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SCHEDULE 13E-4
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Issuer Tender Offer Statement
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
UNO RESTAURANT CORPORATION
(Name of Issuer)
UNO RESTAURANT CORPORATION
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
914900 10 5
(CUSIP Number of Class of Securities)
CRAIG S. MILLER, CHIEF EXECUTIVE OFFICER
UNO RESTAURANT CORPORATION
100 CHARLES PARK ROAD,
WEST ROXBURY, MASSACHUSETTS 02132
617-323-9200
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
With a copy to:
Steven R. London, Esq.
Brown, Rudnick, Freed & Gesmer
One Financial Center
Boston, Massachusetts 02111
617-856-8313
September 29, 1998
(Date Tender Offer First Published, Sent or Given to Security Holders)
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CALCULATION OF FILING FEE:
TRANSACTION AMOUNT OF
VALUATION* $7,000,000.00 FILING FEE: $1,400.00
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* Based upon the purchase of 1,000,000 Shares of Common Stock, $.01 par value
(the maximum number of Shares offered to be purchased) at $7.00 per Share (the
maximum per Share purchase price which may be selected by the Company pursuant
to the tender offer).
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and date of its filing.
Amount Previously Paid: ________________
Form or Registration No.: _________________
Filing Party: ____________________________
Date Filed: _____________________________
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ITEM 1. SECURITY AND ISSUER.
(a) Name: Uno Restaurant Corporation
Address of Principal Executive Office: 100 Charles Park Road, West
Roxbury, MA 02132
(b) Title of Securities Being Sought: Common Stock, par value $0.01 per
share (the "Shares")
Amount outstanding on September 28, 1998: 10,600,994 Shares
Information with respect to the exact amount of securities being sought and the
consideration being offered therefor is set forth in the Cover Page, Summary at
Page 3 and "Number of Shares; Proration" beginning on Page 8 in the Offer to
Purchase (the "Offer to Purchase"), filed as Exhibit (a)(1) hereto, which is
incorporated herein by reference. The executive officers, directors and
affiliates of the Issuer have advised the Issuer that they do not intend to
tender any Shares pursuant to the Offer.
(c) Information with respect to the principal market for and price range of the
Shares is set forth in "Price Range of Shares; Dividends" beginning on Page 14
in the Offer to Purchase, which is incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) Information with respect to the source and amount of funds to be used for
the purchase of Shares is set forth in "Source and Amount of Funds" beginning on
Page 16 in the Offer to Purchase, which is incorporated herein by reference.
(b)(1) A summary of each loan agreement or arrangement containing the identity
of the parties, the term, the collateral, the stated and effective interest
rates, and other material terms or conditions relative to such loan agreements
is set forth in "Source and Amount of Funds" beginning on Page 16 in the Offer
to Purchase, which is incorporated herein by reference.
(2) Other than as set forth in "Source and Amount of Funds" beginning on
Page 16 in the Offer to Purchase, which is incorporated herein by reference, no
formal plans or arrangements have been made to repay such borrowings under the
credit agreement described in "Source and Amount of Funds" in the Offer to
Purchase.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
Information with respect to the purpose of the tender offer and planned
disposition of the securities and possible effects of the tender offer is set
forth in "Certain Conditions of the Offer," "Background and Purpose of the
Offer; Certain Effects of the Offer" and "Interest of Directors and Executive
Officers; Transactions and Arrangements Concerning the Shares" beginning on
Pages 12, 14 and 20, respectively, in the Offer to Purchase, which are
incorporated herein by reference. Other than as indicated, there are no current
plans or proposals that relate to or would result in:
(a) The acquisition by any person of additional securities of the Issuer, or the
disposition of any securities of the Issuer;
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(b) An extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the Issuer or any of
its subsidiaries;
(d) Any change in the present board of directors or management of the Issuer
including, but not limited to, any plans or proposals to change the number or
the term of directors, to fill any existing vacancy on the board or to change
any material term of the employment contract of any executive officer;
(e) Any material change in the present dividend rate or policy, or indebtedness
or capitalization of the Issuer;
(f) Any other material change in the Issuer's corporate structure or business;
(g) Changes in the Issuer's charter, bylaws or instruments corresponding thereto
or other actions which may impede the acquisition of control of the Issuer by
any person;
(h) Causing a class of equity security of the Issuer to be delisted from a
national securities exchange, or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) A class of equity security of the Issuer becoming eligible for termination
of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934, as amended; or
(j) The suspension of the Issuer's obligation to file reports pursuant to
Section 15(d) of the Securities Exchange Act of 1934, as amended.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
Neither the Issuer nor any of its subsidiaries nor, to the knowledge of
the Issuer, any of its executive officers or directors or any associate of any
of the foregoing has engaged in any transactions involving the Shares during the
40 business days prior to the date hereof, except as is set forth in "Interest
of Directors and Executive Officers; Transactions and Arrangements Concerning
the Shares" beginning on Page 20, and on Schedule A at Page 25 in the Offer to
Purchase, which is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
Neither the Issuer nor, to the knowledge of the Issuer, any of its
executive officers, directors, or affiliates is a party to any contract,
arrangement, understanding or relationship relating directly or indirectly to
the Offer and the securities of the Issuer, except as set forth in "Fees and
Expenses" beginning on Page 23 in the Offer to Purchase, which is incorporated
herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Information with respect to persons employed, retained or to be
compensated by the Issuer to make solicitations or recommendations in connection
with the tender offer is set forth in "Fees and Expenses" beginning on Page 23
in the Offer to Purchase, which is incorporated herein by reference.
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ITEM 7. FINANCIAL INFORMATION.
(a)(1) See the information set forth on pages 33 through 52 of the Company's
Annual Report on Form 10-K for the year ended September 28, 1997, filed as
exhibit (g)(1) hereto, which pages are incorporated herein by reference.
(a)(2) See the information set forth on pages 3 through 6 of the Company's
Quarterly Report on Form 10-Q for the quarter ended June 28, 1998, filed as
Exhibit (g)(2) hereto, which pages are incorporated herein by reference.
(a)(3)-(4) See "Summary Historical Financial Information" at Page 18 in the
Offer to Purchase, which is incorporated herein by reference.
(b)(1)-(3) See "Summary Unaudited Pro Forma Financial Information" at Page 19 in
the Offer to Purchase, which is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) To the Issuer's knowledge, none of its executive officers or directors is a
party to any material contract, arrangement, understanding or relationship
between such person and the Issuer which is material to a decision by a
stockholder whether to tender or hold Shares in the tender offer.
(b) There are no applicable regulatory requirements which must be complied with
or approvals which must be obtained in connection with the tender offer.
(c) Not applicable.
(d) There are no material pending legal proceedings relating to the tender
offer.
(e) Not applicable.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith or incorporated by reference
herein to documents previously filed.
(a)(1) Form of Offer to Purchase dated September 29, 1998.
(2)Form of Letter of Transmittal (including Certification of Taxpayer
Identification Number on Substitute Form W-9).
(3)Form of Notice of Guaranteed Delivery.
(4)Form of Letter from BancBoston Robertson Stephens Inc. (Dealer Manager)
to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(5)Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(6)Form of Letter dated September 29, 1998 from Aaron D. Spencer, Chairman,
and Craig S. Miller, Chief Executive Officer of the Issuer, to the
stockholders of the Issuer.
(7)Text of Press Release dated September 29, 1998.
(b) $55,000,000 Amended and Restated Revolving Credit and Term Loan Agreement
dated as of November 4, 1997 by and among Uno Restaurants, Inc., and Saxet
Corp., as borrowers, Uno Foods Inc., Pizzeria Uno Corporation, URC Holding
Company, Inc. and Uno Restaurant Corporation, as guarantors, and Fleet National
Bank, as agent and BankBoston N.A. as co-agent, filed as Exhibit 10(s) to the
Company's Annual Report on Form 10-K for the fiscal year ended September 28,
1997.
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(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Pages 33 through 52 of the Company's Annual Report on Form 10-K for the
year ended September 28, 1997.
(g)(2) Pages 3 through 7 of the Company's Quarterly Report on Form 10-Q for the
quarter ended June 28, 1998.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
UNO RESTAURANT CORPORATION
By: /s/ Craig S. Miller
----------------------------------------
Craig S. Miller, Chief Executive Officer
Dated: September 29, 1998
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EXHIBIT INDEX
DESCRIPTION OF EXHIBIT
(a)(1)Form of Offer to Purchase dated September 29, 1998.
(2)Form of Letter of Transmittal (including Certification of Taxpayer
Identification Number on Substitute Form W-9).
(3)Form of Notice of Guaranteed Delivery.
(4)Letter from BancBoston Robertson Stephens (Dealer Manager) to Brokers,
Dealers, Commercial Banks, Trust Companies and Other Nominees.
(5)Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(6)Form of Letter dated September 29, 1998 from Craig S. Miller, President of
the Issuer, to the stockholders of the Issuer.
(7)Press Release dated September 29, 1998.
(g)(1) Pages 33 through 52 of the Company's Annual Report on Form 10-K for the
year ended September 28, 1997.
(g)(2) Pages 3 through 7 of the Company's Quarterly Report on Form 10-Q for the
quarter ended June 28, 1998.
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<PAGE> 1
OFFER BY
UNO RESTAURANT CORPORATION
TO PURCHASE FOR CASH UP TO 1,000,000
SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT IN EXCESS OF $7.00
NOR LESS THAN $5.75 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON OCTOBER 30, 1998, UNLESS THE OFFER IS EXTENDED.
Uno Restaurant Corporation, a Delaware corporation (the "Company"), hereby
invites its stockholders to tender up to 1,000,000 shares (the "Shares") of its
Common Stock, $0.01 par value per share (the "Common Stock"), to the Company at
prices, not in excess of $7.00 nor less than $5.75 per Share, specified by
tendering stockholders, upon the terms and subject to the conditions set forth
in this Offer to Purchase and in the related Letter of Transmittal (which
together constitute the "Offer"). The Company will, upon the terms and subject
to the conditions of the Offer, determine a single per Share price (not in
excess of $7.00 nor less than $5.75 per Share) (the "Purchase Price") that it
will pay for Shares properly tendered pursuant to the Offer, taking into account
the number of Shares so tendered and the prices specified by tendering
stockholders. The Company will select the lowest Purchase Price that will allow
it to buy 1,000,000 Shares (or such lesser number of Shares as are properly
tendered at or below the Purchase Price) pursuant to the Offer. Each stockholder
who has properly tendered and not withdrawn Shares at prices at or below the
Purchase Price will receive the Purchase Price, net to the stockholder in cash,
for all Shares purchased upon the terms and subject to the conditions of the
Offer. In the event that prior to 5:00 p.m., New York City time, on October 30,
1998, or such later time and date to which the Offer may be extended by the
Company, a greater number of Shares are properly tendered and not withdrawn at
or below the Purchase Price than will be accepted for purchase by the Company,
the Company will accept Shares for purchase tendered at or below the Purchase
Price on a pro rata basis. All Shares not purchased pursuant to the Offer,
including Shares tendered at prices in excess of the Purchase Price and Shares
not purchased because of proration or conditional tenders, will be returned. The
Company reserves the right, in its sole discretion, to purchase more than
1,000,000 Shares pursuant to the Offer.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO OTHER CONDITIONS. SEE SECTION 5.
The Shares are traded on the New York Stock Exchange (the "NYSE") under the
symbol UNO. On September 28, 1998, the last full trading day prior to the
announcement of the Offer, the closing per Share sales price as reported on the
NYSE was $5.8125. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
THE SHARES. SEE SECTION 6.
------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, EACH
STOCKHOLDER MUST MAKE HIS OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. NONE OF THE COMPANY, ITS BOARD OF DIRECTORS OR THE DEALER MANAGER
MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN
FROM TENDERING SHARES. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR
EXECUTIVE OFFICER OF THE COMPANY INTENDS TO TENDER ANY SHARES PURSUANT TO THE
OFFER.
------------------------
The Dealer Manager for the Offer is:
BANCBOSTON ROBERTSON STEPHENS INC.
The date of this Offer to Purchase is September 29, 1998.
<PAGE> 2
IMPORTANT
Any stockholder desiring to tender all or any portion of his Shares should
either (i) complete and sign the Letter of Transmittal (or a facsimile thereof)
in accordance with the instructions in the Letter of Transmittal and deliver it
and all other required documents to ChaseMellon Shareholder Services, L.L.C.
(the "Depositary") and either deliver the stock certificates for such Shares to
the Depositary or follow the procedure for book-entry delivery set forth in
Section 2, or (ii) request his broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for him. Any stockholder having Shares
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee should contact such person or institution if he desires to tender
such Shares.
Any stockholder who desires to tender Shares and whose certificates for
such Shares are not immediately available or who cannot comply with the
procedure for book-entry transfer by the expiration of the Offer must tender
such Shares by following the procedures for guaranteed delivery set forth in
Section 2.
TO EFFECT A VALID TENDER OF SHARES, STOCKHOLDERS MUST VALIDLY COMPLETE THE
LETTER OF TRANSMITTAL, INCLUDING THE SECTION RELATING TO THE PRICE AT WHICH THEY
ARE TENDERING SHARES.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or Notice of Guaranteed Delivery
may be directed to ChaseMellon Shareholder Services, L.L.C. (the "Information
Agent") or the Dealer Manager at their respective addresses and the telephone
numbers set forth on the back cover of this Offer to Purchase.
2
<PAGE> 3
SUMMARY
This general summary is provided for the convenience of the Company's
stockholders and is qualified in its entirety by reference to the full text and
more specific details of this Offer to Purchase.
Number of Shares to be
Purchased.................. 1,000,000 Shares (or such lesser number of Shares
as are validly tendered).
Purchase Price............. The Company will determine a single per Share net
cash price, not greater than $7.00 nor less than
$5.75 per Share, that it will pay for Shares
validly tendered. The Company will select the
lowest Purchase Price that will allow it to buy
1,000,000 Shares (or such lesser number of Shares
as are validly tendered at prices not greater than
$7.00 nor less than $5.75 per Share) validly
tendered. All Shares acquired in the Offer will be
acquired at the Purchase Price even if tendered
below the Purchase Price. Each stockholder desiring
to tender Shares must specify in the Letter of
Transmittal the minimum price (not greater than
$7.00 nor less than $5.75 per Share) at which such
stockholder is willing to have Shares purchased by
the Company. Stockholders wishing to maximize the
possibility that their Shares will be purchased at
the Purchase Price may check the box in the Letter
of Transmittal marked "Shares Tendered at Purchase
Price Determined by Dutch Auction." Checking this
box may result in a Purchase Price of the Shares so
tendered at the minimum price of $5.75.
Market Price of Shares..... On September 28, 1998, the last reported sale price
of the Shares on the NYSE Composite Tape was
$5.8125 per Share.
Conditions to the Offer.... The Offer is subject to certain conditions. See
Section 5.
How to Tender Shares....... See Section 2. Call the Information Agent or
consult your broker for assistance.
Brokerage Commissions...... None.
Stock Transfer Tax......... None, if payment is made to the registered holder.
Expiration and Proration
Dates...................... October 30, 1998 at 5:00 p.m., New York City time,
unless extended by the Company.
Payment Date............... As soon as practicable after the Expiration Date.
Position of the Company and
its Directors.............. Neither the Company nor its Board of Directors
makes any recommendation to any stockholder as to
whether to tender or refrain from tendering, or as
to what price or prices to tender, Shares.
Withdrawal Rights.......... Tendered Shares may be withdrawn at any time until
5:00 p.m., New York City time, on October 30, 1998,
unless the Offer is extended by the Company and,
unless previously purchased, after 5:00 p.m., New
York City time, on December 1, 1998. See Section 3.
Odd Lots................... No preference will be given to Shares tendered by
any stockholder owning beneficially fewer than 100
Shares in the aggregate. Such Shares will be
subject to proration along with all other validly
tendered Shares.
Further Developments
Regarding the Offer........ Call the Information Agent or consult your broker.
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NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING
SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER
THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL.
IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.
4
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
Introduction..................................................... 6
The Offer........................................................ 7
1. Number of Shares; Proration................................. 8
2. Procedure for Tendering Shares.............................. 11
3. Withdrawal Rights........................................... 11
4. Acceptance for Payment of Shares and Payment of Purchase
Price....................................................... 11
5. Certain Conditions of the Offer............................. 12
6. Price Range of Shares; Dividends............................ 14
7. Background and Purpose of the Offer; Certain Effects of the
Offer....................................................... 14
8. Source and Amount of Funds.................................. 16
9. Certain Information Concerning the Company.................. 16
10. Interest of Directors and Executive Officers; Transactions
and Arrangements Concerning the Shares...................... 20
11. Certain Legal Matters; Regulatory Approvals................. 20
12. Certain Federal Income Tax Consequences..................... 20
13. Extension of the Offer; Termination; Amendments............. 23
14. Fees and Expenses........................................... 23
15. Miscellaneous............................................... 24
</TABLE>
5
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To the Holders of Common Stock of Uno Restaurant Corporation:
INTRODUCTION
Uno Restaurant Corporation, a Delaware corporation (the "Company"), hereby
invites its stockholders to tender shares (the "Shares") of its Common Stock,
$0.01 par value per share (the "Common Stock"), to the Company at a price, not
in excess of $7.00 nor less than $5.75 per Share, specified by such
stockholders, upon the terms and subject to the conditions set forth in this
Offer to Purchase and the related Letter of Transmittal (which together
constitute the "Offer"). The Company will, upon the terms and subject to the
conditions of the Offer, determine a single per Share price (not in excess of
$7.00 nor less than $5.75 per Share) net to the Seller in cash (the "Purchase
Price") that it will pay for Shares properly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will select the lowest Purchase Price that
will allow it to buy 1,000,000 Shares (or such lesser number of Shares as are
properly tendered at or below the Purchase Price) pursuant to the Offer. The
Company also reserves the right, in its sole discretion, to purchase more than
1,000,000 Shares pursuant to the Offer. The Board of Directors of the Company
has concluded that the purchase of Shares pursuant to the Offer is a prudent use
of the Company's financial resources.
THIS OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO OTHER CONDITIONS. SEE SECTION 5.
All stockholders who have properly tendered and not withdrawn their Shares
at prices at or below the Purchase Price will receive the Purchase Price, net to
the stockholder in cash, for all Shares purchased upon the terms and subject to
the conditions of the Offer, including the provisions relating to proration and
conditional tenders described herein. If, prior to the Expiration Date as
defined in Section 1, more than 1,000,000 Shares (or such greater number of
Shares as the Company may elect to purchase pursuant to the Offer) are properly
tendered at or below the Purchase Price and not withdrawn, the Company will
accept Shares for purchase on a pro rata basis from all stockholders who
properly tender Shares at or below the Purchase Price. If any stockholder
tenders Shares held by him and does not wish to have such Shares purchased
pursuant to the Offer subject to proration, such stockholder may tender Shares
subject to the condition that a designated number or none of such Shares be
purchased in the event of proration. See Sections 1 and 2. The Company will
return at its own expense all Shares not purchased under the Offer, including
Shares tendered at prices greater than the Purchase Price and Shares not
purchased because of proration or conditional tenders. Tendering stockholders
will not be obligated to pay brokerage fees or commissions or, except as set
forth in Instruction 7 of the Letter of Transmittal, stock transfer taxes on the
purchase of Shares by the Company pursuant to the Offer. In addition, the
Company will pay all fees and expenses of BancBoston Robertson Stephens Inc.
(the "Dealer Manager"), ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") and ChaseMellon Shareholder Services, L.L.C. the ("Information
Agent") in connection with the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, EACH
STOCKHOLDER MUST MAKE HIS OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. NONE OF THE COMPANY, ITS BOARD OF DIRECTORS OR THE DEALER MANAGER
MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN
FROM TENDERING SHARES. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR
EXECUTIVE OFFICER OF THE COMPANY INTENDS TO TENDER ANY SHARES PURSUANT TO THE
OFFER.
As of September 28, 1998, there were 10,600,994 Shares outstanding and
850,138 Shares issuable upon exercise of outstanding vested stock options under
the Company's stock option plans (the "Options"). The 1,000,000 Shares that the
Company is offering to purchase represent approximately 9.4% of the Shares
outstanding at that date (approximately 8.7% assuming the exercise of all
outstanding vested Options). The vested options expire at various times through
2008. In addition to the foregoing, 1,668,858 Shares are issuable upon exercise
of outstanding unvested options under the Company's stock option plans, which
options are eligible for vesting at various times through August 25, 2003. Of
the 1,668,858 Shares subject to unvested
6
<PAGE> 7
options, 910,000 Shares are subject to options held by officers of the Company
and vest upon the achievement of certain Company performance goals or increases
in the market price of the Shares.
