Option Plan for
Non-Employee Directors, filed as Exhibit A to the Company's Proxy
Statement for the Annual Meeting of Stockholders held on February 8,
1995*
10.7 Uno Restaurant Corporation 1993 Non-Qualified Stock Option Plan for
Non-Employee Directors, filed as Exhibit A to the Company's Proxy
Statement for the Annual Meeting of Stockholders held on March 2, 1993*
10.8 Form of Indemnification Agreement between the Company and its Directors
filed as Exhibit 10.6 to the 1987 Registration Statement*
</TABLE>
II-5
<PAGE> 60
<TABLE>
<C> <S> <C>
10.11 Variable Royalty Plan for Franchises, filed as Exhibit 10(l) to the
1991 Annual Report on Form 10-K*
10.16 $50,000,000 Revolving Credit and Term Loan Agreement dated as of
December 9, 1994 by and among Uno Restaurants, Inc., as Borrower, Uno
Foods Inc., Pizzeria Uno Corporation, URC Holding Company, Inc. and Uno
Restaurant Corporation, as Guarantors, and Fleet Bank of Massachusetts,
N.A. as Agent (without exhibits), filed as Exhibit 10(p) to the
Company's Annual Report on Form 10-K for the fiscal year ended October
2, 1994 (the "1994 Annual Report on Form 10-K")*
10.17 Asset Purchase Agreement dated September 1, 1994, by and among Bay
Street Restaurants, Inc., Bay Street of Philadelphia, Pennsylvania,
Inc., Bay Street of Woodbridge, New Jersey, Inc., Bay Street of
Schaumburg, Illinois, Inc. and Bay Street Services, Inc., and UNO Bay,
Inc., B.S. of Woodbridge, Inc., B.S. of Schaumburg, Inc. and B.S.
Intangible Asset Corp., filed as Exhibit 10(q) to the 1994 Annual
Report on Form 10-K*
10.18 Change in Control Protection Agreements dated January 6, 1994 between
Uno Restaurant Corporation and each of its named executive officers,
Mr. Spencer, Mr. Miller, Mr. Brown, Mr. Fox and Mr. Gallucci, filed as
Exhibit 10(r) to the 1994 Annual Report on Form 10-K*
10.19 Master Lease-Purchase Agreement between ORIX Credit Alliance, Inc., as
Lessor, and Massachusetts Industrial Finance Agency, as Lessee, dated
April 19, 1994, and Master Sublease-Purchase Agreement between Massa-
chusetts Industrial Finance Agency, as Sublessor, and Uno Foods, Inc.
as Sublessee, dated April 19, 1994, filed as Exhibit 10(s) to the 1994
Annual Report on Form 10-K*
11.1 Statement re computation of per share earnings
13.1 The Company's Annual Report on Form 10-K for the fiscal year ended
October 2, 1994 (Exhibits thereto previously filed and not refiled
herewith)
13.2 The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended January 1, 1995
13.3 The April 2, 1995 Form 10-Q
23.1 Consent of Brown, Rudnick, Freed & Gesmer (contained in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
24.1 Power of Attorney (contained on page II-4)
<FN>
- ---------------
* Not filed herewith. In accordance with Rule 411 under the Securities Act of
1933, as amended, reference is made to the documents previously filed with the
Securities and Exchange Commission, which documents, or parts thereof as
described above, are hereby incorporated by reference.
</TABLE>
II-6
<PAGE> 1
Draft of May 3, 1995
2,000,000 Shares
UNO RESTAURANT CORPORATION
Common Stock
UNDERWRITING AGREEMENT
__________, 1995
MONTGOMERY SECURITIES
600 Montgomery Street
San Francisco, California 94111
As Representative of the several Underwriters
Dear Sirs:
SECTION 1. Introductory. Uno Restaurant Corporation, a Delaware
corporation (the "Company"), proposes to issue and sell 2,000,000
shares of its authorized but unissued Common Stock (the "Common Stock")
to the several underwriters named in Schedule A annexed hereto (the
"Underwriters"), for whom you are acting as Representative. Said
aggregate of 2,000,000 shares are herein called the "Firm Common
Shares." In addition, the Company proposes to grant to the Underwriters
an option to purchase up to 300,000 additional shares of Common Stock
(the "Optional Common Shares"), as provided in Section 5 hereof. The
Firm Common Shares and, to the extent such option is exercised, the
Optional Common Shares are hereinafter collectively referred to as the
"Common Shares."
You have advised the Company that the Underwriters propose to make
a public offering of their respective portions of the Common Shares on
the effective date of the registration statement hereinafter referred
to, or as soon thereafter as in your judgment is advisable.
The Company hereby confirms its agreements with respect to the
purchase of the Common Shares by the Underwriters as follows:
SECTION 2. Representations and Warranties of the Company. The
Company hereby represents and warrants to the several Underwriters
that:
(a) A registration statement on Form S-2 (File No.
33- ) with respect to the Common Shares has been prepared by
<PAGE> 2
the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with
the Commission. The Company has prepared and has filed or proposes
to file prior to the effective date of such registration statement
an amendment or amendments to such registration statement, which
amendment or amendments have been or will be similarly prepared.
There have been delivered to you two signed copies of such
registration statement and amendments, together with two copies of
each exhibit filed therewith. Conformed copies of such
registration statement and amendments (but without exhibits) and
of the related preliminary prospectus have been delivered to you
in such reasonable quantities as you have requested for each of
the Underwriters. The Company will next file with the Commission
one of the following: (i) prior to effectiveness of such
registration statement, a further amendment thereto, including the
form of final prospectus, or (ii) a final prospectus in accordance
with Rules 430A and 424(b) of the Rules and Regulations. As filed,
such amendment and form of final prospectus, or such final
prospectus, shall include all Rule 430A Information and, except to
the extent that you shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you
prior to the date and time that this Agreement was executed and
delivered by the parties hereto, or, to the extent not completed
at such date and time, shall contain only such specific additional
information and other changes (beyond that contained in the latest
Preliminary Prospectus) as the Company shall have previously
advised you in writing would be included or made therein.
The term "Registration Statement" as used in this Agreement
shall mean such registration statement at the time such
registration statement becomes effective and, in the event any
post-effective amendment thereto becomes effective prior to the
First Closing Date (as hereinafter defined), shall also mean such
registration statement as so amended; provided, however, that such
term shall also include all Rule 430A Information deemed to be
included in such registration statement at the time such
registration statement becomes effective as provided by Rule 430A
of the Rules and Regulations. The term "Preliminary Prospectus"
shall mean any preliminary prospectus referred to in the preceding
paragraph and any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits
Rule 430A Information. The term "Prospectus" as used in this
Agreement shall mean the prospectus relating to the
-2-
<PAGE> 3
Common Shares in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations
or, if no filing pursuant to Rule 424(b) of the Rules and
Regulations is required, shall mean the form of final prospectus
included in the Registration Statement at the time such
registration statement becomes effective. The term "Rule 430A
Information" means information with respect to the Common Shares
and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule
430A of the Rules and Regulations. Any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein
pursuant to Form S-2 under the Act, as of the date of such
Preliminary Prospectus or Prospectus, as the case may be.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each
Preliminary Prospectus has conformed in all material respects to
the requirements of the Act and the Rules and Regulations and, as
of its date, has not included any untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; and at the time the Registration
Statement becomes effective, and at all times subsequent thereto
up to and including each Closing Date hereinafter mentioned, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, will contain all material statements and
information required to be included therein by the Act and the
Rules and Regulations and will in all material respects conform to
the requirements of the Act and the Rules and Regulations, and
neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will include any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, no representation or warranty
contained in this subsection 2(b) shall be applicable to
information contained in or omitted from any Preliminary
Prospectus, the Registration Statement, the Prospectus or any such
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by or on behalf of
any Underwriter, directly or through the Representative,
specifically for use in the preparation thereof. The documents
incorporated by reference in the Prospectus, when they were filed
with the Commission, conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations of
the Commission thereunder, and,
-3-
<PAGE> 4
when filed, none of such documents contained an untrue statement
of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(c) The Company does not own or control, directly or
indirectly, any corporation, association or other entity other
than the subsidiaries listed in Exhibit 21 to the Annual Report on
Form 10-K for the Company's most recent fiscal year. The Company
and each of its subsidiaries have been duly incorporated and are
validly existing as corporations in good standing under the laws
of their respective jurisdictions of incorporation, with full
power and authority (corporate and other) to own and lease their
properties and conduct their respective businesses as described in
the Prospectus; the Company owns all of the outstanding capital
stock of its subsidiaries free and clear of all claims, liens,
charges and encumbrances; the Company and each of its subsidiaries
are in possession of and operating in compliance with all
authorizations, licenses, permits, consents, certificates and
orders material to the conduct of their respective businesses, all
of which are valid and in full force and effect; the Company and
each of its subsidiaries are duly qualified to do business and in
good standing as foreign corporations in each jurisdiction in
which the ownership or leasing of properties or the conduct of
their respective businesses requires such qualification, except
for jurisdictions in which the failure to so qualify would not
have a material adverse effect upon the Company and its
subsidiaries, taken as a whole; and no proceeding has been
instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification.
(d) The Company has an authorized and outstanding capital
stock as set forth under the heading "Capitalization" in the
Prospectus; the issued and outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and
nonassessable, are duly listed on the New York Stock Exchange,
have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase
securities, and conform to the description thereof contained in
the Prospectus. All issued and outstanding shares of capital stock
of each subsidiary of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. Except as
disclosed in or contemplated by the Prospectus and the financial
statements of the Company, and the related notes
-4-
<PAGE> 5
thereto, included in the Prospectus, neither the Company nor any
subsidiary has outstanding any options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase,
any securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations.
The description of the Company's stock option, stock bonus and
other stock plans or arrangements, and the options or other rights
granted and exercised thereunder, set forth in the Prospectus
accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and
rights.
(e) The Common Shares to be sold by the Company have been
duly authorized and, when issued, delivered and paid for in the
manner set forth in this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable, and will conform to
the description thereof contained in the Prospectus. No preemptive
rights or other rights to subscribe for or purchase exist with
respect to the issuance and sale of the Common Shares by the
Company pursuant to this Agreement. No stockholder of the Company
has any right which has not been waived to require the Company to
register the sale of any shares owned by such stockholder under
the Act in the public offering contemplated by this Agreement. No
further approval or authority of the stockholders or the Board of
Directors of the Company will be required for the issuance and
sale of the Common shares to be sold by the Company as
contemplated herein.
(f) The Company has full legal right, power and authority to
enter into this Agreement and perform the transactions
contemplated hereby. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and
binding obligation of the Company in accordance with its terms.
The making and performance of this Agreement by the Company and
the consummation of the transactions herein contemplated will not
violate any provisions of the certificate of incorporation or
bylaws, or other organizational documents, of the Company or any
of its subsidiaries, and will not conflict with, result in the
breach or violation of, or constitute, either by itself or upon
notice or the passage of time or both, a default under any
agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of its respective properties may be bound
or affected, any statute or any authorization, judgment, decree,
order, rule or regulation of
-5-
<PAGE> 6
any court or any regulatory body, administrative agency or other
governmental body applicable to the Company or any of its
subsidiaries or any of their respective properties. No consent,
approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body is required
for the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement,
except for compliance with the Act, the Blue Sky laws applicable
to the public offering of the Common Shares by the several
Underwriters and the clearance of such offering with the National
Association of Securities Dealers, Inc. (the "NASD").
(g) Ernst & Young LLP, who have expressed their opinion with
respect to the financial statements and schedules filed with the
Commission as a part of the Registration Statement and included in
the Prospectus and in the Registration Statement, are independent
accountants as required by the Act and the Rules and Regulations.
(h) The financial statements and schedules of the Company,
and the related notes thereto, included in the Registration
Statement and the Prospectus present fairly the financial position
of the Company as of the respective dates of such financial
statements and schedules, and the results of operations and
changes in financial position of the Company for the respective
periods covered thereby. Such statements, schedules and related
notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis as certified
by the independent accountants named in subsection 2(g). No other
financial statements or schedules are required to be included in
the Registration Statement. The selected financial data set forth
in the Prospectus under the captions "Capitalization" and
"Selected Financial Data" fairly present the information set forth
therein on the basis stated in the Registration Statement.
(i) Except as disclosed in the Prospectus, and except as to
defaults which individually or in the aggregate would not be
material to the Company, neither the Company nor any of its
subsidiaries is in violation or default of any provision of its
certificate of incorporation or bylaws, or other organizational
documents, or is in breach of or default with respect to any
provision of any agreement, judgment, decree, order, mortgage,
deed of trust, lease, franchise, license, indenture, permit or
other instrument to which it is a party or by which it or any of
its properties are bound; and there does not exist any state of
facts which constitutes
-6-
<PAGE> 7
an event of default on the part of the Company or any such
subsidiary as defined in such documents or which, with notice or
lapse of time or both, would constitute such an event of default.
(j) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits
to the Registration Statement by the Act or by the Rules and
Regulations which have not been described or filed as required.
The contracts so described in the Prospectus are in full force and
effect on the date hereof; and neither the Company nor any of its
subsidiaries, nor to the best of the Company's knowledge, any
other party is in breach of or default under any of such
contracts.
(k) Except as disclosed in the Prospectus, there are no legal
or governmental actions, suits or proceedings pending or, to the
best of the Company's knowledge, threatened to which the Company
or any of its subsidiaries is or may be a party or of which
property owned or leased by the Company or any of its subsidiaries
is or may be the subject, or related to environmental or
discrimination matters, which actions, suits or proceedings might,
individually or in the aggregate, prevent or adversely affect the
transactions contemplated by this Agreement or result in a
material adverse change in the condition (financial or otherwise),
properties, business, results of operations or prospects of the
Company and its subsidiaries, taken as a whole; and no labor
disturbance by the employees of the Company or any of its
subsidiaries exists or is imminent which might be expected to
affect adversely such condition, properties, business, results of
operations or prospects. Neither the Company nor any of its
subsidiaries is a party or subject to the provisions of any
material injunction, judgment, decree or order of any court,
regulatory body, administrative agency or other governmental body.
(l) The Company or the applicable subsidiary has good and
marketable title to all the properties and assets reflected as
owned in the financial statements hereinabove described (or
elsewhere in the Prospectus), subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except (i) those, if
any, reflected in such financial statements (or elsewhere in the
Prospectus), or (ii) those which are not material in amount and do
not adversely affect the use made and proposed to be made of such
property by the Company and its subsidiaries. The Company or the
applicable subsidiary holds its leased properties under valid and
binding leases, with such exceptions as are not materially
-7-
<PAGE> 8
significant in relation to the business of the Company. Except as
disclosed in the Prospectus, the Company owns or leases all such
properties as are necessary to its operations as now conducted or
as proposed to be conducted.
(m) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as
described in or specifically contemplated by the Prospectus: (i)
the Company and its subsidiaries have not incurred any material
liabilities or obligations, indirect, direct or contingent, or
entered into any material verbal or written agreement or other
transaction which is not in the ordinary course of business; (ii)
the Company and its subsidiaries have not sustained any material
loss or interference with their respective businesses or
properties from fire, flood, windstorm, accident or other
calamity, whether or not covered by insurance; (iii) the Company
has not paid or declared any dividends or other distributions with
respect to its capital stock and the Company and its subsidiaries
are not in default in the payment of principal or interest on any
outstanding debt obligations; (iv) there has not been any change
in the capital stock (other than upon the sale of the Common
Shares hereunder and upon the exercise of options and warrants
described in the Registration Statement) or indebtedness material
to the Company and its subsidiaries (other than in the ordinary
course of business); and (v) there has not been any material
adverse change in the condition (financial or otherwise),
business, properties, results of operations or prospects of the
Company and its subsidiaries.
(n) Except as disclosed in or specifically contemplated by
the Prospectus, the Company and its subsidiaries have sufficient
trademarks, trade names, patent rights, copyrights, licenses,
approvals and governmental authorizations to conduct their
businesses as now conducted; the expiration of any trademarks,
trade names, patent rights, mask works, copyrights, licenses,
approvals or governmental authorizations would not have a material
adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company or its
subsidiaries; and the Company has no knowledge of any material
infringement by it or its subsidiaries of trademark, trade name
rights, patent rights, copyrights, licenses, trade secret or other
similar rights of others, and there is no claim being made against
the Company or its subsidiaries regarding trademark, trade name,
patent, mask work, copyright, license, trade secret or other
infringement which could have a material adverse effect on the
condition (financial or otherwise),
-8-
<PAGE> 9
business, results of operations or prospects of the Company
and its subsidiaries, taken as a whole.
(o) The Company has not been advised, and has no reason to
believe, that either it or any of its subsidiaries is not
conducting business in compliance with all applicable laws, rules
and regulations of the jurisdictions in which it is conducting
business, including, without limitation, all applicable local,
state and federal environmental laws and regulations; except where
failure to be so in compliance would not materially adversely
affect the condition (financial or otherwise), business, results
of operations or prospects of the Company and its subsidiaries,
taken as a whole.
(p) The Company and its subsidiaries have filed all necessary
federal, state and foreign income and franchise tax returns and
have paid all taxes shown as due thereon; and the Company has no
knowledge of any tax deficiency which has been or might be
asserted or threatened against the Company or its subsidiaries
which could materially and adversely affect the business,
operations or properties of the Company and its subsidiaries,
taken as a whole.
(q) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(r) The Company has not distributed and will not distribute
prior to the First Closing Date any offering material in
connection with the offering and sale of the Common Shares other
than the Prospectus, the Registration Statement and the other
materials permitted by the Act.
(s) Each of the Company and its subsidiaries maintains
insurance of the types and in the amounts generally deemed
adequate for its business, including, but not limited to,
insurance covering real and personal property owned or leased by
the Company and its subsidiaries against theft, damage,
destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and
effect.
(t) Neither the Company nor any of its subsidiaries has at
any time during the last five years (i) made any unlawful
contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law, or (ii) made
any payment to any federal or state governmental officer or
official, or other person charged with similar
-9-
<PAGE> 10
public or quasi-public duties, other than payments required or
permitted by the laws of the United States of any jurisdiction
thereof.
(u) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably
expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of
the Common Shares.
SECTION 3. Representations and Warranties of the Underwriters. The
Representative, on behalf of the several Underwriters, represents and
warrants to the Company that the information set forth (i) on the cover
page of the Prospectus with respect to price, underwriting discounts
and commissions and terms of offering and (ii) under "Underwriting" in
the Prospectus was furnished to the Company by and on behalf of the
Underwriters for use in connection with the preparation of the
Registration Statement and the Prospectus and is correct in all
material respects. The Representative represents and warrants that it
has been authorized by each of the other Underwriters as the
Representative to enter into this Agreement on its behalf and to act
for it in the manner herein provided.
SECTION 4. Purchase, Sale and Delivery of Common Shares. On the
basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth,
the Company agrees to issue and sell the Firm Common Shares to the
Underwriters. The Underwriters agree, severally and not jointly, to
purchase from the Company the number of Firm Common Shares described
below. The purchase price per share to be paid by the several
Underwriters to the Company shall be $_____ per share. The obligation
of each Underwriter to the Company shall be to purchase from the
Company the number of Firm Common Shares set forth opposite the name of
such Underwriter in Schedule A hereto.
Delivery of certificates for the Firm Common Shares to be
purchased by the Underwriters and payment therefor shall be made at the
offices of Montgomery Securities, 600 Montgomery Street, San Francisco,
California (or such other place as may be agreed upon by the Company
and the Representative) at such time and date, not later than the fifth
full business day following the first date that any of the Common
Shares are released by you for sale to the public, as you shall
designate by at least 48 hours prior notice to the Company (the "First
Closing Date"); provided, however, that if the Prospectus is at any
time prior to the First Closing Date recirculated to the public, the
First Closing Date shall occur upon the later of the fifth full
business day following the first date that any of the Common Shares are
-10-
<PAGE> 11
released by you for sale to the public or the date that is 48 hours
after the date that the Prospectus has been so recirculated.
Delivery of certificates for the Firm Common Shares shall be made
by or on behalf of the Company to you, for the respective accounts of
the Underwriters against payment by you, for the accounts of the
several Underwriters, of the purchase price therefor by certified or
official bank checks payable in next day funds to the order of the
Company. The certificates for the Firm Common Shares shall be
registered in such names and denominations as you shall have requested
at least two full business days prior to the First Closing Date, and
shall be made available for checking and packaging on the business day
preceding the First Closing Date at a location in New York, New York,
as may be designated by you. Time shall be of the essence, and delivery
at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriters.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions
herein set forth, the Company hereby grants an option to the several
Underwriters to purchase, severally and not jointly, up to an aggregate
of 300,000 Optional Common Shares at the purchase price per share to be
paid for the Firm Common Shares, for use solely in covering any
over-allotments made by you for the account of the Underwriters in the
sale and distribution of the Firm Common Shares. The option granted
hereunder may be exercised at any time (but not more than once) within
30 days after the first date that any of the Common Shares are released
by you for sale to the public, upon notice by you to the Company
setting forth the aggregate number of Optional Common Shares as to
which the Underwriters are exercising the option, the names and
denominations in which the certificates for such shares are to be
registered and the time and place at which such certificates will be
delivered. Such time of delivery (which may not be earlier than the
First Closing Date), being herein referred to as the "Second Closing
Date," shall be determined by you, but if at any time other than the
First Closing Date shall not be earlier than three nor later than five
full business days after delivery of such notice of exercise. The
number of Optional Common Shares to be purchased by each Underwriter
shall be determined by multiplying the number of Optional Common Shares
to be sold by the Company pursuant to such notice of exercise by a
fraction, the numerator of which is the number of Firm Common Shares to
be purchased by such Underwriter as set forth opposite its name in
Schedule A and the denominator of which is 2,000,000 (subject to such
adjustments to eliminate any fractional share purchases as you in your
discretion may make). Certificates for the Optional Common Shares will
be made available for checking and packaging on
-11-
<PAGE> 12
the business day preceding the Second Closing Date at a location in New
York, New York, as may be designated by you. The manner of payment for
and delivery of the Optional Common Shares shall be the same as for the
Firm Common Shares purchased from the Company as specified in the two
preceding paragraphs. At any time before lapse of the option, you may
cancel such option by giving written notice of such cancellation to the
Company. If the option is cancelled or expires unexercised in whole or
in part, the Company will deregister under the Act the number of Option
Shares as to which the option has not been exercised.
You have advised the Company that each Underwriter has authorized
you to accept delivery of its Common Shares, to make payment and to
receipt therefor. You, individually and not as the Representative of
the Underwriters, may (but shall not be obligated to) make payment for
any Common Shares to be purchased by any Underwriter whose funds shall
not have been received by you by the First Closing Date or the Second
Closing Date, as the case may be, for the account of such Underwriter,
but any such payment shall not relieve such Underwriter from any of its
obligations under this Agreement.
Subject to the terms and conditions hereof, the Underwriters
propose to make a public offering of their respective portions of the
Common Shares as soon after the effective date of the Registration
Statement as in the judgment of the Representative is advisable and at
the public offering price set forth on the cover page of and on the
terms set forth in the Prospectus.
SECTION 5. Covenants of the Company. The Company covenants
and agrees that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective
at the time and date that this Agreement is executed and delivered
by the parties hereto, to become effective. If the Registration
Statement has become or becomes effective pursuant to Rule 430A of
the Rules and Regulations, or the filing of the Prospectus is
otherwise required under Rule 424(b) of the Rules and Regulations,
the Company will file the Prospectus, properly completed, pursuant
to the applicable paragraph of Rule 424(b) of the Rules and
Regulations within the time period prescribed and will provide
evidence satisfactory to you of such timely filing. The Company
will promptly advise you in writing (i) of the receipt of any
comments of the Commission, (ii) of any request of the Commission
for amendment of or supplement to the Registration Statement
(either before or after it becomes effective), any Preliminary
Prospectus or the
-12-
<PAGE> 13
Prospectus or for additional information, (iii) when the
Registration Statement shall have become effective and (iv) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the institution
of any proceedings for that purpose. If the Commission shall enter
any such stop order at any time, the Company will use its best
efforts to obtain the lifting of such order at the earliest
possible moment. The Company will not file any amendment or
supplement to the Registration Statement (either before or after
it becomes effective), any Preliminary Prospectus or the
Prospectus of which you have not been furnished with a copy a
reasonable time prior to such filing or to which you reasonably
object or which is not in compliance with the Act and the Rules
and Regulations.
(b) The Company will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the
Registration Statement or the Prospectus which in your judgment
may be necessary or advisable to enable the several Underwriters
to continue the distribution of the Common Shares and will use its
best efforts to cause the same to become effective as promptly as
possible. The Company will fully and completely comply with the
provisions of Rule 430A of the Rules and Regulations with respect
to information omitted from the Registration Statement in reliance
upon such Rule.
(c) If at any time within the nine-month period referred to
in Section 10(a)(3) of the Act during which a prospectus relating
to the Common Shares is required to be delivered under the Act any
event occurs, as a result of which the Prospectus, including any
amendments or supplements, would include an untrue statement of a
material fact, or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, or if it is necessary at any time to amend the
Prospectus, including any amendments or supplements, to comply
with the Act or the Rules and Regulations, the Company will
promptly advise you thereof and will promptly prepare and file
with the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or an
amendment or supplement which will effect such compliance and will
use its best efforts to cause the same to become effective as soon
as possible; and, in case any Underwriter is required to deliver a
prospectus after such nine-month period, the Company upon request,
but at the expense of such Underwriter, will promptly prepare such
amendment or amendments to the Registration Statement and
-13-
<PAGE> 14
such Prospectus or Prospectuses as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the Act.
(d) As soon as practicable, but not later than 45 days after
the end of the first quarter ending after one year following the
"effective date of the Registration Statement" (as defined in Rule
158(c) of the Rules and Regulations), the Company will make
generally available to its security holders an earnings statement
(which need not be audited) covering a period of 12 consecutive
months beginning after the effective date of the Registration
Statement which will satisfy the provisions of the last paragraph
of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to
be delivered in connection with sales by an Underwriter or dealer,
the Company, at its expense, but only for the nine-month period
referred to in Section 10(a)(3) of the Act, will furnish to you or
mail to your order copies of the Registration Statement, the
Prospectus, the Preliminary Prospectus and all amendments and
supplements to any such documents in each case as soon as
available and in such quantities as you may request, for the
purposes contemplated by the Act.
(f) The Company shall cooperate with you and your counsel in
order to qualify or register the Common Shares for sale under (or
obtain exemptions from the application of) the Blue Sky laws of
such jurisdictions as you designate, will comply with such laws
and will continue such qualifications, registrations and
exemptions in effect so long as reasonably required for the
distribution of the Common Shares. The Company shall not be
required to qualify as a foreign corporation or to file a general
consent to service of process in any such jurisdiction where it is
not presently qualified or where it would be subject to taxation
as a foreign corporation. The Company will advise you promptly of
the suspension of the qualification or registration of (or any
such exemption relating to) the Common Shares for offering, sale
or trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance
of any order suspending such qualification, registration or
exemption, the Company, with your cooperation, will use its best
efforts to obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company
will furnish to the Representative and, upon request of the
Representative, to each of the other Underwriters:
-14-
<PAGE> 15
(i) as soon as practicable after the end of each fiscal year,
copies of the Annual Report of the Company containing the balance
sheet of the Company as of the close of such fiscal year and
statements of income, stockholders' equity and cash flows for the
year then ended and the opinion thereon of the Company's
independent public accountants; (ii) as soon as practicable after
the filing thereof, copies of each proxy statement, Annual Report
on Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or
other report filed by the Company with the Commission, the NASD or
any securities exchange; and (iii) as soon as available, copies of
any report or communication of the Company mailed generally to
holders of its Common Stock.
(h) During the period of 90 days after the first date that
any of the Common Shares are released by you for sale to the
public, without the prior written consent of Montgomery Securities
(which consent may be withheld at the sole discretion of
Montgomery Securities), the Company will not other than pursuant
to outstanding stock options and warrants disclosed in the
Prospectus, issue, offer, sell, grant options to purchase or
otherwise dispose of any of the Company's equity securities or any
other securities convertible into or exchangeable with its Common
Stock or other equity security.
(i) The Company will apply the net proceeds of the sale of
the Common Shares sold by it substantially in accordance with its
statements under the caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to qualify or
register its Common Stock for sale in non-issuer transactions
under (or obtain exemptions from the application of) the Blue Sky
laws of the State of California (and thereby permit market making
transactions and secondary trading in the Company's Common Stock
in California), will comply with such Blue Sky laws and will
continue such qualifications, registrations and exemptions in
effect for a period of five years after the date hereof.
(k) The Company will use its best efforts to list, subject to
official notice of issuance, on the New York Stock Exchange, the
Stock to be issued and sold by the Company.
You, on behalf of the Underwriters, may, in your sole discretion,
waive in writing the performance by the Company of any one or more of
the foregoing covenants or extend the time for their performance.
-15-
<PAGE> 16
SECTION 6. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes
effective or is terminated, the Company agrees to pay all costs, fees
and expenses incurred in connection with the performance of its
obligations hereunder and in connection with the transactions
contemplated hereby, including without limiting the generality of the
foregoing, (i) all expenses incident to the issuance and delivery of
the Common Shares (including all printing and engraving costs), (ii)
all fees and expenses of the registrar and transfer agent of the Common
Stock, (iii) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Common Shares to the
Underwriters, (iv) all fees and expenses of the Company's counsel and
the Company's independent accountants, (v) all costs and expenses
incurred in connection with the preparation, printing, filing, shipping
and distribution of the Registration Statement, each Preliminary
Prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein,
this Agreement, the Agreement Among Underwriters, the Selected Dealers
Agreement, the Underwriters' Questionnaire, the Underwriters' Power of
Attorney and the Blue Sky memorandum, (vi) all filing fees, attorneys'
fees and expenses incurred by the Company or the Underwriters in
connection with qualifying or registering (or obtaining exemptions from
the qualification or registration of) all or any part of the Common
Shares for offer and sale under the Blue Sky laws, (vii) the filing fee
of the National Association of Securities Dealers, Inc., and (viii) all
other fees, costs and expenses referred to in Item 14 of the
Registration Statement. Except as provided in this Section 6, Section 8
and Section 10 hereof, the Underwriters shall pay all of their own
expenses, including the fees and disbursements of their counsel
(excluding those relating to qualification, registration or exemption
under the Blue Sky laws and the Blue Sky memorandum referred to above).
SECTION 7. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the
Firm Common Shares on the First Closing Date and the Optional Common
Shares on the Second Closing Date shall be subject to the accuracy of
the representations and warranties on the part of the Company herein
set forth as of the date hereof and as of the First Closing Date or the
Second Closing Date, as the case may be, to the accuracy of the
statements of Company officers made pursuant to the provisions hereof,
to the performance by the Company of its obligations hereunder, and to
the following additional conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 P.M., Washington, D.C. Time, on
the date of this Agreement, or at such later time as shall
-16-
<PAGE> 17
have been consented to by you; if the filing of the Prospectus, or
any supplement thereto, is required pursuant to Rule 424(b) of the
Rules and Regulations, the Prospectus shall have been filed in the
manner and within the time period required by Rule 424(b) of the
Rules and Regulations; and prior to such Closing Date, no stop
order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall
have been instituted or shall be pending or, to the knowledge of
the Company or you, shall be contemplated by the Commission; and
any request of the Commission for inclusion of additional
information in the Registration Statement, or otherwise, shall
have been complied with to your satisfaction.
