<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: October 1, 1995
------------------------------
COMMISSION FILE NUMBER: 1-13044
COOKER RESTAURANT CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 62-1292102
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
5500 VILLAGE BOULEVARD, WEST PALM BEACH, FLORIDA 33407
(Address of principal executive offices) (zip code)
(407) 615-6000
Registrant's telephone number, including area code
Indicate by check X whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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7,155,195 COMMON SHARES, WITHOUT PAR VALUE
------------
(Number of Common Shares outstanding as of the close of business
on October 1, 1995)
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CONDENSED BALANCE SHEET
(UNAUDITED - DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
October 1, January 1,
1995 1995
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<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . $ 789 $ 1,855
Accounts receivable . . . . . . . . . . . . . . . . . . . 208 315
Inventory . . . . . . . . . . . . . . . . . . . . . . . . 801 830
Preopening Expenses . . . . . . . . . . . . . . . . . . . 120 678
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . 385 662
------- -------
Total current assets . . . . . . . . . . . . . . . . . 2,303 4,340
Property and equipment, net . . . . . . . . . . . . . . . . . . 70,044 64,481
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . 1,778 2,037
Total assets . . . . . . . . . . . . . . . . . . . . . $74,125 $70,858
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses . . . . . . . . . . $ 6,401 $ 7,036
Income taxes . . . . . . . . . . . . . . . . . . . . . . . 411 719
------- -------
Total current liabilities . . . . . . . . . . . . . . 6,812 7,755
Long term debt . . . . . . . . . . . . . . . . . . . . . . 29,924 28,600
Deferred income taxes . . . . . . . . . . . . . . . . . . 595 595
------- -------
Total liabilities . . . . . . . . . . . . . . . . . . 37,331 36,950
------- -------
Shareholders' equity:
Common stock . . . . . . . . . . . . . . . . . . . . . . . 26,030 26,003
Treasury stock . . . . . . . . . . . . . . . . . . . . . . (6,034) (6,034)
Retained earnings . . . . . . . . . . . . . . . . . . . . 16,798 13,939
------- -------
Total shareholders' equity . . . . . . . . . . . . . . 36,794 33,908
Total liabilities and shareholders' equity . . . . . . $74,125 $70,858
======= =======
</TABLE>
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<PAGE> 3
CONDENSED STATEMENT OF INCOME
(UNAUDITED - DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 1, October 2, October 1, October 2,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales ............................................. $22,758 $21,226 $68,351 $62,176
Cost of Sales:
Food and beverages ............................ 6,538 6,019 19,516 17,873
Labor ......................................... 7,903 7,896 23,903 23,344
Restaurant operating expenses ................. 3,759 3,532 11,183 10,139
Restaurant depreciation/amortization .......... 943 1,327 3,032 3,736
------- ------- ------- -------
Total cost of sales ...................... 19,143 18,774 57,634 55,092
Restaurant operating income ....................... 3,615 2,452 10,717 7,084
Other (income) expenses:
General and administrative .................... 1,479 1,166 4,083 3,243
Interest expense and income, net .............. 403 466 1,372 1,203
------- ------- ------- -------
Total other (income) expenses ............ 1,882 1,632 5,455 4,446
Income before taxes ............................... 1,733 820 5,262 2,638
Income taxes .................................. 624 271 2,046 883
------- ------- ------- -------
Net income ........................................ $ 1,109 $ 549 $ 3,216 $ 1,755
======= ======= ======= =======
Earnings per common share ......................... $0.15 $ 0.08 $ 0.44 $ 0.24
======= ======= ======= =======
Weighted average of common shares
outstanding (in thousands) 7,507 7,211 7,368 7,275
======= ======= ======= =======
</TABLE>
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<PAGE> 4
CONDENSED STATEMENT OF CASH FLOW
(UNAUDITED - DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended
October 1, October 2,
1995 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,216 $ 1,755
Depreciation and amortization . . . . . . . . . . . . . . . 3,399 4,077
Loss on disposal of fixed assets . . . . . . . . . . . . . . 19 6
Decrease in current assets . . . . . . . . . . . . . . . . . 210 1,057
Increase in other assets . . . . . . . . . . . . . . . . . . (111) (1,055)
Increase (decrease) in current liabilities . . . . . . . . . 4 (977)
------- --------
Net cash from operations . . . . . . . . . . . . . . . . 6,737 4,863
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment . . . . . . . . . . . . . . . . . . . (8,154) (10,414)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends . . . . . . . . . . . . . . . . . . . . (358) (366)
Proceeds from borrowings . . . . . . . . . . . . . . . . . . 1,324 7,995
Proceeds from issuance of common stock . . . . . . . . . . . 27 (71)
Purchase of treasury stock . . . . . . . . . . . . . . . . . 0 (4,688)
Repurchase of debentures . . . . . . . . . . . . . . . . . . (643) 0
------- --------
Net cash provided by financing activities . . . . . . . 350 2,870
NET DECREASE IN CASH . . . . . . . . . . . . . . . . . . . . . . (1,067) (2,681)
CASH AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . 1,856 3,407
------- --------
CASH AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . $ 789 $ 726
======= ========
</TABLE>
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<PAGE> 5
BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included.