The Shares are traded on the New York Stock Exchange (the "NYSE") under the
symbol UNO. On September 28, 1998, the last full trading day on the NYSE prior
to the announcement of the Offer, the closing per Share sales price was $5.8125.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. SEE
SECTION 6.
Any Shares acquired by the Company pursuant to the Offer will be cancelled
and will be returned to the status of authorized but unissued shares of Common
Stock. Such Shares will be available for reissuance by the Company without
further stockholder action for general or other corporate purposes, including
stock options and other employee benefit plans, stock splits or dividends,
acquisitions and the raising of additional capital for use in the Company's
business. Except for stock options and other employee benefit plans, the Company
has no current plans for any such uses of such shares.
THE OFFER
1. NUMBER OF SHARES; PRORATION
Upon the terms and subject to the conditions of the Offer, the Company will
accept for payment and purchase up to 1,000,000 Shares, or such lesser number of
Shares as are properly tendered at or below the Purchase Price at or prior to
the Expiration Date (as defined herein), and not withdrawn in accordance with
Section 3. The term "Expiration Date" means 5:00 p.m., New York City time, on
October 30, 1998, unless the Company, in its sole discretion, shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall refer to the latest time and date at which the
Offer, as so extended by the Company, shall expire. For a description of the
Company's right to extend the period of time during which the Offer is open, and
to delay, terminate or amend the Offer, see Section 13. If the Offer is
oversubscribed, Shares tendered at or below the Purchase Price prior to the
Expiration Date will be subject to proration. The proration period also expires
on the Expiration Date.
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share Purchase Price that it will pay for Shares
properly tendered pursuant to the Offer, taking into account the number of
Shares so tendered and the prices specified by the tendering stockholders. The
Company will select the lowest Purchase Price that will allow it to buy
1,000,000 Shares (or such lesser number of Shares as are properly tendered at or
below the Purchase Price) pursuant to the Offer. In addition, the Company
reserves the right, in its sole discretion, to purchase more than 1,000,000
Shares pursuant to the Offer. See Section 13. In accordance with applicable
regulations of the Securities and Exchange Commission (the "Commission"), the
Company may purchase pursuant to the Offer an additional amount of Shares not to
exceed 2% of the outstanding Shares without amending or extending the Offer.
If (i) the Company increases or decreases the price to be paid for Shares,
or the Company increases the number of Shares being sought and such increase in
the number of Shares being sought exceeds 2% of the outstanding Shares, or the
Company decreases the number of Shares being sought and (ii) the Offer is
scheduled to expire at any time earlier than the expiration of a period ending
on the tenth business day from, and including, the date that notice of such
increase or decrease is first published, sent or given in the manner described
in Section 13, the Offer will be extended until the expiration of such period of
ten business days. For purposes of the Offer, a "business day" means any day
other than a Saturday, Sunday or federal holiday and consists of the time period
from 12:01 a.m. through 12:00 midnight, New York City time.
In accordance with Instruction 5 of the Letter of Transmittal, each
stockholder desiring to tender Shares must specify the price, not in excess of
$7.00 nor less than $5.75 per Share, at which such stockholder is willing to
have Shares purchased by the Company. As promptly as practicable following the
Expiration Date, the Company will determine the Purchase Price (not in excess of
$7.00 nor less than $5.75 per Share) that will allow it to purchase up to
1,000,000 Shares properly tendered and not withdrawn by the Expiration Date. As
promptly as practicable thereafter, the Company will publicly announce the
Purchase Price, and upon the terms and subject to the conditions of the Offer
(including the proration provisions described herein), all stockholders who have
properly tendered and not withdrawn Shares at prices at or below the Purchase
Price
7
<PAGE> 8
will receive the Purchase Price for all Shares purchased. All Shares not
purchased pursuant to the Offer, including Shares tendered at prices in excess
of the Purchase Price and Shares not purchased because of proration or
conditional tenders, will be returned to the tendering stockholders at the
Company's expense as promptly as practicable following the Expiration Date.
If the number of Shares properly tendered by the Expiration Date at prices
at or below the Purchase Price, and not withdrawn, is less than or equal to
1,000,000 (or such greater number of Shares as the Company may elect to purchase
pursuant to this Offer) the Company will, upon the terms and subject to the
conditions of this Offer, purchase at the Purchase Price all Shares so tendered.
If the number of Shares properly tendered by the Expiration Date at prices
at or below the Purchase Price, and not withdrawn, is greater than 1,000,000 (or
such greater number of Shares as the Company may elect to purchase pursuant to
the Offer), the Company will, upon the terms and subject to the conditions of
the Offer, purchase at the Purchase Price 1,000,000 Shares (or such greater
number of Shares) in the following order of priority: (i) Shares unconditionally
tendered at or below the Purchase Price by the Expiration Date on a pro rata
basis (with adjustments to avoid the purchase of fractional Shares), and (ii)
Shares conditionally tendered at or below the Purchase Price by the Expiration
Date selected by lot. See the discussion below for further information relating
to conditional tenders of Shares.
The Company reserves the right, but will not be obligated, to purchase all
Shares properly tendered and not withdrawn, at or below the Purchase Price, by
any stockholder who has so tendered all Shares owned beneficially or of record
and as a result of any proration would then own an aggregate of fewer than 100
Shares. In addition, the Company reserves the right, but will not be obligated,
to purchase in excess of 1,000,000 Shares pursuant to the Offer to avoid
proration.
As described in Section 12, the number of Shares that the Company will
purchase from a stockholder may affect the federal income tax consequences to
the stockholder of such purchase and therefore may be relevant to a
stockholder's decision whether to tender Shares. Because the order in which
Shares are purchased from a stockholder may also affect the federal income tax
consequences to the stockholder, stockholders may designate in the Letter of
Transmittal the order in which their Shares are to be purchased in the event of
proration. If any stockholder tenders Shares held by him and does not wish to
have such Shares subject to proration before purchase, such stockholder may
tender Shares subject to the condition that at least a designated minimum number
or none of such Shares be purchased. Any stockholder desiring to make such a
conditional tender should so indicate in the box captioned "Conditional Tender"
on the Letter of Transmittal and, if applicable, on the Notice of Guaranteed
Delivery. It is the tendering stockholder's responsibility to determine the
minimum number of Shares to be tendered. Stockholders should consult their tax
advisors with respect to the effects of proration of the Offer and the
advisability of making a conditional tender. See Section 12.
If as a result of proration the number of Shares to be purchased from any
stockholder making a conditional tender is reduced below the minimum number
specified by such stockholder, such tender will automatically be regarded as
withdrawn, except as provided below, and all Shares tendered by such stockholder
will be returned as promptly as practicable after the Expiration Date at the
Company's expense. If so many conditional tenders are withdrawn that the total
number of Shares available for purchase by the Company falls below the number of
Shares that the Company has determined to purchase pursuant to the Offer, then,
to the extent feasible, the Company will select enough of such conditional
tenders, which would otherwise have been withdrawn, to enable the Company to
purchase such desired number of Shares. In selecting among such conditional
tenders, the Company will select by lot and will limit its purchase in each case
to the designated minimum number of Shares to be purchased.
2. PROCEDURE FOR TENDERING SHARES
PROPER TENDER OF SHARES. To validly tender Shares pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees and any other
documents required by the Letter of Transmittal must be received by the
Depositary at its address set forth on the back cover of this Offer to Purchase,
and either (a) certificates for the Shares to
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<PAGE> 9
be tendered must be received by the Depositary at such address or (b) such
Shares must be tendered pursuant to the procedures for book-entry transfer
described below (and a confirmation of such tender received by the Depositary),
in each case by the Expiration Date, or (ii) the guaranteed delivery procedure
described below must be followed.
IN ACCORDANCE WITH INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL, EACH
STOCKHOLDER DESIRING TO TENDER SHARES PURSUANT TO THE OFFER MUST INDICATE, IN
THE BOX CAPTIONED "PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING
TENDERED" IN THE LETTER OF TRANSMITTAL, THE PRICE (IN MULTIPLES OF $0.125) AT
WHICH SUCH SHARES ARE BEING TENDERED. If a stockholder desires to tender Shares
in separate lots at a different price for each lot, such stockholder must
complete a separate Letter of Transmittal for each lot and price at which he is
tendering Shares. The same Shares cannot be tendered (unless properly withdrawn
previously in accordance with the terms of the Offer) at more than one price. IN
ORDER TO TENDER SHARES PROPERLY, A PRICE BOX, BUT ONLY ONE PRICE BOX, ON EACH
LETTER OF TRANSMITTAL MUST BE CHECKED. Stockholders wishing to maximize the
possibility that their Shares will be purchased at the Purchase Price may check
the box on the Letter of Transmittal marked "Shares Tendered at Purchase Price
Determined by Dutch Auction." Checking this box may result in a purchase of the
Shares so tendered at the minimum price of $5.75.
Stockholders desiring to make a conditional tender of their Shares must
complete the box captioned "Conditional Tender" in the Letter of Transmittal
and, if applicable, on the Notice of Guaranteed Delivery.
BOOK-ENTRY DELIVERY. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in the
system of the Book-Entry Transfer Facility may make delivery of Shares by
causing such Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the procedures of such Book-Entry
Transfer Facility. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees and any other required
documents must, in any case, be received by the Depositary at the address set
forth on the back cover of this Offer to Purchase by the Expiration Date, or the
guaranteed delivery procedure described below must be complied with by the
tendering stockholder. Delivery of the Letter of Transmittal and any other
required documents to the Book-Entry Transfer Facility does not constitute
delivery to the Depositary.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal if the Letter of Transmittal is signed by the registered holder of
the Shares exactly as the name of the registered holder appears on the
certificate (which term, for purposes of this Section 2, includes any
participant in the Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of the Shares) tendered therewith, and payment is
to be made directly to such registered holder, or if Shares are tendered for the
account of a financial institution that is a member of the Securities Transfer
Agents Medallion Program, the Stock Exchange Medallion Program or the New York
Stock Exchange, Inc. Medallion Signature Program (each such entity, an "Eligible
Institution"). In all other cases, all signatures on the Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instruction 1 of the Letter
of Transmittal. If a certificate representing Shares is registered in the name
of a person other than the signatory of a Letter of Transmittal, or if payment
is to be made or Shares not purchased or tendered are to be issued to a person
other than the registered owner, the certificate must be endorsed or accompanied
by an appropriate stock power, in either case signed exactly as the name of the
registered owner appears on the certificate with the signature on the
certificate or stock power guaranteed by an Eligible Institution.
METHOD OF DELIVERY. The method of delivery of Shares and all other
required documents is at the option and risk of the tendering stockholder. If
certificates for Shares are to be sent by mail, registered mail with return
receipt requested, properly insured, is recommended.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent backup federal income
tax withholding equal to 31% of the gross payments made pursuant to the Offer,
each stockholder who does not otherwise establish an
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<PAGE> 10
exemption from such withholding must notify the Depositary of such stockholder's
correct taxpayer identification number (or certify that such taxpayer is
awaiting a taxpayer identification number) and provide certain other information
by completing a Substitute Form W-9 included in the Letter of Transmittal.
Foreign stockholders are required to submit a Form W-8 in order to avoid backup
withholding.
EACH STOCKHOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO WHETHER SUCH
STOCKHOLDER IS SUBJECT TO OR EXEMPT FROM FEDERAL INCOME TAX WITHHOLDING.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and cannot deliver certificates for such Shares (or the procedures for
book-entry transfer cannot be completed on a timely basis) or time will not
permit all required documents to reach the Depositary by the Expiration Date,
such Shares may nevertheless be tendered if all of the following conditions are
met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Company
(indicating the price at which the Shares are being tendered) is
received by the Depositary (as provided below) by the Expiration
Date; and
(iii) the certificates for such Shares (or a confirmation of a
book-entry transfer of such Shares into the Depositary's account
at the Book-Entry Transfer Facility), together with a properly
completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by the Letter of
Transmittal, are received by the Depositary within three NYSE
trading days after the date the Depositary receives such Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of shares
to be accepted, the price to be paid therefor, the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment of
any tender of Shares will be determined by the Company, in its sole discretion,
which determination shall be final and binding on all parties. The Company
reserves the absolute right to reject any or all tenders of Shares determined by
it not to be in proper form or the acceptance for payment of or payment for
which may be unlawful. The Company also reserves the absolute right to waive any
of the conditions of the Offer or any defect or irregularity in any tender of
Shares. No tender of Shares will be deemed to be properly made until all defects
and irregularities have been cured or waived. None of the Company, the Dealer
Manager, the Information Agent, the Depository or any other person will be under
any duty to give notification of any defect or irregularity in tenders or incur
any liability for failure to give any such notice.
TENDER CONSTITUTES AN AGREEMENT. The proper tender of Shares pursuant to
any one of the procedures described above will constitute the tendering
stockholder's acceptance of the terms and conditions of the Offer and a binding
agreement between the tendering stockholder and the Company.
It is a violation of Rule 14e-4 promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), for a person, directly or
indirectly, to tender shares for such stockholder's own account unless, at the
time of the tender and at the end of the proration period, the person so
tendering (i) has a net long position equal to or greater than the amount of (a)
Shares tendered or (b) other securities immediately convertible into, or
exercisable or exchangeable for the amount of Shares tendered and will acquire
such Shares for tender by conversion, exercise or exchange of such other
securities, and (ii) will cause such Shares to be delivered in accordance with
the terms of the Offer. Rule 14e-4 promulgated under the Exchange Act provides a
similar restriction applicable to the tender or guarantee of a tender on behalf
of another person. The tender of Shares pursuant to any one of the procedures
described above will constitute the tendering stockholder's acceptance of the
terms and conditions of the Offer as well as his representation and warranty
that (A) such stockholder has a net long position in the Shares being tendered
within the meaning of
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<PAGE> 11
Rule 14e-4 promulgated under the Exchange Act and (B) the tender of such Shares
complies with Rule 14e-4 promulgated under the Exchange Act.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares pursuant
to the Offer will be irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company as provided in this Offer to Purchase, may
also be withdrawn after 5:00 p.m., New York City time, on December 1, 1998.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If the certificates have been delivered or otherwise
identified to the Depositary, then, prior to the release of such certificates,
the tendering stockholder must submit the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Shares tendered by an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer set forth in Section
2, the notice of withdrawal must specify the name and the number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with the procedures of such facility. All questions as to the
form and validity (including time of receipt) of notices of withdrawal will be
determined by the Company, in its sole discretion, which determination shall be
final and binding. None of the Company, the Dealer Manager, the Depositary, the
Information Agent or any other person shall be obligated to give any notice of
any defects or irregularities in any notice of withdrawal and none of them shall
incur any liability for failure to give any such notice. Any Shares properly
withdrawn will thereafter be deemed not tendered for purposes of the Offer.
However, withdrawn Shares may be re-tendered prior to the Expiration Date by
again following any of the procedures described in Section 2.
If, as a result of proration, the number of Shares to be purchased from any
stockholder making a conditional tender is reduced below the minimum number
specified by such stockholder, such tender will automatically be regarded as
withdrawn.
If the Company extends the Offer, is delayed in its purchase of Shares or
is unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain on behalf of the Company all tendered Shares, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in this Section 3 subject to Rule
13e-4(f)(5) under the Exchange Act which provides that the issuer making the
tender offer shall either pay the consideration offered, or return the tendered
securities, promptly after the termination or withdrawal of the tender offer.
4. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the Offer (including
proration), and promptly after the Expiration Date, the Company will determine a
single per Share Purchase Price (not in excess of $7.00 nor less than $5.75 per
Share) that it will pay for Shares properly tendered and not withdrawn, taking
into account the number of Shares tendered and the prices specified by tendering
stockholders. The Company will select the lowest Purchase Price that will allow
it to buy up to 1,000,000 Shares as are properly tendered and not withdrawn at
or below the Purchase Price, as soon as practicable after the Expiration Date.
Following the determination of the Purchase Price, the Company will announce the
Purchase Price, and payment for Shares accepted for payment pursuant to the
Offer will be made promptly (subject to possible delay in the event of
proration) but only after timely receipt by the Depositary of certificates for
Shares (or of a confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility), a properly completed
and duly executed Letter of Transmittal (or manually executed facsimile thereof)
and any other required documents.
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<PAGE> 12
For purposes of the Offer, the Company will be deemed to have accepted for
payment, subject to proration, Shares tendered at or below the Purchase Price
and not withdrawn if, as and when the Company gives oral or written notice to
the Depositary of its acceptance of such Shares for payment pursuant to the
Offer. Payment for Shares to be purchased pursuant to the Offer will be made by
depositing the aggregate Purchase Price for such Shares with the Depositary,
which will act as agent for the tendering stockholders for the purpose of
receiving payment from the Company and transmitting such payments to tendering
stockholders.
In the event of proration, the Company will determine the proration factor
and pay for those tendered Shares accepted for payment as soon as practicable
after the Expiration Date; however, the Company does not expect to be able to
announce the final results of any such proration until approximately five NYSE
trading days after the Expiration Date. Certificates for all Shares not
purchased, including all Shares tendered at prices in excess of the Purchase
Price and Shares not purchased due to proration or conditional tenders, will be
returned (or, in the case of Shares tendered by book-entry transfer, such Shares
will be credited to the account maintained within the Book-Entry Transfer
Facility by the participant therein who so delivered such Shares) as soon as
practicable after the Expiration Date or termination of the Offer without
expense to the tendering stockholder. Under no circumstances will interest be
paid by the Company by reason of any delay in paying for any Shares or
otherwise. In addition, if certain events occur, the Company may not be
obligated to purchase the Shares pursuant to the Offer. See Section 5.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances permitted by
the Offer) if Shares not tendered or not accepted for purchase are to be
registered in the name of any person other than the registered owner, or if
tendered certificates are registered in the name of any person other than the
person signing the Letter of Transmittal, the amount of all stock transfer
taxes, if any (whether imposed on the registered owner or such other person),
payable on account of the transfer to such person will be deducted from the
Purchase Price unless evidence satisfactory to the Company of the payment of
such taxes or exemption therefrom is submitted. See Instruction 7 of the Letter
of Transmittal.
ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND SIGN
THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO
REQUIRED FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAID TO
SUCH STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION 2.
5. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment or purchase or pay for any Shares tendered and
may terminate or amend the Offer or may postpone the acceptance for payment of,
or the payment for, Shares tendered, if at any time on or after September 29,
1998, but on or before the Expiration Date, any of the following events shall
have occurred (or shall have been determined by the Company to have occurred)
which, in the Company's sole judgment in any such case and regardless of the
circumstances (including any action or omission to act by the Company), makes it
inadvisable to proceed with the Offer or with such acceptance for purchase or
payment:
(a) There shall have occurred (i) the commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States, (ii) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange or in
the over-the-counter market, (iii) the declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States, (iv) any
limitation by any governmental, regulatory or administrative authority or agency
or any other event that, in the sole judgment of the Company, might affect the
extension of credit by banks or other lending institutions, (v) a decline in the
last sales price of the Shares of more than 15% as reported on the NYSE measured
from the close of business on September 29, 1998, (vi) any change in the general
political, market, economic or financial conditions in the United States or
abroad that has or may have material adverse significance with respect to the
Company's business, operations or prospects or the trading in the Shares, or
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<PAGE> 13
(vii) any decline in either the Dow Jones Industrial Average or the Standard and
Poor's Index of 500 Industrial Companies of more than 15%, measured from the
close of business on September 29, 1998; or
(b) There shall have been threatened, instituted or pending any action or
proceeding by any government or governmental authority or regulatory or
administrative agency, domestic or foreign, or by any other person, domestic or
foreign, before any court or governmental authority or regulatory or
administrative agency, domestic or foreign, (i) challenging or seeking to make
illegal, or delay or otherwise directly or indirectly restrain or prohibit the
making of the Offer, the acceptance for payment of or payment for some or all of
the Shares by the Company or otherwise directly or indirectly relating in any
manner to or affecting the Offer, or (ii) that otherwise, in the sole judgment
of the Company, has or may have a material adverse effect on the business,
financial condition, income, operations or prospects of the Company or its
subsidiaries taken as a whole or has or may materially impair the contemplated
benefits of the Offer to the Company; or
(c) There shall have been any action threatened, pending or taken or
approval withheld or any statute, rule, regulation, judgment or order or
injunction proposed, sought, enacted, enforced, promulgated, amended, issued or
deemed applicable to the Offer or the Company or any of its subsidiaries by any
court, governmental authority or regulatory or administrative agency, domestic
or foreign, that, in the sole judgment of the Company might, directly or
indirectly, result in any of the consequences referred to in clauses (i) or (ii)
of paragraph (b) above; or
(d) A tender or exchange offer for some or all of the Shares (other than
the Offer) or a proposal with respect to a merger, consolidation or other
business combination with or involving the Company or any subsidiary shall have
been proposed to be made or shall have been made by another person; or
(e) Any entity, person or "group" (as that term is used in Section 13(d)(3)
of the Exchange Act) shall have acquired or proposed to acquire beneficial
ownership of more than 5% of the outstanding Shares, or any new group shall have
been formed which beneficially owns more than 5% of the outstanding Shares; or
(f) Any change or changes shall have occurred (or any development shall
have occurred involving any prospective change or changes) in the business,
assets, liabilities, condition (financial or otherwise), operations, results of
operations or prospects of the Company or its subsidiaries that, in the sole
judgment of the Company, have or may have material adverse significance with
respect to the Company or its subsidiaries.