(b) You shall be satisfied that since the respective dates as
of which information is given in the Registration Statement and
Prospectus, (i) there shall not have been any change in the
capital stock other than pursuant to the exercise of outstanding
options and warrants disclosed in the Prospectus of the Company or
any of its subsidiaries or any material change in the indebtedness
(other than in the ordinary course of business) of the Company or
any of its subsidiaries, (ii) except as set forth or contemplated
by the Registration Statement or the Prospectus, no material
verbal or written agreement or other transaction shall have been
entered into by the Company or any of its subsidiaries, which is
not in the ordinary course of business, (iii) no loss or damage
(whether or not insured) to the property of the Company or any of
its subsidiaries shall have been sustained which materially and
adversely affects the condition (financial or otherwise),
business, results of operations or prospects of the Company and
its subsidiaries, taken as a whole, (iv) no legal or governmental
action, suit or proceeding affecting the Company or any of its
subsidiaries which is material to the Company and its
subsidiaries, taken as a whole, or which affects or may affect the
transactions contemplated by this Agreement shall have been
instituted or threatened and (v) there shall not have been any
material change in the condition (financial or otherwise),
business, management, results of operations or prospects of the
Company and its subsidiaries which makes it impractical or
inadvisable in the judgment of the Representative to proceed with
the public offering or purchase the Common Shares as contemplated
hereby.
(c) There shall have been furnished to you, as
Representative of the Underwriters, on each Closing Date, in
-17-
<PAGE> 18
form and substance satisfactory to you, except as otherwise
expressly provided below:
(i) An opinion of Brown, Rudnick, Freed & Gesmer,
counsel for the Company, addressed to the Underwriters and
dated the First Closing Date, or the Second Closing Date, as
the case may be, to the effect that:
(1) Each of the Company and its subsidiaries has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to do
business as a foreign corporation and is in good
standing in all other jurisdictions where the ownership
or leasing of properties or the conduct of its business
requires such qualification, except for jurisdictions in
which the failure to so qualify would not have a
material adverse effect on the Company and its
subsidiaries, taken as a whole, and has full corporate
power and authority to own its properties and conduct
its business as described in the Registration Statement;
(2) The authorized, issued and outstanding capital
stock of the Company is as set forth under the caption
"Capitalization" in the Prospectus; all necessary and
proper corporate proceedings have been taken in order to
authorize validly such authorized Common Stock; all
outstanding shares of Common Stock have been duly and
validly issued, are fully paid and nonassessable, were
not issued in violation of or subject to any preemptive
rights or other similar rights to subscribe for or
purchase any securities and conform to the description
thereof contained in the Prospectus;
(3) All of the issued and outstanding shares of the
Company's subsidiaries have been duly and validly
authorized and issued, are fully paid and nonassessable
and, to the knowledge of such counsel, are owned
beneficially by the Company free and clear of all liens,
encumbrances and adverse claims;
(4) The certificates evidencing the Common Shares
to be delivered hereunder are in due and proper form
under Delaware law, and when duly countersigned by the
Company's transfer agent and
-18-
<PAGE> 19
registrar, and delivered to you or upon your order
against payment of the agreed consideration therefor in
accordance with the provisions of this Agreement, the
Common Shares represented thereby will be duly
authorized and validly issued, fully paid and
nonassessable, will not have been issued in violation of
or subject to any preemptive rights or other similar
rights to subscribe for or purchase securities and will
conform in all respects to the description thereof
contained in the Prospectus;
(5) Except as disclosed in or specifically
contemplated by the Prospectus, to such counsel's
knowledge, there are no outstanding options, warrants or
other rights calling for the issuance of, and no
commitments, plans or arrangements to issue, any shares
of capital stock of the Company or any security
convertible into or exchangeable for capital stock of
the Company;
(6)(a) The Registration Statement has become
effective under the Act, and, to the best of such
counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or
preventing the use of the Prospectus has been issued and
no proceedings for that purpose have been instituted or
are pending or contemplated by the Commission; any
required filing of the Prospectus and any supplement
thereto pursuant to Rule 424(b) of the Rules and
Regulations has been made in the manner and within the
time period required by such Rule 424(b);
(b) The Registration Statement, the Prospectus and
each amendment or supplement thereto (except for the
financial statements and schedules and financial data
included therein as to which such counsel need express
no opinion) comply as to form in all material respects
with the requirements of the Act and the Rules and
Regulations.
(c) To such counsel's knowledge, there are no
franchises, leases, contracts, agreements or documents
of a character required to be disclosed in the
Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement which are not
disclosed or filed, as required;
-19-
<PAGE> 20
(d) To such counsel's knowledge, there are no legal
or governmental actions, suits or proceedings pending or
threatened against the Company which are required to be
described in the Prospectus which are not described as
required; and
(e) The documents incorporated by reference in the
Prospectus (except for any financial statements and
schedules and financial data included in such documents
as to which such counsel need express no opinion), when
they were filed with the Commission, complied as to form
in all material respects with the requirements of the
Exchange Act and the rules and regulations of the
Commission thereunder;
(7) The Company has full right, power and authority
to enter into this Agreement and to sell and deliver the
Common Shares to be sold by it to the several
Underwriters; this Agreement has been duly and validly
authorized by all necessary corporate action by the
Company, has been duly and validly executed and
delivered by and on behalf of the Company, and is a
valid and binding agreement of the Company in accordance
with its terms, except as enforceability may be limited
by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting
creditors' rights generally and except as to those
provisions relating to indemnity or contribution for
liabilities arising under the Act as to which no opinion
need be expressed; and no approval, authorization,
order, consent, registration, filing, qualification,
license or permit of or with any court, regulatory,
administrative or other governmental body is required
for the execution and delivery of this Agreement by the
Company or the consummation of the transactions
contemplated by this Agreement, except such as have been
obtained and are in full force and effect under the Act
and such as may be required under applicable Blue Sky
laws in connection with the purchase and distribution of
the Common Shares by the Underwriters and the clearance
of such offering with the NASD;
(8) The execution and performance of this Agreement
and the consummation of the transactions herein
contemplated will not conflict with, result in the
breach of, or constitute, either by itself
-20-
<PAGE> 21
or upon notice or the passage of time or both, a default
under, any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other
instrument known to such counsel to which the Company or
any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of its or
their property may be bound or affected which is
material to the Company and its subsidiaries, or violate
any of the provisions of the certificate of
incorporation or bylaws, or other organizational
documents, of the Company or any of its subsidiaries or,
so far as is known to such counsel, violate any statute,
judgment, decree, order, rule or regulation of any court
or governmental body having jurisdiction over the
Company or any of its subsidiaries or any of its or
their property;
(9) To such counsel's knowledge, neither the
Company nor any subsidiary is in violation of its
certificate of incorporation or bylaws;
(10) To such counsel's knowledge, no holders of
securities of the Company have rights which have not
been waived to the registration of shares of Common
Stock or other securities, because of the filing of the
Registration Statement by the Company or the offering
contemplated hereby;
In rendering such opinion, such counsel may rely, as to
matters of local law, on opinions of local counsel, and as to
matters of fact, on certificates of officers of the Company
and of governmental officials, in which case their opinion is
to state that they are so doing and that the Underwriters are
justified in relying on such opinions or certificates and
copies of said opinions or certificates are to be attached to
the opinion. Such counsel shall also include a statement to
the effect that nothing has come to such counsel's attention
that would lead such counsel to believe that either at the
effective date of the Registration Statement or at the
applicable Closing Date the Registration Statement or the
Prospectus, or any such amendment or supplement, contains any
untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading (except that no
such
-21-
<PAGE> 22
statement need be made with respect to the financial
statements and schedules and financial data included
therein);
(ii) Such opinion or opinions of Hale and Dorr, counsel
for the Underwriters dated the First Closing Date or the
Second Closing Date, as the case may be, with respect to the
incorporation of the Company, the sufficiency of all
corporate proceedings and other legal matters relating to
this Agreement, the validity of the Common Shares, the
Registration Statement and the Prospectus and other related
matters as you may reasonably require, and the Company shall
have furnished to such counsel such documents and shall have
exhibited to them such papers and records as they may
reasonably request for the purpose of enabling them to pass
upon such matters. In connection with such opinions, such
counsel may rely on representations or certificates of
officers of the Company and governmental officials.
(iii) A certificate of the Company executed by the
Chairman of the Board or President and the chief financial or
accounting officer of the Company, dated the First Closing
Date or the Second Closing Date, as the case may be, to the
effect that:
(1) The representations and warranties of the
Company set forth in Section 2 of this Agreement are
true and correct as of the date of this Agreement and as
of the First Closing Date or the Second Closing Date, as
the case may be, and the Company has complied with all
the agreements and satisfied all the conditions on its
part to be performed or satisfied on or prior to such
Closing Date;
(2) The Commission has not issued any order
preventing or suspending the use of the Prospectus or
any Preliminary Prospectus filed as a part of the
Registration Statement or any amendment thereto; no stop
order suspending the effectiveness of the Registration
Statement has been issued; and to the best of the
knowledge of the respective signers, no proceedings for
that purpose have been substituted or are pending or
contemplated under the Act;
-22-
<PAGE> 23
(3) Each of the respective signers of the
certificate has carefully examined the Registration
Statement and the Prospectus; in his opinion and to the
best of his knowledge, the Registration Statement and
the Prospectus and any amendments or supplements thereto
contain all statements required to be stated therein
regarding the Company and its subsidiaries; and neither
the Registration Statement nor the Prospectus nor any
amendment or supplement thereto includes any untrue
statement of a material fact or omits to state any
material fact required to be stated therein or necessary
to make the statements therein not misleading;
(4) Since the initial date on which the
Registration Statement was filed, no agreement, written
or oral, transaction or event has occurred which should
have been set forth in an amendment to the Registration
Statement or in a supplement to or amendment of any
prospectus which has not been disclosed in such a
supplement or amendment;
(5) Since the respective dates as of which
information is given in the Registration Statement and
the Prospectus, and except as disclosed in or
contemplated by the Prospectus, there has not been any
material adverse change or a development involving a
material adverse change in the condition (financial or
otherwise), business, properties, results of operations,
management or prospects of the Company and its
subsidiaries; and no legal or governmental action, suit
or proceeding is pending or threatened against the
Company or any of its subsidiaries which is material to
the Company and its subsidiaries, whether or not arising
from transactions in the ordinary course of business, or
which may adversely affect the transactions contemplated
by this Agreement; since such dates and except as so
disclosed, neither the Company nor any of its
subsidiaries has entered into any verbal or written
agreement or other transaction which is not in the
ordinary course of business or incurred any material
liability or obligation, direct, contingent or indirect,
made any change in its capital stock, made any material
change in its short-term debt or funded debt or
repurchased or otherwise acquired any of the Company's
capital stock; and the Company has not declared or paid
any dividend, or made any other
-23-
<PAGE> 24
distribution, upon its outstanding capital stock payable
to stockholders of record on a date prior to the First
Closing Date or Second Closing Date; and
(6) Since the respective dates as of which
information is given in the Registration Statement and
the Prospectus and except as disclosed in or
contemplated by the Prospectus, the Company and its
subsidiaries have not sustained a material loss or
damage by strike, fire, flood, windstorm, accident or
other calamity (whether or not insured).
(iv) On the date before this Agreement is executed and
also on the First Closing Date and the Second Closing Date a
letter addressed to you, as Representative of the
Underwriters, from Ernst & Young LLP, independent
accountants, the first one to be dated the day before the
date of this Agreement, the second one to be dated the First
Closing Date and the third one (in the event of a Second
Closing) to be dated the Second Closing Date, in form and
substance satisfactory to you.
(v) On or before the First Closing Date, letters from
each director and officer of the Company, [, and
________________________] in form and substance satisfactory
to you, confirming that for a period of 90 days after the
first date that any of the Common Shares are released by you
for sale to the public, such person will not directly or
indirectly sell or offer to sell or otherwise dispose of any
shares of Common Stock or any right to acquire such shares
without the prior written consent of Montgomery Securities,
which consent may be withheld at the sole discretion of
Montgomery Securities.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to
you and to Hale and Dorr, counsel for the Underwriters. The Company
shall furnish you with such manually signed or conformed copies of such
opinions, certificates, letters and documents as you request. Any
certificate signed by any officer of the Company and delivered to the
Representative or to counsel for the Underwriters shall be deemed to be
a representation and warranty by the Company to the Underwriters as to
the statements made therein.
If any condition to the Underwriters' obligations hereunder
to be satisfied prior to or at the First Closing Date is not so
-24-
<PAGE> 25
satisfied, this Agreement at your election will terminate upon
notification by you as Representative to the Company without liability
on the part of any Underwriter or the Company except for the expenses
to be paid or reimbursed by the Company pursuant to Sections 6 and 8
hereof and except to the extent provided in Section 10 hereof.
SECTION 8. Reimbursement of Underwriters' Expenses.
Notwithstanding any other provisions hereof, if this Agreement shall be
terminated by you pursuant to Section 7, or if the sale to the
Underwriters of the Common Shares at the First Closing is not
consummated because of any refusal, inability or failure on the part of
the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse you and the other
Underwriters upon demand for all out-of-pocket expenses that shall have
been reasonably incurred by you and them in connection with the
proposed purchase and the sale of the Common Shares, including but not
limited to fees and disbursements of counsel, printing expenses, travel
expenses, postage, telegraph charges and telephone charges relating
directly to the offering contemplated by the Prospectus. Any such
termination shall be without liability of any party to any other party
except that the provisions of this Section, Section 6 and Section 10
shall at all times be effective and shall apply.
SECTION 9. Effectiveness of Registration Statement. You and the
Company will use your and its best efforts to cause the Registration
Statement to become effective, to prevent the issuance of any stop
order suspending the effectiveness of the Registration Statement and,
if such stop order be issued, to obtain as soon as possible the lifting
thereof.
SECTION 10. Indemnification. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of the Act against any
losses, claims, damages, liabilities or expenses, joint or several, to
which such Underwriter or such controlling person may become subject,
under the Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or other federal or state statutory law or regulation,
or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of
the Company), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state in any of them a material fact
-25-
<PAGE> 26
required to be stated therein or necessary to make the statements in
any of them not misleading, or arise out of or are based in whole or in
part on any inaccuracy in the representations and warranties of the
Company contained herein or any failure of the Company to perform its
obligations hereunder or under law; and will reimburse each Underwriter
and each such controlling person for any legal and other expenses as
such expenses are reasonably incurred by such Underwriter or such
controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and
in conformity with the information furnished to the Company pursuant to
Section 3 hereof. In addition to its other obligations under this
Section 10(a), the Company agrees that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, or any inaccuracy in the
representations and warranties of the Company herein or failure to
perform its obligations hereunder, all as described in this Section
10(a), it will reimburse each Underwriter on a quarterly basis for all
reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation,
inquiry or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Company's
obligation to reimburse each Underwriter for such expenses and the
possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any
such interim reimbursement payment is so held to have been improper,
each Underwriter shall promptly return it to the Company together with
interest, compounded daily, determined on the basis of the prime rate
(or other commercial lending rate for borrowers of the highest credit
standing) announced from time to time by Bank of America NT&SA, San
Francisco, California (the "Prime Rate"). Any such interim
reimbursement payments which are not made to an Underwriter within 30
days of a request for reimbursement, shall bear interest at the Prime
Rate from the date of such request. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who
-26-
<PAGE> 27
controls the Company within the meaning of the Act, against any losses,
claims, damages, liabilities or expenses to which the Company, or any
such director, officer or controlling person may become subject, under
the Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent
of such Underwriter), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, in reliance upon
and in conformity with the information furnished to the Company
pursuant to Section 3 hereof; and will reimburse the Company, or any
such director, officer or controlling person for any legal and other
expense reasonably incurred by the Company, or any such director,
officer or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. In addition to its other
obligations under this Section 10(b), each Underwriter severally agrees
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission,
described in this Section 10(b) which relates to information furnished
to the Company pursuant to Section 3 hereof, it will reimburse the
Company (and, to the extent applicable, each officer, director,
controlling person) on a quarterly basis for all reasonable legal or
other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Underwriters' obligation to
reimburse the Company (and, to the extent applicable, each officer,
director, controlling person) for such expenses and the possibility
that such payments might later be held to have been improper by a court
of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company
(and, to the extent applicable, each officer, director, controlling
person) shall promptly return it to the Underwriters together with
interest, compounded daily, determined on the basis of the Prime Rate.
Any such interim
-27-
<PAGE> 28
reimbursement payments which are not made to the Company within 30 days
of a request for reimbursement, shall bear interest at the Prime Rate
from the date of such request. This indemnity agreement will be in
addition to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section or to the extent it
is not prejudiced as a proximate result of such failure. In case any
such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with all
other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified
party in conducting the defense of any such action or that there may be
legal defenses available to it and/or other indemnified parties which
are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select
separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to
such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under
this Section for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless
(i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the
proviso to the next preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, approved by the Representative in the
case of paragraph (a), representing the indemnified parties who are
parties to such action) or (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after
-28-
<PAGE> 29
notice of commencement of the action, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying
party.
(d) If the indemnification provided for in this Section 10 is
required by its terms but is for any reason held to be unavailable to
or otherwise insufficient to hold harmless an indemnified party under
paragraphs (a), (b) or (c) in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable
indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of any losses, claims, damages,
liabilities or expenses referred to herein (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company
and the Underwriters from the offering of the Common Shares or (ii) if
the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the
relative fault of the Company and the Underwriters in connection with
the statements or omissions or inaccuracies in the representations and
warranties herein which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The respective relative benefits received by the
Company and the Underwriters shall be deemed to be in the same
proportion, in the case of the Company as the total price paid to the
Company for the Common Shares sold by it to the Underwriters (net of
underwriting commissions but before deducting expenses), and in the
case of the Underwriters as the underwriting commissions received by
them bears to the total of such amounts paid to the Company and
received by the Underwriters as underwriting commissions. The relative
fault of the Company and the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the
Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the
limitations set forth in subparagraph (c) of this Section 10, any legal
or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. The
provisions set forth in subparagraph (c) of this Section 10 with
respect to notice of commencement of any action shall apply if a claim
for contribution is to be made under this subparagraph (d); provided,
however, that no additional notice shall be required with respect to
any action
-29-
<PAGE> 30
for which notice has been given under subparagraph (c) for purposes of
indemnification. The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 10
were determined solely by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. Notwithstanding the
provisions of this Section 10, no Underwriter shall be required to
contribute any amount in excess of the amount of the total underwriting
commissions received by such Underwriter in connection with the Common
Shares underwritten by it and distributed to the public. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 10 are several in
proportion to their respective underwriting commitments and not joint.
(e) It is agreed that any controversy arising out of the operation
of the interim reimbursement arrangements set forth in Sections 10(a)
and 10(b) hereof, including the amounts of any requested reimbursement
payments and the method of determining such amounts, shall be settled
by arbitration conducted under the provisions of the Constitution and
Rules of the Board of Governors of the New York Stock Exchange, Inc. or
pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for
arbitration or written notice of intention to arbitrate, therein
electing the arbitration tribunal. In the event the party demanding
arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or
notice is authorized to do so. Such an arbitration would be limited to
the operation of the interim reimbursement provisions contained in
Sections 10(a) and 10(b) hereof and would not resolve the ultimate
propriety or enforceability of the obligation to reimburse expenses
which is created by the provisions of such Sections 10(a) and 10(b)
hereof.
SECTION 11. Default of Underwriters. It shall be a condition to
this Agreement and the obligation of the Company to sell and deliver
the Common Shares hereunder, and of each Underwriter to purchase the
Common Shares in the manner as described herein, that, except as
hereinafter in this paragraph provided, each of the Underwriters shall
purchase and pay for all the Common Shares agreed to be purchased by
such Underwriter hereunder upon tender to the Representative of all
such shares in accordance with the terms hereof. If any Underwriter or
-30-
<PAGE> 31
Underwriters default in their obligations to purchase Common Shares
hereunder on either the First or Second Closing Date and the aggregate
number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase on such Closing Date does
not exceed 10% of the total number of Common Shares which the
Underwriters are obligated to purchase on such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion
to their respective commitments hereunder, to purchase the Common
Shares which such defaulting Underwriters agreed but failed to purchase
on such Closing Date. If any Underwriter or Underwriters so default and
the aggregate number of Common Shares with respect to which such
default occurs is more than the above percentage and arrangements
satisfactory to the Representative and the Company for the purchase of
such Common Shares by other persons are not made within 48 hours after
such default, this Agreement will terminate without liability on the
part of any non-defaulting Underwriter or the Company except for the
expenses to be paid by the Company pursuant to Section 6 hereof and
except to the extent provided in Section 10 hereof.
In the event that Common Shares to which a default relates are to
be purchased by the non-defaulting Underwriters or by another party or
parties, the Representative or the Company shall have the right to
postpone the First or Second Closing Date, as the case may be, for not
more than five business days in order that the necessary changes in the
Registration Statement, Prospectus and any other documents, as well as
any other arrangements, may be effected. As used in this Agreement, the
term "Underwriter" includes any person substituted for an Underwriter
under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 12. Effective Date. This Agreement shall become effective
immediately as to Sections 6, 8, 10, 13 and 14 and, as to all other
provisions, (i) if at the time of execution of this Agreement the
Registration Statement has not become effective, at 2:00 P.M.,
California time, on the first full business day following the
effectiveness of the Registration Statement, or (ii) if at the time of
execution of this Agreement the Registration Statement has been
declared effective, at 2:00 P.M., California time, on the first full
business day following the date of execution of this Agreement; but
this Agreement shall nevertheless become effective at such earlier time
after the Registration Statement becomes effective as you may determine
on and by notice to the Company or by release of any of the Common
Shares for sale to the public. For the purposes of this Section 12, the
Common Shares shall be deemed to have been so released upon the release
for publication of any newspaper advertisement relating to the Common
Shares or upon the release by
-31-
<PAGE> 32
you of telegrams (i) advising Underwriters that the Common Shares are
released for public offering, or (ii) offering the Common Shares for
sale to securities dealers, whichever may occur first.
SECTION 13. Termination. Without limiting the right to
terminate this Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice
to you or by you by notice to the Company at any time prior to the
time this Agreement shall become effective as to all its
provisions, and any such termination shall be without liability on
the part of the Company to any Underwriter (except for the
expenses to be paid or reimbursed by the Company pursuant to
Sections 6 and 8 hereof and except to the extent provided in
Section 10 hereof) or of any Underwriter to the Company (except to
the extent provided in Section 10 hereof).
(b) This Agreement may also be terminated by you prior to the
First Closing Date by notice to the Company (i) if additional
material governmental restrictions, not in force and effect on the
date hereof, shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American
Stock Exchange or in the over the counter market by the NASD, or
trading in securities generally shall have been suspended on
either such Exchange or in the over the counter market by the
NASD, or a general banking moratorium shall have been established
by federal, New York or California authorities, (ii) if an
outbreak of major hostilities or other national or international
calamity or any substantial change in political, financial or
economic conditions shall have occurred or shall have accelerated
or escalated to such an extent, as, in the judgment of the
Representative, to affect adversely the marketability of the
Common Shares, (iii) if any adverse event shall have occurred or
shall exist which makes untrue or incorrect in any material
respect any statement or information contained in the Registration
Statement or Prospectus or which is not reflected in the
Registration Statement or Prospectus but should be reflected
therein in order to make the statements or information contained
therein not misleading in any material respect, or (iv) if there
shall be any action, suit or proceeding pending or threatened, or
there shall have been any development or prospective development
involving particularly the business or properties or securities of
the Company or any of its subsidiaries or the transactions
contemplated by this Agreement, which, in the reasonable
-32-
<PAGE> 33
judgment of the Representative, may materially and adversely
affect the Company's business or earnings and makes it
impracticable or inadvisable to offer or sell the Common Shares.
Any termination pursuant to this subsection (b) shall without
liability on the part of any Underwriter to the Company or on the
part of the Company to any Underwriter (except for expenses to be
paid or reimbursed by the Company pursuant to Sections 6 and 8
hereof and except to the extent provided in Section 10 hereof).
SECTION 14. Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations, warranties and
other statements of the Company, of its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made
by or on behalf of any Underwriter or the Company or any of its or
their partners, officers or directors or any controlling person, as the
case may be, and will survive delivery of and payment for the Common
Shares sold hereunder and any termination of this Agreement.
SECTION 15. Notices. All communications hereunder shall be in
writing and, if sent to the Representative shall be mailed, delivered
or telegraphed and confirmed to you at 600 Montgomery Street, San
Francisco, California 94111, Attention: ____________, with a copy to
Mark G. Borden, Esq., Hale and Dorr, 60 State Street, Boston,
Massachusetts 02109; and if sent to the Company shall be mailed,
delivered or telegraphed and confirmed to the Company at 108 Charles
Park Road, West Roxbury, Massachusetts 02132, Attention: President with
a copy to Steven R. London, Esq., Brown, Rudnick, Freed & Gesmer, One
Financial Center, Boston, Massachusetts 02111. The Company or you may
change the address for receipt of communications hereunder by giving
notice to the others.
SECTION 16. Successors. This Agreement will inure to the benefit
of and be binding upon the parties hereto, including any substitute
Underwriters pursuant to Section 11 hereof, and to the benefit of the
officers and directors and controlling persons referred to in Section
10, and in each case their respective successors, personal
representatives and assigns, and no other person will have any right or
obligation hereunder. No such assignment shall relieve any party of its
obligations hereunder. The term "successors" shall not include any
purchaser of the Common Shares as such from any of the Underwriters
merely by reason of such purchase.
SECTION 17. Representation of Underwriters. You will act as
Representative for the several Underwriters in connection with all
-33-
<PAGE> 34
dealings hereunder, and any action under or in respect of this
Agreement taken by you as Representative, will be binding upon all the
Underwriters.
SECTION 18. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this
Agreement shall not affect the validity or enforceability of any other
Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid
or unenforceable, there shall be deemed to be made such minor changes
(and only such minor changes) as are necessary to make it valid and
enforceable.
SECTION 19. Applicable Law. This Agreement shall be
governed by and construed in accordance with the internal laws
(and not the laws pertaining to conflicts of laws) of the State of
California.
SECTION 20. General. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings
and negotiations with respect to the subject matter hereof. This
Agreement may be executed in several counterparts, each one of which
shall be an original, and all of which shall constitute one and the
same document.
In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings
in this Agreement are for the convenience of the parties only and will
not affect the construction or interpretation of this Agreement. This
Agreement may be amended or modified, and the observance of any term of
this Agreement may be waived, only by a writing signed by the Company
and you.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof,
whereupon it will become a binding agreement between the Company and
the several Underwriters including you, all in accordance with its
terms.
Very truly yours,
UNO RESTAURANT CORPORATION
By:______________________________
President
-34-
<PAGE> 35
The foregoing Underwriting Agreement is hereby confirmed and accepted
by us in San Francisco, California as of the date first above written.
MONTGOMERY SECURITIES
Acting as Representative of the several
Underwriters named in the attached Schedule A.
By:______________________________
Partner
-35-
<PAGE> 36
Draft of May 3, 1995
SCHEDULE A
<TABLE>
<CAPTION>
Number of Firm
Common Shares
Name of Underwriter to be Purchased
--------------------- ---------------
<S> <C>
Montgomery Securities.....................
TOTAL.......................... 2,000,000
=========
</TABLE>
A-1
<PAGE> 1
May 9, 1995
Uno Restaurant Corporation
100 Charles Park Road
West Roxbury, MA 02132
Re: Registration Statement on Form S-2
File No. 33-
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Uno Restaurant Corporation, a Delaware
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission of a Registration Statement on Form S-2
(the "Registration Statement") pursuant to which the Company is registering
under the Securities Act of 1933, as amended (the "Act"), a total of 2,300,000
shares of common stock, $.01 par value (the "Common Stock"). Pursuant to the
Registration Statement and an underwriting agreement (the "Underwriting
Agreement") by and between the Company and Montgomery Securities in
substantially the form filed as Exhibit 1.1 to the Registration Statement, the
Company proposes to sell to the Underwriters up to 2,300,000 shares of Common
Stock (the "Shares"). This opinion is being rendered in connection with the
filing of the Registration Statement. Unless otherwise indicated, capitalized
terms used herein shall have the meanings ascribed thereto in the Underwriting
Agreement.
For purposes of this opinion, we have assumed, without any
investigation, (i) the legal capacity of each natural person, (ii) the full
power and authority of each entity and person other than the Company to execute,
deliver and perform each document heretofore executed and delivered or hereafter
to be executed and delivered and to do each other act heretofore done or
hereafter to be done by such entity or person, (iii) the due authorization by
each entity or person other than the Company of each document heretofore
executed and delivered or hereafter to be executed and delivered and to do each
other act heretofore done or to be done by such entity or person, (iv) the due
execution and delivery by each entity or person other than the Company of each
document heretofore executed and delivered or hereafter to be executed and
delivered by such entity or person, (v) the legality, validity, binding effect
and enforceability as to each entity or person other than the Company of each
document heretofore executed and
<PAGE> 2
Uno Restaurant Corporation
May 9, 1995
Page Two
delivered or hereafter to be executed and delivered and of each other act
heretofore done or hereafter to be done by such entity or person, (vi) the
genuineness of each signature on, and the completeness of each document
submitted to us as an original, (vii) the conformity to the original of each
document submitted to us as a copy, (viii) the authenticity of the original of
each document submitted to us as a copy, (ix) the completeness, accuracy and
proper indexing of all governmental and judicial records searched and (x) no
modification of any provision of any document, no waiver of any right or remedy
and no exercise of any right or remedy other than in a commercially reasonable
and con scionable manner and in good faith.
In connection with this opinion, we have examined the follow ing
(collectively, the "Documents"):
(i) the Restated Certificate of Incorporation of the Company, as
amended, as certified by the Secretary of State of the State of
Delaware;
(ii) the Amended and Restated Bylaws of the Company;
(iii) the corporate minute books or other records of the Company
pertaining to the proceedings of the stockholders and directors of
the Company;
(iv) a certificate dated May 3, 1995 of the Secretary of State of the
State of Delaware as to the good standing of the Company; and
(v) the form of Underwriting Agreement.
The opinions expressed herein are based solely upon (i) our review
of the Documents, (ii) discussions with Robert M. Brown, the Company's Chief
Financial Officer, (iii) the representations and warranties of the Company
contained in the Underwriting Agreement, (iv) discussions with those of our
attorneys who have devoted substantive attention to the matters contained
herein, and (v) such review of published sources of law as we have deemed
necessary.
Our opinions contained herein are limited to the laws of the
Commonwealth of Massachusetts, the general corporate laws of the State of
Delaware and the Federal law of the United States of America.
<PAGE> 3
Uno Restaurant Corporation
May 9, 1995
Page Three
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly
existing and in good standing in the State of Delaware.
2. The Shares to be sold by the Company under the
circumstances contemplated in the Registration Statement are duly authorized
and, when delivered pursuant to the Underwriting Agreement, will be validly
issued, fully paid and nonassessable.
We understand that this opinion is to be used in connection with the
Registration Statement. We consent to the filing of this opinion as an Exhibit
to said Registration Statement and to the reference to our firm wherever it
appears in the Registration Statement, including the prospectus constituting a
part thereof and any amendments thereto. This opinion may be used in connection
with the offering of the Shares only while the Registration Statement, as it may
be amended from time to time, remains in effect.
Very truly yours,
BROWN, RUDNICK, FREED & GESMER
By: BROWN, RUDNICK, FREED &
GESMER, P.C.
By: /s/ Steven R. London
--------------------------
Steven R. London, A Member
Duly Authorized
SRL/PJF/SPW/JRS
<PAGE> 1
EXHIBIT 11.1
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
FISCAL YEARS ENDED TWENTY-SIX WEEKS ENDED
------------------------------------------ --------------------------
OCT 2, OCT 3, SEP 27, APR 2, APR 3,
1994 1993 1992 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Weighted average shares outstanding.......... 11,260,965 11,212,394 11,185,031 11,359,090 11,226,747
Common Stock equivalents:
Stock options ............................ 99,923 78,694 128,150 325,256 150,495
---------- ---------- ---------- ---------- ----------
Total(1) ............................... 11,359,988 11,291,088 11,313,181 11,684,346 11,377,242
========== ========== ========== ========== ==========
Net Income ............................. $5,756,000 $4,163,000 $1,762,000 $2,763,000 $1,941,000
========== ========== ========== ========== ==========
EARNINGS PER COMMON SHARE .................. $ .51 $ .37 $ .16 $ .24 $ .17
========== ========== ========== ========== ==========
<FN>
(1) Average shares outstanding and all per share amounts included above are
based on the increased numbers of shares giving retroactive effect to the
five-for-four stock split discussed in Note 13 to the Consolidated
Financial Statements for the Year Ended October 2, 1994.
</TABLE>
<PAGE> 1
EXHIBIT 13.1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 /FEE REQUIRED/
For the fiscal year ended OCTOBER 2, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 /NO FEE REQUIRED/
For the transition period from _____________ to _____________.
Commission file number 1-9573
UNO RESTAURANT CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 04-2953702
- --------------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 CHARLES PARK ROAD, WEST ROXBURY, MA 02132
- --------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 323-9200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
NONE
-------------------------------------------
(Title of Class)
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
--- ---
<PAGE> 2
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
The aggregate market value of the registrant's Common Stock, $.01 par
value, held by non-affiliates of the registrant as of November 30, 1994, was
$57,941,388 based on the closing price of $12.875 on that date on the New York
Stock Exchange. As of November 30, 1994, 9,076,603 shares of the registrant's
Common Stock, $.01 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on February 8, 1995 which will be filed within 120 days
after the end of the registrant's fiscal year, are incorporated by reference in
Part III of this report. Portions of the registrant's Registration Statement
on Form S-1 (Registration No. 33-13100) (the "1987 Registration Statement"),
the registrant's Registration Statement on Form S-1 (Registration No. 33-29252)
(the "1989 Registration Statement"), the registrant's Registration Statement on
Form S-2 (Registration No. 33-38944) (the "1991 Registration Statement"), the
registrant's Annual Report on Form 10-K for the fiscal year ended October 2,
1988, the registrant's Annual Report on Form 10-K for the fiscal year ended
September 30, 1990, the registrant's Annual Report on Form 10-K for the fiscal
year ended September 29, 1991, the registrant's Quarterly Report on Form 10-Q
for the fiscal quarter ended July 1, 1990, the registrant's Annual Report on
Form 10-K for the fiscal year ended September 27, 1992, the registrant's Annual
Report on Form 10-K for the fiscal year ended October 3, 1993, the registrant's
Proxy Statement for the Annual Meeting of Stockholders held on February 7,
1990, and the registrant's Proxy Statement for the Annual Meeting of
Stockholders held on March 2, 1993, are incorporated by reference in Part IV of
this Report.
-2-
<PAGE> 3
PART I
ITEM 1. BUSINESS
GENERAL AND DEVELOPMENTS DURING FISCAL YEAR 1994
Uno Restaurant Corporation is a Delaware corporation organized in August
1986 to become a holding company for the Pizzeria Uno business then operated by
two affiliated corporations. As used in this Report, the term "Company" refers
to Uno Restaurant Corporation and its wholly-owned subsidiaries.
The Company operates and franchises casual dining, full-service
restaurants under the name "Pizzeria Uno... Chicago Bar & Grill." The
restaurants feature gourmet, Chicago-style deep-dish pizzas and a variety of
entrees, including pastas, thin crust pizzas, appetizers, salads, desserts and
beverages. The Company acquired the rights to the name "Pizzeria Uno" from the
late Ike Sewell, who opened the original Pizzeria Uno restaurant in Chicago,
Illinois in 1943 and is considered the originator of Chicago- style deep-dish
pizza. The Company opened its first Pizzeria Uno restaurant in 1979. At the
end of fiscal 1994, it owned and operated 63 full-service Pizzeria Uno
restaurants in New England, New York, Pennsylvania, Baltimore/Washington DC,
St. Louis, Chicago and Orlando, and had 59 franchised restaurants located
throughout the United States, including one each in Puerto Rico and Canada.
From September 1993 to April 1994, the Company invested approximately
$2.5 million to add new kitchen capabilities, including saute stations, grills
and fryers to each of its existing company-owned restaurants. This project was
initiated in order to raise the quality standards of certain non-pizza menu
items to the same high quality level as the Company's Chicago-style deep-dish
pizza. In addition, the expanded kitchen capabilities allow the addition of
new menu items that help to broaden the customer base and increase visit
frequency. As a result, the Company believes it has improved its competitive
position within the casual dining segment of the restaurant industry.
During the fourth quarter of fiscal 1992, the Company decided to close
two poorly-located Company-owned restaurants after the end of the fiscal year.
These restaurants were located in St. Louis, Missouri and Cambridge,
Massachusetts. The Company recognized a pre-tax charge to earnings of $2.5
million for fiscal year 1992 as a result of its decision. The Company closed
the restaurant in Cambridge, MA on October 17, 1992, and closed the restaurant
in St. Louis on October 24, 1993.
During the fiscal year ended October 2, 1994, the Company opened seven
full-service Company-owned restaurants, sold a restaurant to its franchisee in
Lake Buena Vista, FL, acquired three restaurants from its franchisee in
Connecticut and closed a restaurant in St. Louis, MO. Four franchised
restaurants opened during the fiscal year, three were sold to the Company, one
was sold by the Company to a franchisee and one was closed.
During the fiscal year ending October 1, 1995, the Company anticipates
opening 18 Company-owned full-service restaurants and six franchised
restaurants. The timing of these planned openings is subject to various
factors, including locating satisfactory sites and negotiating leases and
franchise agreements.
-3-
<PAGE> 4
On September 1, 1994, the Company entered into a definitive agreement
with Bay Street Restaurants, Inc. to purchase the net assets of three
restaurants located in Chicago, Illinois, Woodbridge, New Jersey and
Philadelphia, Pennsylvania. The three full- service, casual dining
restaurants, which specialize in seafood, generated total annual sales of over
$7.3 million for their most recent 12-month period. It is anticipated that the
next several months will be devoted to familiarization with the Bay Street
concept for potential introduction into the New England area and other
Northeast markets. Mr. William Bouffard, President of Bay Street Restaurants,
Inc. and Mr. James Vinz, Vice President of Operations, will be joining the Uno
management team and heading up the Bay Street restaurant group. The
transaction was completed on December 23, 1994.
Pursuant to a Third Amendment to Note Purchase Agreement dated February
15, 1993, the Company amended the terms of its agreement relating to a $10
million private debt placement in June 1990 of senior, unsecured notes with
CIGNA, a major insurance company. The amendments reduced through January 2,
1994 the fixed charge to earnings coverage ratio required to be maintained by
the Company. Compliance with this covenant was waived by CIGNA for the second
fiscal quarter of 1994. Since that time the Company has maintained compliance
with all covenants.
In December 1994, the Company obtained a $50 million unsecured,
revolving credit and term loan facility through Fleet Bank. The new agreement
replaces a $20 million unsecured revolving credit agreement obtained by the
Company on May 31, 1994. The revolving credit facility will convert to a three
year term loan in December 1997, and advances under this agreement will accrue
interest at the bank's prime rate, or alternatively, at 125 basis points above
LIBOR. Company management believes that sufficient cash will be available from
operations and this revolving credit facility to finance development plans for
the foreseeable future and to fund its remaining principal payments under its
senior note agreement of $3.3 million each due in June 1995 and 1996.
The Board of Directors of the Company declared a 25% stock split on
November 15, 1994 payable in the form of a stock dividend on February 28, 1995
to the stockholders of record of the Company on February 8, 1995. The stock
split will result in one additional share of Common Stock being issued for each
four shares of Common Stock issued and outstanding on the record date. The
stock split is subject to the approval by stockholders of an increase in the
number of authorized shares of Common Stock of the Corporation at the Annual
Meeting of Stockholders to be held on February 8, 1995. Cash will be issued in
lieu of fractional shares.
-4-
<PAGE> 5
The table below shows the markets served by Pizzeria Uno as of November
30, 1994:
<TABLE>
<CAPTION>
COMPANY-OWNED RESTAURANTS
-------------------------
<S> <C> <C>
CONNECTICUT (4) Cambridge Forest Hills
- --------------- (2 locations) Manhattan
Danbury Danvers (5 locations)
Fairfield Dedham Lynbrook
Milford Framingham Massapequa
West Hartford Hanover Syracuse
Hyannis Vestal
FLORIDA (1) Kingston Yonkers
- ----------- Lynnfield
Orlando Newton NEW JERSEY (1)
Newtonville (a) --------------
ILLINOIS (3) Revere Paramus
- ------------ Springfield
Chicago Waltham (a) OHIO (1)
Pizzeria Uno --------
Pizzeria Due MISSOURI (2) Columbus
Su Casa (b) ------------
St. Louis PENNSYLVANIA (2)
MAINE (1) Chesterfield ----------------
- --------- Fairview Heights Philadelphia
Portland Franklin Mills
Pittsburgh
MARYLAND (5) NEW HAMPSHIRE (3) Monroeville
- ------------ -----------------
Baltimore Concord RHODE ISLAND (1)
Harbor Place Manchester ----------------
Bel Air Nashua Warwick
Bethesda
Towson VIRGINIA (4)
Waldorf NEW YORK (16) ------------
------------- Balston
MASSACHUSETTS (22) Albany Fairfax
- ------------------ Amherst Norfolk
Boston Buffalo Reston
(5 locations) New York City
Braintree Bayside WASHINGTON, DC (2)
Brockton Bay Ridge ------------------
Burlington Cleveland Park
Union Station
</TABLE>
__________________________________
(a) Quick-service (take-out only).
(b) Mexican restaurant.
-5-
<PAGE> 6
<TABLE>
<CAPTION>
FRANCHISED RESTAURANTS
----------------------
<S> <C> <C>
ARIZONA (2) KENTUCKY (1) OHIO (4)
- ----------- ----------- --------
Phoenix Lexington Cincinnati
Tempe (2 locations)
MARYLAND (1) Cleveland
CALIFORNIA (9) ------------ (2 locations)
- -------------- Deep Creek
Cupertino OKLAHOMA (1)
Fremont ------------
Los Angeles MASSACHUSETTS (4) Tulsa
San Diego -----------------
(2 locations) Holyoke PENNSYLVANIA (5)
San Francisco Marlborough ----------------
(3 locations) Springfield King of Prussia
Santa Clara (2 locations)(c) Langhorne Media
Philadelphia
CANADA (1) MICHIGAN (2) (2 locations)
- ---------- ------------
Toronto Ann Arbor PUERTO RICO (1)
Bloomfield ---------------
FLORIDA (5) San Juan
- ----------- MINNESOTA (2)
Miami ------------ TEXAS (5)
Orlando Minnetonka ---------
Altamonte Springs Edina Addison
Church Street Sta. Arlington
Lake Buena Vista NEVADA (1) Dallas
Tampa ---------- Ft. Worth
Las Vegas Houston
HAWAII (1)
- ---------- NEW YORK (4) WASHINGTON, DC (1)
Honolulu ------------ ------------------
Kingston Georgetown
ILLINOIS (2) Poughkeepsie
- ------------ Rochester WISCONSIN (3)
Champaign White Plains -------------
Chicago Milwaukee
O'Hare Airport (a) NEW JERSEY (4) Madison
-------------- (2 locations)
INDIANA (2) Cherry hill
- ----------- Secaucus
Indianapolis South Plainfield
Merrillville Wayne
</TABLE>
__________________________________
(a) Quick-service (take-out only).
(b) Mexican restaurant.
(c) Including one Quick-service (take-out only)
RESTAURANT CONCEPT
The Company has combined the concept of a full-service restaurant with the
popularity of pizza. In addition to a diverse menu, customers at a Pizzeria
Uno restaurant enjoy an ambience and decor that is more upscale than typical
pizza restaurants. The Company's target markets include middle to upper-middle
income individuals in the 17 to 49 year-old age group and, particularly in
suburban
-6-
<PAGE> 7
locations, middle to upper-middle income families. Management believes that
the Company's concept is best executed by careful site selection, training,
supervision and menu development.
The Company's signature product, its deep-dish pizza, filled with
ingredients such as fresh meats, spices, vegetables and real cheeses, is baked
to order in a deep pan, according to proprietary recipes. Management believes
that the Company's custom formulation of ingredients and proprietary recipes
produce a superior pizza that is difficult to duplicate. In addition to its
deep-dish pizza, other menu items include thin crust pizza, pasta items,
appetizers, salads, sandwiches, and desserts. All of the Company's menu items
are available for carry-out. Carry-out revenues represent approximately 10% of
Company-owned restaurant sales.
Pizzeria Uno restaurants offer a casual, friendly and entertaining
atmosphere, efficient service and high-quality menu items at moderate prices.
Entree selections currently range in price from approximately $4.00 to $9.99.
The average per person revenue per meal, including beverages, is approximately
$9.00. Virtually all full-service restaurants offer a full liquor selection
and have a bar and lounge. Food sales constitute approximately 81% of total
restaurant sales of the Company, and alcoholic beverage sales account for the
remaining 19%.
Pizzeria Uno restaurants are located in both urban areas and suburban
shopping and entertainment areas. The typical new restaurant occupies
approximately 6,300 square feet, with a seating capacity of approximately 200
customers. Each restaurant employs 50 to 70 people, many of whom are part-time
personnel. Most restaurants are open from 11:00 a.m. to midnight, seven days
per week.
The Company considers the specific location of a restaurant to be critical
to its long-term success and devotes significant effort to the investigation
and evaluation of potential sites. The Company's executives inspect and
approve the site for each Company-owned and franchised restaurant.
The Company has developed a restaurant design that is consistent with its
theme as "Pizzeria Uno...Chicago Bar & Grill". To ensure compliance with
Company standards, preliminary design and complete kitchen design for both
Company-owned and franchised restaurants are prepared by the Company.
Company-owned and franchised restaurants can be situated as free-standing
units, or in strip centers or malls, can either be owned or leased, and are
generally situated in prime retail-oriented locations. See "ITEM 2.
PROPERTIES." Management estimates the current cost of opening a full-service
restaurant, excluding land, but including building, improvements, furniture,
fixtures and equipment and pre-opening expenses, ranges between $1.0 and $1.4
million.
CONSUMER PRODUCT BUSINESS AND NON-TRADITIONAL DISTRIBUTION CHANNELS
The Company has been expanding its consumer product business in recent
years principally through distribution of its deep-dish pizza in the fresh deli
counters of approximately 600 supermarkets in New England, New York, New
Jersey, Pennsylvania and Ohio. Currently, Pizzeria Uno deep-dish pizza is the
dominant brand of fresh, refrigerated pizza sold in New England supermarkets.
The Company has also developed a line of private-label thin-crust pizza for
selected New England supermarket chains.
In addition, in January 1993, the Company began supplying frozen pizzas to
American Airlines for service on its flights. Approximately 1.5 million pizzas
were served aboard American Airlines flights during the fiscal year ended
October 2, 1994.
-7-
<PAGE> 8
To support the growth of the Company's consumer product business, a
production facility in Brockton, Massachusetts began operation in January 1993.
This facility provides sufficient capacity to at least double the level of
sales achieved in fiscal 1994. See "ITEM 2. Properties."
The Company is continuing to test other traditional and non-traditional
distribution channels for its signature, deep-dish pizza product where there is
heavy consumer traffic. The Company is testing a food-court Pizzeria Uno at
the International Terminal at Chicago's O'Hare Airport. Two prototype
neighborhood take-out units, "Uno...Pizza Takery", are also being tested, which
the Company believes may offer the potential to tap the quick-service market
segment that it currently serves on only a limited basis. In addition, the
Company currently has 20 similar franchised Take-Out Units operating within
supermarkets in New England.
BUSINESS EXPANSION
The Company intends to continue to add Company-owned restaurants in two of
its primary Northeast metropolitan markets, i.e., New York and
Baltimore/Washington, DC. Due to its current greater concentration of units in
New England, further expansion in this market will be very selective. The
Company's acquisition of the original restaurants in Chicago during fiscal 1992
and the right to further develop restaurants in Illinois should lead to
expansion opportunities in this market during fiscal 1995. The Company is also
engaged in site development efforts in central Florida and Denver, Colorado.
Franchisees will continue to be granted the right to expand the Pizzeria Uno
restaurant business in selected metropolitan areas throughout the United States
and, as opportunities arise, outside the United States. See "Franchise
Program." The specific rate at which the Company is able to open new
restaurants will be determined by its success in locating satisfactory sites
and attracting qualified franchisees.
FRANCHISE PROGRAM
As of October 2, 1994, the Company had 59 franchised Pizzeria Uno
restaurants operated by 34 franchisees located in 19 states, the District of
Columbia, Puerto Rico, and Canada. Franchises are generally granted on a
unit-by-unit basis, rather than by territory. The Company is in continual
discussions with existing and prospective franchisees and expects to grant
additional franchises to qualified applicants with restaurant-related operating
experience and requisite financial resources.
New domestic franchisees are required to pay an initial franchise fee of
$52,500 per unit and a continuing monthly royalty of 5% of restaurant sales.
Royalties and franchise fees for international franchises are negotiated on an
individual basis. At the beginning of fiscal 1992, the Company implemented a
variable royalty plan for its franchisees that allows royalty rate reductions
from contractual rates for those franchised restaurants meeting certain
qualifications. The reduced royalty rate is available only to those franchised
restaurants that do not achieve minimum sales levels during their first five
years of operation in relation to their overall capital investment, including
capitalized lease obligations. The minimum royalty rate under the variable
royalty plan is 3% and ranges up to the 5% standard franchise royalty rate.
Seven franchised restaurants currently qualify for some degree of royalty rate
reduction under the variable royalty plan. Royalties currently being received
by the Company average approximately 4.2% of franchised restaurant sales.
-8-
<PAGE> 9
The franchise agreements generally prohibit the Company from granting
competing franchises or opening competing restaurants within three miles of a
franchised restaurant. The franchise agreements have an initial term of 20
years with three successive ten- year renewal periods at the option of the
franchisee, provided that the agreement has not previously been terminated by
either party. Upon each renewal, the Company may require a franchisee to sign
a revised franchise agreement and to make capital expenditures to renovate the
restaurant, but may not increase the continuing monthly royalty or charge a
renewal fee. The Company retains the right to terminate a franchise agreement
for a variety of reasons, including significant and willful understatement of
gross receipts, failure to pay fees, material misrepresentation on an
application for a franchise, or material breach or default under the franchise
agreement, including failure to maintain Company operating standards. Many
state franchise laws further limit the ability of a franchisor to terminate or
refuse to renew a franchise. The Company has the right to audit and receive
certain monthly and annual financial and other information from franchisees.
In order to ensure uniform quality standards, the Company requires
franchisees to comply with Company specifications as to space, design and
decor, menu items, principal food ingredients and day-to-day operations, as set
forth in the Company's operations manual. The Company's executives or
field-service personnel generally visit each franchise location four times per
year. The Company conducts sales audits of all franchisees on an annual
basis.
The Company guarantees certain limited equipment and leasehold improvement
financing to qualified franchisees through an agreement with an unaffiliated
finance company. Under this agreement, the Company guarantees financing
provided by the finance company to qualified franchisees in the maximum
aggregate amount of $2.1 million for all such franchisees combined. The
Company has also guaranteed up to a maximum of $447,000 of future lease
payments in the event of default by specific franchisees.
RESTAURANT MANAGEMENT
The staff for a typical Pizzeria Uno restaurant consists of one general
manager, two assistant managers and approximately 50 to 70 hourly employees,
many of whom are part-time personnel. Managers of Company-owned restaurants
are compensated with a salary plus a performance bonus based on restaurant
sales and profits. The Company conducts initial and ongoing training for all
managers and franchisees.
The Company employs ten regional operations directors. The Company also
currently employs five field-service supervisors to monitor all franchised
restaurants. Their duties include quarterly visits and detailed, annual
inspections of quality, service and sanitation. As additional restaurants are
opened, the Company intends to add qualified supervisors in order to maintain
quality control.
PURCHASING
The Company negotiates directly with suppliers for all primary food
ingredients and beverage products to ensure adequate supplies and to obtain
competitive prices. The Company seeks competitive bids from suppliers on many
of its primary food ingredients on an annual basis. The Company approves
suppliers of these ingredients and products and requires them to adhere to
product specifications established by the Company. Several key ingredients are
proprietary. They are manufactured for the Company under private label and
sold to authorized distributors for resale to Company-owned restaurants and
franchisees. The Company and its franchisees purchase
-9-
<PAGE> 10
substantially all food and beverage products from authorized local or national
distributors. In most cases, franchisees find it more economical to purchase
most of these products from the same distributors servicing the Company-owned
restaurants in order to take advantage of volume discounts. The Company does
not derive any income from suppliers or distributors on sales to franchisees.
All essential food and beverage products are available, or upon short notice
can be made available, from alternative qualified suppliers.
ADVERTISING AND MARKETING
To attract its target market, the Company relies primarily on television,
radio and direct mail advertising. Through an advertising cooperative fund,
the Company produces regional and local advertising materials and also produces
menus and promotional programs for both franchised and Company-owned
restaurants.
Franchisees are required to contribute a fee of .75% of franchised
restaurant sales to the advertising cooperative fund, and the Company
contributes an equal percentage of Company-owned restaurant sales. Except for
the materials prepared and distributed by the Company through the advertising
cooperative fund, franchisees are responsible for the implementation of
advertising and marketing for their respective restaurants, subject to
adherence to Company-established guidelines. In addition, the Company's
franchise agreement requires franchisees to spend at least 2% of franchised
restaurant sales each year on local advertising and public relations.
COMPETITION
The restaurant business is highly competitive with respect to price,
service, restaurant location and food quality and is often affected by changes
in consumer tastes, economic conditions and population and traffic patterns.
The Company competes within each market with locally-owned restaurants as well
as with national and regional restaurant chains, some of which operate more
restaurants and have greater financial resources and longer operating histories
than the Company.
Management believes that among the Company's competitive strengths are its
custom formulation of ingredients and proprietary recipes which, when prepared
according to the Company's precise cooking techniques, produce a superior
deep-dish pizza that is difficult to duplicate. Management also believes that
the Company's $2.5 million kitchen upgrade program (see "ITEM 1. BUSINESS,
General and Developments During Fiscal Year 1994), as well as the Company's
emphasis on a distinctive restaurant design, friendly and entertaining
atmosphere, diverse menu, efficient service and moderate prices enables
Pizzeria Uno restaurants to compete effectively with other casual-theme,
full-service restaurants.
TRADEMARKS
The original "Pizzeria Uno" restaurant was founded in 1943 by the late Ike
Sewell in Chicago, Illinois. In 1979, the Company acquired from Mr. Sewell the
worldwide rights to certain names, including "Uno," "Pizzeria Uno" and
"Pizzeria Due" (with the exception of the right to use the names in Illinois),
for the purpose of developing and expanding the concept. In the fourth quarter
of fiscal 1992, pursuant to the Company's right of first refusal, the Company
purchased the original Chicago restaurants and the right to develop additional
restaurants in Illinois from Mr. Sewell's estate.
-10-
<PAGE> 11
The Company regards its many trademarks and service marks as having
significant value and as being an important factor in the marketing of its
products. Its most significant marks include "Uno," "Pizzeria Uno" and
"Pizzeria Due." The Company's registrations of its significant marks expire at
various times from 1998 to 2005. However, the Company intends to renew its
registration of its marks prior to expiration. The Company's policy is to
pursue registration of its marks whenever possible and to oppose vigorously any
infringement of its marks.
GOVERNMENTAL REGULATION
The Company is subject to various federal, state and local laws affecting
its business. Each of the Company's restaurants is subject to licensing and
regulation by a number of governmental authorities, which may include alcoholic
beverage control, health and safety and fire agencies in the state or
municipality in which the restaurant is located. Difficulties or failures in
obtaining the required licenses or approvals could delay or prevent the
development of a new restaurant in a particular area.
Alcoholic beverage control regulations require each of the Company's
restaurants to apply to a state authority and, in certain locations, county and
municipal authorities for a license or permit to sell alcoholic beverages on
the premises. Typically, licenses must be renewed annually and may be revoked
or suspended for cause at any time. Alcoholic beverage control regulations
relate to numerous aspects of the daily operations of the Company's
restaurants, including minimum age of patrons and employees, hours of
operation, advertising, wholesale purchasing, inventory control, and handling,
storage and dispensing of alcoholic beverages.
The Company may be subject in certain states to "dram-shop" statutes, which
generally provide a person injured by an intoxicated person the right to
recover damages from an establishment which wrongfully served alcoholic
beverages to such person. The Company carries liquor liability coverage as
part of its existing comprehensive general liability insurance and has never
been named as a defendant in a lawsuit involving "dram-shop" statutes.
The Company is also subject to federal and a substantial number of state
laws regulating the offer and sale of franchises. Such laws impose
registration and disclosure requirements on franchisors in the offer and sale
of franchises. These laws often also apply substantive standards to the
relationship between franchisor and franchisee and limit the ability of a
franchisor to terminate or refuse to renew a franchise.
EMPLOYEES
As of October 2, 1994, the Company employed approximately 4,559 persons, 98
of whom were corporate personnel and 274 of whom were field service or
restaurant managers or trainees. The remaining employees were restaurant
personnel, many of whom were part-time. Of the 98 corporate employees, 51
were in management positions and 47 were general office employees.
-11-
<PAGE> 12
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company and their ages are as follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE TITLE SINCE
---- --- ----- -----
<S> <C> <C>
Aaron D. Spencer .........63 Chairman, Chief Executive 1979
Officer and Director
Craig S. Miller ..........45 President, Chief Operating 1985
Officer and Director
Robert M. Brown ..........47 Senior Vice President- 1987
Finance, Chief Financial
Officer, Treasurer and Director
Alan M. Fox ..............47 Senior Vice President- --
Purchasing, President-Uno
Foods Inc.
William A. Gallucci ......63 Senior Vice President- --
Franchising
Thomas W. Gathers ........38 Senior Vice President- --
Human Resources and Training
Eugene I. Lee ............33 Senior Vice President- --
Operations
Damon M. Liever ..........40 Senior Vice President- --
Marketing
</TABLE>
The following is certain additional information concerning each executive
officer of the Company. When used below, unless otherwise noted, positions
held with the Company include positions held with the Company's predecessors.
Mr. Spencer, the founder and Chief Executive Officer of the Company, has
been Chairman since 1986 and previously served as the Company's President until
1986. Mr. Spencer has 29 years of experience in the restaurant industry and
was the founder and owner of the predecessor of the Company which operated a
chain of 24 Kentucky Fried Chicken franchised restaurants at the time the
restaurants were sold.
Mr. Miller has been President and Chief Operating Officer since 1986. From
1984 to 1986, he served as a Vice President and then Executive Vice President
of the Company. Prior to joining the Company, Mr. Miller spent 11 years with
the General Mills Inc. restaurant subsidiary, including four years in various
executive capacities with Casa Gallardo Mexican restaurants and six years with
the Red Lobster restaurant chain. Mr. Miller has a total of 27 years of
experience in the restaurant industry.
Mr. Brown has been Senior Vice President-Finance since 1988 and has served
as Chief Financial Officer and Treasurer since 1987. From 1987 to 1988, he
served as Vice President-Finance of the Company. From 1984 to 1987, Mr. Brown
served as vice
-12-
<PAGE> 13
president, treasurer and chief financial officer of the waste management
subsidiary of Genstar Corporation, and was employed by SCA Services, Inc. from
1980 to 1984, most recently as assistant controller. Mr. Brown is a certified
public accountant and has worked in accounting and finance since 1969.
Mr. Fox has been Senior Vice President-Purchasing since October 1990.
Also, since 1990, Mr. Fox has been President of Uno Foods Inc., the Company's
subsidiary responsible for retail pizza distribution. Mr. Fox served as Senior
Vice President-Purchasing and Development from 1989 to 1990, and served as Vice
President of Purchasing from 1988 to 1989. Prior to joining the Company, from
1971 to 1988, Mr. Fox served as vice president-purchasing at Worcester Quality
Foods, Inc. a wholesale food service distributor. Mr. Fox has a total of 23
years of experience in the restaurant and food service industries.
Mr. Gallucci has been Senior Vice President-Franchising since October 1994.
From 1988 to 1994, he served as Senior Vice President-Operations, and from 1985
to 1988, he served as Vice President-Operations of the Company. Prior to
joining the Company, Mr. Gallucci served for 12 years with Magic Pan
International, Inc. as a division operations vice president, and prior to that
he was employed by Stouffer Corporation for 16 years. Mr. Gallucci has a total
of 37 years of experience in the restaurant industry.
Mr. Gathers has been Senior Vice President-Human Resources and Training
since November 1992. Mr. Gathers served as Vice President-Human Resources and
Training since August 1990. Prior to joining the Company, Mr. Gathers served
in several senior training and development functions with the General Mills
Inc. restaurant subsidiary from 1981 to 1990. Mr. Gathers has a total of 18
years of experience in the restaurant industry.
Mr. Lee has been Senior Vice President-Operations since October 1994. From
1992 to 1994, he served as Vice President-Operations of the Company. From
1988, when he joined the Company, to 1992, Mr. Lee held several operations
management positions. Prior to joining the Company, Mr. Lee served for 10
years with the York Steak House division of General Mills, Inc. as an area
supervisor. Mr. Lee has a total of 16 years of experience in the restaurant
industry.
Mr. Liever has been Senior Vice President-Marketing since January 1994.
From 1993 to 1994, he served as Vice President- Marketing of the Company.
Prior to joining the Company, Mr. Liever served as Vice President-Marketing for
the Black-Eyed Pea restaurant division of Unigate PLC from 1991 to 1993. From
1981 to 1991 Mr. Liever held several senior marketing positions with Pepsico
subsidiaries, including Frito-Lay and Taco Bell.