In addition, notwithstanding any other provision of the Offer, the Company
shall not be required to accept for payment or purchase or pay for any Shares
tendered and may terminate or amend the Offer or may postpone the acceptance for
payment of, or the payment for, Shares tendered if the purchase by the Company
of 1,000,000 Shares (or such lesser number of Shares as are properly tendered at
or below the Purchase Price) would reduce the total number of record holders of
Shares to less than 300. If the purchase by the Company of such Shares would
reduce the total number of record holders of Shares to less than 300, the
Company currently intends to amend the Offer to reduce the total number of
Shares invited to tender from 1,000,000 to such lesser number which the Company
will specify at that time in order to maintain at least 300 record holders of
Shares after the completion of the purchase by the Company pursuant to the Offer
as so amended. If the Company does so amend the Offer, the Company will also
extend the Offer to the extent required by Rules 13e-4(e)(2) and 13e-4(f) under
the Exchange Act so that the Expiration Date does not occur until at least an
additional ten business days following and including the date such amendment is
first published, sent or given. See Section 7 and Section 13.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company in its sole discretion regardless of the circumstances
(including any action or inaction by the Company) giving rise to any such
conditions, or may be waived by the Company, in its sole discretion, in whole or
in part at any time. The failure by the Company at any time to exercise its
rights under any of the foregoing conditions shall not be deemed a waiver of any
such right; the waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other facts
and circumstances; and each such right shall be deemed an ongoing right which
may be asserted at any time or from time to time. Any determination by the
Company concerning the events described in this Section shall be final and
binding on all parties.
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<PAGE> 14
6. PRICE RANGE OF SHARES; DIVIDENDS
The Company's Common Stock is traded on the NYSE under the ticker symbol
UNO. The following table sets forth the reported high and low sales prices for
the Common Stock for each quarter during fiscal 1998 and 1997.
FISCAL YEAR ENDED SEPTEMBER 28, 1997
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
First Quarter............................................... $7.875 $6.375
Second Quarter.............................................. $7.375 $6.375
Third Quarter............................................... $7.250 $5.875
Fourth Quarter.............................................. $7.250 $5.813
</TABLE>
FISCAL YEAR ENDING SEPTEMBER 27, 1998
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
First Quarter............................................... $7.50 $6.250
Second Quarter.............................................. $7.375 $5.813
Third Quarter............................................... $7.688 $7.00
Fourth Quarter.............................................. $7.625 $5.75
</TABLE>
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. On September 28, 1998, the
last full trading day of the NYSE prior to the announcement of the Offer, the
closing per Share sales price for the Company on the NYSE Composite Tape was
$5.8125.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. BACKGROUND AND PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
The Board of Directors of the Company has concluded that the purchase of
Shares pursuant to the Offer is a prudent use of the Company's financial
resources. The Offer provides stockholders who are considering the sale of all
or a portion of their Shares the opportunity to determine the price at which
they are willing to sell their Shares and, if any such Shares are purchased
pursuant to the Offer, to sell such Shares for cash at a price which
approximates or is in excess of current market prices at approximately the date
the Offer was announced without the usual transaction costs associated with
market sales. The Offer also allows stockholders to sell a portion of their
Shares while retaining a continuing equity interest in the Company if they so
desire. In addition, the stockholders owning fewer than 100 shares whose Shares
are purchased pursuant to the Offer not only will avoid the payment of brokerage
commissions but also will avoid any applicable odd-lot discounts payable on a
sale of their Shares in a NYSE transaction. Stockholders who determine not to
accept the Offer will realize a proportionate increase in their equity interest
in the Company if the Shares are purchased pursuant to the Offer.
Shares acquired by the Company pursuant to the Offer will be cancelled and
will return to the status of authorized but unissued shares of Common Stock.
Such Shares will be available for reissuance by the Company without further
stockholder action for general or other corporate purposes, including stock
options (including the stock options referred to in the Introduction and below)
and other employee benefit plans, stock splits or dividends, acquisitions, and
the raising of additional capital for use in the Company's business. Except for
stock options and other employee benefit plans, the Company has no current plans
for any such uses of such shares.
As of September 28, 1998 the Company had issued and outstanding 10,600,994
Shares, and 850,138 Shares were issuable upon exercise of outstanding vested
Options. The 1,000,000 Shares that the Company is
14
<PAGE> 15
offering to purchase represent approximately 9.4% of the Shares outstanding at
that date (approximately 8.7% assuming the exercise of all outstanding vested
Options). The vested options expire at various times through 2008. In addition
to the foregoing, 1,668,858 Shares are issuable upon exercise of outstanding
unvested options under the Company's stock option plans, which options are
eligible for vesting at various times through August 25, 2003. Of the 1,668,858
Shares subject to unvested options, 910,000 Shares are subject to options held
by officers of the Company which vest upon the achievement of certain Company
performance goals or increases in the market price of the Shares. As of
September 28, 1998, all executive officers and directors of the Company as a
group beneficially owned an aggregate of 6,813,023 Shares (including 623,651
Shares issuable upon the exercise of outstanding vested Options, but not
including 1,005,818 Shares subject to unvested options), or approximately 60.3%
of the outstanding Shares (assuming the exercise of all outstanding vested
Options) on such date. If the Company purchases 1,000,000 Shares pursuant to the
Offer and no executive officer or director tenders Shares pursuant to the Offer,
the Company's executive officers and directors as a group would beneficially own
approximately 66.1% of such outstanding Shares (assuming the exercise of all
outstanding vested Options).
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, NONE OF
THE COMPANY, ITS BOARD OF DIRECTORS OR THE DEALER MANAGER MAKES ANY
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING ANY OR ALL OF SUCH STOCKHOLDER'S SHARES AND NEITHER HAS AUTHORIZED ANY
PERSON TO MAKE ANY SUCH RECOMMENDATION. STOCKHOLDERS ARE URGED TO EVALUATE
CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX
ADVISORS AND MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES TO TENDER AND AT WHAT PRICE OR PRICES.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that otherwise might trade publicly and may reduce the number of
stockholders. Nonetheless, it is anticipated that there still will be a
sufficient number of Shares outstanding and publicly traded following the Offer
to ensure a continued trading market in the Shares. Based upon published
guidelines, the Company does not believe that the purchase of Shares pursuant to
the Offer will cause the Company's remaining Shares to cease to be listed on the
NYSE. The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its stockholders
and to the Securities and Exchange Commission (the "Commission") and comply with
the Commission's proxy rules in connection with meetings of the Company's
stockholders. The Company believes that the purchase of Shares pursuant to the
Offer will not result in the Shares becoming eligible for deregistration under
the Exchange Act. Section 12(g)(4) of the Exchange Act provides that the Shares
would become eligible for deregistration under the Exchange Act if the number of
holders of record of the Shares is reduced to less than 300. Rule 13e-3 of the
Exchange Act also provides certain disclosure and other requirements if certain
transactions or series of transactions have either a reasonable likelihood or a
purpose of causing, among other results, any class of equity securities of an
issuer to be held of record by less than 300 holders. The Company currently has
no plans or intention to cause the Shares to be delisted from the NYSE or to
become eligible for deregistration under the Exchange Act. Therefore, as a
consequence of these provisions under the Exchange Act, the Company shall not be
required to accept for payment or purchase and pay for any Shares tendered and
may terminate or amend the Offer if such acceptance for payment and purchase
would reduce the total number of record holders of Shares to less than 300. If
the purchase by the Company of such Shares would reduce the total number of
record holders of Shares to less than 300, the Company currently intends to
amend the Offer to reduce the total number of Shares invited to tender from
1,000,000 to such lesser number which the Company will specify at that time in
order to maintain at least 300 record holders of Shares after the completion of
the purchase by the Company pursuant to the Offer. See Section 5. As of
September 25, 1998, the Company had 412 record holders.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. The Company
15
<PAGE> 16
believes that, following the repurchase of Shares pursuant to the Offer, the
Shares will continue to be margin securities for purposes of the Federal Reserve
Board's margin regulations.
Although the Company has no current plans to acquire additional Shares, the
Company may in the future purchase additional Shares in the open market, in
private transactions, through tender offers or otherwise. Any such purchases may
be on the same terms or on terms which are more or less favorable to
stockholders than the terms of the Offer. However, Rule 13e-4 of the Exchange
Act prohibits the Company and its affiliates from purchasing any Shares, other
than pursuant to the Offer, until at least ten business days after the
Expiration Date or termination of the Offer. Any possible future purchases by
the Company will depend on many factors, including the market price of the
Shares, the Company's business and financial positions, the results of the Offer
and general economic and market conditions.
8. SOURCE AND AMOUNT OF FUNDS
If the Company were to purchase 1,000,000 Shares pursuant to the Offer at
the maximum Purchase Price of $7.00 per Share, the Company expects that the
maximum aggregate cost of the Offer, including all fees and expenses applicable
to the Offer, would be approximately $7,300,000. Consummation of the Offer is
not conditioned upon the Company obtaining financing. The funds needed to
purchase the Shares will be derived from the Company's $55 million credit
facility (the "Credit Facility") under the Amended and Restated Revolving Credit
and Term Loan Agreement dated as of November 4, 1997 by and among the Company,
Uno Foods, Inc., Pizzeria Uno Corporation and URC Holding Company, Inc., as
guarantors, Uno Restaurants, Inc. and Saxet Corporation, as borrowers, and Fleet
National Bank, as Agent, and BankBoston, N.A., as Co-Agent. As of September 27,
1998, the Company had borrowed $37,760,000 under the Credit Facility. The Credit
Facility consists of three components, a $26.6 million revolver, a $20 million
mortgage facility and a $8.4 million term loan. The $26.6 million revolver is
due on October 2002. The $20 million mortgage facility is due in 27 quarterly
installments of $500,000 plus interest commencing on January 31, 1998 with a
final installment of the outstanding principal plus interest due in October
2004. The $8.4 million term loan is due in 20 quarterly installments of $420,000
plus interest commencing on January 31, 1998. Amounts borrowed under the Credit
Facility accrue interest at variable rates based on, at the election of the
Company, either the LIBOR plus 100-175 basis points or prime plus 0-50 basis
points, and are secured by certain real properties owned by Saxet Corporation.
The Credit Facility contains covenants which limit, among other things, the
incurrence of additional indebtedness by the Company, the creation of liens on
the Company's assets, the making of certain investments by the Company, mergers,
consolidations and certain sales and transfers of assets, the payment of
dividends, certain changes in the Company's capital structure and changes in
control of the Company. The Credit Facility also contains certain financial
covenants relating to the financial condition of the Company, including those
relating to net worth, cash flow coverage, leverage, profitability, capital
expenditures and earnings. Provisions under the Credit Facility are not
considered restrictive to normal operations. The Company has received a waiver
of certain covenants under the Credit Facility, subject to the Company's
continued compliance with all of the other terms of the Credit Facility, to
permit the Company to conduct the Offer.
9. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company owns and operates or franchises a total of 157 restaurants,
including 94 owned and 63 franchised casual dining, full-service restaurants
under the name "Pizzeria Uno...Chicago Bar & Grill." The Pizzeria Uno
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 fiscal year ended September 28, 1997, Company-owned restaurants
averaged $1,818,000 in sales. Company-owned restaurants are located primarily in
major markets from New England to Virginia, as well as, Florida, Chicago and
Denver, and franchised restaurants are located throughout the United States as
well as two franchised restaurants in Seoul Korea.
16
<PAGE> 17
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 the fiscal year ended September 28, 1997, the Company opened seven
full-service Company-owned restaurants and closed one full-service Company-owned
restaurant. This level of unit expansion is consistent with the growth strategy
initiated during the fiscal year ended September 29, 1996 which slowed growth
from 16 new units during the fiscal year ended October 1, 1995 to seven new
units during fiscal 1996. This slower growth rate allowed the Company to
complete a new prototype building design, roll out several new menu initiatives
and to focus on operational execution. Six full-service franchised restaurants
opened during the fiscal year ended September 28, 1997 and three full-service
franchised restaurants closed during that same period. During the fiscal year
ended September 27, 1998, the Company opened four Company-owned full-service
restaurants and closed two Company-owned full-service restaurants along with two
Company-owned quick-service units. During the same period, five full-service
franchised restaurants opened and eight full-service franchised restaurants and
one quick-service franchised unit closed.
During the past four years, the Company has implemented several 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, the Company enhanced
its kitchen capabilities, to include saute stations, grills and fryers, enabling
the Company to enhance the quality, breadth and appeal of its non-pizza menu
items. This has allowed the Company to be very aggressive in its approach to
product development, as the Company believes that by keeping its menu offerings
current, guest satisfaction and frequency will be enhanced. The Company also
redesigned its prototype restaurant to replicate the look of an old Chicago
warehouse. This prototype was designed as a less serious, more fun experience
and was intended to make the restaurants more consistent with its casual dining
theme. In addition, the Company also refined the name of its restaurants to
"Pizzeria Uno...Chicago Bar & Grill" to communicate its concept and broadened
menu to consumers.
The Company continues to expand 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 1,000 supermarkets and wholesale
price club stores, primarily in New England, for sale in their fresh deli
counters and frozen food sections. For the past five years, the Company has also
been supplying frozen Pizzeria Uno brand, Chicago-style deep-dish pizza to
American Airlines for service on its flights. The Company has introduced a
similar pizza product at Pizzeria Uno kiosks in 45 General Cinema theaters and
is also in several other theater chains. The Company is also supplying Pizzeria
Uno brand pizzas and calzones to several hundred hotels, including approximately
100 Doubletree Hotels, for service to guests throughout the various food venues
of the hotels. Several other branded and private label tests are underway with
other hotel groups and major food service providers.
In September 1997, the Company announced the signing of two international
agreements for the development of Pizzeria Uno restaurants in Indonesia and
Pakistan and during fiscal year ended September 27, 1998, the Company entered
into a master franchise agreement for the Middle East. The master franchise
agreement for the Middle East provides for the development of 22 Pizzeria Uno
restaurants over seven years in United Arab Emirates, Saudi Arabia, Egypt,
Kuwait, Jordan, Oman, Qater , Bahrain and Lebanon. However, there can be no
assurances that any of these agreements will result in the opening of successful
new restaurants in these locations.
The Company is a Delaware corporation whose principle executive offices are
located at 100 Charles Park Road, West Roxbury, Massachusetts 02132 and its
telephone number is 617-323-9200.
17
<PAGE> 18
Summary Historical Financial Information. The following table sets forth
certain summary consolidated historical financial information of the Company and
its subsidiaries. The historical financial information at and for the fiscal
years ended September 28, 1997, September 29, 1996 and October 1, 1995 has been
derived from the Company's audited consolidated financial statements in the
Company's Annual Report on Form 10-K for the fiscal year ended September 28,
1997. The financial information for the 39 weeks ended June 28, 1998 and June
29, 1997 has been derived from the unaudited consolidated financial statements
in the Company's Quarterly Report on Form 10-Q for the quarter ended June 28,
1998. The following historical financial information should be read in
conjunction with and is qualified in its entirety by reference to, such audited
and unaudited consolidated financial statements and their related notes and
other financial information. Copies of the foregoing reports may be obtained as
described in Section 15 of this Offer.
SUMMARY HISTORICAL FINANCIAL INFORMATION
(Amounts in thousands, except ratios and per share data)
<TABLE>
<CAPTION>
THIRTY-NINE
WEEKS ENDED YEAR ENDED
--------------------- -------------------------------------------
JUNE 28, JUNE 29, SEPTEMBER 28, SEPTEMBER 29, OCTOBER 1,
1998 1997 1997 1996 1995
--------- --------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES
Restaurant sales..................... $130,171 $120,414 $164,389 $159,581 $146,100
Consumer product sales............... 7,083 6,526 9,115 8,351 8,477
Franchise income..................... 3,349 3,322 4,516 4,209 4,129
-------- -------- -------- -------- --------
140,603 130,262 178,020 172,141 158,706
COSTS AND EXPENSES:
Cost of sales........................ 35,477 32,307 43,994 44,064 39,420
Labor and benefits................... 43,236 39,996 54,183 51,868 47,377
Occupancy costs...................... 21,025 19,905 27,045 26,339 22,925
Other operating costs................ 13,369 12,519 16,067 15,890 13,583
General and administrative........... 9,824 9,588 13,384 12,155 11,229
Depreciation and amortization........ 9,136 8,691 12,469 12,964 10,795
Special charges...................... 0 4,000 4,000 3,937 0
-------- -------- -------- -------- --------
132,067 127,006 171,142 167,217 145,329
-------- -------- -------- -------- --------
OPERATING INCOME....................... $ 8,536 $ 3,256 $ 6,878 $ 4,924 $ 13,377
OTHER INCOME (EXPENSE):
Interest expense..................... (2,705) (1,935) (2,695) (2,358) (1,924)
Other expense........................ (116) (52) (132) (123) (20)
-------- -------- -------- -------- --------
Income before income taxes............. 5,715 1,269 4,051 $ 2,443 $ 11,433
Provision for income taxes............. 1,886 432 1,378 757 4,230
-------- -------- -------- -------- --------
Net income before accounting change.... 3,829 837 2,673 1,686 7,203
Cumulative effect of accounting
change............................... 636 0 0 0 0
-------- -------- -------- -------- --------
NET INCOME............................. $ 3,193 $ 837 $ 2,673 $ 1,686 $ 7,203
-------- -------- -------- -------- --------
Weighted average shares outstanding.... 10,989 12,256 12,008 13,073 12,364
-------- -------- -------- -------- --------
Earnings per share before accounting
change............................... $ 0.35 $ 0.07 $ 0.22 $ 0.13 $ 0.58
Earnings per share after accounting
change............................... $ 0.29 $ 0.07 $ 0.22 $ 0.13 $ 0.58
Ratio of earnings to fixed charges..... 1.80 3.43 3.70 1.54 2.52
-------- -------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
JUNE 28, JUNE 29, SEPTEMBER 28, SEPTEMBER 29,
1998 1997 1997 1996
--------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Working capital........................ (13,293) (12,185) (14,096) (7,188)
Property, equipment and leasehold
improvements......................... 190,572 179,368 181,139 166,656
Total assets........................... 143,508 140,920 143,732 134,945
Long term debt......................... 41,067 37,673 42,516 37,085
Stockholders' equity................... 73,270 77,697 70,880 77,136
Book value per share................... $ 6.75 $ 6.38 $ 6.46 $ 6.32
</TABLE>
18
<PAGE> 19
Preliminary Results for Fourth Quarter of Fiscal 1998. Average weekly and
comparable store sales for the fourth quarter ended September 27, 1998 increased
by 3.7% and 2.5%, respectively. Preliminary earnings projections for the fourth
quarter are $.18-$.20 per share. These results are unaudited. Stockholders
should be cautioned that final results may differ from the Company's preliminary
estimates. The Company expects to announce fourth quarter and full year results
for the fiscal year ended September 27, 1998 during the first week of November.