Officers are elected by, and serve at the pleasure of, the Board of
Directors.
See also "ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT,"
"ITEM 11. EXECUTIVE COMPENSATION," "ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT," and "ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS."
ITEM 2. PROPERTIES
During January 1993, the Company began operation of a 30,000 square foot
production plant that was purchased in Brockton, Massachusetts. The production
plant
-13-
<PAGE> 14
produces frozen product for service aboard American Airlines flights, as well
as fresh, refrigerated pizzas that are sold at deli counters in approximately
600 supermarkets in New England, New York, New Jersey, Pennsylvania and Ohio.
This facility provides sufficient capacity to support double the level of sales
achieved in fiscal 1994. See "ITEM 1. Consumer Product Business and Non-
traditional Distribution Channels."
Prior to fiscal 1992, all Company-owned restaurants were located in leased
space. However, during fiscal 1992, the Company purchased real estate to
develop new restaurants in Portland, Maine, Lynnfield, Massachusetts and
Hyannis, Massachusetts; during fiscal 1993, in Orlando, Florida; during fiscal
1994 in Amherst, New York, and Paoli, Pennsylvania; and subsequent to the end
of fiscal 1994, in Potomac, Virginia, and Schaumburg, Illinois. The Company
also purchased during fiscal 1992 the real estate related to its three Chicago
restaurants.
The leases for Company-owned restaurants typically have initial terms of 15
years with certain renewal options and provide for a base rent plus real estate
taxes, insurance and other expenses, plus additional percentage rents based on
revenues of the restaurant. All of the Company's franchised restaurants are in
space leased from parties unaffiliated with the Company, with the exception of
one franchised restaurant which is subleased from the Company. Franchised
restaurant leases typically have lease terms through the initial term of the
franchise agreements.
One of the Company-owned restaurants in Boston, Massachusetts is located on
the first floor of a six-story office building owned by Aaron D. Spencer,
Chairman and Chief Executive Officer of the Company. Mr. Spencer has leased
the entire building to the Company pursuant to a five-year lease, ending on
March 29, 1997, at a rent of $162,000 per year. The rent will be increased by
12% of the cost of any improvements to the building made by Mr. Spencer. The
Company is responsible for all taxes, utilities, insurance, maintenance and
repairs. The lease may be terminated by either the Company or Mr. Spencer upon
six months prior notice. If Mr. Spencer or the Company terminates the lease,
a new lease between the Company and Mr. Spencer relating only to the restaurant
space of the building will become effective immediately. The new lease will
have a five-year term with two five-year renewal options. Rent under the new
lease will be 6.5% of total restaurant revenues but with a minimum rent,
determined by independent appraisal, equal to the fair market rent at the time
the new lease becomes effective. The Company currently sublets all but the
restaurant space at rents which approximate the $162,000 annual rent that it is
obligated to pay Mr. Spencer. Management believes that the terms of both the
existing lease and the new lease which will become effective upon termination
of the existing lease are comparable to those otherwise available in the real
estate market.
The Company's executive offices are located in two adjacent buildings in
West Roxbury, Massachusetts. The first, a three-story building owned by Mr.
Spencer, is leased to the Company pursuant to a five-year lease, commencing on
March 30, 1987, with options to renew for two additional five-year periods.
Rent during the initial term of the lease was $30,000 per year. Currently,
the first of the two five-year options has been exercised at a rate of $36,000
per year. During the final option period, rent will be equal to fair market
rent, but may not be less than the rent under the lease during the immediately
preceding term. The value of any leasehold improvements made by the Company
will not be considered in determining fair market value rent. The Company
added the third floor to the building. The Company is responsible for all
taxes, utilities, insurance, maintenance and repairs. The second, a two-story
building owned by Mr. Spencer's children, is also leased to the
-14-
<PAGE> 15
Company pursuant to a 15 year lease commencing on February 1, 1990, with
options to renew for three additional five-year periods. Rent during the first
five years of the initial term of the lease is $106,800 per year, increasing to
$128,160 per year for the next five years, and to $153,792 for the final five
years of the initial term of the lease. The Company is responsible for all
taxes, utilities, insurance, maintenance and repairs. Rent during any option
period will be 120% of the rent for the prior term of the lease. Management
believes that the terms of the leases for the two offices are as favorable as
otherwise available in the real estate market. With the two buildings, the
executive offices currently consist of approximately 25,000 square feet and
house the Company's executive, administrative and clerical offices.
ITEM 3. LEGAL PROCEEDINGS
As of November 30, 1994, the Company was not a party to any material
pending legal proceedings other than ordinary routine litigation incidental to
the Company's business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company's Common Stock, $.01 par value, is listed on the New York Stock
Exchange under the symbol "UNO." The table below sets forth the range of high
and low sales prices on the New York Stock Exchange for the period from
September 28, 1992 to October 2, 1994:
<TABLE>
<CAPTION>
COMMON STOCK
PRICE
------------
HIGH LOW
---- ---
<S> <C> <C>
FISCAL YEAR ENDED OCTOBER 3, 1993
- ---------------------------------
First Quarter 9 7/8 5 5/8
Second Quarter 8 5/8 6 1/4
Third Quarter 8 1/8 6 3/4
Fourth Quarter 9 5/8 7 3/8
FISCAL YEAR ENDED OCTOBER 2, 1994
- ---------------------------------
First Quarter 10 7/8 8 3/4
Second Quarter 10 5/8 8 1/8
Third Quarter 10 3/4 8 7/8
Fourth Quarter 13 5/8 9 7/8
</TABLE>
-15-
<PAGE> 16
NUMBER OF STOCKHOLDERS
As of October 2, 1994, there were approximately 3,000 beneficial
owners of the Company's Common Stock.
DIVIDENDS
The Company has never paid any cash dividends on its Common Stock and
for the foreseeable future intends to continue its policy of retaining earnings
to finance the development and growth of the Company. The Board of Directors
may reconsider this policy from time to time in light of conditions then
existing, including the Company's earnings performance, financial condition and
capital requirements. Pursuant to both the private placement in June 1990 of
$10 million of senior, unsecured notes with a major insurance company, and a
$50 million unsecured revolving and term credit agreement obtained in December
1994, the Company became subject to various financial and operating covenants,
including limitations on the payment of cash dividends. The most restrictive
limitations, in general, preclude the Company from paying cash dividends, if
such payment, when aggregated with certain other payments, would exceed 35% of
net income for the then most recent four-quarter period or would cause certain
net tangible asset and debt ratios to be exceeded.
-16-
<PAGE> 17
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------------------------------------
Oct. 2 Oct. 3 Sept. 27 Sept. 29 Sept. 30
1994 1993 1992 1991 1990
------ ------ -------- -------- --------
(53 weeks)
(Amounts in thousands except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
REVENUES
Restaurant sales ................ $112,674 $ 98,234 $77,500 $65,921 $50,593
Consumer product sales........... 7,418 7,073 3,106 1,996 1,136
Franchise income ................ 3,973 3,638 3,507 3,408 2,962
-------- -------- ------- ------- -------
124,065 108,945 84,113 71,325 54,691
COSTS AND EXPENSES
Cost of food and beverages ...... 30,177 26,024 19,224 16,187 12,589
Labor and benefits............... 36,935 32,990 24,912 21,017 15,438
Occupancy costs.................. 18,979 17,295 14,492 10,735 7,387
Other operating costs............ 10,751 9,166 9,638 5,013 2,981
General and administrative....... 9,277 8,233 7,022 7,298 5,886
Depreciation and amortization.... 7,655 7,152 5,773 5,096 3,416
-------- -------- ------- ------- -------
113,774 100,860 81,061 65,346 47,697
-------- -------- ------- ------- -------
OPERATING INCOME ................. 10,291 8,085 3,052 5,979 6,994
OTHER INCOME (EXPENSE) ........... (845) (1,085) (150) (487) (328)
-------- -------- ------- ------- -------
INCOME BEFORE INCOME TAXES ....... 9,446 7,000 2,902 5,492 6,666
Provision for income taxes ...... 3,690 2,837 1,140 2,337 2,846
-------- -------- ------- ------- -------
NET INCOME ....................... $ 5,756 $ 4,163 $ 1,762 $ 3,155 $ 3,820
======== ======== ======= ======= =======
EARNINGS PER COMMON SHARE ........ $ 0.63 $ 0.46 $ 0.19 $ 0.37 $ 0.48
======== ======== ======= ======= =======
WEIGHTED AVERAGE SHARES
OUTSTANDING .................... 9,088 9,033 9,051 8,590 8,018
======== ======== ======= ======= =======
</TABLE>
-17-
<PAGE> 18
ITEM 6. (CONT'D)
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------------------------------------
Oct. 2 Oct. 3 Sept. 27 Sept. 29 Sept. 30
1994 1993 1992 1991 1990
------ ------ -------- -------- --------
(53 weeks)
(Amounts in thousands except number of restaurants)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets ..................... $92,221 $74,735 $68,117 $61,260 $43,299
Long-term debt ................... 17,303 8,167 10,000 10,000 10,000
Capital lease obligations ........ 820 472 474 476 477
Shareholders' equity ............. 55,958 49,375 45,090 43,131 26,141
OPERATING DATA:
SYSTEM-WIDE SALES(a)
Company-owned ................... $110,272 $96,540 $77,226 $65,840 $50,695
Franchised ...................... 87,612 82,710 77,891 69,545 60,014
-------- -------- -------- -------- --------
TOTAL ........................... $197,884 $179,250 $155,117 $135,385 $110,709
======== ======== ======== ======== ========
AVERAGE RESTAURANT SALES(a)
Company-owned ................... $1,886 $1,807 $1,786 $1,874 $2,037
Franchised ...................... 1,487 1,389 1,356 1,322 1,381
NUMBER OF RESTAURANTS
Company-owned(b)................. 66 57 51 40 33
Franchised(c) ................... 61 58 59 55 47
-------- -------- -------- -------- --------
TOTAL AT YEAR END ............... 127 115 110 95 80
======== ======== ======== ======== ========
</TABLE>
______________________
(a) Pizzeria Uno full-service restaurants only.
(b) Includes one Mexican restaurant and two quick-service Uno units in 1994;
one Mexican restaurant and one quick-service Uno unit in 1993 and 1992; one
steakhouse restaurant in 1991; and two steakhouse restaurants and two
quick-service Uno units in 1990.
(c) Includes two quick-service Pizzeria Uno units in 1994 and one in 1991.
-18-
<PAGE> 19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship to total
revenues, unless otherwise indicated, of certain items included in the Company's
income statements and operating data for the periods indicated:
<TABLE>
<CAPTION>
52 Weeks 53 Weeks 52 Weeks
Ended Ended Ended
10/2/94 10/3/93 9/27/92
-------- -------- --------
<S> <C> <C> <C>
REVENUES:
Restaurant sales ........................... 90.8% 90.2% 92.1%
Consumer product sales...................... 6.0 6.5 3.7
Franchise income ........................... 3.2 3.3 4.2
----- ----- -----
Total ..................................... 100.0 100.0 100.0
COSTS AND EXPENSES:
Cost of food & beverages (1) ............... 25.1 24.7 23.9
Labor & benefits (1) ....................... 30.8 31.3 30.9
Occupancy costs (1) ........................ 15.8 16.4 18.0
Other operating costs (1) .................. 9.0 8.7 12.0
General & administrative ................... 7.5 7.6 8.3
Depreciation & amortization (1)............. 6.4 6.8 7.2
----- ----- -----
OPERATING INCOME ............................ 8.3 7.4 3.7
OTHER EXPENSE ............................... (.7) (1.0) (.2)
----- ----- -----
INCOME BEFORE TAXES ......................... 7.6 6.4 3.5
Provision for income taxes .................. 3.0 2.6 1.4
----- ----- -----
NET INCOME .................................. 4.6% 3.8% 2.1%
===== ===== =====
</TABLE>
(1) Percentage of restaurant and consumer product sales
-19-
<PAGE> 20
FISCAL YEAR 1994 COMPARED TO FISCAL YEAR 1993
Total revenue, which includes Company-owned restaurant sales, consumer
product sales primarily through supermarkets and American Airlines, and
franchise income, increased 14% to $124.1 million in fiscal 1994 from $108.9
million the prior year. Company-owned restaurant sales increased 15% to $112.7
million due primarily to a 9.4% increase in operating weeks of full-service
restaurants resulting from the addition of eight restaurants. Revenue this year
was higher also due to a 6.5% increase in comparable-store sales, which were
stronger in each successive quarter this year, finishing up 7.4% for the second
half of the year.
Consumer product sales increased 5% to $7.4 million from $7.1 million
in fiscal 1993. This year's sales growth was due to expanded sales of private
label thin-crust pizzas to several supermarket chains in New England. Initial
shipments of both refrigerated and frozen Pizzeria Uno brand pizzas have
recently begun to new customers in New York, New Jersey, Pennsylvania and Ohio
in order to expand our regional presence beyond New England.
Franchise income, which includes royalty income and initial franchise
fees, increased 9% to $4 million from $3.6 million last year. Royalty income
increased 10% to $3.8 million due to an increase of 7.1% in average unit sales
and the opening of four new restaurants, for a net addition of one (three units
were purchased by the Company from a franchisee in fiscal 1994). Initial
franchise fees totaled $150,000 compared to $147,500 in fiscal 1993.
Operating income for fiscal year 1994 was up 27% to $10.3 million
compared to $8.1 million for the previous year, as the operating profit margin
increased to 8.3% from 7.4%.
Cost of food and beverages as a percentage of sales increased to 25.1%
from 24.7% in the prior year. This percentage cost increase primarily reflected
changes in sales mix intended to enhance customers' value perception. Labor and
benefits decreased slightly to 30.8% from 31.3% in the previous year,
principally due to the leverage of higher unit sales. Occupancy costs, as a
percent of sales, declined to 15.8% from 16.4% last year. The factors
responsible for this improvement included the Company's purchase of several
restaurant properties since fiscal 1992, and the operating leverage provided by
the increase in comparable-store sales. Other operating costs remained
relatively stable from year to year. General and administrative expenses, as
well as depreciation and amortization expenses, continued to decline as a
percent of total revenue, due principally to the leverage generated by the
Company's strong sales growth.
Other expense, net, declined to $845,000 from $1,085,000 in the
previous year. The principal factor for this change was a gain of $312,000 on
the sale of a restaurant in Orlando to a franchisee in fiscal 1994. The
effective income tax rate declined to 39.1% from 40.5% in fiscal 1993. Fiscal
1994's rate was lower due primarily to the FICA tip credit, which was effective
on January 1, 1994.
FISCAL YEAR 1993 COMPARED TO FISCAL YEAR 1992
Total revenue increased 30% to $108.9 million for fiscal 1993 from
$84.1 million in 1992. Company-owned restaurant sales increased 27% to $98.2
million due to a 24% increase in operating weeks of full-service restaurants
resulting from the addition of six new restaurants. Average annual sales, which
includes all units,
-20-
<PAGE> 21
were up 1.1% over 1992, and comparable-store sales declined slightly by .4%.
Comparable-store sales trends turned positive in April 1993 and, for the last
two quarters of fiscal 1993, were up 1.6% and 4.2%, respectively.
Consumer product sales increased 128% to $7.1 million from $3.1 million
in fiscal 1992. The growth of this business was due principally to the new
channels of distribution that were added. Specifically, a major contract with
American Airlines, and penetration into the New York metropolitan area were
responsible for the rapid expansion of this business. Also, shipments were
initiated to new customers in Pennsylvania and New Jersey. A new production
facility opened in January 1993, and additional capacity was added in fiscal
1993 to support this continued growth.
Franchise income, which includes royalty income and initial franchise
fees, increased 4% to $3.6 million from $3.5 million in fiscal 1992. Royalty
income increased 6% to $3.5 million due to a 6% increase in operating weeks
resulting from the opening of three new restaurants. Initial franchise fees
totaled $147,500 compared to $220,000 in fiscal 1992 due to fewer new franchise
openings.
Operating income for fiscal year 1993 was $8.1 million compared to $3.1
million for the previous year. The 1992 results included a one-time pre-tax
charge of $2.5 million related to the closure of two restaurants. Operating
income rose 45% for fiscal 1993, and operating margins improved to 7.4% from
6.6% in fiscal 1992 (before the $2.5 million pre-tax charge).
Cost of food and beverages as a percentage of sales increased to 24.7%
from 23.9% in the prior year. This increase in part reflected changes in menu
products intended to enhance customers' value perception. Labor and benefits
increased slightly to 31.3% from 30.9% in the previous year, principally due to
the addition of an additional manager in certain units to enhance customer
service. Occupancy costs, as a percent of restaurant sales, declined to 16.4%
from 18%. The factors responsible for this improvement included the Company's
purchase of several restaurant properties in fiscal years 1992 and 1993, and the
operating leverage provided by the substantial sales growth of the consumer
products business. Other operating costs remained relatively stable from year
to year after adjusting for the one-time charge associated with the store
closure provision previously mentioned. Administrative expenses as well as
depreciation and amortization charges continued to decline as a percent of total
revenue, due principally to the leverage generated by the Company's strong sales
growth.
Other expense, net, increased to $1,085,000 from $150,000 in the
previous year. The principal factors for this change were increased interest
costs and a decline in investment income as the company financed its growth in
1993 through the use of its available cash and partial use of its revolving
credit facility. The effective income tax rate was 40.5% compared to 39.3% in
fiscal 1992. Fiscal 1992's rate was lower due to the benefit of tax-exempt
interest income.
LIQUIDITY AND SOURCES OF CAPITAL
Capital expenditures of $24 million during fiscal year 1994 were funded
by cash flow from operations and partial use of the Company's revolving credit
facility. In December 1994, the Company obtained a $50 million unsecured
revolving credit facility to replace its then existing $20 million credit line.
The new revolving credit facility will convert to a three year term loan in
December 1997, and advances under this agreement will accrue interest at the
bank's prime rate, or alternatively, 125 basis points above LIBOR. Company
management believes that sufficient cash will be
-21-
<PAGE> 22
available from operations and its revolving credit facility to finance
development plans for the foreseeable future and to fund its remaining principal
payments under its senior note agreement of $3.3 million each due in June 1995
and 1996.
The Company is currently obligated under 78 leases, including 75 leases
for Company-owned restaurants, two leases for its executive offices, and a lease
for an office building containing one of its restaurants.
IMPACT OF INFLATION
Inflation has not been a major factor in the Company's business for the
last several years. Menu prices have been adjusted for increases in food and
labor costs when appropriate. However, there can be no assurance that this will
continue.
SEASONALITY
The Company's results of operations have not been materially affected
by seasonality.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are listed under Part
IV, Item 14 in this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
-22-
<PAGE> 23
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this Item 10 is hereby incorporated by
reference to the text appearing under Part I, Item 1 - Business, under the
caption "Executive Officers of the Registrant" at page 11 of this Report, and by
reference to the Company's definitive Proxy Statement which is expected to be
filed by the Company within 120 days after the close of its fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 is hereby incorporated by
reference to the Company's definitive Proxy Statement which is expected to be
filed by the Company within 120 days after the close of its fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item 12 is hereby incorporated by
reference to the Company's definitive Proxy Statement which is expected to be
filed by the Company within 120 days after the close of its fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item 13 is hereby incorporated by
reference to the Company's definitive Proxy Statement which is expected to be
filed by the Company within 120 days after the close of its fiscal year.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) 1. INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Auditors .......................... 29
Consolidated Balance Sheets -- October 2, 1994 and
October 3, 1993 ........................................ 30
Statements of Consolidated Income -- Years ended
October 2, 1994, October 3, 1993, and
September 27, 1992 ..................................... 31
Statements of Consolidated Shareholders' Equity --
Years ended October 2, 1994, October 3, 1993, and
September 27, 1992 ..................................... 32
Statements of Consolidated Cash Flows -- Years ended
October 2, 1994, October 3, 1993 and
September 27, 1992 ..................................... 33
Notes to Consolidated Financial Statements .............. 34
</TABLE>
-23-
<PAGE> 24
2. FINANCIAL STATEMENT SCHEDULES
All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or
are inapplicable and, therefore, have been omitted.
3. EXHIBITS
(3) Articles of Incorporation and By-laws.
(a) Restated Certificate of Incorporation filed as Exhibit 3.1
to Registration Statement on Form S-1 (Registration No.
33-13100) (the "1987 Registration Statement").*
(b) By-laws filed as Exhibit 3.2 to the 1987 Registration
Statement.*
(4) Instruments Defining the Rights of Security Holders,
including Indentures.
(a) Specimen Certificate of Common Stock filed as Exhibit 4(a)
to the Company's Annual Report on Form 10-K for the fiscal
year ended September 29, 1991 (the "1991 Annual Report on
Form 10- K.")*
(b) Note Purchase Agreement dated as of June 1, 1990 between the
Company, Uno Restaurants, Inc., Connecticut General Life
Insurance Company, CIGNA Property and Casualty Insurance
Company on behalf of one or more separate accounts, Insurance
Company of North America and Life Insurance Company of North
America, filed as Exhibit 4 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended July 1, 1990,* and
First Amendment to Note Purchase Agreement dated as of July
31, 1991, filed as Exhibit 4(b) to the 1991 Annual Report on
Form 10-K,* and Second Amendment to Note Purchase Agreement
dated as of April 30, 1992, filed as Exhibit 4(b) to the 1992
Annual Report on Form 10-K,* and Third Amendment to Note
Purchase Agreement dated as of February 15, 1993, filed as
Exhibit 4(b) to the 1993 Annual Report on Form 10-K.*
(10) Material Contracts.
(a) Lease between the Company and Aaron D. Spencer dated March
30, 1987 for premises in West Roxbury, Massachusetts, filed
as Exhibit 10.2 to the 1987 Registration Statement.*
(b) Lease between the Company and Aaron D. Spencer dated March
30, 1987 for premises in Boston, Massachusetts, filed as
Exhibit 10.3 to the 1987 Registration Statement.*
(c) Lease between Uno Restaurants, Inc. and Lisa S. Cohen and
Mark N. Spencer dated February 1, 1990 for premises in West
Roxbury, Massachusetts, filed as Exhibit 10(d) to the
Company's Annual
-24-
<PAGE> 25
Report on Form 10-K for the fiscal year ended September 30,
1990 (the "1990 Annual Report on Form 10-K").*
(d) Form of Franchise Agreement and Area Franchise Agreement, filed as
Exhibit 10.5 to the Registration Statement on Form S-2 (Registration No.
33-38944) (the "1991 Registration Statement"*).
(e) Uno Restaurant Corporation 1987 Employee Stock Option Plan, filed as
Exhibit 10.5 to the 1987 Registration Statement,* and the Uno Restaurant
Corporation 1987 Employee Stock Option Plan, As Amended, filed as
Exhibit A to the Company's Proxy Statement for the Annual Meeting of
Stockholders held on February 22, 1994.*
(f) Uno Restaurant Corporation 1989 Non-Qualified Stock Option Plan for
Non-Employee Directors, filed as Exhibit A to the Company's Proxy
Statement for the Annual Meeting of Stockholders held on February 7,
1990.*
(g) Uno Restaurant Corporation 1993 Non-Qualified Stock Option Plan for
Non-Employee Directors, filed as Exhibit A to the Company's Proxy
Statement for the Annual Meeting of Stockholders held on March 2, 1993.*
(h) Form of Indemnification Agreement between the Company and its Directors
filed as Exhibit 10.6 to the 1987 Registration Statement.* **
(i) $5,000,000 Revolving and Term Loan and Guaranty Agreement dated as of
August 24, 1988 among Uno Restaurants, Inc. as Borrower, Uno Restaurant
Corporation as Guarantor, Pizzeria Uno Corporation as Guarantor and Bank
of New England, N.A. as Lender (without exhibits) filed as Exhibit 10(g)
to the Company's Annual Report on Form 10-K for the fiscal year ended
October 2, 1988.*
(j) Uno Buena Vista Associates Joint Venture Agreement dated March 8, 1991
between Pizzeria Uno of Buena Vista, Inc. and Grayborn Buena Vista,
Inc., filed as Exhibit 10(k) to the 1991 Annual Report on Form 10-K.*
(k) Variable Royalty Plan for Franchises, filed as Exhibit 10(l) to the 1991
Annual Report on Form 10- K.*
(l) Stock Purchase Agreement dated September 22, 1992 by and among Florence
D. Sewell, the Estate of Ike Sewell, Deceased, and Uno Restaurants,
Inc., filed as Exhibit 10(m) to the 1992 Annual Report on Form 10-K.*
(m) Agreement dated November 17, 1992 by and between Uno Restaurants, Inc.,
Jeffrey H. Grayson, and Pizzeria Uno Corporation, filed as Exhibit 10(n)
to the 1992 Annual Report on Form 10-K.*
-25-
<PAGE> 26
(n) $10,000,000 Revolving Credit and Guaranty Agreement dated as
of December 7, 1992 by and among Uno Restaurants, Inc., as
Borrower, Uno Foods Inc., Pizzeria Uno Corporation, Uno
Holding Company and Uno Restaurant Corporation, collectively
as the Loan Parties, and Fleet Bank of Massachusetts, N.A. as
Lender (without exhibits) filed as Exhibit 10(o) to the 1992
Annual Report on Form 10-K.*
(o) $20,000,000 Amended Revolving Credit and Guaranty Agreement
dated as of May 31, 1994 by and among Uno Restaurants, Inc.,
as Borrower, Uno Foods Inc., Pizzeria Uno Corporation, Uno
Holding Company and Uno Restaurant Corporation, collectively
as the Loan Parties, and Fleet Bank of Massachusetts, N.A. as
Lender (without exhibits).
(p) $50,000,000 Revolving Credit and Term Loan Agreement dated as
of December 9, 1994 by and among Uno Restaurants, Inc., as
Borrower, Uno Foods Inc., Pizzeria Uno Corporation, URC
Holding Company, Inc. and Uno Restaurant Corporation, as
Guarantors, and Fleet Bank of Massachusetts, N.A. as Agent
(without exhibits).
(q) Asset Purchase Agreement dated September 1, 1994, by and among
Bay Street Restaurants, Inc., Bay Street of Philadelphia,
Pennsylvania, Inc., Bay Street of Woodbridge, New Jersey,
Inc., Bay Street of Schaumburg, Illinois, Inc. and Bay Street
Services, Inc. (collectively, the "Seller"), and UNO Bay,
Inc., B.S. of Woodbridge, Inc., B.S. of Schaumburg, Inc. and
B.S. Intangible Asset Corp. (collectively, the "Purchaser").
(r) Change in Control Protection Agreements dated January 6, 1994
between Uno Restaurant Corporation and each of its named
executive officers, Mr. Spencer, Mr. Miller, Mr. Brown, Mr.
Fox and Mr. Gallucci.**
(s) Master Lease-Purchase Agreement between ORIX Credit Alliance,
Inc., as Lessor, and Massachusetts Industrial Finance Agency,
as Lessee, dated April 19, 1994, and Master Sublease-Purchase
Agreement between Massachusetts Industrial Finance Agency, as
Sublessor, and Uno Foods, Inc. as Sublessee, dated April 19,
1994.
(11) Statement Re: Computation of Per Share Earnings
(21) Subsidiaries of the Registrant
(23) Consent of Ernst & Young LLP, Independent Auditors
________________________
* In accordance with Rule 12b-23 and Rule 12b-32 under the Securities Exchange
Act of 1934, as amended, reference is made to the documents previously filed
with the Securities and Exchange Commission, which documents are hereby
incorporated by reference.
** Management Contract
-26-
<PAGE> 27
(b) REPORTS ON FORM 8-K
During the fiscal quarter ended October 2, 1994, the Company did not
file any Current Reports on Form 8-K.
-27-
<PAGE> 28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant) Uno Restaurant Corporation
------------------------------------------------------------------
By (Signature and Title) /s/ Robert M. Brown
-----------------------------------------------
Robert M. Brown, Senior Vice President
Date December 22, 1994
-----------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
By (Signature and Title) /s/ Aaron D. Spencer
-----------------------------------------------
Aaron D. Spencer, Chairman, Chief Executive
Officer and Director
Date December 22, 1994
-----------------
By (Signature and Title) /s/ Craig S. Miller
-----------------------------------------------
Craig S. Miller, President, Chief Operating
Officer and Director
Date December 22, 1994
-----------------
By (Signature and Title) /s/ Robert M. Brown
-----------------------------------------------
Robert M. Brown, Treasurer, Senior Vice
President-Finance, Chief Financial Officer
and Director
Date December 22, 1994
-----------------
By (Signature and Title) /s/ John T. Gerlach
-----------------------------------------------
John T. Gerlach, Director
Date December 22, 1994
-----------------
By (Signature and Title) /s/ E. Robert Kinney
-----------------------------------------------
E. Robert Kinney, Director
Date December 22, 1994
-----------------
By (Signature and Title) /s/ S. James Coppersmith
-----------------------------------------------
S. James Coppersmith, Director
Date December 22, 1994
-----------------
By (Signature and Title) /s/ Stephen J. Sweeney
-----------------------------------------------
Stephen J. Sweeney, Director
Date December 22, 1994
-----------------
-28-
<PAGE> 29
[LOGO ERNST & YOUNG LLP] 200 Clarendon Street Phone: 617 266 2000
Boston
Massachusetts 02116-5072
Report of Independent Auditors
The Board of Directors
Uno Restaurant Corporation
We have audited the accompanying consolidated balance sheets of Uno Restaurant
Corporation and subsidiaries as of October 2, 1994 and October 3, 1993, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended October 2, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits 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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Uno Restaurant
Corporation and subsidiaries at October 2, 1994 and October 3, 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended October 2, 1994, in conformity with generally
accepted accounting principles.