Forward-Looking Statements. This Offer may contain certain forward-looking
statements. Stockholders are cautioned that all forward-looking statements
involve risks and uncertainties which could cause actual results to differ from
those projected, including without limitation, the Company's ability to open new
restaurants and operate new and existing restaurants profitably, changes in
local, regional, national and international economic conditions, especially
economic conditions in the areas in which the Company's restaurants are
concentrated, increasingly intense competition in the casual-dining segment of
the restaurant industry, increases in food, labor, employee benefits and similar
costs, and other risks detailed from time to time in the Company's periodic
reports filed with the Securities and Exchange Commission.
Pro Forma Financial Information. The following unaudited pro forma
consolidated financial information sets forth historical information as adjusted
to give affect to (i) the purchase of 1,000,000 Shares at $5.75 per Share and
(ii) the purchase of 1,000,000 Shares at $7.00 per share, utilizing proceeds
from the Company's Credit Facility to finance the purchases. The pro forma
adjustments assume that the purchases occurred for purposes of the consolidated
statements of income as of the first day of the period and for purposes of the
condensed consolidated balance sheet as of its date. See "Notes to Unaudited Pro
Forma Financial Information," below. The pro forma information does not purport
to be indicative of the results which may be obtained in the future or which
would actually have been obtained had the purchase of the Shares pursuant to the
Offer and the transactions incidental thereto been completed at the dates
indicated. The pro forma information should be read in conjunction with and is
qualified in its entirety by reference to, the audited and unaudited
consolidated financial statements and the accompanying and related notes set
forth in the Company's Annual Report on Form 10-K for the fiscal year ended
September 28, 1997, and the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 28, 1998.
SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION
(Amounts in thousands, except ratios and per share data)
<TABLE>
<CAPTION>
1,000,000 SHARES AT $5.75 1,000,000 SHARES AT $7.00
PURCHASE PRICE PURCHASE PRICE
------------------------------- -------------------------------
39 WEEKS ENDED YEAR ENDED 39 WEEKS ENDED YEAR ENDED
JUNE 28, 1998 SEPT. 28, 1997 JUNE 28, 1998 SEPT. 28, 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
OPERATING INCOME.................. $ 8,536 $ 6,878 $ 8,536 $ 6,878
Interest expense.................. (3,050) (3,155) (3,125) (3,255)
Other expense..................... (116) (132) (116) (132)
-------- -------- -------- --------
Income before income taxes........ $ 5,370 $ 3,591 $ 5,295 $ 3,491
Provision for income taxes........ 1,772 1,222 1,747 1,188
-------- -------- -------- --------
Net income before accounting
change.......................... $ 3,598 $ 2,369 $ 3,548 $ 2,303
Cumulative effect of accounting
change.......................... $ 636 $ 0 $ 636 $ 0
-------- -------- -------- --------
NET INCOME........................ $ 2,962 $ 2,369 $ 2,912 $ 2,303
Weighted average shares
outstanding..................... 9,989 11,008 9,989 11,008
Earnings per share before
accounting change............... $ 0.36 $ 0.22 $ 0.36 $ 0.21
Earnings per share after
accounting change............... $ 0.30 $ 0.22 $ 0.29 $ 0.21
Ratio of earnings to fixed
charges......................... 1.68 3.20 1.65 3.11
</TABLE>
<TABLE>
<CAPTION>
JUNE 28, 1998 SEPT. 28, 1997 JUNE 28, 1998 SEPT. 28, 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA
Working capital................... (13,293) (14,096) (13,293) (14,096)
Property, equipment and leasehold
improvements.................... 190,572 181,139 190,572 181,139
Total assets...................... 143,508 143,732 143,508 143,732
Long term debt.................... 46,817 48,266 48,067 49,516
Stockholders equity............... 67,520 65,130 66,270 63,880
Book value per share.............. $ 6.85 $ 6.54 $ 6.72 $ 6.41
(notes on following page)
</TABLE>
19
<PAGE> 20
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
The pro forma adjustments reflect:
(1) the increase in interest expense resulting from the borrowings
under the Company's revolving Credit Facility to finance the Share
repurchases. The additional interest expense has been calculated at the
assumed rate of 8%;
(2) the adjustment to the provision for income taxes to reflect the
increased interest expense utilizing the Company's effective income tax
rate of 33% for the 39 weeks ended June 28, 1998 and the fiscal year ended
September 28, 1997;
(3) the increase in long-term debt resulting from borrowings under the
Company's revolving Credit Facility to finance the Share repurchases; and
(4) the reduction in stockholders' equity resulting from the
repurchase and retirement of the Company's Common Stock.
10. INTEREST OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND
ARRANGEMENTS CONCERNING THE SHARES
Except as set forth in Schedule A hereto, neither the Company, nor any
subsidiary of the Company, nor, to the Company's knowledge, any of the Company's
or any of its subsidiaries' executive officers or directors or associates of any
of the foregoing, has engaged in any transaction involving Shares during the
period of forty business days prior to the date hereof.
Except as set forth in this Offer to Purchase, neither the Company, nor any
subsidiary of the Company, nor, to the Company's knowledge, any of its executive
officers or directors, or any of the executive officers or directors of its
subsidiaries, is a party to any contract, arrangement, understanding or
relationship relating, directly or indirectly, to the Offer with any other
person with respect to Shares. See Section 14.
None of the Company or, to the Company's knowledge, its executive officers
or directors has current plans or proposals which relate to or would result in
any extraordinary corporate transaction involving the Company, such as a merger,
a reorganization, the sale or transfer of a material amount of its assets or the
assets of any of its subsidiaries (although the Company from time to time may
consider various acquisition or divestiture opportunities), any change in its
current Board of Directors or management, any material change in its current
dividend policy or indebtedness or capitalization, any other material change in
its business or corporate structure, any material change in its Amended and
Restated Certificate of Incorporation or Amended and Restated Bylaws, or causing
a class of its equity securities to become eligible for termination of
registration pursuant to Section 12(g)(4) of the Exchange Act, or the suspension
of the Company's obligation to file reports pursuant to Section 15(d) of the
Exchange Act, or any actions similar to any of the foregoing.
11. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
The Company is not aware of any license or regulatory permit that appears
to be material to the Company's business that might be adversely affected by the
Company's acquisition of Shares as contemplated herein or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Company as contemplated herein. Should
any such approval or other action be required, the Company presently
contemplates that such approval or other action will be sought. The Company is
unable to predict whether it may determine that it is required to delay the
acceptance for payment of, or payment for, Shares tendered pursuant to the Offer
pending the outcome of any such matter. There can be no assurance that any such
approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that the failure to obtain any such approval
or other action might not result in adverse consequences to the Company's
business. The Company's obligations under the Offer to accept for payment and
pay for Shares are subject to certain conditions. See Section 5.
12. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The discussion below provides certain Federal income tax consequences of a
sale of Shares pursuant to the Offer by a United States person (a United States
citizen or resident alien, a domestic corporation, a domestic partnership or a
domestic trust or estate). Certain stockholders (including insurance companies,
tax-exempt organizations, financial institutions or insurance companies,
financial institutions or broker dealers,
20
<PAGE> 21
foreign stockholders and stockholders who have acquired their Shares upon the
exercise of options or otherwise as compensation) may be subject to special
rules not discussed below. This discussion does not reflect any tax laws of any
jurisdiction other than the Federal income tax laws of the United States. Each
stockholder should consult his or her own tax advisor as to the particular tax
consequences to him of a sale of Shares pursuant to the Offer, including the
applicability and effect of any state, local, foreign or other tax laws.
The sale of Shares pursuant to the Offer will be a taxable transaction for
Federal income tax purposes. Under Section 302 of the Internal Revenue Code of
1986, as amended (the "Code"), a sale of Shares pursuant to the Offer will, as a
general rule, be treated as a "sale or exchange" if the sale of Shares (a) is
"substantially disproportionate" with respect to the stockholder, (b) results in
a "complete redemption" of all of the stock of the Company owned by the
stockholder or (c) is "not essentially equivalent to a dividend" with respect to
the stockholder. Each of these three provisions is discussed below.
The sale of Shares will be "substantially disproportionate" if the
percentage of the outstanding Shares actually and constructively owned by the
stockholder satisfies the following three requirements:
(i) after the sale, the stockholder owns less than 50% of the total
combined voting power of all classes of outstanding stock entitled to vote;
(ii) the stockholder's percentage of the total outstanding voting
stock immediately after the purchase is less than 80% of the stockholder's
percentage of the total outstanding voting stock immediately before the
purchase; and
(iii) the stockholder's percentage of outstanding common stock
(whether voting or non-voting) immediately after the purchase is less than
80% of the stockholder's percentage of outstanding common stock (whether
voting or non-voting) immediately before the purchase.
The sale of Shares will be deemed to result in a "complete redemption" if
either (a) all the Shares actually and constructively owned by the stockholder
are sold pursuant to the Offer or (b) all the Shares actually owned by the
stockholder are sold pursuant to the Offer and the stockholder is eligible to
waive (and effectively waives) constructive ownership of any other Shares under
procedures described in Section 302 of the Code.
The sale of Shares may be "not essentially equivalent to a dividend" if the
sale results in a "meaningful reduction" of the stockholder's proportionate
interest in the Company. Unlike the other tests, which are precise and
mathematical, whether the sale will be considered as "not essentially equivalent
to a dividend" depends on the particular stockholder's facts and circumstances.
Any stockholder intending to rely upon the "not essentially equivalent to a
dividend" test should consult his or her own tax advisor as to its application
in the stockholder's particular situation.
In determining whether any of the above tests are satisfied, a stockholder
must take into account not only Shares which are actually owned by the
stockholder, but also Shares which are constructively owned by the stockholder
within the meaning of Section 318 of the Code.
Under Section 318, a stockholder is deemed to own Shares actually owned,
and in some cases constructively owned, by certain related individuals and
entities. A stockholder is also deemed to own Shares which the stockholder has
the right to acquire by exercise of an option or conversion or exchange of a
security. An individual stockholder is considered to own Shares owned directly
or indirectly by or for his spouse and his children, grandchildren and parents.
In addition, a stockholder is considered to own a proportionate number of Shares
owned by trusts or estates in which the stockholder has a beneficial interest,
by partnerships in which the stockholder is a partner and by corporations in
which the stockholder owns directly or indirectly 50% or more in value of the
stock. Similarly, shares directly or indirectly owned by beneficiaries of
estates or trusts, by partners of partnerships and, under certain circumstances,
by stockholders of corporations may be considered owned by these entities.
If any of the above tests under Section 302 of the Code is satisfied, the
stockholder will recognize a gain (or loss) in the amount by which the purchase
price received by the stockholder pursuant to the Offer is greater (or less)
than the stockholder's tax basis in the Shares sold. The recognized gain or loss
will be capital gain or loss if the Shares are held as a capital asset, and will
be long-term capital gain or loss if the Shares have been held as a capital
asset for longer than one year.
21
<PAGE> 22
If none of the above tests under Section 302 of the Code are satisfied, the
stockholder may be treated as having received a dividend in the amount of the
cash received for the Shares sold pursuant to the Offer, to the extent that the
Company has earnings and profits from the current year or prior years (or both).
In the case of a dividend, the stockholder's tax basis in the Shares sold will
not reduce the amount of the dividend.
Proration of the Offer, pursuant to which fewer than all of the Shares
tendered may be purchased by the Company, could adversely affect a stockholder's
ability to satisfy the above tests under Section 302 of the Code. Under certain
circumstances, an increase in the number of Shares purchased by the Company
could also adversely affect a stockholder's ability to satisfy these tests. As
described above, the Company may increase the total number of Shares accepted by
up to 2% of the outstanding Shares without prior notice and without extending
the tender period. See Section 1 for information regarding proration and
conditional tenders and Section 3 for information concerning withdrawals.
Stockholders are urged to consult their tax advisors with respect to the effects
of proration or an increase in the number of Shares purchased by the Company and
with respect to the advisability of making a conditional tender or a withdrawal
of Shares.
A stockholder will be considered as having received a payment for Shares
tendered pursuant to the Offer at the time a payment is received by the
Depositary as agent for the stockholder.
In general, any amount received by an individual stockholder and treated as
a dividend will be subject to the federal tax rate applicable to the
stockholder's other income (i.e., a maximum of 39.6% at the time this discussion
was prepared), without any reduction for the stockholder's basis in the Shares.
Amounts received in excess of the corporation's earnings and profits will be
applied to reduce the stockholder's basis in his shares to zero, and thereafter
be treated as capital gains. The amount paid to an individual stockholder that
is treated as long term capital gain will be subject to the rate applicable to
their long term capital gains (a maximum of 20% at the time this discussion was
prepared), while other gains will be subject to the same rates as ordinary
income. In either case, a stockholder's capital gains are computed by reducing
the gross amount of the gain by his basis in the Shares redeemed. Capital
losses, if any, can be used to offset other capital gains that a stockholder may
have, and up to $3,000 of ordinary income. Unused capital losses may be carried
forward indefinitely.
Stockholders that are corporations will be subject to tax at the
corporation's regular tax rate on its capital gains (currently, a maximum rate
of 35%). The amount of the corporate stockholder's capital gains will be
computed by reducing the gross amount of the gain by the corporation's basis in
the Shares redeemed.
In general, any income which is treated as a dividend and which is received
by a stockholder that is a domestic corporation will be subject to tax at the
corporation's regular tax rate, but it will be eligible for the appropriate
dividends-received deduction under Section 243 of the Code (generally a 70%
deduction for corporations that own less than 20% of the distributing
corporation). This deduction is subject to applicable limitations, including
those relating to "debt-financed portfolio stock" under Section 246A of the Code
and the 46-day holding period requirement of Section 246 of the Code.
Any amount treated as a dividend to a corporate stockholder may constitute
an "extraordinary dividend" subject to the provisions of Section 1059 of the
Code. Under Section 1059 of the Code, a corporate stockholder must reduce the
tax basis of its stock (but not below zero) by the portion of any "extraordinary
dividend" which is deducted under the dividends received deduction and, if such
portion exceeds the stockholder's tax basis for the stock, must treat any such
excess as additional gain on the subsequent sale or other disposition of such
shares. Except as may otherwise be provided in regulations in the case of any
redemption of stock which is not pro rata as to all stockholders, any amount
treated as a dividend under the rules of Section 302 is treated as an
extraordinary dividend regardless of the stockholder's holding period or the
amount of the dividend. Corporate stockholders should consult their own tax
advisors, particularly as to the application of Section 1059 to the Offer.
The Depositary will be required to withhold 31% of the gross proceeds paid
to a stockholder or other payee pursuant to the Offer unless either (a) the
stockholder provides the stockholder's taxpayer identification number and
certifies under penalties of perjury that such number is correct; (b) the
stockholder certifies that he is awaiting a taxpayer identification number; or
(c) an exception applies under applicable law and regulations. Therefore, unless
such an exception exists and is proved in a manner satisfactory to the Company
and the Depositary, each tendering stockholder should complete and sign the
Substitute Form W-9 included
22
<PAGE> 23
in the Letter of Transmittal, so as to provide the information and certification
necessary to avoid backup withholding.
13. EXTENSION OF THE OFFER; TERMINATION; AMENDMENTS
The Company expressly reserves the right, at any time or from time to time
before the Expiration Date, to extend the period of time during which the Offer
is open by giving oral or written notice of such extension to the Depositary and
making a public announcement thereof. There can be no assurance, however, that
the Company will exercise its right to extend the Offer. During any such
extension, all Shares previously tendered and not accepted for payment or
withdrawn will remain subject to the Offer and may be accepted for payment by
the Company.
The Company also expressly reserves the right, in its sole discretion, (i)
to delay payment for any Shares not theretofore paid for, or to terminate the
Offer and not to accept for payment or pay for any Shares not theretofore
accepted for payment upon the occurrence of any of the conditions specified in
Section 5, or (ii) at any time or from time to time to amend the Offer in any
respect, including increasing or decreasing the number of Shares the Company may
purchase pursuant to the Offer whether or not upon the occurrence of any of the
conditions specified in Section 5.
Any such extension, delay, termination or amendment will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which the Company may choose to make any public announcement, except
as provided by applicable law (including Rule 13e-4(e)(2) of the Exchange Act),
the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
If the Company makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Company will extend the Offer to the extent required by Rules
13e-4(e)(2) and 13e-4(f) under the Exchange Act, which require that the minimum
period during which an offer must remain open following material changes in the
terms of the offer or information concerning the offer (other than a change in
price or a change in percentage of securities sought) will depend upon the facts
and circumstances, including the relative materiality of such terms or
information. The Company confirms that its reservation of the right to delay
payment for Shares which it has accepted for payment is limited by Rule
13e-4(f)(5) under the Exchange Act, which requires that an issuer pay the
consideration offered or return the tendered securities promptly after the
termination or withdrawal of a tender offer. If (i) the Company increases or
decreases the price to be paid for Shares, or the Company increases the number
of Shares being sought and such increase in the number of Shares being sought
exceeds 2% of the outstanding Shares or the Company decreases the number of
Shares being sought and (ii) the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that notice of such increase or decrease is first
published, sent or given, the Offer will be extended until the expiration of
such period of ten business days.
14. FEES AND EXPENSES
BancBoston Robertson Stephens Inc.("BRS") has been retained by the Company
to act as Dealer Manager in connection with the Offer. BRS will receive a fee
for its services as Dealer Manager of $100,000. The Company has also agreed to
reimburse BRS for certain reasonable out-of-pocket expenses incurred in
connection with the Offer, including reasonable fees and disbursements of
counsel, and to indemnify BRS against certain liabilities, including certain
liabilities under the Federal securities laws.
The Company has retained ChaseMellon Shareholder Services, L.L.C. to act as
Information Agent and Depositary in connection with the Offer. The Information
Agent may contact holders of Shares by mail, telephone, telex, telegraph and
personal interviews and may request brokers, dealers and other nominee
stockholders to forward materials relating to the Offer to beneficial owners.
Neither the Information Agent nor the Depositary will make solicitations or
recommendations in connection with the Offer. ChaseMellon Shareholder Services,
L.L.C., as Information Agent and the Depositary, will receive reasonable and
customary compensation for both services, will be reimbursed for certain
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses in connection with the Offer, including certain
liabilities under the Federal securities laws.
23
<PAGE> 24
The Company will not pay any fees or commissions to any broker or dealer or
any other person (other than the Dealer Manager, the Information Agent and the
Depositary) for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies will, upon request, be reimbursed
by the Company for reasonable and necessary costs and expenses incurred by them
in forwarding materials to their customers.
15. MISCELLANEOUS
The Company is subject to the information requirements of the Exchange Act
and in accordance therewith files periodic reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. The Company is required to disclose in such proxy statements
certain information, as of particular dates, concerning the Company's directors
and officers, their compensation, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company. Such material and other information may be
inspected at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 2120, Washington, D.C. 20549; and
also should be available for inspection and copying at the following regional
offices of the Commission: Northeast Regional Office, 7 World Trade Center,
Suite 1300, New York, New York 10048 and Midwest Regional Office, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can also be obtained by mail, upon payment of the Commission's
customary charges, from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
also maintains a Web site on the World Wide Web at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. Such
material also should be available for inspection at the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer is not in compliance with any valid
applicable law, the Company will make a good faith effort to comply with such
law. If, after such good faith effort, the Company cannot comply with such law,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) the holders of Shares residing in such jurisdiction. In any jurisdiction the
securities or blue sky laws of which require the Offer to be made by a licensed
broker or dealer, the Offer is being made on the Company's behalf by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
Pursuant to Rule 13e-4 promulgated under the Exchange Act, the Company has
filed with the Commission an Issuer Tender Offer Statement on Schedule 13E-4
(the "Schedule 13E-4") which contains additional information with respect to the
Offer. The Schedule 13E-4, including the exhibits and any amendments thereto,
may be examined, and copies may be obtained, at the same places and in the same
manner as is set forth above with respect to information concerning the Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR THE DEALER MANAGER IN CONNECTION WITH
THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE DEALER
MANAGER.