/s/ ERNEST & YOUNG LLP
------------------------------
ERNST & YOUNG LLP
November 1, 1994, except for
Note 13, as to which the date is
November 15, 1994
- 29 -
<PAGE> 30
Uno Restaurant Corporation and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
OCTOBER 2 OCTOBER 3
1994 1993
---------------------------
(In Thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 961 $ 998
Royalties receivable 553 476
Consumer product receivable 473 496
Inventory 1,744 1,315
Deferred pre-opening costs 568 483
Deferred income taxes 139 807
Prepaid expenses and other current assets 1,600 1,722
--------------------------
Total current assets 6,038 6,297
Property, equipment and leasehold improvements, net 80,057 65,509
Deferred income taxes 1,303 1,182
Other assets:
Deposit (Note 2) 3,000
Liquor licenses and other assets 1,336 1,179
Royalty fee, net 487 568
--------------------------
4,823 1,747
--------------------------
$92,221 $74,735
==========================
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 2 OCTOBER 3
1994 1993
----------------------------
(Dollar Amounts in Thousands
Except Per Share Data)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,006 $ 4,600
Accrued expenses 4,064 4,167
Accrued compensation and taxes 2,357 1,541
Income taxes payable 654 883
Current portion of long-term debt and capital lease
obligations 3,400 3,333
-------------------------
Total current liabilities 15,481 14,524
Long-term debt, net of current portion 17,303 8,167
Capital lease obligations 820 472
Deferred rent 2,659 2,197
Shareholders' Equity:
Perferred Stock, $1.00 par value, 1,000,000 shares
authorized, no shares issued or outstanding
Common Stock, $.01 par value, 12,000,000 shares
authorized, 9,072,499 shares in 1994 and 8,976,418
shares in 1993 issued and outstanding 91 90
Additional paid-in capital 30,613 29,787
Retained earnings 25,254 19,498
-------------------------
Total shareholders' equity 55,958 49,375
-------------------------
$99,221 $74,735
=========================
</TABLE>
See accompanying notes
<PAGE> 31
Uno Restaurant Corporation and Subsidiaries
Statements of ConsOlidated Income
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
OCTOBER 2 OCTOBER 3 SEPTEMBER 27
1994 1993 1992
------------------------------------------
(53 WEEKS)
(Amounts in Thousands Except
Per Share Data)
<S> <C> <C> <C>
Revenues:
Restaurant sales $112,674 $ 98,234 $77,500
Consumer product sales 7,418 7,073 3,106
Franchise income 3,973 3,638 3,507
------------------------------------------
124,065 108,945 84,113
Costs and expenses:
Cost of food and beverages 30,177 26,024 19,224
Labor and benefits 36,935 32,990 24,912
Occupancy costs 18,979 17,295 14,492
Other operating costs 10,751 9,166 9,638
General and administrative 9,277 8,233 7,022
Depreciation and amortization 7,655 7,152 5,773
------------------------------------------
113,774 100,860 81,061
------------------------------------------
Operating income 10,291 8,085 3,052
Other income (expense):
Interest expense (1,147) (1,077) (783)
Other income (expense) 302 (8) 633
------------------------------------------
(845) (1,085) (150)
------------------------------------------
Income before income taxes 9,446 7,000 2,902
Provision for income taxes 3,690 2,837 1,140
------------------------------------------
Net income $ 5,756 $ 4,163 $ 1,762
==========================================
Earnings per common share $ .63 $ .46 $ .19
==========================================
Weighted average number of common
shares 9,088 9,033 9,051
==========================================
</TABLE>
See accompanying notes.
-3l-
<PAGE> 32
Uno Restaurant Corporation and Subsidiaries
Statements of Consolidated Shareholders' Equity
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
----------------- PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
-----------------------------------------------------------------
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1991 8,939 $89 $29,548 $13,573 $(79) $43,131
Net income 1,762 1,762
Exercise of stock options 25 1 129 130
Tax benefit from exercise of
non-qualified stock options 67 67
-----------------------------------------------------------------
Balance at September 27, 1992 8,964 90 29,744 15,335 (79) 45,090
Net income 4,163 4,163
Exercise of stock options 12 20 79 99
Tax benefit from exercise of
non-qualified stock options 23 23
-----------------------------------------------------------------
Balance at October 3, 1993 8,976 90 29,787 19,498 0 49,375
Net income 5,756 5,756
Exercise of stock options 96 1 712 713
Tax benefit from exercise of
non-qualified stock options 114 114
-----------------------------------------------------------------
Balance at October 2, 1994 9,072 $91 $30,613 $25,254 $ 0 $55,958
=================================================================
</TABLE>
See accompanying notes.
- 32 -
<PAGE> 33
Uno Restaurant Corporation and Subsidiaries
Statements of Consolidated Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------
OCTOBER 2 OCTOBER 3 SEPTEMBER 27
1994 1993 1992
---------------------------------------
(53 WEEKS)
(In Thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 5,756 $ 4,163 $ 1,762
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,765 7,235 5,874
Deferred income taxes 547 (424) (1,968)
Provision for deferred rent 462 735 1,050
Gain on disposal of equipment (321) (82) (47)
Loss on closure of restaurants 2,500
Changes in operating assets and liabilities, net
of effects of purchase of business:
Royalties receivable (77) (55) 139
Inventory (429) (127) (283)
Prepaid expenses and other assets (960) (1,629) (1,108)
Accounts payable and accrued expenses 1,948 794 1,041
Income taxes payable (229) 377 68
------------------------------------
Net cash provided by operating activities 14,462 10,987 9,028
INVESTING ACTIVITIES
Additions to property, equipment and leasehold
improvements (22,170) (12,460) (18,731)
Proceeds from sale of fixed assets 2,529 483 303
Increase in deposit (3,000)
Purchase of business, net of cash acquired (1,800) 108 (2,744)
Sale of marketable securities 11,829
Net advances to unconsolidated subsidiary (547)
------------------------------------
Net cash used in investing activities (24,441) (11,869) (9,890)
FINANCING ACTIVITIES
Proceeds from long-term debt 39,895 31,735 11,595
Principal payments on long-term debt and capital
lease obligations (30,780) (30,417) (11,417)
Exercise of stock options 827 122 197
------------------------------------
Net cash provided by financing activities 9,942 1,440 375
Increase (decrease) in cash and cash equivalents (37) 558 (487)
Cash and cash equivalents at beginning of period 998 440 927
------------------------------------
Cash and cash equivalents at end of period $ 961 $ 998 $ 440
====================================
</TABLE>
See accompanying notes.
-33-
<PAGE> 34
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
October 2, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Uno Restaurant
Corporation and its wholly-owned subsidiaries (the Company). All intercompany
accounts and transactions have been eliminated in consolidation. The Company
operates and franchises restaurants primarily in the Northeast, Mid-Atlantic and
Midwest United States.
FISCAL YEAR
The Company's fiscal year ends on the close of business on the Sunday closest to
September 30 in each year. The fiscal year ended October 3, 1993 included 53
weeks of operations.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less at the date of purchase to be cash equivalents.
INVENTORY
Inventory, which consists of food, beverages and store supplies, is stated at
the lower of cost (first-in, first-out method) or market.
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements are recorded at cost. The Company
provides for depreciation of buildings and equipment over their estimated useful
lives using the straight-line method. Leasehold improvements are amortized over
the shorter of their estimated useful lives or the term of the lease using the
straight-line method.
-34-
<PAGE> 35
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION--FRANCHISE FEES
The Company defers franchise fees until the franchisee opens the restaurant and
all services have been substantially performed; at that time, the entire amount
of the fee is recorded as income. Royalty income is recorded as earned based on
rates provided by the respective franchise agreements. Expenses related to
franchise activities amounted to approximately $1,427,000, $1,210,000 and
$1,506,000 in fiscal years 1994, 1993 and 1992, respectively.
A summary of franchise unit activity is as follows:
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------------
OCTOBER 2 OCTOBER 3 SEPTEMBER 27
1994 1993 1992
--------------------------------------
<S> <C> <C> <C>
Units operating at beginning of year 58 59 55
Units opened 5 3 8
Units closed (1) (2) (4)
Units converted to Company-owned units (3) (2)
--------------------------------------
Units operating at end of year 59 58 59
======================================
</TABLE>
PRE-OPENING COSTS
Costs relating to the opening of new restaurants are deferred until the
restaurants open and are amortized over 12 months from that point using the
straight-line method.
INCOME TAXES
In fiscal year 1994, deferred income taxes are recognized for temporary
differences between financial statement and income tax bases of assets and
liabilities for which income tax benefits and obligations will be realized in
future years. In fiscal years 1993 and 1992, the provision for deferred income
taxes represents the tax effect of differences in the timing of income and
expense recognition for tax and financial statement purposes.
(See Note 10).
-35-
<PAGE> 36
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER SHARE
Earnings per share amounts are calculated based upon the weighted average number
of shares outstanding, giving effect to the dilutive effect of stock options.
RECLASSIFICATIONS
Certain amounts in the accompanying 1993 and 1992 financial statements have been
reclassified to permit comparison with 1994.
2. BUSINESS ACQUISITIONS AND DISPOSITIONS
Effective December 10, 1993, the Company acquired the leasehold improvements and
equipment of three franchised restaurants in Connecticut. Effective August 1,
1992, the Company purchased all of the outstanding shares of the original
Pizzeria Uno, Pizzeria Due and Su Casa restaurants and properties in Chicago.
The agreement also includes the rights to future development in the Illinois
market.
These acquisitions have been accounted for under the purchase method of
accounting. The results of operations of the acquired companies prior to the
dates of acquisition would not have a material impact on the consolidated
results of operations in fiscal years 1994, 1993 and 1992.
In September 1994, the Company entered into an agreement with Bay Street
Restaurants, Inc. to purchase the net assets of three restaurants located in
Illinois, New Jersey and Pennsylvania. The arrangement is subject to the
satisfaction of certain governmental licensing requirements, and accordingly,
the aggregate purchase price has been recorded as a refundable deposit as of
October 2, 1994.
On November 8, 1993, the Company sold to a franchisee for $2,500,000 a Pizzeria
Uno restaurant in Lake Buena Vista, Florida and recorded a gain of $312,000,
which has been included in other income. The Company acquired full ownership of
its previous joint venture during fiscal year 1993 by paying cash of $45,000 and
assuming liabilities in the amount of $2,500,000.
-36-
<PAGE> 37
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
3. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements consist of the following:
<TABLE>
<CAPTION>
OCTOBER 2 OCTOBER 3
1994 1993
----------------------
(In Thousands)
<S> <C> <C>
Land $ 7,601 $ 5,030
Buildings 9,729 6,954
Equipment 31,797 24,410
Leasehold improvements 55,657 50,019
Construction in progress 2,870 690
----------------------
107,654 87,103
Less allowances for depreciation and amortization 27,597 21,594
----------------------
$ 80,057 $65,509
======================
</TABLE>
4. RELATED-PARTY TRANSACTIONS
The Company leases three buildings from its principal shareholder for a
restaurant and for corporate office space. Rent expense in the amounts of
$442,000, $446,000 and $436,000 was charged to operations in fiscal years 1994,
1993 and 1992, respectively. The Company believes that the terms of these leases
approximate fair rental value.
The Company's President and his brother own and operate three franchised
restaurants. Additionally, the Chairman of the Company owns a 50% interest in a
franchised pizza bakery, and one of the directors of the Company has a
partnership interest in a franchised restaurant. These franchisees pay royalties
to the Company under standard franchise agreements, with the exception of the
pizza bakery, which is being operated as a test concept, and as a result, is not
currently being charged royalties. Royalties waived for the pizza bakery were
$14,000 and $3,000 in fiscal years 1994 and 1993, respectively.
5. LEASES
The Company conducts the majority of its operations in leased facilities, which
are accounted for as capital or operating leases. The leases typically provide
for a base rent plus real estate taxes, insurance and other expenses, plus
additional contingent rent based upon revenues of the restaurant. Contingent
rent amounted to $981,000, $842,000 and $916,000 in fiscal years 1994, 1993 and
1992, respectively.
- 37 -
<PAGE> 38
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. LEASES (CONTINUED)
At October 2, 1994, the minimum rental commitments under all noncancelable
capital and operating leases with initial or remaining terms of more than one
year are as follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
Year LEASES LEASES
- ---- --------------------------
(In Thousands)
<S> <C> <C>
1995 $ 7,485 $ 130
1996 7,569 130
1997 7,769 130
1998 7,671 130
1999 7,479 130
Thereafter 73,801 1,385
-------------------------
$111,774 2,035
========
Less amount representing interest 1,148
------------
Present value of net minimum lease payments 887
Less current portion of obligation under capital leases 67
------------
Long-term obligation under capital leases $ 820
============
</TABLE>
Total expenses for all leases were as follows:
<TABLE>
<CAPTION>
CAPITAL
CAPITAL LEASE LEASE ASSET OPERATING
Year INTEREST AMORTIZATION LEASE RENTALS
- ---- --------------------------------------------
(In Thousands)
<S> <C> <C> <C>
1994 $51 $58 $10,193
1993 41 44 9,337
1992 40 44 8,149
</TABLE>
Certain operating lease agreements contain free rent inducements and scheduled
rent increases which are being amortized over the terms of the agreements,
ranging from 15 to 20 years, using the straight-line method.
- 38 -
<PAGE> 39
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. FINANCING ARRANGEMENTS
Long-term debt consists of the following:
<TABLE>
<CAPTION>
OCTOBER 2 OCTOBER 3
1994 1993
-------------------------
(In Thousands)
<S> <C> <C>
10.22% senior notes payable to Cigna Insurance
Company in three annual installments of $3,333,
beginning June 1, 1994 $ 6,667 $10,000
Revolving credit and note agreement,
payable on June 1, 1997 13,969 1,500
------------------------
20,636 11,500
Less current portion 3,333 3,333
------------------------
$17,303 $ 8,167
========================
</TABLE>
The note agreements contain certain financial and operating covenants, including
maintenance of certain levels of net worth and income.
During 1994, the Company expanded its $10,000,000 unsecured revolving line of
credit and note agreement to $20,000,000, expiring on June 1, 1997. The Company
is entitled to borrow at its discretion amounts which accrue interest at the
LIBOR rate plus 125 basis points or at the prime rate plus 1/4%. At October 2,
1994, borrowings of $8,500,000 accrue interest at 6.125% (LIBOR rate plus 125
basis points) and borrowings of $5,469,000 accrue interest at 8% (prime rate
plus 1/4%). At October 2, 1994, $6,031,000 was available to the Company for
borrowing under this agreement. A commitment fee, which ranges from .375% to
.5%, is accrued on unused borrowings under the credit agreement.
Annual principal maturities of long-term debt are as follows (in thousands):
<TABLE>
<CAPTION>
Year
----
<S> <C>
1995 $ 3,333
1996 3,334
1997 13,969
-------
$20,636
=======
</TABLE>
- 39-
<PAGE> 40
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. FINANCING ARRANGEMENTS (CONTINUED)
The Company made cash payments of interest of $1,465,000, $1,219,000 and
$1,091,000 during fiscal years 1994, 1993 and 1992, respectively. The Company
capitalized interest during the construction period of newly constructed
restaurants amounting to $228,000 in fiscal year 1994, $186,000 in fiscal year
1993 and $329,000 in fiscal year 1992 and included those amounts in leasehold
improvements.
The Company provides certain limited lease financing to qualified franchisees
through an agreement with an unaffiliated finance company. The Company's maximum
guarantee under the agreement was $2,100,000 at October 2, 1994.
The Company has also guaranteed up to a maximum of $447,000 of future lease
payments in the event of default by specific franchisees.
The Company has an outstanding letter of credit in the amount of $150,000 at
October 2, 1994, which expires in fiscal year 1996.
7. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
<TABLE>
<CAPTION>
OCTOBER 2 OCTOBER 3
1994 1993
-------------------------------
(In Thousands)
<S> <C> <C>
Prepaid expenses $ 694 $ 434
Insurance refunds receivable 296 730
Other accounts receivable 610 558
-------------------------------
$1,600 $1,722
===============================
</TABLE>
- 40 -
<PAGE> 41
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
8. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
OCTOBER 2 OCTOBER 3
1994 1993
-------------------------------
(In Thousands)
<S> <C> <C>
Accrued rent $1,380 $1,136
Accrued utilities 486 289
Accrual for loss on closure of restaurants 588 1,418
Accrued group insurance 252 209
Accrued interest 223 333
Other 1,135 782
-------------------------------
$4,064 $4,167
===============================
</TABLE>
9. EMPLOYEE BENEFIT PLANS
The Company maintains an Employee Stock Ownership Plan (ESOP) and a 401(k)
Savings Plan (Savings Plan) for all of its eligible employees. Contributions to
the ESOP are discretionary and are allocated among all employees based upon the
participants' compensation. The Savings Plan is maintained in accordance with
the provisions of Section 401(k) of the Internal Revenue Code and allows all
employees with at least six months of service to make annual tax-deferred
voluntary contributions up to 15% of their salary. The Company may match 25% of
the first 2% and 10% of the next 4% of the employees' contributions. Total
contributions made to the plans were $110,000, $25,000 and $25,000 in fiscal
years 1994, 1993 and 1992, respectively.
Effective October 1, 1994, the Company adopted a Deferred Compensation Plan
which allows officers to defer a portion of their compensation. Annual deferral
amounts are limited to 20% of the participant's income. Deferred compensation
expense in the amount of $265,000 was recorded in fiscal year 1994.
-41 -
<PAGE> 42
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. INCOME TAXES
Effective October 4, 1993, the Company adopted Financial Accounting Standards
Board (FASB) Statement No. 109 (Statement 109). Under Statement 109, the
liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on the differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
As permitted by Statement 109, the Company has elected not to restate the
financial statements of any prior years. The effect of the change on net income
for fiscal 1993, as well as the cumulative effect, was not material.
Deferred taxes are attributable to the following temporary differences at
October 2, 1994 (In Thousands).
<TABLE>
<CAPTION>
<S> <C>
DEFERRED TAX ASSETS:
Deferred rent $1,087
Depreciation 350
Accrued expenses 277
Franchise fees 101
Other 473
------
Total deferred tax assets 2,288
DEFERRED TAX LIABILITIES:
Deferred pre-opening costs 313
Prepaid insurance 172
Royalty fee 92
Other 269
------
Total deferred tax liabilities 846
------
NET DEFERRED TAX ASSETS $1,442
======
</TABLE>
-42-
<PAGE> 43
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. INCOME TAXES (CONTINUED)
The provision (credit) for income taxes consisted of the following:
<TABLE>
<CAPTION>
LIABILITY
METHOD DEFERRED METHOD
-------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 2 OCTOBER 3 SEPTEMBER 27
1994 1993 1992
-------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Current:
Federal $2,536 $2,490 $ 2,052
State 607 771 1,056
---------------------------------------
3,143 3,261 3,108
Deferred:
Federal 243 (370) (1,298)
State 304 (54) (670)
---------------------------------------
547 (424) (1,968)
---------------------------------------
Income tax expense $3,690 $2,837 $1,140
=======================================
</TABLE>
Components of the provision (credit) for deferred income taxes were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
------------------------
OCTOBER 3 SEPTEMBER 27
1993 1992
------------------------
(In Thousands)
<S> <C> <C>
Reserve for store closings $ 396 $ (932)
Provision for deferred rent (344) (432)
Pre-opening costs (275) (11)
Depreciation (203) (79)
Other 2 (514)
--------------------
$(424) $(1,968)
====================
</TABLE>
- 43 -
<PAGE> 44
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. INCOME TAXES (CONTINUED)
A reconciliation of the effective tax rates with the federal statutory rates is
as follows:
<TABLE>
<CAPTION>
LIABILITY
METHOD DEFERRED METHOD
-------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 2 OCTOBER 3 SEPTEMBER 27
1994 1993 1992
-------------------------------------------
<S> <C> <C> <C>
Federal statutory rate 34.0% 34.0% 34.0%
State income taxes, net of federal income
tax benefit 6.0 6.7 8.8
Tax credits (1.8)
Other .9 (.2) (3.5)
------------------------------------
Effective income tax rate 39.1% 40.5% 39.3%
====================================
</TABLE>
The Company made income tax payments of $3,779,000, $2,826,000 and $2,970,000
during fiscal years 1994, 1993 and 1992, respectively.
11. STOCK OPTION PLANS
The 1987 Employee Stock Option Plan (the Plan) provides for up to 1,500,000
shares of common stock issuable upon exercise of options granted under the Plan.
Options may be granted at an exercise price not less than fair market value on
the date of grant. All options vest at a rate of 20% per year beginning one
year after the date of grant, with the exception of 75,000 and 50,000 options
granted to the President and Chairman of the Company, respectively, which vest
immediately at the date of grant. All options terminate ten years after the date
of grant, with the exception of the 140,000 options granted to the Chairman,
which terminate five years after the date of grant. Options outstanding at
October 2, 1994 are non-qualified stock options.
The 1989 and 1993 Non-Qualified Stock Option Plans for Non-Employee Directors
(the Directors Plans) provide for up to 81,250 shares of Common Stock issuable
upon exercise of options granted under the Directors Plans. The 1989 and 1993
Directors Plans terminate on November 10, 1999 and August 17, 2002,
respectively, but such termination shall not affect the validity of options
granted prior to the dates of termination. Options are to be granted at an
exercise price equal to the fair market value of the shares of Common Stock at
the date of grant. Options granted under the Directors Plans may be exercised
commencing one year after the date of grant and ending ten years from the date
of grant.
- 44 -
<PAGE> 45
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
11. STOCK OPTION PLANS (CONTINUED)
Information regarding the Company's stock option plans is summarized below:
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------
OCTOBER 2 OCTOBER 3 SEPTEMBER 27
1994 1993 1992
-------------------------------------------
<S> <C> <C> <C>
Options outstanding at beginning of fiscal
year 768,387 570,411 450,924
Granted 205,838 267,973 165,500
Exercised (at $5.09 to $10.80 per share) (96,081) (19,450) (24,330)
Canceled (43,157) (50,547) (21,683)
------------------------------------------
Options outstanding at close of fiscal year 834,987 768,387 570,411
==========================================
Option price range at close $5.09 $5.09 $5.09
of fiscal year to $14.25 to $14.25 to $14.25
Options exercisable at close of fiscal year 344,199 355,301 325,530
Options available for grant at close of fiscal
year 543,558 0 61,511
</TABLE>
- 45 -
<PAGE> 46
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------
JANUARY 2 APRIL 3 JULY 3 OCTOBER 2
1994 1994 1994 1994
------------------------------------------------------
(Amounts in thousands, except per share information.)
<S> <C> <C> <C> <C>
Revenue $27,567 $28,028 $32,259 $36,211
Gross profit (1) 4,736 4,843 5,956 7,450
Operating income 1,755 1,771 2,639 4,126
Income before income taxes 1,780 1,483 2,362 3,821
Net income 1,059 882 1,490 2,325
Earnings per share .12 .10 .16 .25
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------
DECEMBER 27 MARCH 28 JUNE 27 OCTOBER 3
1992 1993 1993 1993
------------------------------------------------------
(14 WEEKS)
<S> <C> <C> <C> <C>
Revenue $23,788 $24,767 $28,432 $31,958
Gross profit (1) 5,018 5,116 5,813 7,060
Operating income 1,600 1,415 2,030 3,040
Income before income taxes 1,407 1,108 1,740 2,745
Net income 815 643 1,014 1,691
Earnings per share .09 .07 .11 .19
</TABLE>
(1) Restaurant and consumer product sales, less cost of food and beverages,
labor and benefits, occupancy, and other operating expenses, excluding
advertising expenses.
13. SUBSEQUENT EVENT
On November 15, 1994, the Board of Directors of the Company voted a
five-for-four split of the Company's common stock, to be effected in the form of
a stock dividend, payable to shareholders of record on February 8, 1995. The
split is contingent upon shareholder approval of a proposal to amend the
Company's articles of incorporation to increase the number of authorized shares
of common stock from 12,000,000 to
- 46 -
<PAGE> 47
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. SUBSEQUENT EVENTS (CONTINUED)
25,000,000. The results of the shareholder vote will be announced at the annual
meeting of shareholders, scheduled to be held on February 8, 1995. Had the
additional shares resulting from the proposed stock split been outstanding
throughout all of fiscal years 1994, 1993 and 1992, earnings per share would
have been as follows:
<TABLE>
<CAPTION>
FISCAL YEARS
1994 1993 1992
--------------------------
<S> <C> <C> <C>
Pro forma earnings per share $.51 $.37 $.16
</TABLE>
Financial information contained elsewhere in this report has not been adjusted
to reflect the impact of the proposed common stock split.
- 47 -
<PAGE> 48
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit
Number Page
- ------- ----
<S> <C>
(3)(a) Restated Certificate of Incorporation *
(3)(b) By-laws *
(4)(a) Specimen Certificate of Common Stock *
(4)(b) Note Purchase Agreement dated as of June 1, 1990 between the Company,
Uno Restaurants, Inc., Connecticut General Life Insurance Company, CIGNA
Property and Casualty Company on behalf of one or more separate
accounts, Insurance Company of North America and Life Insurance Company
of North America,* and First Amendment to Note Purchase Agreement dated
as of July 31, 1991,* and Second Amendment to Note Purchase Agreement
dated as of April 30, 1992,* and Third Amendment to Note Purchase
Agreement dated as of February 15, 1993. *
(10)(a) Lease between the Company and Aaron D. Spencer dated March 30, 1987 for
premises in West Roxbury, Massachusetts *
(10)(b) Lease between the Company and Aaron D. Spencer dated March 30, 1987 for
premises in Boston, Massachusetts *
(10)(c) Lease between Uno Restaurants, Inc. and Lisa S. Cohen and Mark N.
Spencer dated February 1, 1990 for premises in West Roxbury,
Massachusetts *
(10)(d) Form of Franchise Agreement and Area Franchise Agreement *
(10)(e) Uno Restaurant Corporation 1987 Employee Stock Plan, and As Amended *
(10)(f) Uno Restaurant Corporation 1989 Non-Qualified Stock Option Plan for
Non-Employee Directors *
(10)(g) Uno Restaurant Corporation 1993 Non-Qualified Stock Option Plan for
Non-Employee Directors *
(10)(h) Form of Indemnification Agreement between the Company and its Directors *
(10)(i) $5,000,000 Revolving and Term Loan and Guaranty Agreement dated as of
August 24, 1988 among Uno Restaurants, Inc. as Borrower, Uno Restaurant
Corporation as Guarantor, Pizzeria Uno Corporation as Guarantor and Bank
of New England, N.A. as Lender (without exhibits) *
(10)(j) Uno Buena Vista Associates Joint Venture Agreement dated March 8, 1991
between Pizzeria Uno of Buena Vista, Inc. and Grayborn Buena Vista,
Inc. *
(10)(k) Variable Royalty Plan for Franchisees *
</TABLE>
-48-
<PAGE> 49
<TABLE>
<S> <C>
(10)(l) Stock Purchase Agreement dated September 22, 1992 by and among Florence
D. Sewell, the Estate of Ike Sewell, Deceased, and Uno Restaurants,
Inc. *
(10)(m) Agreement dated November 17, 1992 by and between Uno Restaurants, Inc.,
Jeffrey H. Grayson, and Pizzeria Uno Corporation. *
(10)(n) $10,000,000 Revolving Credit and Guaranty Agreement dated as of December
7, 1992 by and among Uno Restaurants, Inc., as Borrower, Uno Foods Inc.,
Pizzeria Uno Corporation, Uno Holding Company and Uno Restaurant
Corporation, collectively as the Loan Parties, and Fleet Bank of
Massachusetts, N.A. as Lender (without exhibits). *
(10)(o) $20,000,000 Amended Revolving Credit and Guaranty Agreement dated as of
May 31, 1994 by and among Uno Restaurants, Inc., as Borrower, Uno Foods
Inc., Pizzeria Uno Corporation, Uno Holding Company and Uno Restaurant
Corporation, collectively as the Loan Parties, and Fleet Bank of
Massachusetts, N.A. as Lender (without exhibits).
(10)(p) $50,000,000 Revolving Credit and Term Loan Agreement dated as of
December 9, 1994 by and among Uno Restaurants, Inc., as Borrower, Uno
Foods Inc., Pizzeria Uno Corporation, URC Holding Company, Inc. and Uno
Restaurant Corporation, as Guarantors, and Fleet Bank of Massachusetts,
N.A. as Agent (without exhibits).
(10)(q) Asset Purchase Agreement dated September 1, 1994, by and among Bay
Street Restaurants, Inc., Bay Street of Philadelphia, Pennsylvania,
Inc., Bay Street of Woodbridge, New Jersey, Inc., Bay Street of
Schaumburg, Illinois, Inc. and Bay Street Services, Inc. (collectively,
the "Seller"), and UNO Bay, Inc., B.S. of Woodbridge, Inc., B.S. of
Schaumburg, Inc. and B.S. Intangible Asset Corp. (collectively, the
"Purchaser").
(10)(r) Change in Control Protection Agreements dated January 6, 1994 between
Uno Restaurant Corporation and each of its named executive officers, Mr.
Spencer, Mr. Miller, Mr. Brown, Mr. Fox and Mr. Gallucci.
(10)(s) Master Lease-Purchase Agreement between ORIX Credit Alliance, Inc., as
Lessor, and Massachusetts Industrial Finance Agency, as Lessee, dated
April 19, 1994, and Master Sublease-Purchase Agreement between
Massachusetts Industrial Finance Agency, as Sublessor, and Uno Foods,
Inc. as Sublessee, dated April 19, 1994.
(11) Statement Re: Computation of Per Share Earnings
(21) Subsidiaries of the Registrant
(23) Consent of Ernst & Young LLP, Independent Auditors
</TABLE>
- --------------------
* In accordance with Rule 12b-23 and Rule 12b-32 under the Securities
Exchange Act of 1934, as amended, reference is made to the documents
previously filed with the Securities and Exchange Commission, which
documents are hereby incorporated by reference.
-49-
<PAGE> 50
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
November 1, 1994, except for Note 13, as to which the date is February 8,
1995, in the Registration Statement and related Prospectus of Uno Restaurant
Corporation for the registration of 2,300,000 shares of common stock, and to the
incorporation by reference therein of our report dated November 1, 1994, except
for Note 13, as to which the date is November 15, 1994, with respect to the
consolidated financial statements of Uno Restaurant Corporation included in its
Annual Report (Form 10-K) for the year ended October 2, 1994, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Boston, Massachusetts
May 5, 1995
<PAGE> 1
EXHIBIT 13.2
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JANUARY 1, 1995
-------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------ ------------
Commission file number 1-9573
------------------------------------
UNO RESTAURANT CORPORATION
-------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2953702
------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Charles Park Road, West Roxbury, Massachusetts 02132
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(617) 323-9200
-----------------------------------------------------------
(Registrant's telephone number, including area code)
-----------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
As of January 31, 1995, 9,099,229 shares of the registrant's Common Stock,
$.01 par value, were outstanding.
<PAGE> 2
UNO RESTAURANT CORPORATION
INDEX
Page
----
PART I. FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS.........................................3
Consolidated Balance Sheets --
January 1, 1995 and October 2, 1994..........................3
Consolidated Statements of Income --
Thirteen weeks ended
January 1, 1995 and January 2, 1994..........................4
Consolidated Statements of Cash Flows --
Thirteen weeks ended January 1, 1995 and
January 2, 1994..............................................5
Notes to Consolidated Financial
Statements...................................................6
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS....................................7
PART II. OTHER INFORMATION
- ---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.............................9
2
<PAGE> 3
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share data)
<TABLE>
<CAPTION>
Jan. 1, Oct. 2,
1995 1994
------- -------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 169 $ 961
Royalties receivable 466 553
Consumer products receivables 515 473
Inventory 1,869 1,744
Prepaid expenses 1,675 990
Deferred pre-opening costs 805 568
Deferred income taxes 193 139
Other current assets 649 610
-------- --------
TOTAL CURRENT ASSETS 6,341 6,038
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Land 8,336 7,601
Buildings 11,455 9,729
Leasehold improvements 61,275 55,657
Equipment 34,915 31,797
Construction in progress 4,959 2,870
-------- --------
120,940 107,654
Less allowance for depreciation and amortization 29,575 27,597
-------- --------
91,365 80,057
OTHER ASSETS
Deposit 3,000
Deferred income taxes 1,365 1,303
Royalty fee 467 487
Liquor licenses and other assets 3,108 1,336
-------- --------
$102,646 $ 92,221
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,733 $ 5,006
Accrued expenses 4,763 4,064
Accrued compensation and taxes 1,808 2,357
Income taxes payable 917 654
Current portion--bank loan 3,400 3,400
-------- --------
TOTAL CURRENT LIABILITIES 16,621 15,481
LONG-TERM DEBT 24,878 17,303
CAPITAL LEASE OBLIGATION 804 820
DEFERRED RENT 2,805 2,659
SHAREHOLDERS' EQUITY
Preferred Stock, $1.00 par value, 1,000,000 shares
authorized, none issued
Common Stock, $.01 par value, 12,000,000 shares auth-
orized, 9,086,998 and 9,072,499 shares issued and out-
standing in Fiscal Years 1995 and 1994, respectively 91 91
Additional paid-in capital 30,673 30,613
Retained earnings 26,774 25,254
-------- --------
TOTAL SHAREHOLDERS' EQUITY 57,538 55,958
-------- --------
$102,646 $ 92,221
======== ========
</TABLE>
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------
Jan 1, Jan 2,
1995 1994
------- -------
<S> <C> <C>
REVENUES
Restaurant sales $32,894 $24,861
Consumer product sales 2,108 1,721
Franchise income 974 985
------- -------
35,976 27,567
COSTS AND EXPENSES
Cost of sales 9,067 6,813
Labor and benefits 10,660 8,304
Occupancy 5,310 4,216
Other operating costs 3,189 2,513
General and administrative 2,697 2,195
Depreciation and amortization 2,267 1,771
------- -------
33,190 25,812
------- -------
OPERATING INCOME 2,786 1,755
OTHER INCOME (EXPENSE) (371) 25
------- -------
Income before income taxes 2,415 1,780
Provision for income taxes 895 721
------- -------
NET INCOME $ 1,520 $ 1,059
======= =======
EARNINGS PER COMMON SHARE $.16 $.12
======= =======
Weighted average shares outstanding 9,297 9,116
======= =======
</TABLE>
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
Thirteen weeks Ended
------------------------
Jan 1, Jan 2,
1995 1994
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 1,520 $ 1,059
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,283 1,799
Credit for deferred income taxes (116) 204
Gain on disposal of equipment (4) (327)
Changes in operating assets and liabilities:
Decrease in receivables 45 7
Increase in inventory (126) (54)
Increase in other assets and prepaid expenses (1,263) (191)
Increase in accounts payable and
accrued expenses 877 34
(Decrease) Increase in income taxes payable 263 (339)
Increase in deferred rent 146 187
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 3,625 $ 2,379
INVESTMENT ACTIVITIES
Additions to improvements and equipment (11,738) (4,643)
Proceeds from sale of fixed assets 4 2,510
Decrease in deposits 3,000
Business acquisition, less cash acquired (3,301) (1,800)
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES (12,035) (3,933)
FINANCING ACTIVITIES
Proceeds from revolving credit agreement 15,915 6,165
Principal payments on revolving credit agreement
and capital lease obligations (8,357) (5,330)
Exercise of stock options 60 15
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,618 850
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS (792) (704)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 961 998
-------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 169 $ 294
======== ========
</TABLE>
Certain amounts in fiscal 1994 have been reclassified to permit comparison.
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - Basis of Presentation
The accompanying unaudited, consolidated financial statements have been
prepared in accordance with instructions to Form 10-Q and, therefore, do not
include all information and footnotes normally included in financial statements
prepared in conformity with generally accepted accounting principles. They
should be read in conjunction with the financial statements of the company for
the fiscal year ended October 2, 1994.
The accompanying financial statements include all adjustments (consisting
only of normal recurring accruals) that management considers necessary for a
fair presentation of its financial position and results of operations for the
interim periods presented.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth the percentage relationship to total revenues,
unless otherwise indicated, of certain items included in the Company's income
statements and operating data for the period indicated:
THIRTEEN WEEKS ENDED JANUARY 1, 1995 COMPARED TO THIRTEEN WEEKS ENDED JANUARY 2,
1994
<TABLE>
<CAPTION>
13 Weeks 13 Weeks
Ended Ended
1/1/95 1/2/94
------ ------
<S> <C> <C>
REVENUES:
Restaurant sales 91.4% 90.2%
Consumer product sales 5.9 6.2
Franchise income 2.7 3.6
------ ------
Total 100.0% 100.0%
------ ------
COSTS AND EXPENSES:
Cost of food & beverages (1) 25.9% 25.6%
Labor and benefits (1) 30.5 31.2
Occupancy costs (1) 15.2 15.9
Other operating costs (1) 9.1 9.5
General and administrative 7.5 8.0
Depreciation and amortization (1) 6.5 6.7
------ ------
Operating income 7.7 6.4
Other income (expense) (1.0) --
------ ------
Income before taxes 6.7 6.4
Provision for income taxes 2.5 2.6
------ ------
Net income 4.2 3.8
====== ======
(1) Percentage of restaurant and consumer product sales
NUMBER OF RESTAURANTS
AT END OF QUARTER:
Company-owned Uno's full service 66 57
Franchised Uno's - full service 59 58
</TABLE>
Total revenue which increased 30.5% to $36.0 million from $27.6 million last
year. Company-owned restaurant sales rose 32.3% to $32.9 million from $24.9
million last year due primarily to 18% growth in store operating weeks of
full-service Pizzeria Uno units and the acquisition of three Bay Street Seafood
restaurants. Comparable-store sales for Uno units for the first three months of
the fiscal year were 7.4% above the same period last year. For the seventh
consecutive quarter, the company has realized positive comparable-store sales
gains.
Consumer product sales increased 22.5% to $2,108,000 from $1,721,000 for the
first quarter this year. The growth within the core New England region
especially of private label products remains strong and test shipments of a new
frozen product outside of the New England market have generated several new
distribution opportunities.
Franchise income, which includes royalty income and initial franchise fees,
7
<PAGE> 8
declined slightly to $974,000 from $985,000 last year. Royalty income increased
5.5% due to average weekly sales gains of 3.4% for the first three months of the
fiscal year. Initial franchise fees amounted to $30,000 this year compared to
$90,000 last year due to the opening of one new unit during the first three
months of this year versus the four openings of last year.
Operating income for the first quarter of the fiscal year improved to $2,786,000
from $1,755,000 last year. The operating margin for the period increased to
7.7% from 6.4%. The principal factors which impacted the operating margin were:
labor costs declined as a percentage of sales due to operating efficiencies and
the leverage of higher unit sales; occupancy costs were lower as a result of
several property purchases and the benefits of higher average sales; other
operating, general and administrative and depreciation/amortization expenses all
declined on a sales percentage basis due primarily to the operating leverage
realized by the company's sales growth. Increased cost of food and beverage as
a percentage of sales reflects changes in sales mix due to expansion of our
non-pizza menu offerings, however, it was the sales mix change that accounted
for most of the gain in comparable-store sales.
Other expense of $371,000 for the period compared unfavorably against other
income of $25,000 last year. Other income last year resulted primarily from a
gain on the sale of an Orlando, Florida restaurant to a franchisee. Net
interest expense this year was approximately $96,000 higher than last year. The
effective tax rate of 37% for the quarter compared favorably to last year's rate
of 40.5% due in part to the FICA tip credit, which was effective on January 1,
1994. Net income increased 40% to $1,520,000 from $1,059,000 last year based on
the factors noted above.
Liquidity and Sources of Capital
Capital expenditures of $11,738,000 during the three months of fiscal 1995 were
funded by cash flow from operations and loan proceeds from the Company's
revolving credit facility. The Company has expanded its credit facility from
$20 million to $50 million and believes that sufficient cash will be available
from operations and its new credit facility to finance development plans for the
foreseeable future.
The Company is currently obligated under 80 leases, including 77 leases for
Company-owned restaurants, two leases for its executive offices, and a lease for
an office building containing one of its restaurants.
8
<PAGE> 9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. Statement re: computation of per share earnings
(b) Reports on Form 8-K - Uno Restaurant Corporation filed a Form 8-K
dated November 23, 1994, during the quarter ended January 1,
1995, indicating that on November 15, 1994, the Board of
Directors of Uno Restaurant Corporation declared a 25% stock
split to be effected in the form of a stock dividend payable in
shares of the Company's common stock, $.01 par value, on February
28, 1995 to stockholders of record of the Corporation on February
8, 1995.
9
<PAGE> 10
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.
UNO RESTAURANT CORPORATION
(Registrant)
Date: February 14, 1995 By: /s/ Craig S. Miller
--------------------- ------------------------------
Craig S. Miller
President
Date: February 14, 1995 By: /s/ Robert M. Brown
--------------------- ------------------------------
Robert M. Brown
Senior Vice President-Finance,
and Chief Financial Officer
10
<PAGE> 11
Exhibit 11
Statement re: computation of per share earnings
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------
Jan 1, Jan 2,
1995 1994
-------- --------
<S> <C> <C>
Weighted average shares
outstanding 9,076,582 8,978,950
Common Stock equivalents:
Stock options 220,342 136,642
---------- ----------
9,296,924 9,115,592
========== ==========
Net Income $1,520,000 $1,059,000
========== ==========
EARNINGS PER COMMON SHARE $ .16 $ .12
========== ==========
</TABLE>
11
<PAGE> 1
EXHIBIT 13.3
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended APRIL 2, 1995
------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------ -----------
Commission file number 1-9573
-----------------------------------
UNO RESTAURANT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2953702
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Charles Park Road, West Roxbury, Massachusetts 02132
------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(617) 323-9200
------------------------------------------------------------------
(Registrant's telephone number, including area code)
------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
As of April 30, 1995, 11,377,793 shares of the registrant's Common
Stock, $.01 par value, were outstanding.
<PAGE> 2
UNO RESTAURANT CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS............................ 3
Consolidated Balance Sheets --
April 2, 1995 and October 2, 1994............... 3
Consolidated Statements of Income --
Twenty-six weeks ended April 2, 1995
and April 3, 1994............................... 4
Consolidated Statements of Cash Flows --
Twenty-six weeks ended April 2, 1995 and
April 3, 1994................................... 5
Notes to Consolidated Financial
Statements...................................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS....................... 7
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-
HOLDERS......................................... 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............... 12
</TABLE>
2
<PAGE> 3
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share data)
<TABLE>
<CAPTION>
April 2, Oct. 2,
1995 1994
----------- -------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 214 $ 961
Royalties receivable 597 553
Consumer products receivables 682 473
Inventory 1,936 1,744
Prepaid expenses 2,143 990
Deferred pre-opening costs 1,180 568
Deferred income taxes 238 139
Other current assets 1,041 610
-------- ---------
TOTAL CURRENT ASSETS 8,031 6,038
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Land 9,166 7,601
Buildings 11,502 9,729
Leasehold improvements 66,868 55,657
Equipment 37,789 31,797
Construction in progress 6,518 2,870
-------- --------
131,843 107,654
Less allowances for depreciation and amortization 31,792 27,597
-------- --------
100,051 80,057
OTHER ASSETS
Deposit 3,000
Deferred income taxes 1,435 1,303
Royalty fee 446 487
Liquor licenses and other assets 3,184 1,336
-------- --------
$113,147 $ 92,221
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 6,619 $ 5,006
Accrued expenses 4,620 4,064
Accrued compensation and taxes 2,319 2,357
Income taxes payable 138 654
Current portion--bank loan 3,402 3,400
-------- -------
TOTAL CURRENT LIABILITIES 17,098 15,481
LONG-TERM DEBT 33,358 17,303
CAPITAL LEASE OBLIGATION 778 820
DEFERRED RENT 2,952 2,659
SHAREHOLDERS' EQUITY
Preferred Stock, $1.00 par value, 1,000,000 shares
authorized, none issued
Common Stock, $.01 par value, 25,000,000 shares (12,000,000 in 1994)
authorized, 11,374,699 and 9,072,499 shares issued and outstanding in Fiscal
Years 1995 and 1994, respectively 114 91
Additional paid-in capital 30,830 30,613
Retained earnings 28,017 25,254
-------- -------
TOTAL SHAREHOLDERS' EQUITY 58,961 55,958
-------- -------
$113,147 $92,221
======== =======
</TABLE>
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
------------------------- ------------------------
Apr 2, Apr 3, Apr 2, Apr 3,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Restaurant sales $33,873 $25,010 $66,767 $49,980
Consumer product sales 2,245 2,175 4,353 3,896
Franchise income 1,033 951 2,007 1,936
------- ------- ------- -------
37,151 28,136 73,127 55,812
COSTS AND EXPENSES
Cost of sales 9,365 6,899 18,432 13,731
Labor and benefits 11,429 8,469 22,089 16,813
Occupancy 5,274 4,447 10,584 8,680
Other operating costs 3,000 2,518 6,189 5,049
General and administrative 2,924 2,195 5,621 4,390
Depreciation and amortization 2,604 1,833 4,871 3,609
------- ------- ------- -------
34,596 26,361 67,786 52,272
------- ------- ------- -------
OPERATING INCOME 2,555 1,775 5,341 3,540
OTHER EXPENSE (583) (292) (954) (277)
------- ------- ------- -------
Income before income taxes 1,972 1,483 4,387 3,263
Provision for income taxes 729 601 1,624 1,322
------- ------- ------- -------
NET INCOME $ 1,243 $ 882 $ 2,763 $ 1,941
======= ======= ======= =======
EARNINGS PER COMMON SHARE $ .11 $ .08 $ .24 $ .17
======= ======= ======= =======
Weighted average shares outstanding 11,748 11,360 11,684 11,377
======= ======= ======= =======
</TABLE>
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
Twenty-six Weeks Ended
------------------------
Apr 2, Apr 3,
1995 1994
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 2,763 $ 1,941
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,921 3,658
Deferred income taxes (231) 10
Gain on disposal of equipment (9) (332)
Changes in operating assets and liabilities:
Decrease (Increase) in consumer product receivable (209) 118
Decrease (Increase) in royalty receivables (44) (87)
Increase in inventory (192) (36)
Increase in other assets and prepaid expenses (2,977) (998)
Increase in accounts payable and
accrued expenses 2,131 572
Decrease in income taxes payable (516) (638)
Increase in deferred rent 293 379
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,930 4,587
INVESTMENT ACTIVITIES
Additions to improvements and equipment (22,625) (9,477)
Proceeds from sale of fixed assets 9 2,517
Business acquisition, less cash acquired, and deposit (316) (1,800)
------- -------
NET CASH USED FOR INVESTING ACTIVITIES (22,932) (8,760)
FINANCING ACTIVITIES
Proceeds from revolving credit agreement 31,075 15,135
Principal payments on revolving credit agreement
and capital lease obligations (15,060) (11,556)
Exercise of stock options 240 48
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 16,255 3,627
------- -------
DECREASE IN CASH AND CASH EQUIVALENTS (747) (546)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 961 998
------- -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 214 $ 452
======= =======
</TABLE>
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited, consolidated financial statements have been
prepared in accordance with instructions to Form 10-Q and, therefore, do not
include all information and footnotes normally included in financial statements
prepared in conformity with generally accepted accounting principles. They
should be read in conjunction with the financial statements of the company for
the fiscal year ended October 2, 1994.
The accompanying financial statements include all adjustments (consisting
only of normal recurring accruals) that management considers necessary for a
fair presentation of its financial position and results of operations for the
interim periods presented.
NOTE B - STOCK SPLIT
On February 28, 1995, the Company effected a 25% stock split in the form of
a stock dividend to the stockholders of record on February 8, 1995 which was
approved by the Company's Board of Directors on November 15, 1994.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth the percentage relationship to total revenues,
unless otherwise indicated, of certain items included in the Company's income
statements and operating data for the periods indicated:
<TABLE>
THIRTEEN WEEKS ENDED APRIL 2, 1995 COMPARED TO THIRTEEN WEEKS ENDED
APRIL 3, 1994
<CAPTION>
13 Weeks 13 Weeks
Ended Ended
4/2/95 4/3/94
-------- --------
<S> <C> <C>
REVENUES:
Restaurant sales 91.2% 88.9%
Consumer product sales 6.0 7.7
Franchise income 2.8 3.4
------ ------
Total 100.0% 100.0%
------ ------
COSTS AND EXPENSES:
Cost of food and beverages (1) 25.9% 25.4%
Labor and benefits (1) 31.6 31.1
Occupancy costs (1) 14.6 16.4
Other operating costs (1) 8.3 9.3
General and administrative 7.9 7.8
Depreciation and amortization (1) 7.2 6.8
------ ------
Operating income 6.9 6.3
Other expense (1.6) (1.0)
------ ------
Income before taxes 5.3 5.3
Provision for income taxes 2.0 2.1
------ ------
Net income 3.3% 3.2%
====== ======
<FN>
- ---------------
(1) Percentage of restaurant and consumer product sales
</TABLE>
<TABLE>
NUMBER OF RESTAURANTS
AT END OF QUARTER:
<S> <C> <C>
Company-owned Uno's full service 71 57
Franchised Uno's - full service 58 59
</TABLE>
Total revenues increased 32.0% to $37.2 million for the thirteen weeks
ended April 2, 1995 from $28.1 million for the same period last year.
Company-owned restaurant sales increased 35.4% to $33.9 million for the thirteen
weeks ended April 2, 1995 from $25.0 million for the same period last year due
primarily to a 21.4% growth in store operating weeks of full-service Pizzeria
Uno units and the acquisition of three Bay Street Grill restaurants.
Comparable-store sales for Pizzeria Uno full-service units for the thirteen
weeks ended April 2, 1995 were 5.8% above the same period last year.
Consumer product sales increased 3.2% to $2,244,700 for the thirteen
weeks
7
<PAGE> 8
ended April 2, 1995 from $2,174,700 for the same period last year. Sales growth
within the core New England region for the thirteen weeks ended April 2, 1995
continued, especially of private label products, and test shipments of frozen
products outside of the New England market also continued.
Franchise income, which includes royalty income and initial franchise
fees, increased 8.7% to $1,033,400 for the thirteen weeks ended April 2, 1995
from $951,000 for the same period last year. Royalty income increased 10.1% to
$1,008,400 from $916,000 for the same period last year due in part to
increases in franchise restaurant sales for the thirteen weeks ended April 2,
1995 and two new openings since the comparable period last year. Initial
franchise fees amounted to $25,000 for the thirteen weeks ended April 2, 1995
compared to $35,000 for the same period last year.
Cost of food and beverages increased to 25.9% of restaurant and
consumer product sales for the thirteen weeks ended April 2, 1995 from 25.4% for
the same period last year. This percentage cost increase reflected primarily
changes in sales mix toward a larger percentage of higher-cost non-pizza menu
items.
Labor and benefits increased as a percentage of restaurant and consumer
product sales to 31.6% for the thirteen weeks ended April 2, 1995 compared to
31.1% for the same period last year due to initial periods of labor inefficiency
in connection with accelerated unit growth.
Occupancy costs declined as a percentage of restaurant and consumer
product sales from 16.4% for the thirteen weeks ended April 2, 1995 to 14.6% for
the same period last year, due to the operating leverage provided by the
increase in comparable store sales as well as the Company's ownership of an
increasing number of fee owned properties.
Other operating costs declined as a percentage of restaurant and
consumer product sales to 8.3% for the thirteen weeks ended April 2, 1995 from
9.3% for the same period last year, principally due to lower advertising
expenditures.
General and administrative costs as a percentage of total revenues for
the thirteen weeks ended April 2, 1995 remained relatively unchanged from the
same period last year.
Depreciation and amortization expenses increased as a percentage of
restaurant and consumer product sales to 7.2% for the thirteen weeks ended April
2, 1995 from 6.8% for the same period last year due to an increase in
pre-opening amortization expense associated with the increased rate of unit
growth recently.
Operating income for the for the thirteen weeks ended April 2, 1995
improved 43.9% to $2,555,000 from $1,775,000 for the same period last year, as
the operating margin for the thirteen weeks ended April 2, 1995 increased to
6.9% from 6.3% for the same period last year.
Other expense of $583,000 for the thirteen weeks ended April 2, 1995
increased from $292,000 for the same period last year, due principally to
higher interest costs relating to the increased level of debt used to fund the
Company's accelerated expansion plan and its ownership of an increasing number
of restaurant properties.
The effective income tax rate declined to 37.0% for the 13 weeks ended
April 2, 1995 from 40.5% in the comparable period in 1994. The effective income
tax
8
<PAGE> 9
rate for the 13 weeks ended April 2, 1995 was lower primarily due to the effect
of the FICA tip tax credit, which became effective on January 1, 1994 and
generally lower state income taxes.
Net income increased 40.9% for the 13 weeks ended April 2, 1995
to $1,243,000 from $882,000 for the same period last year based on
the factors noted above.
<TABLE>
TWENTY-SIX WEEKS ENDED APRIL 2, 1995 COMPARED TO TWENTY-SIX WEEKS ENDED
APRIL 3, 1994
<CAPTION>
26 Weeks 26 Weeks
Ended Ended
4/2/95 4/3/94
------ ------
<S> <C> <C>
REVENUES:
Restaurant sales 91.3% 89.6%
Consumer product sales 6.0 7.0
Franchise income 2.7 3.4
Total 100.0% 100.0%
------ ------
COSTS AND EXPENSES:
Cost of food and beverages (1) 25.9 25.5
Labor and benefits (1) 31.1 31.2
Occupancy costs (1) 14.9 16.1
Other operating costs (1) 8.7 9.4
General and administrative 7.7 7.9
Depreciation and amortization (1) 6.8 6.7
------ ------
Operating income 7.3 6.3
Other income (expense) (1.3) (.5)
------ ------
Income before taxes 6.0 5.8
Provision for income taxes 2.2 2.4
------ ------
Net income 3.8% 3.4%
====== ======
<FN>
- ---------------
(1) Percentage of restaurant and consumer product sales
</TABLE>
Total revenue increased 31.0% to $73.1 million for the 26 weeks ended
April 2, 1995 from $55.8 million in the comparable period in 1994. Company-owned
restaurant sales increased 33.6% to $66.8 million for the 26 weeks ended April
2, 1995 due primarily to a 19.8% increase in operating weeks of full-service
Pizzeria Uno restaurants resulting from the addition of 14 restaurants during
the past four quarters, as well as the purchase of three Bay Street Grill
restaurants in December 1994. The increase in restaurant sales was also due to a
6.6% increase in comparable store sales for the 26 weeks ended April 2, 1995.
Consumer product sales increased 11.7% to $4.4 million for the 26 weeks
ended April 2, 1995 from $3.9 million in the comparable period in 1994 due to
higher sales of Pizzeria Uno brand and private label refrigerated pizza, as well
as increased shipments of frozen pizza for tests by customers outside New
England.
Franchise income increased 3.7% to $2.0 million for the 26 weeks ended
April 2, 1995 from $1.9 million in the comparable period in 1994. Royalty income
increased 7.8% to $2.0 for the 26 weeks ended April 2, 1995 generally due to an
increase in franchise restaurant sales. Initial franchise fees totaled $55,000
for the
9
<PAGE> 10
26 weeks ended April 2, 1995 compared to $125,000 in the comparable period in
1994.
Cost of food and beverages as a percentage of restaurant and consumer
product sales increased to 25.9% for the 26 weeks ended April 2, 1995 from 25.5%
in the comparable period in 1994. This percentage cost increase primarily
reflected changes in sales mix toward a larger percentage of higher-cost
non-pizza menu items.
Labor and benefits as a percentage of restaurant and consumer product
sales decreased slightly to 31.1% for the 26 weeks ended April 2, 1995 from
31.2% in the comparable period in 1994, principally due to the leverage of
higher comparable store sales.
Occupancy costs as a percentage of restaurant and consumer product sales
declined to 14.9% for the 26 weeks ended April 2, 1995 from 16.1% in the
comparable period in 1994, primarily due to an increased number of owned
restaurant properties and the operating leverage provided by the increase in
comparable store sales noted above.
Other operating costs declined as a percentage of restaurant and consumer
product sales to 8.7% for the 26 weeks ended April 2, 1995 from 9.4% in the
comparable period in 1994. The primary reasons for this improvement were lower
advertising expenses as a percentage of restaurant and consumer product sales
and the operating leverage provided by the increase in comparable store sales.
General and administrative expenses decreased as a percentage of total
revenues to 7.7% for the 26 weeks ended April 2, 1995 from 7.9% in the
comparable period in 1994 as a result of allocating certain fixed expenses over
a larger revenue base.
Depreciation and amortization expenses as a percentage of restaurant and
consumer product sales increased slightly to 6.8% for the 26 weeks ended April
2, 1995 from 6.7% in the comparable period in 1994, principally due to increased
amortization of pre-opening costs associated with the higher rate of unit
growth.
Operating income increased 50.9% to $5.3 million for the 26 weeks ended
April 2, 1995 compared to $3.5 million in the comparable period in 1994. The
operating profit margin improved to 7.3% from 6.3%, primarily as a result of the
increase in Company-owned restaurants and comparable store sales.
Other expense increased to $954,000 or 1.3% as a percentage of total
revenues for the 26 weeks ended April 2, 1995 from $277,000 or .5% of total
revenues in the comparable period in 1994. This increase was due to higher
interest expense associated with the increased level of debt used to fund the
Company's accelerated expansion plan and its ownership of an increasing number
of restaurant properties. In addition, other expense in the comparable period in
1994 was favorably affected by a $312,000 gain on the sale of a restaurant to a
franchisee.
The effective income tax rate declined to 37.0% for the 26 weeks ended
April 2, 1995 from 40.5% in the comparable period in 1994. The effective income
tax rate for the 26 weeks ended April 2, 1995 was lower primarily due to the
effect of the FICA tip tax credit, which became effective on January 1, 1994 and
generally lower state income taxes.
10
<PAGE> 11
LIQUIDITY AND SOURCES OF CAPITAL
The following table presents a summary of the Company's cash flows for the
26 weeks ended April 2, 1995.
<TABLE>
<S> <C>
Net cash provided by operating activities $ 5,930
Net cash used in investing activities (22,932)
Net cash provided by financing activities 16,255
--------
Increase (Decrease) in cash and cash equivalents (747)
========
</TABLE>
Historically, the Company has leased most of its restaurant locations and
pursued a strategy of controlled growth, financing its expansion principally
from operating cash flow, equity offerings and from the sale of senior,
unsecured notes and short-term borrowing under revolving lines of credit. During
the 26 week period ended April 2, 1995, the Company's investment in property,
equipment and leasehold improvements was $22.6 million.
The Company currently plans to open approximately 38 restaurants during
fiscal 1995 and fiscal 1996, 11 of which were open as of May 5, 1995. The
Company expects that the average cash investment required to open a full-service
Pizzeria Uno restaurant, excluding land and pre-opening costs, will be
approximately $1.5 million. For the balance of fiscal 1995, the Company has
planned $19.0 million in additional capital expenditures primarily for the
development of new restaurants.
As of April 2, 1995, the Company had outstanding indebtedness of $30.0
million under its unsecured, revolving line of credit, $6.7 million of senior,
unsecured notes and $847,000 in capital lease obligations. In December 1994, the
Company obtained a $50.0 million unsecured revolving credit facility to replace
its then existing $20.0 million revolving credit facility. The new revolving
credit facility will convert to a three year term loan in December 1997.
Advances under the revolving credit facility will accrue interest at the
lender's prime rate, or alternatively, 125 basis points above LIBOR. The Company
anticipates using the revolving credit facility in the future for repayment of
all or a portion of the $6.7 million of principal outstanding under its senior,
unsecured notes, for the development of additional restaurants, and for working
capital.
The Company believes that existing cash balances, cash generated from
operations and borrowings under its revolving line of credit will be sufficient
to satisfy the Company's working capital and capital expenditure requirements
through fiscal 1995.
IMPACT OF INFLATION
Inflation has not been a major factor in the Company's business for the
last several years. The Company believes it has historically been able to pass
on increased costs through menu price increases, but there can be no assurance
that it will be able to do so in the future. Future increases in local area
construction costs could adversely affect the Company's ability to expand.
SEASONALITY
The Company's business is seasonal in nature, with revenues and, to a
greater degree, operating income being lower in its first and second quarters
than its other quarters due to the Company's reduced winter volumes.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The Company held its Annual Meeting of Stockholders on
February 8, 1995. Of the 9,079,298 shares of Common Stock of
the Company issued and outstanding as of December 28, 1994,
approximately 8,341,077 shares were represented at the meeting
in person or by proxy. Set forth below is a brief description
of each matter voted upon at the meeting and the voting results
with respect to each matter.
1. A proposal to elect two class I directors to serve as
members of the Company's Board of Directors until 1998:
<TABLE>
<CAPTION>
Name For Withheld Abstain
---- --- -------- -------
<S> <C> <C>
S. James Coppersmith 8,325,632 15,445
John T. Gerlach 8,336,632 4,445
</TABLE>
Craig S. Miller, Robert M. Brown and E. Robert
Kinney, the Company's class II directors, will serve as
such until 1996. Aaron D. Spencer and Stephen J. Sweeney,
the Company's class III directors, will serve as such
until 1997.
2. A proposal to amend the Company's Restated Certificate of
Incorportion, as amended, to increase the number of authorized
shares of Common Stock from 12,000,000 to 25,000,000:
<TABLE>
<CAPTION>
For Withheld Abstain
--- -------- -------
<S> <C> <C> <C>
8,229,799 97,491 13,787
</TABLE>
3. A proposal to amend the Company's 1989 Non-Qualified Stock
Option Plan for Non-Employee Directors (i) to increase from 625
to 925 the number of shares of Common Stock for which an option
will be granted each year to each then non-employee director
and (ii) to grant an option to purchase 300 shares of Common
Stock to each non-employee director for each year such
individual has already served as a director of the Company:
<TABLE>
<CAPTION>
For Withheld Abstain
--- -------- -------
<S> <C> <C> <C>
8,150,912 151,936 38,229
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Restated Certificate of Incorporation, as amended, of
the Registrant
3.2 Restated Bylaws, as amended, of the Registrant
11. Statement re: computation of per share earnings
27. Financial Data Schedule
(b) Reports on Form 8-K - Uno Restaurant Corporation
did not file any Reports on Form 8-K during the quarter ended
April 2, 1995.
12
<PAGE> 13
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.
UNO RESTAURANT CORPORATION
--------------------------
(Registrant)
Date: May 9, 1995 By: /s/ Robert M. Brown
---------------- ------------------------------
Robert M. Brown, Duly Authorized
Senior Vice President-Finance,
and Chief Financial Officer
13
<PAGE> 14
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
UNO RESTAURANT CORPORATION
______________
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
______________
Uno Restaurant Corporation, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify as follows:
1. The present name of the Corporation is Uno Restaurant Corporation.
The name under which the Corporation was originally incorporated is Pizzeria
Uno, Inc.
2. The original Certificate of Incorporation of the Corporation was filed
with the Secretary of State of Delaware on August 1, 1986. A Restated
Certificate of Incorporation was filed with the Secretary of State of Delaware
on April 2, 1987, a second Restated Certificate of Incorporation was filed with
the Secretary of State of Delaware on May 7, 1987, and a third Restated
Certificate of Incorporation was filed with the Secretary of State of Delaware
on May 13, 1987 (the "Restated Certificate").