UNO RESTAURANT CORPORATION
SEPTEMBER 29, 1998
24
<PAGE> 25
SCHEDULE A
CERTAIN TRANSACTIONS INVOLVING SHARES
The Company and any individual director or executive officer of the Company
named below engaged in the transactions set forth below since July 31, 1998:
<TABLE>
<CAPTION>
NUMBER PRICE
NAME DATE OF SHARES PER SHARE NATURE OF TRANSACTION
---- ------- ---------- ---------- ----------------------------
<S> <C> <C> <C> <C>
Company...................... 08/10/98 20,000 $7.000 Open Market Stock Repurchase
Company...................... 08/19/98 25,000 $7.000 Open Market Stock Repurchase
Company...................... 08/26/98 25,000 $7.000 Open Market Stock Repurchase
Company...................... 08/27/98 19,000 $7.000 Open Market Stock Repurchase
Company...................... 09/01/98 25,000 $7.000 Open Market Stock Repurchase
Company...................... 09/02/98 10,000 $7.000 Open Market Stock Repurchase
Company...................... 09/03/98 10,000 $7.063 Open Market Stock Repurchase
Company...................... 09/08/98 20,000 $6.938 Open Market Stock Repurchase
Company...................... 09/09/98 13,800 $6.875 Open Market Stock Repurchase
Company...................... 09/24/98 7,382 $5.8125* 401K Matching Contribution
from Treasury Stock
</TABLE>
* The closing per Share sales price as reported on the NYSE on September 24,
1998.
25
<PAGE> 26
Facsimile copies of the Letter of Transmittal will be accepted from
Eligible Institutions only. The Letter of Transmittal and certificates for
Shares and any other required documents should be sent or delivered by each
tendering stockholder of the Company or his broker, dealer, commercial bank,
trust company or other nominee to the Depositary at one of its addresses set
forth below:
The Depositary is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C>
BY MAIL: BY HAND:
Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway -- 13th Floor
South Hackensack, NJ 07606 New York, NY 10271
BY FACSIMILE TRANSMISSION: BY OVERNIGHT COURIER:
(For Eligible Institutions Only) Reorganization Department
201-296-4293 85 Challenger Road
Confirm by Telephone: Mail Drop - Reorganization
201-296-4860 Ridgefield Park, NJ 07660
</TABLE>
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal may be directed to the Dealer Manager
or the Information Agent at their respective address and telephone number set
forth below. Stockholders may also contact their broker, dealer, commercial bank
or trust company for assistance concerning the Offer.
The Information Agent is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
450 WEST 33RD STREET
14TH FLOOR
NEW YORK, NEW YORK 10001
For information:
Banks and Brokers Call Collect: 212-273-8080
All Others Call Toll-Free: 800-549-9249
The Dealer Manager is:
BANCBOSTON ROBERTSON STEPHENS INC.
555 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94104
For information call: 800-288-7726 (Ext. 3367)
<PAGE> 1
Letter of Transmittal
To Tender Shares of Common Stock of
UNO RESTAURANT CORPORATION
Pursuant to the Offer to Purchase dated September 29, 1998
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON FRIDAY, OCTOBER 30, 1998, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C>
By Mail: By Hand:
REORGANIZATION DEPARTMENT REORGANIZATION DEPARTMENT
P.O. BOX 3301 120 BROADWAY -- 13TH FLOOR
SOUTH HACKENSACK, NJ 07606 NEW YORK, NY 10271
By Facsimile Transmission: By Overnight Courier:
(For Eligible Institutions Only) REORGANIZATION DEPARTMENT
(201) 296-4293 85 CHALLENGER ROAD
CONFIRM BY TELEPHONE: MAIL DROP-REORG
(201) 296-4860 RIDGEFIELD PARK, NJ 07660
</TABLE>
For information:
Banks and Brokers Call Collect: 212-273-8080
All Others Call Toll-Free: 800-549-9249
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED (SEE INSTRUCTIONS 3 AND 4)
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES TENDERED
(PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON (ATTACH ADDITIONAL SIGNED
CERTIFICATE(S) LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF NUMBER OF
CERTIFICATE SHARES REPRESENTED SHARES
NUMBER(S)(1) BY CERTIFICATE(S) TENDERED(2)
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total Shares
- ------------------------------------------------------------------------------------------------------------------------
Indicate in this box the order (by certificate number) in which Shares are to be purchased in the event of proration.(3)
(Attach additional signed list if necessary.) See Instruction 12.
lst: 2nd: 3rd: 4th: 5th:
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by stockholders tendering Shares by book-entry
transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares represented
by each Share certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
(3) If you do not designate an order, then in the event less than all Shares
tendered are purchased due to proration, Shares will be selected for
purchase by the Depositary. See Instruction 4.
<PAGE> 2
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE INSTRUCTIONS SET FORTH
IN THIS LETTER OF TRANSMITTAL CAREFULLY.
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE COMPANY WILL NOT
BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT CONSTITUTE VALID
DELIVERY. DELIVERIES TO BOOK-ENTRY TRANSFER FACILITIES WILL NOT CONSTITUTE
VALID DELIVERY TO THE DEPOSITARY.
This Letter of Transmittal is to be used only (i) if certificates for
Shares (as defined below) are to be forwarded with it, or (ii) if a tender of
Shares is to be made by book-entry transfer to the account maintained by the
Depositary at The Depository Trust Company ("DTC") (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 2 of the Offer to
Purchase.
Stockholders who cannot deliver their certificates for Shares and all other
documents which this Letter of Transmittal requires to the Depositary by the
Expiration Date (as defined in the Offer to Purchase) must tender their Shares
using the guaranteed delivery procedure set forth in Section 2 of the Offer to
Purchase. See Instruction 2.
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution:
-------------------------------
Book-Entry Transfer Facility: DTC
Account No.:
-------------------------------------------------
Transaction Code No.:
----------------------------------------
[ ] CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
--------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------
Name of Institution that Guaranteed Delivery:
-------------------
If delivery is by book-entry transfer:
Name of Tendering Institution:
----------------------------------
Account No. at DTC:
---------------------------------------------
Transaction Code No.:
-------------------------------------------
2
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to Uno Restaurant Corporation, a Delaware
corporation (the "Company"), the above-described shares of the Company's Common
Stock, $0.01 par value per share (the "Common Stock" or the "Shares"), at the
price per Share indicated in this Letter of Transmittal, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Company's
Offer to Purchase, dated September 29, 1998 (the "Offer to Purchase"), receipt
of which is hereby acknowledged, and in this Letter of Transmittal (which as it
may be amended or supplemented from time to time, together with the Offer to
Purchase, constitute the "Offer").
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms and subject to the conditions of
the Offer (including, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all right, title and
interest in and to all Shares tendered hereby or orders the registration of such
Shares tendered by book-entry transfer that are purchased pursuant to the Offer
to or upon the order of the Company and hereby irrevocably constitutes and
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares, with full power of substitution (such
power of attorney being an irrevocable power coupled with an interest), to:
(i) deliver certificates for such Shares, or transfer ownership of
such Shares on the account books maintained by the Book-Entry Transfer
Facility, together, in either such case, with all accompanying evidences of
transfer and authenticity, to or upon the order of, the Company upon
receipt by the Depositary, as the undersigned's agent, of the Purchase
Price (as defined below) with respect to such Shares;
(ii) present certificates for such Shares for cancellation and
transfer on the books of the Company; and
(iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, subject to the next paragraph, all in
accordance with the terms of the Offer.
The undersigned hereby represents and warrants to the Company that:
(i) the undersigned has full power and authority to tender, sell,
assign and transfer the Shares tendered hereby;
(ii) when and to the extent the Company accepts the Shares for
payment, the Company will acquire good, marketable and unencumbered title
thereto, free and clear of all security interests, liens, restrictions,
charges, encumbrances, conditional sales agreements, or other obligations
relating to the sale or transfer thereof, and the same will not be subject
to any adverse claim;
(iii) on request, the undersigned will execute and deliver any
additional documents the Depositary or the Company deems necessary or
desirable to complete the assignment, transfer and purchase of the Shares
tendered hereby; and
(v) the undersigned has read and agrees to all of the terms of this
Offer.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive the death or incapacity of the undersigned, and
any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
stated in the Offer, this tender is irrevocable.
The names and addresses of the registered owners should be printed, if they
are not already printed above, as they appear on the certificates representing
Shares tendered hereby. The certificates, the number of Shares that the
undersigned wishes to tender and the purchase price at which such Shares are
being tendered should be indicated in the appropriate boxes.
3
<PAGE> 4
The undersigned understands that the Company will determine a single per
Share price (not in excess of $7.00 nor less than $5.75 per Share) that it will
pay for the Shares validly tendered and not withdrawn pursuant to the Offer (the
"Purchase Price"), taking into account the number of Shares so tendered and the
prices specified by tendering stockholders. The undersigned understands that the
Company will select the Purchase Price that will allow it to buy up to 1,000,000
Shares pursuant to the Offer (or such greater or lesser number of Shares as the
Company may determine in accordance with the terms and conditions of the Offer),
and that all Shares properly tendered at prices at or below the Purchase Price
and not withdrawn will be purchased at the Purchase Price, net to the seller in
cash, upon the terms and subject to the conditions of the Offer, including its
proration provisions, and that the Company will return all other Shares,
including Shares tendered and not withdrawn at prices greater than the Purchase
Price, Shares not purchased because of proration and Shares not purchased
because they were conditionally tendered.
The undersigned recognizes that under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for Shares tendered, or
may not be required to purchase any of the Shares tendered hereby or may accept
for payment fewer than all of the Shares tendered hereby. The undersigned
understands that certificate(s) for any Shares not tendered or not purchased
will be returned to the undersigned at the address indicated above, unless
otherwise indicated under the Special Payment Instructions or Special Delivery
Instructions below. The undersigned recognizes that the Company has no
obligation, pursuant to the Special Payment Instructions, to transfer any
certificate for Shares from the name of their registered owner if the Company
does not accept for payment any of the Shares represented by such certificates
or tendered by such book-entry transfer.
The undersigned understands that he may condition his tender of Shares upon
the acceptance by the Company of a designated number of Shares tendered hereby,
as described in Section 1 of the Offer to Purchase. Such a conditional tender
may be made by completing the box under the heading "Conditional Tender." If
such box is not completed, the tender will be deemed to be unconditional.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
4
<PAGE> 5
The check for the Purchase Price for such of the tendered Shares as are
purchased will be issued to the order of the undersigned and mailed to the
address indicated above unless otherwise indicated under the Special Payment
Instructions or the Special Delivery Instructions below.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED.
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES.
SHARES TENDERED AT PURCHASE PRICE DETERMINED
BY DUTCH AUCTION
[ ] The undersigned wants to maximize the chance of having the Company purchase
all shares the undersigned is tendering (subject to the possibility of
proration). Accordingly, by checking this one box INSTEAD OF ONE OF THE
PRICE BOXES BELOW, the undersigned hereby tenders Shares at, and is willing
to accept, the Purchase Price resulting from the Dutch Auction tender
process. This action could result in receiving a price per Share as low as
$5.75 or as high as $7.00.
**CHECK EITHER THE BOX ABOVE OR CHECK ONE BOX BELOW**
<TABLE>
<S> <C> <C> <C> <C>
[ ] $5.75 [ ] $6.125 [ ] $6.50 [ ] $6.875
[ ] $5.875 [ ] $6.25 [ ] $6.625 [ ] $7.00
[ ] $6.00 [ ] $6.375 [ ] $6.75
</TABLE>
IF PORTIONS OF SHARE HOLDINGS ARE BEING TENDERED AT DIFFERENT PRICES, USE A
SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE SPECIFIED (SEE INSTRUCTION 5).
[ ] CONDITIONAL TENDER
A tendering stockholder may condition his or her tender of Shares upon the
purchase by the Company of a specified minimum number of Shares tendered hereby,
all as described in the Offer to Purchase, particularly in Sections 1 and 2
thereof. Unless at least such minimum number of Shares is purchased by the
Company pursuant to the terms of the Offer, none of the Shares tendered hereby
will be purchased. It is the tendering stockholder's responsibility to calculate
such minimum number of Shares, and each stockholder is urged to consult his own
tax advisor. Unless this box has been completed and a minimum specified, the
tender will be deemed unconditional.
Minimum number of Shares that must be purchased, if any are purchased:
________ Shares
5
<PAGE> 6
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 4, 6 and 8)
To be completed ONLY if certificates for Shares not tendered or not purchased
and/or the check for the purchase price of Shares purchased is to be issued in
the name of someone other than the undersigned.
Issue: [ ] check; [ ] certificate(s) to:
Name:
------------------------------------------------------
(Please Print)
Address:
------------------------------------------------------
------------------------------------------------------
(Include Zip Code)
------------------------------------------------------
(Tax Identification or Social Security No.)
(Complete Substitute Form W-9 below)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 4, 6 and 8)
To be completed ONLY if certificates for Shares not tendered or not purchased
and/or the check for the purchase price of Shares purchased is to be mailed to
someone other than the undersigned, or to the undersigned at an address other
than that shown above.
Mail: [ ] check; [ ] certificate(s) to:
Name:
------------------------------------------------------
(Please Print)
Address:
------------------------------------------------------
------------------------------------------------------
(Include Zip Code)
------------------------------------------------------
STOCKHOLDER(S) SIGN HERE
(See Instructions 1 and 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF OWNER(S))
Dated: , 1998
Name(s):
(PLEASE PRINT)
Capacity (full title):
Address:
(INCLUDE ZIP CODE)
(Tax Identification or Social Security Number(s)):
(Must be signed by registered owner(s) exactly as name(s) appear(s) on
certificate(s) or on a security position listing or by person(s) authorized to
become registered owner(s) by certificate(s) and documents transmitted with this
Letter of Transmittal. If signature is by attorney-in-fact, executor,
administrator, trustee, guardian, officer of a corporation or another acting in
a fiduciary or representative capacity, please set forth the full title. See
Instruction 6.)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 6)
Authorized Signature:
Name:
(PLEASE PRINT)
Title:
Name of Firm:
Address:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
Dated: , 1998
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signature. No signature guarantee is required if either:
(a) this Letter of Transmittal is signed by the registered holder of the Shares
(which term, for purposes of this document, shall include any participant in the
Book-Entry Transfer Facility whose name appears on a security position listing
as the owner of Shares) tendered with this Letter of Transmittal and payment and
delivery are to be made directly to such owner and such owner has not completed
either the box entitled "Special Payment Instructions" or "Special Delivery
Instructions" above, or (b) such Shares are tendered for the account of a
financial institution that is a member of the Securities Transfer Agents
Medallion Program, the Stock Exchange Medallion Program or the New York Stock
Exchange, Inc. Medallion Signature Program (each being referred to as an
"Eligible Institution"). In all other cases, an Eligible Institution must
guarantee all signatures on this Letter of Transmittal. See Instruction 6.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be used either if certificates are
to be forwarded with it to the Depositary or if tenders are to be made pursuant
to the procedure for tender by book-entry transfer set forth in Section 2 of the
Offer to Purchase. Certificates for all physically tendered Shares, or
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of Shares tendered by a book-entry transfer,
together in each case with a properly completed and duly executed Letter of
Transmittal or facsimile thereof, and any other documents required by this
Letter of Transmittal, should be mailed or delivered to the Depositary at the
appropriate address set forth herein and must be received by the Depositary by
the Expiration Date (as defined in the Offer to Purchase).
Stockholders whose certificates are not immediately available or who cannot
deliver certificates for Shares and all other required documents to the
Depositary by the Expiration Date, or whose Shares cannot be delivered on a
timely basis pursuant to the procedure for book-entry transfer, may tender their
Shares by or through any Eligible Institution by properly completing (including
the price at which the Shares are being tendered) and duly executing and
delivering a Notice of Guaranteed Delivery (or facsimile of it) and by otherwise
complying with the guaranteed delivery procedure set forth in Section 2 of the
Offer to Purchase. Pursuant to such procedure, the certificates for all
physically tendered Shares, or book-entry confirmation, as the case may be, as
well as a properly completed and duly executed Letter of Transmittal and all
other documents required by this Letter of Transmittal, must be received by the
Depositary within three New York Stock Exchange trading days after receipt by
the Depositary of such Notice of Guaranteed Delivery, all as provided in Section
2 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice. For Shares to be validly tendered pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery by the
Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
The Company will not purchase any fractional Shares, nor will it accept any
alternative, conditional or contingent tenders except as specifically permitted
by Sections 1 and 2 of the Offer to Purchase. All tendering stockholders, by
execution of this Letter of Transmittal (or a facsimile of it), waive any right
to receive any notice of the acceptance of their tender.
3. Inadequate Space. If the space provided in the box captioned
"Description of Shares Tendered" is inadequate, the certificate numbers and/or
the number of Shares should be listed on a separate signed schedule and attached
to this Letter of Transmittal.
4. Partial Tenders and Unpurchased Shares. (Not applicable to stockholders
who tender by book-entry transfer.) If fewer than all of the Shares evidenced by
any certificate are to be tendered, fill in the number of Shares that are to be
tendered in the column entitled "Number of Shares Tendered." In such case, if
any tendered Shares are purchased, a new certificate for the remainder of the
Shares evidenced by the old certificate(s) will be issued and sent to the
registered holder, unless otherwise specified in the "Special Payment
Instructions" or "Special Delivery Instructions" boxes on this
7
<PAGE> 8
Letter of Transmittal, as soon as practicable after the Expiration Date. All
Shares represented by the certificate(s) listed and delivered to the Depositary
are deemed to have been tendered unless otherwise indicated.
5. Indication of Price at Which Shares Are Being Tendered. For Shares to be
properly tendered, the stockholder must check the box indicating the price per
Share at which he is tendering Shares under "Price (In Dollars) Per Share at
Which Shares Are Being Tendered" on this Letter of Transmittal. ONLY ONE BOX MAY
BE CHECKED. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED, THERE IS
NO PROPER TENDER OF SHARES. A stockholder wishing to tender portions of his
Share holdings at different prices must complete a separate Letter of
Transmittal for each price at which he wishes to tender each such portion of his
Shares. The same Shares cannot be tendered (unless previously properly withdrawn
as provided in Section 3 of the Offer to Purchase) at more than one price.
Stockholders wishing to maximize the possibility that their Shares will be
purchased at the relevant Purchase Price may check the box on the Letter of
Transmittal marked "Shares Tendered at Purchase Price Determined by Dutch
Auction." Checking this box may result in a Purchase Price for the Shares so
tendered at the minimum price of $5.75.
6. Signatures On Letter of Transmittal, Stock Powers and Endorsements.
(a) If this Letter of Transmittal is signed by the registered owner(s)
of the Shares tendered hereby, the signature(s) must correspond exactly
with the name(s) as written on the face of the certificate without any
change whatsoever.
(b) If the Shares are registered in the names of two or more joint
owners, each such owner must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles of it) as there are
different registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered
owner(s) of the Shares listed and tendered hereby, no endorsements of
certificate(s) representing such Shares or separate stock powers are
required unless payment is to be made, or the certificates for Shares not
tendered or not purchased are to be issued, to a person other than the
registered owner(s). Signature(s) on such certificates or stock powers must
be guaranteed by an Eligible Institution. If this Letter of Transmittal is
signed by a person other than the registered owner of the certificate(s)
listed, however, the certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of
the registered owner(s) appear(s) on the certificate, and signatures on
such certificate(s) or stock power(s) must be guaranteed by an Eligible
Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificates or stock powers
are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing
and must submit proper evidence satisfactory to the Company of their
authority so to act.
7. Stock Transfer Taxes. Except as provided in this Instruction, no stock
transfer tax stamps or funds to cover such stamps need accompany this Letter of
Transmittal. The Company will pay or cause to be paid any stock transfer taxes
payable on the transfer to it of Shares purchased pursuant to the Offer. If,
however:
(a) payment of the Purchase Price is to be made to any person(s) other
than the registered owner(s);
(b) Shares not tendered or not accepted for purchase (in the
circumstances permitted in the Offer) are to be registered in the name of
any person(s) other than the registered owner(s); or
(c) tendered certificates are registered in the name(s) of any
person(s) other than the person(s) signing this Letter of Transmittal;
then the Depositary will deduct from the Purchase Price the amount of any stock
transfer taxes (whether imposed on the registered owner or such other person)
payable on account of the transfer to such person unless satisfactory evidence
of the payment of such taxes, or an exemption from them, is submitted.
8. Special Payment and Delivery Instructions. If certificates for Shares
not tendered or not purchased and/or checks are to be issued in the name of a
person other than the signer of the Letter of Transmittal or if such
certificates and/or
8
<PAGE> 9
checks are to be sent to someone other than the signer of the Letter of
Transmittal or to the signer at a different address, the captioned boxes
"Special Payment Instructions" and/or "Special Delivery Instructions" on this
Letter of Transmittal should be completed.