3. The Restated Certificate is hereby amended by striking out Article
"FOURTH" thereof and by substituting in lieu thereof the new Article "FOURTH"
set forth below:
FOURTH: The total number of shares of stock which the Corporation has
authority to issue is Twenty Five Million (25,000,000) shares of Common Stock,
$.01 par value, and one million (1,000,000) shares of Preferred Stock, $1.00 par
value. The Preferred Stock may be issued in one or more series with such rights,
powers, preferences and terms and at such times and for such consideration as
the Board of Directors shall determine, without further stockholder action. With
respect to any series, prior to issuance, the Board of Directors, by resolution,
shall designate that series to distinguish it from other series and classes of
stock of the Corporation, shall specify the number of shares to be included in
the series, including, but without limitation: (i) the dividend rate, if any,
whether fixed or variable, the conditions and times at which the dividend is
payable, its preferences to any other class or series of stock, and whether
dividends will be cumulative or non-cumulative; (ii)
- 1 -
<PAGE> 15
whether the shares are redeemable and, if so, at what times and prices and on
what other terms and conditions; (iii) whether the shares will be convertible or
exchangeable and, if so, the times, prices, rates, adjustments and other terms
of such conversion or exchange; (iv) the voting rights, if any, applicable to
the shares; and (v) the rights of the holders of such shares on the dissolution
of, or upon the distribution of the assets of, the Corporation.
4. The amendment to the Restated Certificate herein certified has been
duly adopted in the manner and by the votes prescribed by Section 242 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned President and Secretary of Uno
Restaurant Corporation have signed this Certificate of Amendment of the Restated
Certificate of Incorporation as of this 8th day of February, 1995.
/s/ Craig S. Miller
--------------------------------------
Craig S. Miller, President
ATTEST:
/s/ John Cunningham
- ----------------------------
John Cunningham,
Secretary
- 2 -
<PAGE> 16
RESTATED CERTIFICATE OF INCORPORATION
OF
UNO RESTAURANT CORPORATION
It is hereby certified that:
1. The present name of the Corporation (hereinafter called the
"Corporation") is Uno Restaurant Corporation. The name under which the
corporation was originally incorporated is Pizzeria Uno, Inc. and the date of
filing the original certificate of incorporation of the Corporation with the
Secretary of State of Delaware is August 1, 1986. The Corporation filed a
Restated Certificate of Incorporation with the Secretary of State of Delaware
which was effective April 2, 1987, and a further Restated Certificate of
Incorporation with the Secretary of State of Delaware which was effective May 7,
1987.
2. The Restated Certificate of Incorporation of the Corporation is
hereby amended by striking out "51%" whenever it appears in Articles Seventh,
Tenth, Eleventh, and Twelfth thereof and by substituting in lieu thereof "60%,"
as set forth in the Restated Certificate of Incorporation hereinafter provided
for.
3. The provisions of the Restated Certificate of Incorporation of the
Corporation as herein amended are hereby restated and integrated into the
single instrument which is hereinafter set forth, and which is entitled Restated
Certificate of Incorporation of Uno Restaurant Corporation without any further
amendments other than the amendments herein certified and without any
discrepancy between the provisions of the Certificate of Incorporation as
amended and supplemented hereby and the provisions of the said single instrument
hereinafter set forth.
4. The amendments and the restatements of the Restated Certificate of
Incorporation herein certified have been duly adopted by the directors and
stockholders in accordance with the provisions of Sections 141, 228, 242, and
245 of the General Corporation Law of the State of Delaware.
5. The effective date of the Restated Certificate of Incorporation and of
the amendments herein certified shall be its filing date.
6. The Certificate of Incorporation of the Corporation, as amended and
restated herein, shall upon the effective date of this Restated Certificate of
Incorporation, read as follows:
-1-
<PAGE> 17
RESTATED CERTIFICATE OF INCORPORATION
OF
UNO RESTAURANT CORPORATION
FIRST: The name of the corporation (hereinafter called the "Corporation")
is UNO RESTAURANT CORPORATION.
SECOND: The address, including street, number, city, and county, of the
registered office of the Corporation in the State of Delaware is 229 South State
Street, Dover, Kent County, Delaware; and the name of the registered agent of
the Corporation in the State of Delaware at such address is The Prentice-Hall
Corporation System, Inc.
THIRD: The nature of the business and the purposes to be conducted and
promoted by the Corporation, shall be (a) to establish, build, purchase or
otherwise acquire, lease, franchise, maintain, manage and operate restaurants
and other eating places, and purchase or otherwise acquire, deal in, sell and
dispose of foods, beverages, liquors, confections, provisions, tobacco, tobacco
products and food products of all kinds and articles, materials, ingredients,
products, machinery, equipment and property related thereto, (b) to construct,
own, buy, sell, lease, equip and operate restaurants and restaurant enterprises
of all kinds; to manufacture, grow, compound, create and generally deal in all
kinds of food, foodstuffs and food products; to manufacture, purchase, lease,
sell and generally deal in restaurant equipment and supplies of all kinds; and
to manufacture, own, operate and generally deal in and with all kinds of
facilities and appurtenances convenient, desirable or necessary in the conduct
and operation of the foregoing and (c) to promote any lawful purpose, and to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the Corporation has
authority to issue is twelve million (12,000,000) shares of Common Stock, $.01
par value, and one million (1,000,000) shares of Preferred Stock, $1.00 par
value. The Preferred Stock may be issued in one or more series with such
rights, powers, preferences and terms and at such times and for such
consideration as the Board of Directors shall determine, without further
stockholder action. With respect to any series, prior to issuance, the Board of
Directors, by resolution, shall designate that series to distinguish it from
other series and classes of stock of the Corporation, shall specify the number
of shares to be included in the series, including, but without limitation: (i)
the dividend rate, if any, whether fixed or variable, the conditions and times
at which the dividend is payable, its preferences to any other class or series
of stock, and whether dividends will be cumulative or non-cumulative; (ii)
whether the shares are redeemable and, if so, at what times and
-2-
<PAGE> 18
prices and on what other terms and conditions; (iii) whether the shares will be
convertible or exchangeable and, if so, the times, prices, rates, adjustments
and other terms of such conversion or exchange; (iv) the voting rights, if any,
applicable to the shares; and (v) the rights of the holders of such shares on
the dissolution of, or upon the distribution of the assets of, the Corporation.
FIFTH: The Corporation shall have perpetual existence.
SIXTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 29l of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
SEVENTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and
regulation of the powers of the Corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided
that:
1. The business of the Corporation shall be conducted by the officers of
the Corporation under the supervision of the Board of Directors.
2. No election of Directors need be by written ballot.
3. The By-Laws of the Corporation may be amended or repealed at any time
after the original adoption of the By-Laws according to Section 109 of the
General Corporation Law of the State of Delaware by a majority of the Continuing
Directors or by the affirmative vote of the holders of at least 60% of the
shares of Voting Stock then outstanding; provided however any such
-3-
<PAGE> 19
amendment or repeal which is approved by a majority of the Continuing Directors
and thereafter submitted to the stockholders for ratification, may be so
ratified by the affirmative vote of the holders of a majority of the shares of
Voting Stock present and entitled to vote.
EIGHTH: (a) The Corporation may, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented, indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all of the
expenses, liabilities or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which a person indemnified may be entitled
under any By-Law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be Director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
(b) No Director shall be personally liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty by such
Director as a director. Notwithstanding the foregoing sentence, a Director
shall be liable to the extent provided by applicable law (i) for breach of the
Director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the Director derived an
improper personal benefit. No amendment to or repeal of this paragraph (b) of
this Article Eighth shall apply to or have any effect on the liability or
alleged liability of any Director of the Corporation for or with respect to any
acts or omissions of such Director occurring prior to such amendment.
NINTH: From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the Corporation by this
Certificate of Incorporation are granted subject to the provisions of this
Article Ninth.
TENTH: (a) In addition to the affirmative vote otherwise required by law or
any provision of this Certificate of Incorporation, except as otherwise
provided in Section (b) of this Article Tenth, any Business Combination shall
require the affirmative vote of the holders of 60% of all Voting Stock, voting
together as a single class.
-4-
<PAGE> 20
Such affirmative vote shall be required notwithstanding any other
provisions of this Certificate of Incorporation, or any provision of law or of
any agreement with any national securities exchange which might otherwise permit
a lesser vote or no vote, and such affirmative vote shall be required in
addition to any affirmative vote of the holders of any particular class or
series of the Voting Stock or other capital stock required by law or by this
Certificate of Incorporation.
(b) The provisions of Section (a) of this Article Tenth shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only such affirmative vote as is required by law, any other
provision of this Certificate of Incorporation, or any agreement with any
national securities exchange, if, in the case of a Business Combination that
does not involve any consideration received by the stockholders of the
Corporation, solely in their respective capacities as stockholders of the
Corporation, the condition specified in the following paragraph (1) is met, or,
in the case of any other Business Combination, the conditions specified in
either of the following paragraphs (1) and (2) are met:
(1) The Business Combination shall have been approved by a majority of the
Continuing Directors, it being understood that this condition shall not be
capable of satisfaction unless there is at least one Continuing Director.
(2) All of the following conditions shall have been met:
(i) The form of the consideration received by holders of shares of a
particular class of outstanding Voting Stock shall be in cash or
in the same form as the Related Person has paid for shares of
such class of Voting Stock within the two-year period ending on
and including the Determination Date. If, within such two-year
period, the Related Person has paid for shares of any class of
Voting Stock with varying forms of consideration, the form of
consideration received per share by holders of shares of such
class of Voting Stock shall be either cash or the form used to
acquire the largest number of shares of such class of Voting
Stock acquired by the Related Person within such two-year period.
(ii) The aggregate amount of consideration received per share by
holders of each class of Voting Stock in such Business
Combination shall be at least equal to the higher of the
following (it being intended that the requirements of this
paragraph 2(ii) shall be met with respect to every such class of
Voting Stock outstanding, whether or not the Related Person has
previously acquired any shares of that particular class of Voting
Stock):
-5-
<PAGE> 21
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the Related Person for any shares of
that class of Voting Stock acquired by it within the
two-year period immediately prior to the Announcement Date
or in the transaction in which it became a Related Person,
whichever is higher; or
(b) the Fair Market Value per share of such Voting Stock on the
Announcement Date; or
(c) in the case of any class of preferred stock, the highest
preferential amount per share to which the holders of shares
of such class of Voting Stock are entitled in the event of
any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation.
(iii) After such Related Person has become a Related Person and
prior to the consummation of such Business Combination:
(a) except as approved by a majority of the Continuing
Directors, there shall have been no failure to declare and
pay at the regular date therefor any full quarterly
dividends (whether or not cumulative) on any outstanding
preferred stock;
(b) there shall have been (I) no reduction in the annual rate
of dividends paid on the common stock (except as necessary
to reflect any subdivision of the common stock), except as
approved by a majority of the Continuing Directors, and (II)
an increase in such annual rate of dividends as necessary to
reflect any reclassification (including any reverse stock
split, recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of
outstanding shares of the common stock), unless the failure
so to increase such annual rate of dividends is approved by
a majority of the Continuing Directors;
(c) such Related Person shall not have become the beneficial
owner of any newly issued shares of Voting Stock directly or
indirectly from the Corporation except as part of the
transaction which results in such Related Person becoming a
Related Person.
-6-
<PAGE> 22
(iv) After such Related Person has become a Related Person, such
Related Person shall not have received the benefit, directly or
indirectly (except proportionately, solely in such Related
Person's capacity as a stockholder of the Corporation), of any
loans, advances, guarantees, pledges or other financial assistance
or any tax credits or other tax advantages provided by the
Corporation, whether in anticipation of or in connection with
such Business Combination or otherwise.
(v) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Exchange
Act and the rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations) shall be
mailed to all stockholders of the Corporation at least 30 days
prior to the consummation of such Business Combination (whether
or not such proxy or information statement is required to be
mailed pursuant to the Exchange Act or subsequent provisions).
Such proxy or information statement shall contain on the front
thereof, prominently displayed, any recommendation as to the
advisability or inadvisability of the Business Combination which
the Continuing Directors, or any of them, may have furnished in
writing to the Board of Directors and/or shall contain an opinion
by an investment banking firm, selected by a majority of the
Continuing Directors, as to the fairness (or unfairness) of the
Business Combination to the stockholders of the Corporation, other
than the Related Person.
c) A majority of the total number of Continuing Directors shall have
the power and duty to determine, on the basis of information known to them after
reasonable inquiry, all facts necessary to determine compliance with this
Article Tenth including, without limitation, (1) whether a person is a Related
Person, (2) the number of shares of Voting Stock beneficially owned by any
person, (3) whether the applicable conditions set forth in paragraph (2) of
Section (b) have been met with respect to any Business Combination, and (4)
whether the assets which are the subject of any Business Combination or the
consideration received for the issuance or transfer of securities by the
Corporation or any Subsidiary in any Business Combination have an aggregate fair
market value in excess of 10% of the Corporation's total stockholders' equity as
reflected on the Corporation's most recent audited financial statements.
d) Nothing contained in this Article Tenth shall be construed to relieve
any Related Person from any fiduciary obligation imposed by law.
-7-
<PAGE> 23
e) Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
51% of all Voting Stock voting together as a single class shall be required to
amend or repeal this Article Tenth, or to adopt any provision inconsistent
herewith.
ELEVENTH
(a) Any direct or indirect purchase or other acquisition in one or more
transactions by the Corporation or any Subsidiary of any of the outstanding
Voting Stock of any class from any one or more individuals or entities known by
the Corporation to be a Related Person, who has beneficially owned such security
or right for less than two years prior to the date of such purchase, at a price
in excess of the Fair Market Value shall, except as hereinafter provided,
require the affirmative vote of the holders of at least a majority of the shares
of Voting Stock, voting as a single class, excluding any votes cast with respect
to shares of Voting Stock beneficially owned by such Related Person. Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified by law or any agreement
with any national securities exchange, or otherwise, but no such affirmative
vote shall be required with respect to any purchase or other acquisition of
securities made as part of (i) a tender or exchange offer by the Corporation to
purchase securities of the same class made on the same terms to all holders of
such securities and complying with the applicable requirements of the Exchange
Act and the rules and regulations thereunder, or any successor rule or
regulation, (ii) pursuant to an open-market purchase program conducted in
accordance with the requirements of Rule 10b-18 promulgated by the Securities
and Exchange Commission pursuant to the Exchange Act or any successor rule or
regulation, or (iii) which is approved by a majority of the Continuing
Directors.
(b) Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
60% of the combined voting power of the outstanding shares of Voting Stock,
voting together as a single class, shall be required to alter, change, amend,
repeal or adopt any provision inconsistent with, this Article Eleventh.
TWELFTH
(a) Number, Election and Terms of Directors
1. Subject to the rights of the holders of any class or series of stock
having a preference over the Corporation's Voting Stock as to dividends or upon
liquidation to elect additional Directors under specific circumstances, the
number of Directors shall initially be seven (7) and thereafter may be changed
from time to time exclusively by the Board of Directors pursuant to a resolution
adopted by a majority of the Continuing Directors or by the affirmative vote of
the holders of at least 60% of the shares of Voting Stock then outstanding. At
the annual meeting
-8-
<PAGE> 24
of stockholders held in 1988, the Directors, other than those who may be elected
by the holder of any class or series of stock having a preference over the
Voting Stock as to dividends or upon liquidation, shall be divided into three
classes, as nearly equal in number as possible, with the term of office of the
first class to expire at the 1989 annual meeting of stockholders, the term of
office of the second class to expire at the 1990 annual meeting of stockholders
and the term of office of the third class to expire at the 1991 annual meeting
of stockholders. At each annual meeting of stockholders following such initial
classification and election, the successors of those Directors whose terms
expire at that meeting shall be elected by a plurality vote of all votes cast at
such meeting for a term of office to expire at the third succeeding annual
meeting of stockholders after their election, unless by reason of any
intervening changes in the authorized number of Directors, the Board shall
designate one or more of the then expired directorships as directorships of
another class in order more nearly to achieve equality of number of Directors
among the classes.
2. If the number of Directors changes, any increase or decrease in
Directors shall be apportioned among the classes so as to maintain all classes
as equal in number as possible, and any additional Director elected to any class
shall hold office for a term which shall coincide with the terms of the other
Directors in such class and until his successor is duly elected and qualified.
(b) Newly Created Directorships and Vacancies
Except as otherwise provided for or fixed by or pursuant to the provisions
of this Certificate of Incorporation relating to the rights of the holders of
any class or series of stock having a preference over the Voting Stock as to
dividends or upon liquidation to elect Directors under specified circumstances,
newly created directorships resulting from any increase in the number of
Directors pursuant to Article Twelfth Section (a)(1) and any vacancies on the
Board of Directors resulting from death, resignation, disqualification, removal
or other cause shall be filled only by the affirmative vote of a majority of the
Continuing Directors then in office, even though less than a quorum of the Board
of Directors. Any Director elected in accordance with the preceding sentence
shall hold office for the remainder of the full term of the class of Directors
in which the new directorship was created or the vacancy occurred and until such
Director's successor shall have been elected and qualified. No decrease in the
number of Directors shall shorten the term of an incumbent Director.
(c) Removal
Subject to the rights of the holders of any class or series of stock having
a preference over the Voting Stock as to dividends or upon liquidation to
elect additional Directors under specified circumstances, any Director may be
removed from office
-9-
<PAGE> 25
only with cause by the affirmative vote of the holders of at least 60% of the
combined voting power of the outstanding shares of Voting Stock, voting together
as a single class or upon the vote of a majority of the Continuing Directors.
(d) Amendment, Repeal or Alteration
Notwithstanding anything contained in this Restated Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
60% of the combined voting power of the outstanding shares of Voting Stock,
voting together as a single class, shall be required to alter, change, amend,
repeal, or adopt any provision inconsistent with, this Article Twelfth.
THIRTEENTH
The Board of Directors of the Corporation, when evaluating any offer of
another Person to (i) purchase or exchange any securities or property for any
outstanding equity securities of the Corporation, (ii) merge or consolidate the
Corporation with another corporation, or (iii) purchase or otherwise acquire all
or substantially all of the properties and assets of the Corporation, shall in
connection with the exercise of its judgment in determining what is in the best
interests of the Corporation and its stockholders, give due consideration not
only to the price or other consideration being offered, but also to all other
relevant factors, including but without limitation, the financial and managerial
resources and future prospects of the other Person; the possible effects on the
business of the Corporation and its Subsidiaries and on the employees,
customers, suppliers and creditors of the Corporation and its Subsidiaries and
the effects on the communities in which the Corporation's facilities are
located. In evaluating any such offer, the Board of Directors shall be deemed
to be performing their duly authorized duties and acting in good faith and in
the best interests of the Corporation.
FOURTEENTH
Definitions
The following definitions shall apply for the purpose of Articles Tenth,
Eleventh, Twelfth and Thirteenth only:
1. "Affiliate" shall have the meaning given such term in Rule 12b-2 under
the Exchange Act.
2. "Associate" shall have the meaning given such term in Rule 12b-2 under
the Exchange Act.
3. "Announcement Date" shall mean the date of first public announcement
of the proposal of a Business Combination.
-10-
<PAGE> 26
4. "Beneficial Ownership" shall have the meaning given such term in Rule
13d-3 of the Exchange Act, except that such term shall include any
Voting Stock which such person has the right to acquire, whether or
not such right may be exercised within 60 days, directly or
indirectly, on or after March 30, 1987.
5. "Business Combination" shall mean:
(i) any merger or consolidation of the Corporation or any
Subsidiary with (a) any Related Person, or (b) any other
corporation (whether or not itself a Related Person) which
is, or after such merger or consolidation would be, an
Affiliate of a Related Person; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of
transactions) to or with any Related Person or any Affiliate
of any Related Person of any assets of the Corporation or any
Subsidiary having an aggregate fair market value in excess of
10% of the Corporation's total stockholders' equity as
reflected on the Corporation's most recent audited financial
statements; or
(iii) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any
Related Person or any Affiliate of any Related Person in
exchange for cash, securities or other property (or a
combination thereof) having an aggregate fair market value in
excess of 10% of the Corporation's total stockholders' equity
as reflected on the Corporation's most recent audited
financial statements; or
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of
any Related Person or any Affiliate of any Related Person; or
(v) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not with or
into or otherwise involving the Related Person) which has the
effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of
equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Related Person or any Affiliate of any Related Person.
-11-
<PAGE> 27
6. "Consideration received" shall mean the amount of cash and the Fair
Market Value, as of the Consummation Date, of consideration other than
cash received by the stockholder. In the event of any Business
Combination in which the Corporation survives, the consideration other
than cash shall include shares of any class of outstanding Voting
Stock retained by the holders of such shares.
7. "Consummation Date" shall mean the date upon which the Business
Combination is consummated.
8. "Continuing Director" shall mean any member of the Board of Directors
who is unaffiliated with the Related Person and who was a member of
the Board of Directors prior to the time that the Related Person
became a Related Person, and any successor of a Continuing Director
who is unaffiliated with the Related Person and is recommended to
succeed a Continuing Director by a majority of the Continuing
Directors then on the Board of Directors.
9. "Corporation" shall mean Uno Restaurant Corporation.
10. "Determination Date" shall mean the date upon which a Related Person
became a Related Person.
11. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, from time to time.
12. "Fair market value" shall mean: (i) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the
date in question of a share of such stock on the principal United
States securities exchange registered under the Exchange Act on which
such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a share of
such stock during the 30-day period preceding the date in question on
the National Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use or, if no such quotations
are available, the fair market value on the date in question of a
share of such stock as determined by the Board of Directors in good
faith; and (ii) in the case of property other than cash or stock, the
fair market value of such property on the date in question as
determined by the Board of Directors in good faith.
13. "Related Person" shall mean any individual, firm, corporation or other
entity (other than the Corporation or any Subsidiary or any
stockholder of the Corporation as of March 30, 1987) which, together
with its Affiliates and Associates and with any other individual,
firm, corporation or other entity (other than the Corporation or any
Subsidiary or any stockholder of the Corporation as of March 30, 1987)
with which it or they have any
-12-
<PAGE> 28
agreement, arrangement or understanding with respect to acquiring,
holding or disposing of Voting Stock, acquires Beneficial Ownership of
more than 5% of the voting power of the outstanding Voting Stock.
14. "Person" shall mean any individual, firm, corporation or other entity.
15. "Subsidiary" shall mean any corporation in which a majority of the
capital stock entitled to vote generally in the election of directors
is owned, directly or indirectly, by the Corporation.
16. "Voting Stock" shall mean all of the then outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors.
-13-
<PAGE> 29
Signed and attested to on May 13, 1987.
/s/ Craig S. Miller
______________________________
Craig S. Miller,
President
Attest:
/s/ Stanley J. Gelin
____________________________
Stanley J. Gelin,
Assistant Secretary
-14-
<PAGE> 30
EXHIBIT 3.2
AMENDED AND RESTATED
BY-LAWS
of
UNO RESTAURANT CORPORATION
A Delaware Corporation
Adopted: November 15, 1994
-----------------
Date
<PAGE> 31
BY-LAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. STOCKHOLDERS................................................ 1
Section 1.1. Annual Meeting........................ 1
Section 1.2. Special Meetings...................... 1
Section 1.3. Notice of Meeting..................... 1
Section 1.4. Quorum................................ 2
Section 1.5. Proxies and Voting.................... 2
Section 1.6. Action at Meeting..................... 2
Section 1.7. Action Without Meeting................ 2
Section 1.8. Voting of Shares of Certain Holders... 2
Section 1.9. Stockholder Lists..................... 3
ARTICLE II. BOARD OF DIRECTORS.......................................... 4
Section 2.1. Powers................................ 4
Section 2.2. Number of Directors; Qualifications... 4
Section 2.3. Nomination of Directors............... 4
Section 2.4. Election of Directors................. 4
Section 2.5. Vacancies; Reduction of the Board..... 5
Section 2.6. Enlargement of the Board.............. 5
Section 2.7. Tenure and Resignation................ 5
Section 2.8. Removal............................... 5
Section 2.9. Meetings.............................. 5
Section 2.10. Notice of Meeting..................... 6
Section 2.11. Agenda................................ 6
Section 2.12. Quorum................................ 6
Section 2.13. Action at Meeting..................... 6
Section 2.14. Action Without Meeting................ 6
Section 2.15. Committees............................ 7
ARTICLE III. OFFICERS.................................................... 7
Section 3.1. Enumeration........................... 7
Section 3.2. Election.............................. 7
Section 3.3. Qualification......................... 7
Section 3.4. Tenure................................ 7
Section 3.5. Removal............................... 8
Section 3.6. Resignation........................... 8
Section 3.7. Vacancies............................. 8
Section 3.8. Chairman of the Board................. 8
Section 3.9. President............................. 8
Section 3.10. Vice-Presidents....................... 8
Section 3.11. Treasurer and Assistant Treasurers.... 8
Section 3.12. Secretary and Assistant Secretaries... 9
Section 3.13. Other Powers and Duties............... 9
</TABLE>
-i-
<PAGE> 32
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV. CAPITAL STOCK............................................... 9
Section 4.1. Stock Certificates.................... 9
Section 4.2. Transfer of Shares.................... 10
Section 4.3. Record Holders........................ 10
Section 4.4. Record Date........................... 10
Section 4.5. Transfer Agent and Registrar for
Shares of Corporation................. 11
Section 4.6. Loss of Certificates.................. 11
Section 4.7. Restrictions on Transfer.............. 11
Section 4.8. Miscellaneous......................... 12
ARTICLE V. DIVIDENDS................................................... 12
Section 5.1. Declaration of Dividends.............. 12
Section 5.2. Reserves.............................. 12
ARTICLE VI. POWERS OF OFFICERS TO CONTRACT WITH THE CORPORATION......... 12
ARTICLE VII. INDEMNIFICATION............................................. 13
Section 7.1. Definitions........................... 13
Section 7.2. Actions in Name of the Corporation
or Stockholder........................ 14
Section 7.3. Other Actions......................... 14
Section 7.4. Determination of Indemnification...... 14
Section 7.5. Advances of Attorney's Fees and Other
Costs................................. 15
Section 7.6. Presumptions upon Termination of
Proceeding............................ 15
Section 7.7. Indemnification not Exclusive......... 15
Section 7.8. Indemnification Agreements............ 15
Section 7.9. Insurance............................. 16
Section 7.10. Employee Benefit Plans................ 16
ARTICLE VIII. MISCELLANEOUS PROVISIONS.................................... 16
Section 8.1. Certificate of Incorporation.......... 16
Section 8.2. Fiscal Year........................... 16
Section 8.3. Corporate Seal........................ 16
Section 8.4. Execution of Instruments.............. 16
Section 8.5. Voting of Securities.................. 16
Section 8.6. Evidence of Authority................. 17
Section 8.7. Corporate Records..................... 17
Section 8.8. Charitable Contributions.............. 17
ARTICLE IX. AMENDMENTS.................................................. 17
</TABLE>
-ii-
<PAGE> 33
BY-LAWS
OF
Uno Restaurant Corporation
(A Delaware Corporation)
ARTICLE I.
Stockholders
Section 1.1. Annual Meeting. The annual meeting of the
stockholders of the corporation shall be held on such date, at such time and
place within or without the State of Delaware as may be designated in the notice
of meeting. If the day fixed for the annual meeting shall fall on a legal
holiday, the meeting shall be held on the next succeeding day not a legal
holiday. If the annual meeting is omitted on the day herein provided, a special
meeting may be held in place thereof, and any business transacted at such
special meeting in lieu of annual meeting shall have the same effect as if
transacted or held at the annual meeting.
Section 1.2. Special Meetings. Special meetings of the
stockholders may be called at any time by the president or by the Board of
Directors. Special meetings of the stockholders shall be held at such time,
date and place within or outside of the State of Delaware as may be designated
in the notice of such meeting.
Section 1.3. Notice of Meeting. A written notice stating the
place, date, and hour of each meeting of the stockholders, and, in the case of a
special meeting, the purposes for which the meeting is called, shall be given to
each stockholder entitled to vote at such meeting, and to each stockholder who,
under the Certificate of Incorporation or these By-laws, is entitled to such
notice, by delivering such notice to such person or leaving it at their
residence or usual place of business, or by mailing it, postage prepaid, and
addressed to such stockholder at his address as it appears upon the books of the
corporation, at least ten (10) days and not more than sixty (60) before the
meeting. Such notice shall be given by the secretary, an assistant secretary,
or any other officer or person designated either by the secretary or by the
person or persons calling the meeting.
The requirement of notice to any stockholder may be waived by a
written waiver of notice, executed before or after the meeting by the
stockholder or his attorney thereunto duly authorized, and filed with the
records of the meeting, or if communication with such stockholder is unlawful,
or by attendance at the meeting without protesting prior thereto or at its
commencement the lack of notice. A waiver of notice of any regular or special
meeting of the stockholders need not specify the purposes of the meeting.
-1-
<PAGE> 34
If a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place are announced at the
meeting at which the adjournment is taken, except that if the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the ad adjourned meeting, notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 1.4. Quorum. The holders of a majority in interest of all
stock issued, outstanding and entitled to vote at a meeting shall constitute a
quorum. Any meeting may be adjourned from time to time by a majority of the
votes properly cast upon the question, whether or not a quorum is present.
Section 1.5. Voting and Proxies. Stockholders shall have one vote
for each share of stock entitled to vote owned by them of record according to
the books of the corporation, unless otherwise provided by law or by the
Certificate of Incorporation. Stockholders may vote either in person or by
written proxy, but no proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period. Proxies shall be filed
with the secretary of the meeting, or of any adjournment thereof. Except as
otherwise limited therein, proxies shall entitle the persons authorized thereby
to vote at any adjournment of such meeting. A proxy purporting to be executed
by or on behalf of a stockholder shall be deemed valid unless challenged at or
prior to its exercise and the burden of proving invalidity shall rest on the
challenger. A proxy with respect to stock held in the name of two or more
persons shall be valid if executed by one of them unless at or prior to exercise
of the proxy the corporation receives a specific written notice to the contrary
from any one of them.
Section 1.6. Action at Meeting. When a quorum is present at any
meeting, a plurality of the votes properly cast for election to any office shall
elect to such office, and a majority of the votes properly cast upon any
question other than election to an office shall decide such question, except
where a larger vote is required by law, the Certificate of Incorporation or
these by-laws. No ballot shall be required for any election unless requested
by a stockholder present or represented at the meeting and entitled to vote in
the election.
Section 1.7. Action Without Meeting. Any action required or
permitted to be taken at any meeting of the stockholders may be taken without a
meeting if the minimum number of stockholders necessary to authorize or take
such action and entitled to vote on the matter consent to the action in writing
and the consents are filed with the records of the meetings of stockholders.
Such consent shall be treated for all purposes as a vote at a meeting.
Section 1.8. Voting of Shares of Certain Holders. Shares of stock
of the corporation standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the by-laws of such
corporation may prescribe, or, in
-2-
<PAGE> 35
the absence of such provision, as the Board of Directors of such corporation may
determine.
Shares of stock of the corporation standing in the name of a
deceased person, a minor ward or an incompetent person, may be voted by his
administrator, executor, court-appointed guardian or conservator without a
transfer of such shares into the name of such administrator, executor, court
appointed guardian or conservator. Shares of capital stock of the corporation
standing in the name of a trustee may be voted by him.