9. Irregularities. The Company will determine, in its sole discretion, all
questions as to the validity, form, eligibility (including time of receipt) and
acceptance for payment of any tender of Shares and its determination shall be
final and binding on all parties. The Company reserves the absolute right to
reject any or all tenders determined by it not to be in proper form or the
acceptance of or payment for which may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in the tender of any
particular Shares, and the Company's interpretation of the terms of the Offer
(including these instructions) will be final and binding on all parties. No
tender of Shares will be deemed to be properly made until all defects and
irregularities have been cured or waived. Unless waived, any defects or
irregularities in connection with tenders must be cured within such time as the
Company shall determine. None of the Company, the Dealer Manager, the
Depositary, the Information Agent nor any other person is or will be obligated
to give notice of defects or irregularities in tenders, nor shall any of them
incur any liability for failure to give any such notice.
10. Questions and Requests for Assistance and Additional Copies. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, the Notice of Guaranteed Delivery and this Letter of
Transmittal may be obtained from, the Information Agent or the Dealer Manager at
their addresses and telephone numbers set forth at the end of the Letter of
Transmittal or from your local broker, dealer, commercial bank or trust company.
11. Substitute Form W-9. Each tendering stockholder is required to provide
the Depositary with a correct taxpayer identification number ("TIN") on
Substitute Form W-9, which is provided under "Important Tax Information" below.
Failure to provide the information on the form may subject the tendering
stockholder to 31% federal income tax withholding on the payments made to the
stockholder or other payee with respect to Shares purchased pursuant to the
Offer. The box in Part 3 of the form may be checked if the tendering stockholder
has not been issued a TIN and has applied for a TIN or intends to apply for a
TIN in the near future. If the box in Part 3 of the form is checked and the
Depositary is not provided with a TIN within sixty (60) days, the Depositary
will withhold 31% on all such payments thereafter until a TIN is provided to the
Depositary.
12. Order of Purchase in Event of Proration. As described in Section 1 of
the Offer to Purchase, stockholders may designate the order in which their
Shares are to be purchased in the event of proration. The order of purchase may
affect whether any capital gain or loss recognized on the Shares purchased is
long-term or short-term (depending on the holding period for the Shares
purchased) and the amount of gain or loss recognized for federal income tax
purposes. See Sections 1 and 12 of the Offer to Purchase.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE OF IT
(TOGETHER WITH CERTIFICATES FOR SHARES OR CONFIRMATION OF BOOK-ENTRY TRANSFER
AND ALL OTHER REQUIRED DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITORY ON OR BEFORE THE EXPIRATION DATE.
9
<PAGE> 10
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary with such
stockholder's correct TIN on Substitute Form W-9 below. If the Depositary is not
provided with the correct TIN, the Internal Revenue Service may subject the
stockholder or other payee to a $50 penalty. In addition, payments that are made
to such stockholder or other payee with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the stockholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on a payment made to a stockholder or other
payee with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of the stockholder's correct TIN by completing
the form below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such stockholder is awaiting a TIN).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
10
<PAGE> 11
PAYOR'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN AND CERTIFY BY ----------------------------------
FORM W-9 SIGNING AND DATING BELOW. Social Security Number
(SEE INSTRUCTION 12) OR
Employer Identification Number
---------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 2 -- For Payee exempt from backup withholding: Exempt [ ]
INTERNAL REVENUE SERVICE
PAYOR'S REQUEST FOR
TAXPAYER IDENTIFICATION NUMBER
("TIN")
---------------------------------------------------------------------------------------------
PART 3 -- Awaiting TIN [ ]
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATIONS -- Under penalties of perjury, I certify that: (1) the number
shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me), (2) I am not subject to backup
withholding because (a) I am exempt from backup withholding; or (b) I have not
been notified by the Internal Revenue Service ("IRS") that I am subject to
backup withholding as a result of failure to report all interest or dividends
or (c) the IRS has notified me that I am no longer subject to backup
withholding, and (3) all other information provided on this form is true,
correct and complete. [ ]
- --------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out Item (2) in Part 2 above if
you have been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject to
backup withholding, you received another notification from the IRS stating
that you are no longer subject to backup withholding, do not cross out Item
(2). If you are exempt from backup withholding, check the box in Part 2 above.
SIGNATURE
-------------------------------------------- DATE
-----------------------
Please fill in your name and address below.
------------------------------------------------------------------------------
Name
------------------------------------------------------------------------------
Address (number and street)
------------------------------------------------------------------------------
City, State and Zip Code
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THIS OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECK THE BOX IN PART 3
OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a TIN to the appropriate IRS Center or Social Security
Administration Office or (b) I intend to mail or deliver an application in the
near future. I understand that if I do not provide a taxpayer identification
number within sixty (60) days, 31% of all reportable payments made to me
thereafter will be withheld until I provide a number.
<TABLE>
<S> <C>
Signature ------------------------------------------ Date ---------------------
</TABLE>
The Information Agent is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
The Dealer Manager is:
BANCBOSTON ROBERTSON STEPHENS INC.
11
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
UNO RESTAURANT CORPORATION
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to tender Shares
pursuant to the Offer (as defined below) if certificates for shares of Common
Stock, $0.01 par value per share (the "Common Stock" or the "Shares"), of the
Company, are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
documents required by the Letter of Transmittal to reach the Depositary by the
Expiration Date (as defined in Section 1 of the Offer to Purchase). Such form
may be delivered by hand or transmitted by telegraph, telex, facsimile
transmission or letter to the Depositary. See Section 2 of the Offer to
Purchase.
TO: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C>
By Mail: By Hand:
REORGANIZATION DEPARTMENT REORGANIZATION DEPARTMENT
P.O. BOX 3301 120 BROADWAY -- 13TH FLOOR
SOUTH HACKENSACK, NJ 07606 NEW YORK, NY 10271
By Facsimile Transmission: By Overnight Courier:
(For Eligible Institutions Only) REORGANIZATION DEPARTMENT
(201) 296-4293 85 CHALLENGER ROAD
CONFIRM BY TELEPHONE: MAIL DROP -- REORG
(201) 296-4860 RIDGEFIELD PARK, NJ 07660
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OR TRANSMISSION OF INSTRUCTIONS VIA A
FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID
DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Uno Restaurant Corporation, a Delaware
corporation, at the price per Share indicated below, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated September 29, 1998, (the "Offer to Purchase") and the related Letter of
Transmittal (which together constitute the "Offer"), receipt of which is hereby
acknowledged, the number of Shares indicated below pursuant to the guaranteed
delivery procedure set forth in Section 2 of the Offer to Purchase.
Name(s) of Record Holder(s):
-----------------------------------------------------
-----------------------------------------------------
(PLEASE TYPE OR PRINT)
Address:
-------------------------------------------------------------------------
Area Code and Tel. No.:
----------------------------------------------------------
Signature(s):
---------------------------------------------------------------------
(SIGN HERE)
Account No.:
---------------------------------------------------------------------
Number of Shares:
----------------------------------------------------------------
Certificate Nos. (if available):
------------------------------------------------------
If Shares will be tendered by book-entry transfer, check the box
[ ] The Depository Trust Company
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX
IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS
CHECKED, THERE IS NO PROPER TENDER OF SHARES
- --------------------------------------------------------------------------------
SHARES TENDERED AT PURCHASE PRICE DETERMINED BY DUTCH AUCTION
[ ] The undersigned wants to maximize the chance of having the Company purchase
all the shares the undersigned is tendering (subject to the possibility of
proration). Accordingly, by checking this one box INSTEAD OF ONE OF THE
PRICE BOXES BELOW, the undersigned hereby tenders Shares at, and is willing
to accept, the Purchase Price resulting from the Dutch Auction tender
process. This action could result in receiving a price per Share as low as
$5.75 or as high as $7.00.
***CHECK EITHER THE BOX ABOVE OR ONE BELOW***
SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER
<TABLE>
<S> <C> <C> <C> <C> <C>
[ ] $5.75 [ ] $6.00 [ ] $6.25 [ ] $6.50 [ ] $6.75 [ ] $7.00
[ ] $5.875 [ ] $6.125 [ ] $6.375 [ ] $6.625 [ ] $6.875
</TABLE>
[ ] CONDITIONAL TENDER. UNLESS THIS BOX HAS BEEN COMPLETED AND A MINIMUM
SPECIFIED, THE TENDER WILL BE DEEMED UNCONDITIONAL
Minimum number of Shares that must be purchased, if any are
purchased: __________ Shares
(GUARANTEE ON PAGE 4)
3
<PAGE> 4
GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., or a commercial bank
or trust company having an office or correspondent in the United States,
guarantees (a) that the above-named person(s) has a "net long position" in the
Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended, and (b) the delivery to the
Depository, at one of its addresses set forth above, of the certificate(s)
representing the Shares tendered hereby, in proper form for transfer, or to
deliver to the Depositary such Shares pursuant to the procedure for book-entry
transfer, in either case with delivery of a properly completed and duly executed
Letter of Transmittal (or manually-signed facsimile thereof) and any other
required documents, all within three (3) New York Stock Exchange trading days
after the date hereof.
<TABLE>
<S> <C>
- ---------------------------------------- ------------------------------------------------
Name of Firm Authorized Signature
- ---------------------------------------- ------------------------------------------------
Address Title
- ---------------------------------------- ------------------------------------------------
Zip Code Name
- ---------------------------------------- ------------------------------------------------
Area Code and Tel. No. Date
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS FORM
SHARE CERTIFICATES MUST BE SENT WITH THE LETTER OF TRANSMITTAL
The Institution which completes this form must communicate the guarantee to
the Depositary and must deliver the Letter of Transmittal and certificates for
Shares to the Depositary within the time period shown herein. Failure to do so
could result in a financial loss to such Institution.
4
<PAGE> 1
BANCBOSTON ROBERTSON STEPHENS INC.
555 CALIFORNIA STREET
SAN FRANCISCO, CA 94104
To Brokers, Dealers, Commercial Banks,
Trust Companies and
Other Nominees:
We have been appointed by Uno Restaurant Corporation, a Delaware
corporation (the "Company"), to act as Dealer Manager in connection with its
offer to purchase for cash up to 1,000,000 shares of its Common Stock, $0.01 par
value per share, (the "Common Stock" or the "Shares") at a price (in multiples
of $0.125), not in excess of $7.00 nor less than $5.75 per Share, specified by
the tendering stockholders, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated September 29, 1998, and in the related
Letter of Transmittal (which together constitute the "Offer"), and we are
enclosing herewith the material listed below relating to the Offer. The Offer is
not conditioned upon any minimum number of Shares being tendered. The Offer is,
however, subject to certain conditions. See Section 5 of the Offer to Purchase.
Stockholders are invited to tender Shares at prices (not in excess of $7.00
nor less than $5.75 per Share), specified by such stockholders, upon the terms
and subject to the conditions of the Offer. The Company will, upon the terms and
subject to the conditions of the Offer, determine a single per Share price (not
in excess of $7.00 nor less than $5.75 per Share) that it will pay for the
Shares properly tendered pursuant to the Offer (the "Purchase Price"), taking
into account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will select the lowest Purchase Price that
will allow it to buy 1,000,000 Shares (or such lesser number of Shares as are
properly tendered at or below the Purchase Price) pursuant to the Offer. All
Shares properly tendered at prices at or below the Purchase Price and not
withdrawn will be purchased at the Purchase Price, net to the seller in cash,
upon the terms and subject to the conditions of the Offer, including the
proration terms thereof. The Company will return all other Shares, including
Shares tendered at prices greater than the Purchase Price and Shares not
purchased because of proration or conditional tenders. No preference will be
given to Shares tendered by any stockholder owning beneficially fewer than 100
Shares in the aggregate. See Section 1 of the Offer to Purchase.
We are asking you to contact your clients for whom you hold Shares
registered in your name (or in the name of your nominee) or who hold Shares
registered in their own names. Please bring the Offer to their attention as
promptly as possible. In connection with the Offer, enclosed for your
information and for forwarding to your clients for whom you hold Shares
registered in your name or in the name of your nominee, are copies of the
following documents:
1. Offer to Purchase, dated September 29, 1998;
2. Letter of Transmittal for your use and for the information of your
clients (together with accompanying Substitute Form W-9 Guidelines);
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or if the procedure
for book-entry transfer cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer; and
5. Letter dated September 29, 1998, from Aaron D. Spencer, Chairman of
the Company and Craig S. Miller, Chief Executive Officer of the Company, to
the Company's stockholders.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON FRIDAY, OCTOBER 30, 1998, UNLESS THE OFFER IS EXTENDED.
<PAGE> 2
No fees or commissions will be payable to brokers, dealers or any other
persons for soliciting tenders of Shares pursuant to the Offer. The Company
will, however, upon request, reimburse you for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to the
beneficial owners of Shares held by you as a nominee or in a fiduciary capacity.
The Company will pay or cause to be paid all stock transfer taxes, if any, on
its purchase of Shares, except as otherwise provided in Instruction 7 of the
Letter of Transmittal.
As described in the Offer to Purchase, if more than 1,000,000 Shares have
been properly tendered at or below the Purchase Price and not withdrawn prior to
the Expiration Date, as defined in Section 1 of the Offer to Purchase, the
Company will accept Shares for purchase in the following order of priority: (i)
Shares unconditionally tendered at or below the Purchase Price by the Expiration
Date on a pro rata basis (with adjustments to avoid the purchase of fractional
Shares) and (ii) Shares conditionally tendered at or below the Purchase Price by
the Expiration Date selected by lot.
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal may be directed to the Dealer Manager,
BancBoston Robertson Stephens Inc., telephone 1-800-288-7726 (Ext. 3367) or to
the Information Agent, ChaseMellon Shareholder Services, L.L.C., telephone 1-
212-273-8080 (call collect).
Very truly yours,
BancBoston Robertson Stephens Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE
AGENT OF THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE
DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED HEREIN.
<PAGE> 1
UNO RESTAURANT CORPORATION
OFFER TO PURCHASE FOR CASH UP TO
1,000,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT IN EXCESS OF
$7.00 NOR LESS THAN $5.75 PER SHARE
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated September
29, 1998, and the related Letter of Transmittal (which together constitute the
"Offer"), in connection with the Offer by Uno Restaurant Corporation, a Delaware
corporation (the "Company"), to purchase for cash up to 1,000,000 Shares of its
Common Stock, $0.01 par value per share (the "Common Stock" or the "Shares") at
a price (in multiples of $0.125), not in excess of $7.00 nor less than $5.75 per
Share, and on the terms and subject to the conditions of the Offer.
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share price (not in excess of $7.00 nor less than
$5.75 per Share) that it will pay for the Shares properly tendered pursuant to
the Offer (the "Purchase Price") taking into account the number of Shares so
tendered and the prices specified by tendering stockholders. The Company will
select the lowest Purchase Price that will allow it to buy 1,000,000 Shares (or
such lesser number of Shares as are properly tendered at or below the Purchase
Price) pursuant to the Offer. All Shares properly tendered at prices at or below
the Purchase Price and not withdrawn will be purchased at the Purchase Price,
net to the seller in cash, upon the terms and subject to the conditions of the
Offer, including the proration terms thereof. The Company will return all other
Shares, including Shares tendered at prices greater than the Purchase Price and
Shares not purchased because of proration or conditional tenders. See Section 1
of the Offer to Purchase.
We are the owner of record of Shares held for your account. As such, a
tender of such Shares can be made only by us as the holders of record, and then
only pursuant to your instructions. We are sending you the Letter of Transmittal
for your information only; you cannot use it to tender Shares we hold for your
account.
Please instruct us as to whether you wish us to tender any or all of the
Shares we hold for your account on the terms and subject to the conditions of
the Offer.
We call your attention to the following:
1. You may tender Shares at prices (in multiples of $0.125) not in
excess of $7.00 nor less than $5.75 per Share, as indicated in the attached
instruction form.
2. The Offer is not conditioned upon any minimum number of Shares
being tendered. The Offer is, however, subject to certain conditions. See
Section 5 of the Offer to Purchase.
3. The Offer, proration period and withdrawal rights will expire at
5:00 p.m., New York City time, on October 30, 1998, unless the Company
extends the Offer.
4. The Offer is for up to 1,000,000 Shares, constituting approximately
9.4% of the Shares outstanding as of September 28, 1998.
5. Tendering stockholders will not be obligated to pay any brokerage
commissions, solicitation fees or, subject to Instruction 7 of the Letter
of Transmittal, stock transfer taxes on the Company's purchase of Shares
pursuant to the Offer.
6. If you are the beneficial owner of Shares that you do not want to
be subject to proration, if any, if purchased pursuant to the Offer, you
may direct us to tender such Shares on your behalf subject to the condition
that at least a designated minimum or none of such Shares be purchased, by
completing the box captioned "Conditional Tenders." It is the beneficial
owner's responsibility to determine the minimum number of Shares to be
tendered. BENEFICIAL OWNERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE EFFECTS OF PRORATION OF THE OFFER AND THE ADVISABILITY OF DIRECTING
US TO MAKE A CONDITIONAL OFFER.
<PAGE> 2
7. Please instruct us clearly if you wish to tender some Shares at one
price and other Shares at another price. We must submit separate Letters of
Transmittal on your behalf for each price you will accept.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the attached instruction form.
An envelope to return your instructions to us is enclosed. If you authorize us
to tender your Shares, we will tender all such Shares unless you specify
otherwise on the attached instruction form.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO
SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION OF THE OFFER. THE
OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON FRIDAY, OCTOBER 30, 1998, UNLESS THE COMPANY EXTENDS THE OFFER.
As described in Section 1 of the Offer to Purchase, if by the Expiration
Date a greater number of Shares are properly tendered at or below the Purchase
Price than the Company will accept for purchase, the Company will accept Shares
for purchase at the Purchase Price in the following order of priority:
(a) first, all Shares properly and unconditionally tendered at or
below the Purchase Price by the Expiration Date on a pro rata basis (with
adjustments to avoid purchases of fractional Shares); and
(b) second, after purchase of all of the above Shares, Shares
conditionally tendered at or below the Purchase Price by the Expiration
Date selected by lot as is more fully described in the Offer to Purchase.
THE COMPANY IS NOT MAKING THE OFFER TO, NOR WILL THE COMPANY ACCEPT TENDERS
FROM OR ON BEHALF OF, OWNERS OF SHARES IN ANY JURISDICTION IN WHICH THE OFFER OR
ITS ACCEPTANCE WOULD VIOLATE THE SECURITIES, BLUE SKY OR OTHER LAWS OF SUCH
JURISDICTION. IN ANY JURISDICTION THE SECURITIES OR BLUE SKY LAWS OF WHICH
REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER IS BEING
MADE ON THE COMPANY'S BEHALF BY A REGISTERED BROKER OR DEALER LICENSED UNDER THE
LAWS OF SUCH JURISDICTION.
2
<PAGE> 3
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR
IF
NO BOX IS CHECKED, THERE IS NO PROPER TENDER OF SHARES.
- --------------------------------------------------------------------------------
SHARES TENDERED AT PURCHASE PRICE DETERMINED BY DUTCH
AUCTION
[ ] The undersigned wants to maximize the chance of having
the Company
purchase all the Shares the undersigned is tendering,
subject to the possibility
of pro ration. Accordingly, by checking this box INSTEAD OF
ONE OF
THE PRICE BOXES BELOW, the undersigned hereby tenders
Shares at,
and is willing to accept, the Purchase Price resulting from
the Dutch Auction
tender process. This action could result in receiving a
price per Share
as low as $5.75 or as high as $7.00.
**CHECK EITHER THE BOX ABOVE OR CHECK ONE BOX BELOW**
SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER
<TABLE>
<S> <C> <C> <C>
[ ] $5.75 [ ] $6.125 [ ] $6.50 [ ] $6.875
[ ] $5.875 [ ] $6.25 [ ] $6.625 [ ] $7.00
[ ] $6.00 [ ] $6.375 [ ] $6.75
</TABLE>
- --------------------------------------------------------------------------------
[ ] CONDITIONAL TENDER
Unless this box has been completed and a minimum specified, the tender will be
deemed unconditional (See Sections 1 and 2 of the Offer to Purchase).
Minimum number of Shares that must be purchased, if any are purchased:
- ------------------ Shares
SIGNATURE BOX
Signature(s):
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
Name(s) and Address(es) (Please Print):
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone No.:
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.:
----------------------------------------------------------------
(Instructions on Page 4)
3
<PAGE> 4
Instructions
With Respect to Offer to Purchase for Cash
Up to 1,000,000 Shares of Common Stock
of
UNO RESTAURANT CORPORATION
At a Purchase Price Not In Excess Of
$7.00 Nor Less Than $5.75 Per Share
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated September 29, 1998, and the related Letter of
Transmittal (which together constitute the "Offer"), in connection with the
offer by Uno Restaurant Corporation, a Delaware corporation (the "Company"), to
purchase for cash up to 1,000,000 Shares of its Common Stock, $0.01 par value
per share (the "Common Stock" or the "Shares") at a price (in multiples of
$0.125), not in excess of $7.00 nor less than $5.75 per Share, on the terms and
subject to the conditions of the Offer.
The Company will determine a single per Share price (not in excess of $7.00
nor less than $5.75 per Share) that it will pay for the Shares properly tendered
pursuant to the Offer (the "Purchase Price"), taking into account the number of
Shares so tendered and the prices specified by tendering stockholders. The
Company will select the lowest Purchase Price that will allow it to buy
1,000,000 Shares (or such lesser number of Shares as are properly tendered at or
below the Purchase Price) pursuant to the Offer.
The undersigned hereby instruct(s) you to tender to the Company the number
of Shares indicated below or, if no number is indicated, all Shares for the
account of the undersigned, at the price per Share indicated above, and subject
to the condition, if any, indicated in the box marked "Conditional Tender,"
above, upon the terms of the Offer. The Company will return Shares tendered at
prices greater than the Purchase Price, Shares not purchased because of
proration and Shares not purchased because they were conditionally tendered.
Aggregate number of Shares to be tendered by you for us:***
--------------------
- ---------------
*** Unless otherwise indicated, it will be assumed that all of the Shares held
for the account of the undersigned are to be tendered.
4
<PAGE> 1
LOGO Uno Restaurant Corporation, 100 Charles Park Road, West
Roxbury, MA 02132
617-323-9200
September 29, 1998
Dear Stockholder:
Uno Restaurant Corporation is offering to purchase up to 1,000,000 shares
of its Common Stock, $.01 par value per Share (the "Common Stock" or the
"Shares"), from its stockholders at a price not in excess of $7.00 nor less than
$5.75 per Share (the "Offer"). The Offer represents approximately 9.4% of the
currently outstanding Shares. The Offer and withdrawal rights will expire at
5:00 p.m., New York City time, on October 30, 1998, unless the Offer is
extended.
The Board of Directors has concluded that the purchase of Shares pursuant
to the Offer is a prudent use of the Company's financial resources. The Offer
provides stockholders who are considering the sale of all or a portion of their
Shares the opportunity to determine the price at which they are willing to sell
their Shares and, if any such Shares are purchased pursuant to the Offer, to
sell such Shares for cash at a price equal to or in excess of current market
prices at the date the Offer was announced without the usual transaction costs
associated with market sales.
The Company is conducting the Offer through a procedure commonly referred
to as a "dutch auction," which allows you to select the price, within the range
of $5.75 to $7.00 per Share, at which you are willing to sell your Shares to the
Company. The Company will select the lowest purchase price that will allow it to
purchase up to 1,000,000 Shares and that same price will be paid for all Shares
purchased in the Offer.
All Shares properly tendered at or below the purchase price so selected
will be purchased at such purchase price in cash, subject to the terms and
conditions of the Offer, including proration in the event more Shares are
tendered at or below such purchase price than will be purchased by the Company.
All Shares not purchased pursuant to the Offer, including Shares tendered at
prices in excess of the purchase price and Shares not purchased because of
proration or conditional tenders, will be returned at the Company's expense.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, EACH
STOCKHOLDER MUST MAKE HIS OWN DECISION WHETHER TO TENDER SHARES, AND, IF SO, HOW
MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE
OFFICER OF THE COMPANY INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
(over)
<PAGE> 2
The Offer is explained in greater detail in the enclosed Offer to Purchase
and Letter of Transmittal. We encourage you to read these documents carefully
before making any decision with respect to the Offer. If you have any questions
or requests for assistance or for additional copies of the Offer to Purchase and
the Letter of Transmittal, you may call the Information Agent for the Offer,
ChaseMellon Shareholder Services, L.L.C. at 800-549-9249.
Very truly yours,
/s/ Aaron D. Spencer
--------------------------------------
Aaron D. Spencer, Chairman
/s/ Craig S. Miller
--------------------------------------
Craig S. Miller, Chief Executive
Officer
<PAGE> 1
FORM OF PRESS RELEASE
UNO RESTAURANT CORPORATION
UNO RESTAURANT CORPORATION TO COMMENCE TENDER OFFER FOR UP TO 1,000,000 SHARES
OF ITS COMMON STOCK AND ANNOUNCES PRELIMINARY
RESULTS FOR FOURTH QUARTER
BOSTON, MASSACHUSETTS -- SEPTEMBER 29, 1998 -- Uno Restaurant Corporation
(NYSE:UNO) (the "Company") announced today that it will commence a "dutch
auction" tender offer for up to 1,000,000 shares of its common stock,
representing approximately 9.4% of its currently outstanding shares. Under the
terms of the offer, the Company will invite stockholders to tender their shares
at prices specified by the tendering stockholders within a range of $5.75 to
$7.00 per share.
The tender offer will begin on September 29, 1998, and will expire at 5:00
p.m., New York City time, on October 30, 1998, unless extended by the Company.
Based upon the number of shares tendered and the prices specified by the
tendering stockholders, the Company will select a single per share purchase
price within the $5.75 to $7.00 price range to be paid for shares which have
been tendered at or below the selected price. If the offer is over-subscribed,
shares will be purchased first from shares unconditionally tendered at or below
the purchase price on a pro rata basis and then from shares unconditionally
tendered at or below the purchase price selected by lot. The Company reserves
the right to purchase more than 1,000,000 shares, and under certain
circumstances, less than 1,000,000 shares. The tender offer is not conditioned
on any minimum number of shares being tendered.
The Board of Directors of the Company is not making any recommendation to
stockholders as to whether they should tender any shares pursuant to the offer.
BancBoston Robertson Stephens Inc. is acting as Dealer-Manager and ChaseMellon
Shareholder Services, L.L.C. is acting as Information Agent and Depositary in
connection with the tender offer.
The Company expects to announce fourth quarter and full year results for
the fiscal year ended September 27, 1998, during the first week of November.
Average weekly and comparable store sales for the fourth quarter ended September
27, 1998 increased by 3.7% and 2.5%, respectively. Preliminary earnings
projections for the fourth quarter are $.18-$.20 per share. These results are
unaudited. Stockholders should be cautioned that final results may differ from
the Company's preliminary estimates.
Uno Restaurant Corporation currently operates 94 "Pizzeria Uno . . .
Chicago Bar & Grill" casual dining, full-service restaurants primarily from New
England to Virginia, as well as Florida, Chicago and Denver, and franchises 63
units in 19 states, the District of Columbia, Puerto Rico and Seoul, Korea. The
Company also operates a consumer foods division, which supplies American
Airlines, movie theaters, hotel restaurants and supermarkets primarily in the
Northeast with frozen and refrigerated Pizzeria Uno brand products, as well as
certain private label products.
Forward-looking statements in this release are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that all forward-looking statements involve risks and
uncertainties which could cause actual results to differ from those projected,
including without limitation, the Company's ability to open new restaurants and
operate new and existing restaurants profitably, changes in local, regional,
national and international economic conditions, especially economic conditions
in the areas in which the Company's restaurants are concentrated, increasingly
intense competition in the casual-dining segment of the restaurant industry,
increases in food, labor, employee benefits and similar costs, and other risks
detailed from time to time in the Company's periodic reports filed with the
Securities and Exchange Commission.
* * * * * *
For more information, contact: Bob Vincent, Chief Financial Officer, Phone:
(617) 323-9200 (ext. 215)
<PAGE> 1
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 (the Company) as of September 28, 1997 and
September 29, 1996, and the related consolidated statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ended September 28, 1997. 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 September 28, 1997 and September 29, 1996, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended September 28, 1997, in conformity with
generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, in fiscal year
1996, the Company adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of."
Ernst & Young LLP
Boston, Massachusetts
November 4, 1997
33
<PAGE> 2
Uno Restaurant Corporation and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
SEPTEMBER 28 1997 SEPTEMBER 29 1996
------------------------------------------
(In thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 1,486 $ 1,828
Royalties receivable 728 710
Consumer products receivable 844 322
Inventory 2,326 2,333
Deferred pre-opening costs 949 470
Prepaid expenses and other assets 1,959 2,387
------------------------------------------
Total current assets 8,292 8,050
Property, equipment and leasehold improvements, net 125,357 120,510
Deferred income taxes 6,599 3,613
Liquor licenses and other assets 3,484 2,892
------------------------------------------
$143,732 $135,065
==========================================
SEPTEMBER 28 1997 SEPTEMBER 29 1996
------------------------------------------
(Dollar amounts in thousands, except share
data)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,966 $ 6,009
Accrued expenses 7,563 5,033
Accrued compensation and taxes 2,641 2,187
Income taxes payable 2,076 1,581
Current portions of long-term debt and capital lease
obligations 3,132 178
------------------------------------------
Total current liabilities 22,378 14,988
Long-term debt, net of current portion 42,516 37,085
Capital lease obligations, net of current portion 867 1,056
Other liabilities 7,091 4,800
Commitments and contingencies
Shareholders' equity:
Preferred Stock, $1.00 par value, 1,000,000 shares authorized,
no shares issued or outstanding
Common Stock, $.01 par value, 25,000,000 shares authorized,
13,754,480 shares in 1997 and 13,697,526 shares in 1996 issued 138 137
Additional paid-in capital 53,803 53,509
Retained earnings 36,816 34,143
------------------------------------------
90,757 87,789
Treasury Stock (2,790,597 shares in 1997 and
1,500,000 shares in 1996, at cost) (19,877) (10,653)
------------------------------------------
Total shareholders' equity 70,880 77,136
------------------------------------------
$143,732 $135,065
==========================================
</TABLE>
See accompanying notes.
34
<PAGE> 3
Uno Restaurant Corporation and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------
SEPTEMBER 28 SEPTEMBER 29 OCTOBER 1
1997 1996 1995
----------------------------------------------
(Amounts in thousands, except
per share data)
<S> <C> <C> <C>
Revenues:
Restaurant sales $164,389 $159,581 $146,100
Consumer product sales 9,115 8,351 8,477
Franchise income 4,516 4,209 4,129
----------------------------------------------
178,020 172,141 158,706
Costs and expenses:
Cost of food and beverages 43,994 44,064 39,420
Labor and benefits 54,183 51,868 47,377
Occupancy costs 27,045 26,339 22,925
Other operating costs 16,067 15,890 13,583
General and administrative 13,384 12,155 11,229
Depreciation and amortization 12,469 12,964 10,795
Special charges 4,000 3,937
----------------------------------------------
171,142 167,217 145,329
----------------------------------------------
Operating income 6,878 4,924 13,377
Other expense:
Interest expense 2,695 2,358 1,924
Other expense 132 123 20
----------------------------------------------
2,827 2,481 1,944
----------------------------------------------
Income before income taxes 4,051 2,443 11,433
Provision for income taxes 1,378 757 4,230
----------------------------------------------
Net income $ 2,673 $ 1,686 $ 7,203
==============================================
Earnings per common share $ .22 $ .13 $ .58
==============================================
Weighted-average number of common shares 12,008 12,756 12,364
==============================================
</TABLE>
See accompanying notes.
35
<PAGE> 4
Uno Restaurant Corporation and Subsidiaries
Consolidated Statements of 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 October 2, 1994 9,072 $ 91 $30,613 $25,254 $55,958
Net income 7,203 7,203
Five-for-four stock split 2,275 23 (23)
Sale of Common Stock, net of
offering costs 2,300 23 22,541 22,564
Exercise of stock options 35 226 226
Purchase of Treasury Stock $ (2,900) (2,900)
Tax benefit from exercise of
nonqualified stock options 76 76
-----------------------------------------------------------------------------
Balance at October 1, 1995 13,682 137 53,433 32,457 (2,900) 83,127
Net income 1,686 1,686
Exercise of stock options 16 63 63
Purchase of Treasury Stock (7,753) (7,753)
Tax benefit from exercise of
nonqualified stock options 13 13
-----------------------------------------------------------------------------
Balance at September 29, 1996 13,698 137 53,509 34,143 (10,653) 77,136
Net income 2,673 2,673
Exercise of stock options 57 1 257 258
Purchase of Treasury Stock (9,224) (9,224)
Tax benefit from exercise of
nonqualified stock options 37 37
-----------------------------------------------------------------------------
Balance at September 28, 1997 13,755 $138 $53,803 $36,816 $(19,877) $70,880
=============================================================================
</TABLE>
See accompanying notes.
36
<PAGE> 5
Uno Restaurant Corporation and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------------
SEPTEMBER 28 SEPTEMBER 29 OCTOBER 1
1997 1996 1995
------------------------------------------------
(In thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,673 $ 1,686 $ 7,203
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 12,573 13,064 10,896
Deferred income taxes (2,986) (2,462) 291
Provision for deferred rent 612 688 637
Loss (gain) on disposal of equipment (15) 19 (28)
Special charges 4,000 3,937
Changes in operating assets and liabilities, net of
effects from business acquisitions:
Royalties receivable (18) 15 (172)
Inventory 7 (107) (482)
Prepaid expenses and other assets (1,888) (903) (3,736)
Accounts payable and other liabilities 4,620 1,157 2,055
Income taxes payable 495 1,455 (528)
------------------------------------------------
Net cash provided by operating activities 20,073 18,549 16,136
INVESTING ACTIVITIES
Additions to property, equipment and leasehold
improvements
(19,982) (22,909) (39,864)
Proceeds from sale of fixed assets 300 144 42
Purchase of business, net of cash acquired (316)
------------------------------------------------
Net cash used in investing activities (19,682) (22,765) (40,138)
FINANCING ACTIVITIES
Proceeds from revolving line of credit 71,193 53,103 60,950
Principal payments on debt and capital lease
obligations
(62,997) (40,687) (56,570)
Issuance of Common Stock 22,564
Purchase of Treasury Stock (9,224) (7,753) (2,900)
Exercise of stock options 295 76 302
------------------------------------------------
Net cash (used) provided by financing activities (733) 4,739 24,346
------------------------------------------------
Increase (decrease) in cash (342) 523 344
Cash at beginning of year 1,828 1,305 961
------------------------------------------------
Cash at end of year $ 1,486 $ 1,828 $ 1,305
================================================
</TABLE>
See accompanying notes.
37
<PAGE> 6
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
September 28, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
The Company owns and operates 92 "Pizzeria Uno...Chicago Bar & Grill" casual
dining, full-service restaurants primarily from New England to Virginia, as well
as Florida, Chicago and Denver, and franchises 66 units in 18 states, the
District of Columbia, Puerto Rico and Seoul, Korea. The Company also operates a
Mexican restaurant in Chicago, several take-out and quick-serve Uno units in
test, and a refrigerated and frozen consumer foods division. The consumer foods
business supplies American Airlines, movie theaters, hotels, supermarket and
wholesale club chains with both frozen and refrigerated Pizzeria Uno brand
products, as well as certain private label products.
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.
FISCAL YEAR
The Company's fiscal year ends on the close of business on the Sunday closest to
September 30 in each year.
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 using the straight-line
method over 25 and 7 years, respectively. Leasehold improvements are amortized
over the shorter of their estimated useful lives or the term of the lease
(generally 20 years) using the straight-line method.
-38-
<PAGE> 7
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 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 $3,441,000, $3,409,000 and $1,889,000 in fiscal years
1997, 1996 and 1995, respectively.
A summary of full-service franchise unit activity is as follows:
YEAR ENDED
-------------------------------------
SEPTEMBER 28 SEPTEMBER 29 OCTOBER 1
1997 1996 1995
-------------------------------------
Units operating at beginning of year 63 59 59
Units opened 6 5 5
Units closed (3) (1) (5)
-------------------------------------
Units operating at end of year 66 63 59
=====================================
PRE-OPENING COSTS
Pre-opening costs consist principally of labor costs associated with the hiring
and training of operating personnel as well as initial food and beverage
purchases. These costs are deferred until the restaurants open and are amortized
over 12 months from that point using the straight-line method.
INCOME TAXES
Deferred income taxes are determined utilizing the liability method. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial reporting and tax basis 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.
<PAGE> 8
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER COMMON SHARE
Earnings per common share amounts are calculated based upon the weighted-average
number of shares outstanding, giving effect to the dilutive effect of stock
options.
USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and costs
and expenses during the reporting period. Actual results could differ from those
estimates.
IMPAIRMENT OF LONG-LIVED ASSETS
In the second quarter of fiscal 1996, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which
establishes criteria for the recognition and measurement of impairment losses
associated with long-lived assets (see Note 2).
STOCK-BASED COMPENSATION
The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB No. 25) in accounting for its
stock-based compensation plans, rather than the alternative fair value
accounting method provided for under SFAS No. 123, "Accounting for Stock-Based
Compensation," as this alternative requires the use of option valuation models
that were not developed for use in valuing employee stock options. Under APB No.
25, since the exercise price of options granted under these plans equals the
market price of the underlying stock on the date of grant, no compensation
expense is required.
<PAGE> 9
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 128, "Earnings Per Share" which simplifies the calculation of earnings per
share and creates a standard of comparability to the recently issued
International Accounting Standard No. 33, "Earnings Per Share." Since early
application is not permitted, the Company will adopt this standard in the first
quarter of fiscal 1998. The Company believes the adoption of this standard will
not have a material impact on the Company's consolidated results of operations.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income" and
SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information." Both SFAS No. 130 and SFAS No. 131 are effective for fiscal years
beginning after December 15, 1997. The Company believes that the adoption of
these new accounting standards will not have a material impact on the Company's
consolidated financial statements.
RECLASSIFICATIONS
Certain amounts in the accompanying financial statements have been reclassified
to conform with the 1997 presentation.
2. SPECIAL CHARGES
During the third quarter of fiscal 1997, the Company recorded a special charge
in the amount of $4.0 million, consisting of an asset impairment charge of $3.3
million and store closing costs of $0.7 million. The $3.3 million asset
impairment charge was recorded to reduce the carrying value of equipment and
leaseholds at two full-service Uno restaurants to their fair market value and
resulted from weak operating results and continuing negative cash flow. The
store closure costs represent remaining minimum lease payments of one
full-service Uno restaurant which was closed during 1997.
As discussed in Note 1, the Company adopted SFAS No. 121 in the second quarter
of fiscal 1996, and recorded a pre-tax charge of $3.9 million to adjust the
carrying value of those assets identified as impaired. The charge consisted of
$1.0 million for three Uno
<PAGE> 10
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. SPECIAL CHARGES (CONTINUED)
Pizza Bakery's, $1.6 million for one full-service Uno restaurant and $1.3
million for certain assets of three Bay Street restaurants. The assets written
down include the Bay Street trademark and leasehold improvements and equipment
of the aforementioned stores. Based upon operating and cash flow results,
management believed that these units would likely continue to generate cash flow
losses and therefore reduced the carrying value of the impaired assets to fair
market value.
3. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 28 SEPTEMBER 29
1997 1996
--------------------------
(In thousands)
<S> <C> <C>
Land $ 15,883 $ 14,796
Buildings 25,265 22,037
Equipment 49,802 45,690
Leasehold improvements 87,047 82,013
Construction in progress 4,201 2,120
--------------------------
182,198 166,656
Less allowances for depreciation and amortization 56,841 46,146
--------------------------
$125,357 $120,510
==========================
</TABLE>
4. RELATED-PARTY TRANSACTIONS
The Company leases three buildings from its principal shareholder for a
restaurant and corporate office space. Rent expense in the amount of
approximately $455,000 was charged to operations in each of the fiscal years
presented. The Company believes that the terms of these leases approximate fair
rental value.
The Company's President and his brother own and operate four franchised
restaurants 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.