Shares of stock of the corporation standing in the name of a
receiver may be voted by such receiver, and shares held by or under the control
of a receiver may be voted by such receiver without the transfer thereof into
his name if authority so to do be contained in an appropriate order of the court
by which such receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to this corporation shall not be
voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time, but shares
of its own stock held by the corporation in a fiduciary capacity may be voted
and shall be counted in determining the total number of outstanding shares.
Section 1.9. Stockholder Lists. The secretary (or the
corporation's transfer agent or other person authorized by these By-laws or by
law) shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stock holders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
ARTICLE II.
Board of Directors
Section 2.1. Powers. Except as reserved to the stockholders by
law, by the Certificate of Incorporation or by these By-laws, the business of
the corporation shall be managed under the direction of the Board of Directors,
who shall have and may exercise
-3-
<PAGE> 36
all of the powers of the corporation. In particular, and without limiting the
foregoing, the Board of Directors shall have the power to issue or reserve for
issuance from time to time the whole or any part of the capital stock of the
corporation which may be authorized from time to time to such person, for such
consideration and upon such terms and conditions as they shall determine,
including the granting of options, warrants or conversion or other rights to
stock.
Section 2.2. Number of Directors; Qualifications. The number of
Directors on the Board of Directors shall be determined as provided in the
Certificate of Incorporation of the corporation. No Director need be a
stockholder.
Section 2.3. Nomination of Directors.
(a) Nominations for the election of Directors may be made by
the Board of Directors or by any stockholder entitled to vote for the election
of Directors. Nominations by stockholders shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid, to the
secretary of the corporation not less than 14 days nor more than 50 days prior
to any meeting of the stockholders called for the election of Directors;
provided, however, that if less than 21 days' notice of the meeting is given to
stockholders, such written notice shall be delivered or mailed, as prescribed,
to the secretary of the corporation not later than the close of the seventh day
following the day on which notice of the meeting was mailed to stock holders.
(b) Each notice under subsection (a) shall set forth (i) the
name, age, business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of each
such nominee, and (iii) the number of shares of stock of the corporation which
are beneficially owned by each such nominee.
(c) The chairman of the meeting of stockholders may, if the
facts warrant, determine and declare to the meeting that a nomination was not
made in accordance with the foregoing procedure, and if he should so determine,
he shall so declare to the meeting and the defective nomination shall be
disregarded.
Section 2.4. Election of Directors. The initial Board of Directors
shall be elected by the incorporator(s) at the first meeting thereof and
thereafter by the stockholders at their annual meeting or at any special
meeting the notice of which specifies the election of Directors as an item of
business for such meeting.
The Directors of the corporation shall be divided into three
classes; Class I, Class II and Class III. Each class shall consist as nearly
as may be possible, of one-third of the whole number of the Board of Directors.
In the election of Directors at the 1988 Annual Meeting of the stockholders, the
Class I
-4-
<PAGE> 37
Directors shall be elected to hold office for a term to expire at the first
annual meeting of the stockholders thereafter; the Class II Directors shall be
elected to hold office for a term to expire at the second annual meeting of the
stockholders thereafter; and the Class III Directors shall be elected to hold
office for a term to expire at the third annual meeting of the stockholders
thereafter; and in the case of each class, until their respective successors are
duly elected and qualified. At each annual election held after the 1988 annual
meeting of the stockholders, the Directors elected to succeed those whose terms
expire shall be identified as being the same class as the Directors they succeed
and shall be elected to hold office for a term to expire at the third annual
meeting of the stockholders after their election, and until their respective
successors are duly elected and qualified. If the number of Directors changes,
any increase or decrease in Directors shall be apportioned among the classes so
as to maintain all classes as equal in number as possible, and any additional
Director elected to any class shall hold office for a term which shall coincide
with the terms of the other Directors in such class and until his successor is
duly elected and qualified.
Section 2.5. Vacancies; Reduction of the Board. Any vacancy in the
Board of Directors, however occurring, including a vacancy resulting from the
enlargement of the Board of Directors, shall be filled as provided in the
Certificate of Incorporation of the corporation.
Section 2.6. Enlargement of the Board. The Board of Directors may
be enlarged as provided in the Certificate of Incorporation of the corporation.
Section 2.7. Tenure and Resignation. Except as otherwise provided
by law, by the Certificate of Incorporation or by these By-laws, Directors shall
hold office until the annual meeting of stockholders at which their term expires
and thereafter until their successors are chosen and qualified. Any Director
may resign by delivering or mailing postage prepaid a written resignation to the
corporation at its principal office or to the president, secretary or assistant
secretary, if any. Such resignation shall be effective upon receipt unless it
is specified to be effective at some other time or upon the happening of some
other event.
Section 2.8. Removal. A Director, whether elected by the
stockholders or Directors, may be removed from office in the manner provided by
the Certificate of Incorporation of the corporation.
Section 2.9. Meetings. Regular meetings of the Board of Directors
may be held without call or notice at such times and such places within or
without the State of Delaware as the Board may, from time to time, determine,
provided that notice of the first regular meeting following any such
determination shall be given to Directors absent from such determination. A
regular
-5-
<PAGE> 38
meeting of the Board of Directors shall be held without notice immediately
after, and at the same place as, the annual meeting of the stockholders or the
special meeting of the stockholders held in place of such annual meeting, unless
a quorum of the Directors is not then present. Special meetings of the Board of
Directors may be held at any time and at any place designated in the call of the
meeting when called by the president, treasurer, or one or more Directors.
Members of the Board of Directors or any committee elected thereby may
participate in a meeting of such board or committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time, and
participation by such means shall constitute presence in person at the meeting.
Section 2.10. Notice of Meeting. It shall be sufficient notice to
a Director to send notice by mail at least seventy-two (72) hours before the
meeting addressed to such person at his usual or last known business or
residence address or to give notice to such person in person or by telephone at
least twenty-four (24) hours before the meeting. Notice shall be given by the
secretary, assistant secretary, if any, or by the officer or Directors calling
the meeting. The requirement of notice to any Director may be waived by a
written waiver of notice, executed by such person before or after the meeting or
meetings, and filed with the records of the meeting, or by attendance at the
meeting without protesting prior thereto or at its commencement the lack of
notice. A notice or waiver of notice of a Directors' meeting need not specify
the purposes of the meeting.
Section 2.11. Agenda. Any lawful business may be transacted at a
meeting of the Board of Directors, notwithstanding the fact that the nature of
the business may not have been specified in the notice or waiver of notice of
the meeting.
Section 2.12. Quorum. At any meeting of the Board of Directors, a
majority of the Directors then in office shall constitute a quorum for the
transaction of business. Any meeting may be adjourned by a majority of the
votes cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice.
Section 2.13. Action at Meeting. Any motion adopted by vote of the
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors, except where a different vote is
required by law, by the Certificate of Incorporation or by these By-laws. The
assent in writing of any Director to any vote or action of the Directors taken
at any meeting, whether or not a quorum was present and whether or not the
Director had or waived notice of the meeting, shall have the same effect as if
the Director so assenting was present at such meeting and voted in favor of such
vote or action.
-6-
<PAGE> 39
Section 2.14. Action Without Meeting. Any action by the Directors
may be taken without a meeting if all of the Directors consent to the action in
writing and the consents are filed with the records of the Directors' meetings.
Such consent shall be treated for all purposes as a vote of the Directors at a
meeting.
Section 2.15. Committees. The Board of Directors may, by the
affirmative vote of a majority of the Directors then in office, appoint an
executive committee or other committees consisting of one or more Directors and
may by vote delegate to any such committee some or all of their powers except
those which by law, the Certificate of Incorporation or these By-laws they may
not delegate. Unless the Board of Directors shall otherwise provide, any such
committee may make rules for the conduct of its business, but unless otherwise
provided by the Board of Directors or such rules, its meetings shall be called,
notice given or waived, its business conducted or its action taken as nearly as
may be in the same manner as is provided in these By-laws with respect to
meetings or for the conduct of business or the taking of actions by the Board of
Directors. The Board of Directors shall have power at any time to fill
vacancies in, change the membership of, or discharge any such committee at any
time. The Board of Directors shall have power to rescind any action of any
committee, but no such rescission shall have retroactive effect.
ARTICLE III.
Officers
Section 3.1. Enumeration. The officers shall consist of a chairman
of the board, president, a treasurer, a secretary and such other officers and
agents (including one or more vice-presidents, assistant treasurers and
assistant secretaries), as the Board of Directors may, in their discretion,
determine.
Section 3.2. Election. The president, treasurer and secretary
shall be elected annually by the Directors at their first meeting following the
annual meeting of the stockholders or any special meeting held in lieu of the
annual meeting. Other officers may be chosen by the Directors at such meeting
or at any other meeting.
Section 3.3. Qualification. An officer may, but need not, be a
Director or stockholder. Any two or more offices may be held by the same
person. Any officer may be required by the Directors to give bond for the
faithful performance of his duties to the corporation in such amount and with
such sureties as the Directors may determine. The premiums for such bonds may
be paid by the corporation.
Section 3.4. Tenure. Except as otherwise provided by the
Certificate of Incorporation or these By-laws, the term of office of each
officer shall be for one year or until his successor is elected and qualified or
until his earlier resignation or removal.
-7-
<PAGE> 40
Section 3.5. Removal. Any officer may be removed from office,
with or without cause, by the affirmative vote of a majority of the Directors
then in office; provided, however, that an officer may be removed for cause only
after reasonable notice and opportunity to be heard by the Board of Directors
prior to action thereon.
Section 3.6. Resignation. Any officer may resign by delivering or
mailing postage prepaid a written resignation to the corporation at its
principal office or to the president, secretary, or assistant secretary, if
any, and such resignation shall be effective upon receipt unless it is specified
to be effective at some other time or upon the happening of some event.
Section 3.7. Vacancies. A vacancy in any office arising from any
cause may be filled for the unexpired portion of the term by the Board of
Directors.
Section 3.8. Chairman of the Board. The Board of Directors may
appoint a chairman of the board and may designate the chair man of the board as
chief executive officer. If the Board of Directors appoints a chairman of the
board, he shall perform such duties and possess such powers as are assigned to
him by the Board of Directors.
Section 3.9. President. The president shall be the chief executive
officer of the corporation, unless a chairman of the board is so designated.
Unless a chairman of the board is so designated or except as otherwise voted by
the Board of Directors, the president shall preside at all meetings of the
stockholders and of the Board of Directors at which present. The president
shall have such duties and powers as are commonly incident to the office and
such duties and powers as the Board of Directors shall from time to time
designate.
Section 3.10. Vice-President(s). The vice-president(s), if any,
shall have such powers and perform such duties as the Board of Directors may
from time to time determine.
Section 3.11. Treasurer and Assistant Treasurers. The treasurer,
subject to the direction and under the supervision and control of the Board of
Directors, shall have general charge of the financial affairs of the
corporation. The treasurer shall have custody of all funds, securities and
valuable papers of the corporation, except as the Board of Directors may
otherwise provide. The treasurer shall keep or cause to be kept full and
accurate records of account which shall be the property of the corporation, and
which shall be always open to the inspection of each elected officer and
Director of the corporation. The treasurer shall deposit or cause to be
deposited all funds of the corporation in such depository or depositories as may
be authorized by the Board of Directors. The treasurer shall have the power to
endorse for deposit or collection all notes, checks, drafts, and other
negotiable instruments payable to the corporation.
-8-
<PAGE> 41
The treasurer shall perform such other duties as are incidental to the office,
and such other duties as may be assigned by the Board of Directors.
Assistant treasurers, if any, shall have such powers and perform
such duties as the Board of Directors may from time to time determine.
Section 3.12. Secretary and Assistant Secretaries. The secretary
shall record, or cause to be recorded, all proceedings of the meetings of the
stockholders and Directors (including committees thereof) in the book of records
of this corporation. The record books shall be open at reasonable times to the
inspection of any stockholder, Director, or officer. The secretary shall
notify the stockholders and Directors, when required by law or by these By-laws,
of their respective meetings, and shall perform such other duties as the
Directors and stockholders may from time to time prescribe. The secretary shall
have the custody and charge of the corporate seal, and shall affix the seal of
the corporation to all instruments requiring such seal, and shall certify under
the corporate seal the proceedings of the Directors and of the stockholders,
when required. In the absence of the secretary at any such meeting, a temporary
secretary shall be chosen who shall record the proceedings of the meeting in the
aforesaid books.
Assistant secretaries, if any, shall have such powers and perform
such duties as the Board of Directors may from time to time designate.
Section 3.13. Other Powers and Duties. Subject to these By-laws
and to such limitations as the Board of Directors may from time to time
prescribe, the officers of the corporation shall each have such powers and
duties as generally pertain to their respective offices, as well as such powers
and duties as from time to time may be conferred by the Board of Directors.
ARTICLE IV.
Capital Stock
Section 4.1. Stock Certificates. Each stockholder shall be
entitled to a certificate representing the number of shares of the capital stock
of the corporation owned by such person in such form as shall, in conformity to
law, be prescribed from time to time by the Board of Directors. Each
certificate shall be signed by the president or vice-president and secretary or
assistant secretary or such other officers designated by the Board of Directors
from time to time as permitted by law, shall bear the seal of the corporation,
and shall express on its face its number, date of issue, class, the number of
shares for which, and the name of the person to whom, it is issued. The
corporate seal and any or all of the signatures of corporation officers may be
facsimile if the stock certificate is manually counter-signed by an authorized
person on behalf of a transfer agent or registrar other than the corporation or
its employee.
-9-
<PAGE> 42
If an officer, transfer agent or registrar who has signed, or whose
facsimile signature has been placed on, a certificate shall have ceased to be
such before the certificate is issued, it may be issued by the corporation with
the same effect as if he were such officer, transfer agent or registrar at the
time of its issue.
Section 4.2. Transfer of Shares. Title to a certificate of stock
and to the shares represented thereby shall be transferred only on the books of
the corporation by delivery to the corporation or its transfer agent of the
certificate properly endorsed, or by delivery of the certificate accompanied by
a written assignment of the same, or a properly executed written power of
attorney to sell, assign or transfer the same or the shares represented thereby.
Upon surrender of a certificate for the shares being transferred, a new
certificate or certificates shall be issued according to the interests of the
parties.
Section 4.3. Record Holders. Except as otherwise may be required
by law, by the Certificate of Incorporation or by these By-laws, the corporation
shall be entitled to treat the record holder of stock as shown on its books as
the owner of such stock for all purposes, including the payment of dividends and
the right to vote with respect thereto, regardless of any transfer, pledge or
other disposition of such stock, until the shares have been transferred on the
books of the corporation in accordance with the requirements of these By-laws.
It shall be the duty of each stockholder to notify the corporation
of his post office address.
Section 4.4. Record Date. In order that the corporation may
determine the stockholders entitled to receive notice of or to vote at any
meeting of stockholders or any adjournments thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty days prior to any
other action. In such case only stockholders of record on such record date
shall be so entitled notwithstanding any transfer of stock on the books of the
corporation after the record date.
If no record date is fixed: (i) the record date for determining
stockholders entitled to receive notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (ii) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is necessary, shall be the day on which
-10-
<PAGE> 43
the first written consent is expressed; and (iii) the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
Section 4.5. Transfer Agent and Registrar for Shares of
Corporation. The Board of Directors may appoint a transfer agent and a
registrar of the certificates of stock of the corporation. Any transfer agent so
appointed shall maintain, among other records, a stockholders' ledger, setting
forth the names and ad dresses of the holders of all issued shares of stock of
the corporation, the number of shares held by each, the certificate numbers
representing such shares, and the date of issue of the certificates representing
such shares. Any registrar so appointed shall maintain, among other records, a
share register, setting forth the total number of shares of each class of shares
which the corporation is authorized to issue and the total number of shares
actually issued. The stockholders' ledger and the share register are hereby
identified as the stock transfer books of the corporation; but as between the
stockholders' ledger and the share register, the names and addresses of
stockholders, as they appear on the stockholders' ledger maintained by the
transfer agent shall be the official list of stockholders of record of the
corporation. The name and address of each stockholder of record, as they appear
upon the stockholders' ledger, shall be conclusive evidence of who are the
stockholders entitled to receive notice of the meetings of stockholders, to
vote at such meetings, to examine a complete list of the stockholders entitled
to vote at meetings, and to own, enjoy and exercise any other property or rights
deriving from such shares against the corporation. Stockholders, but not the
corporation, its Directors, officers, agents or attorneys, shall be responsible
for notifying the transfer agent, in writing, of any changes in their names or
addresses from time to time, and failure to do so will relieve the corporation,
its other stockholders, Directors, officers, agents and attorneys, and its
transfer agent and registrar, of liability for failure to direct notices or
other documents, or pay over or transfer dividends or other property or rights,
to a name or address other than the name and address appearing in the
stockholders' ledger maintained by the transfer agent.
Section 4.6. Loss of Certificates. In case of the loss,
destruction or mutilation of a certificate of stock, a replacement certificate
may be issued in place thereof upon such terms as the Board of Directors may
prescribe, including, in the discretion of the Board of Directors, a
requirement of bond and indemnity to the corporation.
Section 4.7. Restrictions on Transfer. Every certificate for shares
of stock which are subject to any restriction on transfer, whether pursuant to
the Certificate of Incorporation, the By-laws or any agreement to which the
corporation is a party, shall have the fact of the restriction noted
conspicuously on the certificate and shall also set forth on the face or back
either the full text of the restriction or a statement that the corporation will
-11-
<PAGE> 44
furnish a copy to the holder of such certificate upon written request and
without charge.
Section 4.8. Miscellaneous. The amount and classes of the capital
stock and the par value, if any, of the shares, shall be as fixed in the
Certificate of Incorporation. At all times when there are two or more classes
of stock, the several classes of stock shall conform to the description and the
terms and have the respective preferences, voting powers, restrictions and
qualifications set forth in the Certificate of Incorporation and these By-laws.
Every certificate issued when the corporation is authorized to issue more than
one class or series of stock shall set forth on its face or back either (i) the
full text of the preferences, voting powers, qualifications and special and
relative rights of the shares of each class and series authorized to be issued,
or (ii) a statement of the existence of such preferences, powers, qualifications
and rights, and a statement that the corporation will furnish a copy thereof to
the holder of such certificate upon written request and without charge.
ARTICLE V.
Dividends
Section 5.1. Declaration of Dividends. Except as otherwise
required by law or by the Certificate of Incorporation, the Board of Directors
may, in its discretion, declare what, if any, dividends shall be paid from the
surplus or from the net profits of the corporation upon the stock of the
corporation; provided, however, that no dividend shall be declared or paid the
payment of which would diminish the amount of the paid-in capital of the
corporation. Dividends may be paid in cash, in property, in shares of the
corporation's stock, or in any combination thereof. Dividends shall be payable
upon such dates as the Board of Directors may designate.
Section 5.2. Reserves. Before the payment of any dividend and
before making any distribution of profits, the Board of Directors, from time to
time and in its absolute discretion, shall have power to set aside out of the
surplus or net profits of the corporation such sum or sums as the Board of
Directors deems proper and sufficient as a reserve fund to meet contingencies
or for such other purpose as the Board of Directors shall deem to be in the best
interests of the corporation, and the Board of Directors may modify or abolish
any such reserve.
ARTICLE VI.
Powers of Officers to Contract
With the Corporation
Any and all of the Directors and officers of the corporation,
notwithstanding their official relations to it, may enter into and perform any
contract or agreement of any nature between the
-12-
<PAGE> 45
corporation and themselves, or any and all of the individuals from time to time
constituting the Board of Directors of the corporation, or any firm or
corporation in which any such Director may be interested, directly or
indirectly, whether such individual, firm or corporation thus contracting with
the corporation shall thereby derive personal or corporate profits or benefits
or otherwise; provided, that (i) the material facts of such interest are
disclosed or are known to the Board of Directors or committee thereof which
authorizes such contract or agreement; (ii) if the material facts as to such
person's relationship or interest are disclosed or are known to the stockholders
entitled to vote thereon, and the contract is specifically approved in good
faith by a vote or the stockholders; or (iii) the contract or agreement is fair
as to the corporation as of the time it is authorized, approved or ratified by
the Board of Directors, a committee thereof, or the stockholders. Any Director
of the corporation who is interested in any transaction as aforesaid may
nevertheless be counted in determining the existence of a quorum at any meeting
of the Board of Directors which shall authorize or ratify any such transaction.
This Article shall not be construed to invalidate any contract or other
transaction which would otherwise be valid under the common or statutory law
applicable thereto.
ARTICLE VII.
Indemnification
Section 7.1. Definitions. For purpose of this Article VII:
(a) "Covered Person" means an individual: (i) who is a
present or former Director, officer, agent or employee of the corporation or who
serves or served another corporation, partner ship, joint venture, trust,
employee benefit plan or other enterprise in one of those capacities or as
trustee, partner or fiduciary at the request of the corporation; and (ii) who
by reason of his position was, is, or is threatened to be made a party to a
Proceeding. It shall also include such person's heirs, executors and
administrators.
(b) "Proceeding" includes any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal, administrative,
or investigative, and any claim which could be the subject of such a proceeding.
(c) "Disinterested Director" means a Director who is not a
real party in interest to the Proceeding in question.
(d) "Expenses" means liabilities, including but not limited
to amounts paid in satisfaction of judgments, in compromises or as fines or
penalties, and expenses, including reasonable legal and accounting fees.
-13-
<PAGE> 46
Section 7.2. Actions in Name of the Corporation or Stock holder.
The corporation shall indemnify any Covered Person against all Expenses incurred
in connection with the defense or disposition of any Proceeding by or in the
name of the corporation or any stockholder in his capacity as such if the
Covered Person acted in good faith, and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the corporation, except that no
indemnification shall be made with respect to any matter as to which such
Covered Person has been adjudicated liable for negligence or misconduct in the
performance of his duty to the corporation, unless, and only to the extent that,
the court deciding the action determines that such Covered Person is entitled to
indemnification.
Such indemnification may be provided in connection with a Proceeding
in which it is claimed that an officer or Director received an improper personal
benefit by reason of his position, regardless of whether the claim involves his
service in such capacity, subject to the foregoing limitations and to the
additional limitation that it shall not have been finally determined that an
improper personal benefit was received by the Director or officer.
Notwithstanding anything to the contrary in this Section 7.2, if any
Covered Person has been wholly successful on the merits in the defense of any
Proceeding by or in the name of the corporation or any stockholder in his
capacity as such, such Covered Person shall be indemnified by the corporation
against all Expenses incurred by him in connection therewith.
Section 7.3. Other Actions. The corporation shall indemnify any
Covered Person against any Expenses incurred in connection with the defense or
disposition of any Proceeding other than a proceeding of the type described in
Section 7.2 if the Covered Person acted in good faith, in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
Section 7.4. Determination of Indemnification. Any indemnification
hereunder, other than advancement of attorney's fees or costs of defense under
Section 7.5, shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the Covered Person is proper
in the circumstances because he has met the applicable standard of conduct set
forth in Sections 7.2 or 7.3 hereunder.
Such determination shall be made:
(a) By the Board of Directors by a majority vote of a quorum
consisting of Disinterested Directors, or
-14-
<PAGE> 47
(b) If such a quorum is not obtainable, or, even if
obtainable, a quorum of Disinterested Directors so
directs, by independent legal counsel in a written
opinion, or
(c) By the stockholders, by the vote of the holders of a
majority of the outstanding stock at the time entitled
to vote for directors, voting as a single class,
exclusive of any stock owned by any director or officer
who is a real party in interest to the Proceeding in
question.
Section 7.5. Advances of Attorney's Fees and Other Costs. The
corporation shall advance attorney's fees or other Expenses reasonably incurred
by a Covered Person in defending a Proceeding upon receipt of an undertaking by
or on behalf of the Covered Person to repay the amount advanced if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation for such fees and Expenses under Delaware law. Any ultimate
determination of dispute concerning indemnification shall be made by the
Delaware Court of Chancery. The corporation shall advance all fees incurred by
a Covered Person in connection with any Proceeding within twenty (20) days after
receipt by the corporation of evidence of the incurring of such costs. Any
advances and undertakings to repay hereunder shall be unsecured and interest
free. Advances hereunder shall not require approval of the Board of Directors,
stockholders, or any other person or body.
Section 7.6. Presumptions upon Termination of Proceeding. The
termination of any Proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that a person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, did not
have reasonable cause to believe that his conduct was lawful.
Section 7.7. Indemnification Not Exclusive. The right of
indemnification provided by this Article VII shall not be exclusive of or
affect any other rights to which such Covered Person may be entitled by law,
under the Certificate of Incorporation of the corporation, under any
indemnification agreement with the corporation or otherwise.
Section 7.8. Indemnification Agreements. The corporation shall
have the express authority to enter into such agreements as the Board of
Directors deems appropriate for the indemnification of present or future
directors and officers of the corporation in connection with their service to,
or status with, the corporation or any other corporation, entity or enterprise
with whom such person is serving at the express written request of the
corporation.
-15-
<PAGE> 48
Section 7.9. Insurance. The corporation may purchase and maintain
insurance on its behalf and on behalf of any Covered Person against any
liability asserted against such Covered Person and incurred by him in any
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of this Article VII.
Section 7.10. Employee Benefit Plans. If the corporation or any of
its subsidiaries or affiliates sponsors any employee benefit plan, and any
Covered Person undertakes or incurs any responsibility as a fiduciary with
respect thereto then, for purposes of indemnification of such Covered Person
under this Article VII, (i) such Covered Person shall be deemed not to have
failed to have acted in good faith and in the reasonable belief that his action
was in the best interests of the corporation if he acted in good faith and in
the reasonable belief that his action was in the best interests of the
participants or beneficiaries of said plan, and (ii) "Expenses" shall be deemed
to include any taxes or penalties assessed on such Covered Person with respect
to said plan under applicable law.
ARTICLE VIII.
Miscellaneous Provisions
Section 8.1. Certificate of Incorporation. All references in these
By-laws to the Certificate of Incorporation shall be deemed to refer to the
Restated Certificate of Incorporation of the corporation, as amended and in
effect from time to time.
Section 8.2. Fiscal Year. Except as from time to time otherwise
provided by the Board of Directors, the corporation shall have a 52-53 week
fiscal year which shall end at the close of business on the Sunday closest to
September 30th in each year.
Section 8.3. Corporate Seal. The Board of Directors shall have the
power to adopt and alter the seal of the corporation.
Section 8.4. Execution of Instruments. All deeds, leases,
transfers, contracts, bonds, notes, and other obligations authorized to be
executed by an officer of the corporation on its be half shall be signed by the
president or the treasurer except as the Board of Directors may generally or in
particular cases otherwise determine.
Section 8.5. Voting of Securities. Unless the Board of Directors
otherwise provides, the president or the treasurer may waive notice of and act
on behalf of this corporation, or appoint another person or persons to act as
proxy or attorney in fact for this corporation with or without discretionary
power and/or power of substitution, at any meeting of stockholders or
shareholders of any other corporation or organization, any of whose securities
are held by this corporation.
-16-
<PAGE> 49
Section 8.6. Evidence of Authority. A certificate by the secretary
or any assistant secretary as to any action taken by the stockholders, Directors
or any officer or representative of the corporation shall, as to all persons who
rely thereon in good faith, be conclusive evidence of such action. The exercise
of any power which by law, by the Certificate of Incorporation, or by these
By-laws, or under any vote of the stockholders or the Board of Directors, may be
exercised by an officer of the corporation only in the event of absence of
another officer or any other contingency shall bind the corporation in favor of
anyone relying thereon in good faith, whether or not such absence or contingency
existed.
Section 8.7. Corporate Records. The original, or attested copies,
of the Certificate of Incorporation, By-laws, records of all meetings of the
incorporators and stockholders, and the stock transfer books (which shall
contain the names of all stockholders and the record address and the amount of
stock held by each) shall be kept in Delaware at the principal office of the
corporation, or at an office of the corporation, or at an office of its
transfer agent or of the secretary or of the assistant secretary, if any. Said
copies and records need not all be kept in the same office. They shall be
available at all reasonable times to inspection of any stockholder for any
purpose but not to secure a list of stockholders for the purpose of selling said
list or copies thereof or for using the same for a purpose other than in the
interest of the applicant, as a stockholder, relative to the affairs of the
corporation.
Section 8.8. Charitable Contributions. The Board of Directors
from time to time may authorize contributions to be made by the corporation in
such amounts as it may determine to be reason able to corporations, trusts,
funds or foundations organized and operated exclusively for charitable,
scientific or educational purposes, no part of the net earning of which inures
to the private benefit of any stockholder or individual.
ARTICLE IX.
Amendments
These By-laws may be amended, altered or repealed in the manner
provided by the Certificate of Incorporation of the corporation.
-17-
<PAGE> 50
Exhibit 11
Statement re: computation of per share earnings
- ------------------------------------------------
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
----------------------------- -----------------------------
Apr 2, Apr 3, Apr 2, Apr 3,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Weighted average shares
outstanding 11,372,454 11,229,807 11,359,090 11,226,747
Common Stock equivalents:
Stock options 375,084 130,186 325,256 150,495
----------- ----------- ----------- -----------
Total (1) 11,747,538 11,359,993 11,684,346 11,377,242
=========== =========== =========== ===========
Net Income $ 1,243,000 $ 882,000 $ 2,763,000 $ 1,941,000
=========== =========== =========== ===========
EARNINGS PER COMMON SHARE $ .11 $ .08 $ .24 $ .17
=========== =========== =========== ===========
</TABLE>
(1) Average shares outstanding and all per share amounts included above are
based on the increased numbers of shares giving retroactive effect to the
five-for-four stock split discussed in Note 13 to the Consolidated Financial
Statements for the Year Ended October 2, 1994.
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS THE SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS SET FORTH IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q
FOR THE 26 WEEKS ENDED APRIL 2, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-02-1994
<PERIOD-START> OCT-03-1994
<PERIOD-END> APR-02-1995
<EXCHANGE-RATE> 1
<CASH> 214
<SECURITIES> 0
<RECEIVABLES> 1,279
<ALLOWANCES> 0
<INVENTORY> 1,936
<CURRENT-ASSETS> 8,031
<PP&E> 131,843
<DEPRECIATION> 31,792
<TOTAL-ASSETS> 113,147
<CURRENT-LIABILITIES> 17,098
<BONDS> 34,136
<COMMON> 114
0
0
<OTHER-SE> 58,847
<TOTAL-LIABILITY-AND-EQUITY> 113,147
<SALES> 71,120
<TOTAL-REVENUES> 73,127
<CGS> 18,432
<TOTAL-COSTS> 67,786
<OTHER-EXPENSES> 17
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 937
<INCOME-PRETAX> 4,387
<INCOME-TAX> 1,624
<INCOME-CONTINUING> 2,763
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,763
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
<PAGE> 1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
November 1, 1994, except for Note 13, as to which the date is February 8,
1995, in the Registration Statement and related Prospectus of Uno Restaurant
Corporation for the registration of 2,300,000 shares of common stock, and to the
incorporation by reference therein of our report dated November 1, 1994, except
for Note 13, as to which the date is November 15, 1994, with respect to the
consolidated financial statements of Uno Restaurant Corporation included in its
Annual Report (Form 10-K) for the year ended October 2, 1994, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Boston, Massachusetts
May 5, 1995