<PAGE> 11
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
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. Assets held
under capital leases were $2,881,000 at September 28, 1997 and September 29,
1996. Accumulated amortization amounted to $613,000 at September 28, 1997 and
$480,000 at September 29, 1996. Capital lease asset amortization is included in
depreciation and amortization. At September 28, 1997, the minimum rental
commitments under all noncancelable capital and operating leases with initial or
remaining terms of more than one year are as follows:
CAPITAL OPERATING
FISCAL YEAR LEASES LEASES
---------------------
(In thousands)
1998 $ 260 $ 9,420
1999 260 9,321
2000 223 9,236
2001 75 9,311
2002 42 9,365
Thereafter 1,209 78,331
--------------------
2,069 $124,984
Less amount representing interest 1,013 ========
------
Present value of net minimum lease payments 1,056
Less current portion of obligation under capital leases 189
======
Long-term obligation under capital leases $ 867
======
Total expenses for all operating leases were as follows:
MINIMUM CONTINGENT
FISCAL YEAR LEASE RENTALS RENTALS TOTAL
---------------------------------------
(In thousands)
1997 $12,641 $ 811 $13,452
1996 12,105 956 13,061
1995 10,492 1,017 11,509
<PAGE> 12
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. LEASES (CONTINUED)
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. The deferred rent
liability, included in other liabilities, amounted to $4,596,000 at September
28, 1997 and $3,984,000 at September 29, 1996.
6. FINANCING ARRANGEMENTS
Long-term debt consists of the following:
SEPTEMBER 28 SEPTEMBER 29
1997 1996
--------------------------
(In thousands)
Revolving credit and note agreement $40,480 $37,085
8.75%, 15-year secured mortgage notes payable 4,979
--------------------------
45,459 37,085
Less current portion 2,943
--------------------------
$42,516 $37,085
==========================
On November 4, 1997, the Company entered into a new $55,000,000 credit facility,
which includes a $26.6 million unsecured revolver due in October, 2002, a $8.4
million term loan due in 20 quarterly installments of $420,000 plus interest
commencing on January 31, 1998 and a $20.0 million secured mortgage facility due
in 27 quarterly installments of $500,000 plus interest also commencing on
January 31, 1998 with a final payment due in October, 2004. The Company is
entitled to borrow, at its discretion, amounts which accrue interest at variable
rates based on either the LIBOR or prime rate. At September 28, 1997, interest
on outstanding borrowings under the previous revolving line of credit ranged
from 6.875% to 8.50%. A commitment fee of approximately .375% is accrued on
unused borrowings under the new credit agreement. The note agreements contain
certain financial and operating covenants, including maintenance of certain
levels of net worth and income. At September 28, 1997, the carrying value of the
Company's long-term debt approximated fair market value.
<PAGE> 13
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. FINANCING ARRANGEMENTS (CONTINUED)
Annual principal payments of debt are as follows (in thousands):
Year
----
1998 $ 2,943
1999 3,880
2000 3,898
2001 3,918
2002 3,940
Thereafter 26,880
-------
$45,459
=======
In October 1995, the Company entered into a five-year interest rate swap
agreement to convert a portion of its floating rate debt to a fixed-rate basis,
thereby reducing the potential impact of interest rate increases on future
income. The notional amount of this interest rate swap agreement was $20 million
and the fixed swap rate was 6.04%. The differential to be paid or received is
accrued as interest rates change and recognized as an adjustment to interest
expense related to the debt.
The Company made cash payments of interest of $3,044,000, $2,845,000 and
$2,445,000 during fiscal years 1997, 1996 and 1995, respectively. The Company
capitalized interest during the construction period of new restaurants which
amounted to $313,000 in fiscal year 1997, $290,000 in fiscal year 1996 and
$509,000 in fiscal year 1995 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 $1,000,000 at September 28, 1997. The Company
has also guaranteed up to a maximum of $400,000 of future lease payments in the
event of default by a specific franchisee.
<PAGE> 14
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. COMMON STOCK TRANSACTIONS
In June 1997, the Company initiated a Dutch Auction self-tender offer for up to
1,000,000 shares of the Company's common stock and in certain circumstances,
reserved the right to purchase in excess of 1,000,000 shares. Under the terms of
the offer, the Company invited stockholders to tender their shares at prices
ranging from $6.00 to $7.50 per share. In July 1997, the Company completed the
tender offer for 1,207,624 shares of its common stock at $7.00 per share.
In July 1995, the Board of Directors authorized the purchase of up to 500,000
shares of the Company's common stock, of which 358,100 shares were purchased in
fiscal 1995. In October 1995, the Board of Directors increased its authorization
to purchase up to 1.5 million shares of the Company's stock, of which the
balance of 1,141,900 shares were purchased in fiscal 1996. In January 1997, the
Board of Directors authorized the purchase of up to 500,000 additional shares of
the Company's common stock, of which 82,973 shares were purchased in fiscal
1997, prior to the Dutch Auction.
8. PREPAID EXPENSES AND OTHER ASSETS
Prepaid expenses and other current assets consist of the following:
SEPTEMBER 28 SEPTEMBER 29
1997 1996
--------------------------
(In thousands)
Prepaid insurance $ 430 $ 422
Product rebates receivable 402 342
Prepaid rent 220 328
Prepaid operating costs 58 213
Other accounts receivable 849 1,082
--------------------------
$1,959 $2,387
==========================
<PAGE> 15
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. ACCRUED EXPENSES
Accrued expenses consist of the following:
SEPTEMBER 28 SEPTEMBER 29
1997 1996
----------------------------
(In thousands)
Accrued store closure $1,618 $ 413
Accrued rent 1,334 1,379
Accrued insurance 1,103 962
Accrued utilities 760 768
Accrued vacation 632 489
Accrued advertising 561 308
Accrued professional fees 413 172
Franchise fee deposit 348 117
Other 794 425
----------------------------
$7,563 $5,033
============================
10. EMPLOYEE BENEFIT PLANS
The Company maintains a 401(k) Savings and Employee Stock Ownership Retirement
Plan (the Plan) for all of its eligible employees. The Plan is maintained in
accordance with the provisions of Section 401(k) of the Internal Revenue Code
and allows all employees with at least one year of service to make annual
tax-deferred voluntary contributions up to 15% of their salary. Under the Plan,
the Company matches a specified percentage of the employees contributions,
subject to certain limitations. Total contributions made to the plan were
$229,000, $161,000 and $153,000 in fiscal years 1997, 1996 and 1995,
respectively.
The Company sponsors a Deferred Compensation Plan which allows officers to defer
up to 20% of their annual compensation. These assets are placed in a "rabbi
trust" and are presented as assets of the Company in the accompanying balance
sheet as they are available to the general creditors of the Company in the event
of the Company's insolvency. The related liability of $727,000 at September 28,
1997 and $566,000 at September 29, 1996 is included in other liabilities in the
accompanying balance sheet. Deferred compensation expense in the amounts of
$161,000, $140,000 and $173,000 were recorded in fiscal years 1997, 1996 and
1995 respectively.
<PAGE> 16
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
11. INCOME TAXES
Deferred taxes are attributable to the following temporary differences:
SEPTEMBER 28 SEPTEMBER 29
1997 1996
----------------------------
(In thousands)
Deferred tax assets:
Deferred rent $1,842 $1,604
Accrued expenses 1,738 715
Asset impairment charge 1,630 1,123
Depreciation 1,113 123
Franchise fees 291 148
Other 309 261
-----------------------------
Total deferred tax assets 6,923 3,974
Deferred tax liabilities:
Deferred pre-opening costs 217 243
Other 107 118
-----------------------------
Total deferred tax liabilities 324 361
-----------------------------
Net deferred tax assets $6,599 $3,613
=============================
<PAGE> 17
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
11. INCOME TAXES (CONTINUED)
The provision (credit) for income taxes consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
SEPTEMBER 28 SEPTEMBER 29 OCTOBER 1
1997 1996 1995
------------------------------------------
(In thousands)
<S> <C> <C> <C>
Current:
Federal $ 3,448 $ 2,532 $3,098
State 916 687 841
------------------------------------------
4,364 3,219 3,939
Deferred:
Federal (2,435) (1,995) 228
State (551) (467) 63
------------------------------------------
(2,986) (2,462) 291
------------------------------------------
Income tax expense $ 1,378 $ 757 $4,230
==========================================
</TABLE>
A reconciliation of the effective tax rates with the federal statutory rates is
as follows:
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
SEPTEMBER 28 SEPTEMBER 29 OCTOBER 1
1997 1996 1995
------------------------------------------
<S> <C> <C> <C>
Federal statutory rate 34.0% 34.0% 34.1%
State income taxes, net of federal
income tax benefit 4.6 5.0 4.9
Tax credits (7.1) (9.8) (2.6)
Other 2.5 1.8 .6
------------------------------------------
Effective income tax rate 34.0% 31.0% 37.0%
==========================================
</TABLE>
The Company made income tax payments of $3,936,000, $2,416,000 and $3,667,000
during fiscal years 1997, 1996 and 1995, respectively.
<PAGE> 18
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. STOCK-BASED COMPENSATION
During 1997, the Company established the 1997 Employee Stock Option Plan (the
Plan) which provides for the granting of options to purchase up to 1.0 million
shares of common stock. 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. All options terminate ten
years after the date of grant.
The Company's 1987 Employee Stock Option Plan which contains similar provisions
to the 1997 Plan was terminated during fiscal 1997. The 1.3 million options
granted under that plan will continue to vest at a rate of 20% per year
beginning one year after the date of grant, with the exception of 93,750 options
granted to the President of the Company, which vest immediately at the date of
grant. All options terminate ten years after the date of grant, with the
exception of the 112,500 options granted to the Chairman, which terminate five
years after the date of grant.
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, 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.
In August 1997, the Company's Board of Directors authorized an executive stock
option program which allows for the granting of options to purchase up to 1.2
million shares of common stock. Options will vest upon the achievement of
certain financial targets. The plan is subject to stockholder approval.
Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that statement. The
Company determined that the pro forma information for fiscal 1996 and fiscal
1997 was not material to the Company's consolidated results of operations,
however, the effects of expensing the estimated fair value of stock options are
not necessarily indicative of the effects on reporting results of operations for
future years as the pro forma calculations only include one and two years,
respectively, of option grants under the Company's plans.
<PAGE> 19
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. STOCK-BASED COMPENSATION (CONTINUED)
The fair value for these options was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions for fiscal 1997 and fiscal 1996: risk-free interest rates of 6.6%
and 7.0%, respectively, no dividend yield, the volatility factor of the expected
market price of the Company's common stock was 38.2% and a weighted-average
expected life of the options of five years.
Information regarding the Company's stock option plans is summarized below:
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------------------
SEPTEMBER 28 SEPTEMBER 29 OCTOBER 1
1997 1996 1995
----------------------------------------------------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of period 1,289,248 $7.28 1,200,287 $7.61 1,043,735 $7.33
Granted 211,609 6.59 295,508 6.42 277,489 8.46
Exercised (55,667) 4.44 (15,256) 4.74 (41,400) 5.43
Canceled (207,783) 7.06 (191,291) 8.21 (79,537) 8.08
----------------------------------------------------------------------
Outstanding at end
of period 1,237,407 $7.33 1,289,248 $7.28 1,200,287 $7.61
======================================================================
Options exercisable
at end of period 691,491 612,526 538,932
========= ========= =========
Options available for
grant at end of period 854,248 377,279 481,496
========= ========= =========
</TABLE>
Exercise prices for options outstanding ranged from $4.74 to $14.50. Between
$4.74 and $7.41, 753,556 and 365,482 options were outstanding and exercisable,
respectively, and between $7.42 and $14.50, 483,851 and 326,009 were outstanding
and exercisable, respectively. The weighted-average contractual life of the
options is 7.1 years. The Company has 2.1 million shares of common stock
reserved for issuance at September 28, 1997.
<PAGE> 20
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------
DECEMBER 29 MARCH 30 JUNE 29 SEPTEMBER 28
1996 1997 1997 1997
---------------------------------------------------------
(Amounts in thousands, except per share information.)
<S> <C> <C> <C> <C>
Revenues $42,164 $42,711 $45,387 $47,758
Gross profit (1) 8,345 8,618 9,604 10,545
Operating income (loss) 2,265 1,899 (908) 3,622
Income (loss) before
income taxes 1,655 1,233 (1,619) 2,782
Net income (loss) 1,092 815 (1,070) 1,836
Earnings per common share .09 .07 (.09) .16
<CAPTION>
QUARTER ENDED
---------------------------------------------------------
DECEMBER 31 MARCH 31 JUNE 30 SEPTEMBER
1995 1996 1996 29 1996
---------------------------------------------------------
(Amounts in thousands, except per share information.)
<S> <C> <C> <C> <C>
Revenues $40,560 $40,287 $44,694 $46,600
Gross profit (1) 7,754 7,268 9,417 10,574
Operating income (loss) 1,472 (3,525) 2,963 4,014
Income (loss) before
income taxes 852 (4,129) 2,308 3,412
Net income (loss) 545 (2,642) 1,477 2,306
Earnings per common share .04 (.21) .12 .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.
<PAGE> 1
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share data)
June 28, Sept.28,
1998 1997
--------- --------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 2,227 $ 1,486
Royalties receivable 382 728
Consumer products receivable 570 844
Inventory 2,245 2,326
Deferred pre-opening costs 949
Prepaid expenses and other assets 2,534 1,959
-------- --------
TOTAL CURRENT ASSETS 7,958 8,292
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Land 16,689 15,883
Buildings 27,944 25,265
Leasehold improvements 91,738 87,047
Equipment 52,328 49,802
Construction in progress 1,873 4,201
-------- --------
190,572 182,198
Less allowance for depreciation and amortization 65,900 56,841
-------- --------
124,672 125,357
OTHER ASSETS
Deferred income taxes 7,503 6,599
Royalty fee 178 241
Liquor licenses and other assets 3,197 3,243
-------- --------
$143,508 $143,732
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,846 $ 6,966
Accrued expenses 7,952 7,563
Accrued compensation and taxes 2,653 2,641
Income taxes payable 726 2,076
Current portion of long-term debt and capital
lease obligations 4,074 3,132
-------- --------
TOTAL CURRENT LIABILITIES 21,251 22,378
Long-term debt, net of current portion 41,067 42,516
Capital lease obligations, net of current portion 717 867
Other liabilities 7,203 7,091
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, 13,771,674 and
13,754,480 shares issued and outstanding in Fiscal Years 1998 and 1997,
respectively 138 138
Additional paid-in capital 53,898 53,803
Retained earnings 40,009 36,816
-------- --------
94,045 90,757
Treasury Stock (2,917,193 and 2,790,597 shares at cost,in
Fiscal Years 1998 and 1997, respectively) (20,775) (19,877)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 73,270 70,880
-------- --------
$143,508 $143,732
======== ========
</TABLE>
3
<PAGE> 2
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands except per share data)
Thirteen Weeks Ended Thirty-nine Weeks Ended
------------------------ -------------------------
June 28, June 29, June 28, June 29,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Restaurant sales $45,288 $41,987 $130,171 $120,414
Consumer product sales 2,475 2,210 7,083 6,526
Franchise income 1,190 1,189 3,349 3,322
------- ------- -------- --------
48,953 45,386 140,603 130,262
COSTS AND EXPENSES
Cost of sales 12,311 11,118 35,477 32,307
Labor and benefits 14,940 13,803 43,236 39,996
Occupancy 7,065 6,825 21,025 19,905
Other operating costs 4,567 4,245 13,369 12,519
General and administrative 3,487 3,338 9,824 9,588
Depreciation and amortization 3,059 2,965 9,136 8,691
Special charges 4,000 4,000
------- ------- -------- --------
45,429 46,294 132,067 127,006
------- ------- -------- --------
OPERATING INCOME 3,524 (908) 8,536 3,256
OTHER INCOME (EXPENSE) (963) (711) (2,821) (1,987)
------- ------- -------- --------
Income before income taxes 2,561 (1,619) 5,715 1,269
Provision for income taxes 844 (549) 1,886 432
------- ------- -------- --------
Net income before cumulative effect
of change in accounting principle $ 1,717 ($1,070) $ 3,829 $ 837
Cumulative effect of change in
accounting principle for preopening
costs net of income taxes 636
------- ------- -------- --------
NET INCOME (LOSS) $ 1,717 ($1,070) $ 3,193 $ 837
======= ======= ======== ========
Basic and Diluted Earnings per Share:
Net income $ .16 $ (.09) $ .35 $ .07
Cumulative effect of change in
accounting principle $ (.06)
------- ------- -------- --------
Net income $ .16 $ (.09) $ .29 $ .07
======= ======= ======== ========
Weighted average shares outstanding:
Basic 10,895 12,175 10,930 12,197
Diluted 10,990 12,216 10,989 12,256
</TABLE>
4
<PAGE> 3
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Thirty-nine weeks Ended
-------------------------
June 28, June 29,
1998 1997
-------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss) $ 3,193 $ 837
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 9,222 9,401
Deferred income taxes (904) (2,083)
Provision for deferred rent 396 446
(Gain)Loss on disposal of equipment (6) (15)
Special charges 4,000
Cumulative effect of change in accounting principle 949
Changes in operating assets and liabilities, net of effects from business
acquisitions:
Royalties\consumer product receivables 346 17
Inventory 81 18
Prepaid expenses and other assets (278) (1,385)
Accounts payable and other liabilities (882) 1,024
Income taxes payable (1,350) (748)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 10,767 11,512
INVESTMENT ACTIVITIES
Additions to property, equipment and
leasehold improvements (8,574) (13,830)
Proceeds from sale of fixed assets 8 1,103
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES (8,566) (12,727)
FINANCING ACTIVITIES
Proceeds from revolving credit agreement 41,565 49,043
Principal payments on revolving credit agreement
and capital lease obligations (42,222) (48,564)
Purchase of Treasury Stock (898) (524)
Exercise of stock options 95 248
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES (1,460) 203
-------- --------
INCREASE (DECREASE) IN CASH 741 (1,012)
CASH AT BEGINNING OF PERIOD 1,486 1,828
-------- --------
CASH AT END OF PERIOD $ 2,227 $ 816
======== ========
</TABLE>
5
<PAGE> 4
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 September 28, 1997.
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 - EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128, Earnings per Share. Statement 128 replaced the
previously reported primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants and convertible
securities. Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share. All earnings per share amounts for
all periods have been presented, and where necessary, restated to conform to the
Statement 128 requirements. Basic and diluted earnings per share were equivalent
to each other for the quarter ended June 28, 1998.
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks Ended
---------------------------- ----------------------------
June 28, June 29, June 28, June 29,
1998 1997 1998 1997
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Numerator for Basic Earnings
per Share:
Weighted average shares
outstanding 10,894,964 12,174,949 10,930,142 12,196,836
Common Stock equivalents:
Stock options 95,497 40,728 58,713 58,697
----------- ---------- ----------- ----------
Numerator for Diluted Earnings
per Share:
Weighted average shares
outstanding including common
stock equivalents 10,990,461 12,215,677 10,988,855 12,255,533
=========== ========== =========== ==========
Net Income(Loss) before cumulative
effect of change in
accounting principle $ 1,717,000 ($1,070,000) $ 3,829,000 $ 837,000
Cumulative effect of change
in accounting principle for
preopening costs net of
income taxes 636,000
----------- ---------- ----------- ----------
Net Income(Loss) $ 1,717,000 ($1,070,000) $ 3,193,000 $ 837,000
=========== ========== =========== ==========
Basic and Diluted Earnings per Share:
Net Income(Loss) before cumulative
effect of change in
accounting principle $ .16 $ (.09) $ .35 $ .07
Cumulative effect of change in
accounting principle $ (.06)
----------- ---------- ----------- ----------
Net Income(Loss) $ .16 $ (.09) $ .29 $ .07
=========== ========== =========== ==========
</TABLE>
6
<PAGE> 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
NOTE C - PRE-OPENING COSTS
In 1998, the Accounting Standards Executive Committee of the American Institute
of Certified Public Accountants (AICPA) issued Statement of Position 98-5 ("SOP
98-5") entitled "Reporting on the Costs of Start-up Activities." The SOP 98-5
requires companies to expense as incurred all start-up and pre-opening costs
that are not otherwise capitalizable as long lived assets. This new accounting
standard is effective for fiscal years beginning after December 15, 1998 with
early adoption encouraged. The Company has elected early implementation of the
accounting standard retroactive to the beginning of fiscal 1998. The cumulative
effect of this change in accounting principle was $636,000, net of income taxes.
7