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<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The following table sets forth as a percentage of sales certain items
appearing in the Company's statements of operations.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
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10/01/95 10/02/94 10/01/95 10/02/94
<S> <C> <C> <C> <C>
Sales 100.0 100.0 100.0 100.0
Cost of Sales
Food and Beverages 28.7 28.4 28.5 28.8
Labor 34.7 37.2 35.0 37.5
Restaurant Operating Expenses 16.5 16.6 16.4 16.3
Restaurant Depreciation/Amortization 4.2 6.2 4.4 6.0
Subtotal 84.1 88.4 84.3 88.6
Restaurant Operating Income 15.9 11.6 15.7 11.4
Other (Income) Expenses:
General and Administrative 6.5 5.5 6.0 5.2
Interest Expenses (Income), net 1.8 2.2 2.0 2.0
Total Other 8.3 7.7 8.0 7.2
Earnings Before Income Taxes 7.6 3.9 7.7 4.2
Income Taxes 2.7 1.3 3.0 1.4
Earnings After Taxes 4.9 2.6 4.7 2.8
</TABLE>
Sales for the third quarter of fiscal 1995 increased 7.2% to $22,758,000
compared to sales of $21,226,000 for the third quarter of fiscal 1994. For the
first nine months sales increased 9.9% to $68,351,000 compared to sales of
$62,176,000 for the comparable period last year. The increase in sales for
both the third quarter and first nine months was due primarily to the
additional stores opened this year. Comparable store sales for the quarter
were higher than last year by 1.6% and for the first nine months comparable
stores sales were 1.0% higher.
Food and beverage cost as a percent of sales at 28.7% for the third quarter
of 1995 was slightly higher than the 28.4% for the comparable period last year.
For the first nine months food and beverage cost as a percent of sales
decreased to 28.5% from 28.8% for the comparable period in fiscal 1994. The
higher food cost in the third quarter this year is primarily the result of
higher chicken and lettuce prices in September.
Labor costs showed significant improvement, declining in the third quarter
as a percent of sales to 34.7% from 37.2% in last year's third quarter. First
nine months labor cost as a percent of sales at 35.0% is down from the 37.5%
for the comparable period last year. These savings were the result of changes
made to more closely match the hourly employee and management staffing to
sales volume.
Operating expense for the third quarter as a percent of sales at 16.5% was
slightly better than the 16.6% in the third quarter last year. Operating
expense for the first nine months this year as a percent of sales was 16.4%.
This was up from 16.3% for the comparable period last year. This increase was
due to higher repair and maintenance. As the average age of the Company's
units continues to grow, additional costs are required to keep the facilities
in top working condition.
Restaurant depreciation and amortization as a percent of sales in the third
quarter was 4.2%, down 2.0 percentage points from the 6.2% for the comparable
period last year. First nine months restaurant depreciation and amortization
as a
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<PAGE> 7
percent of sales was 4.4%, down 1.6 percentage points from the 6.0% for the
comparable period last year. The Company's policy is to capitalize certain
costs incurred prior to opening. These costs are then amortized over the first
twelve months of operations. This year's third quarter expense includes
amortization related to three units during the third quarter. The comparable
period last year included amortization for eleven units.
General and Administration expenses are higher than last year for both the
third quarter and year to date. The third quarter increase is due to the
hiring of additional trainees in anticipation of new units late this year and
early next year, as well as the expenses related to the relocation of the
Company's administrative offices to Florida. The year to date expense
includes, in addition to trainee and relocation costs, the cost of Executive
and Senior Operations Management bonus payments this year while no bonus was
paid in the first half of last year.
Interest expense for the third quarter as a percent of sales at 1.8% was .4
percentage points lower than the comparable period last year. Interest expense
for the first nine months as a percent of sales was unchanged from the
comparable period last year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of working capital are cash flows from
operations and borrowings under a revolving term note agreement which provides
a $16,300,000 line of credit. Cash flows from operations during the first nine
months of 1995 totaled $6,737,000 and the Company increased its borrowings
under the revolving term note by $1,324,000 leaving the outstanding balance at
October 1, 1995 at $10,369,000.
The Company planned to open five or six new restaurants in 1995. One
new restaurant was opened in the first nine months of 1995, but no new units
were opened during the third quarter. However, four sites were under
development at the end of the third quarter. Two of these units will open in
the fourth quarter of 1995 and two in the first quarter of 1996. Capital
expenditures for new units as well as the refurbishing and remodeling of
existing units totaled $8,154,000 during the first nine months of 1995. These
expenditures were funded by cash flows from operations and additional
borrowings from the revolving term note. Completion of these units will require
an approximate additional expenditure of $4,000,000 in 1995. These
expenditures will be funded out of cash flow from operations and additional
borrowing on the revolving term note agreement. The Company believes that cash
flows from operations, together with borrowings from the revolving term note
will be sufficient to fund the remaining 1995 planned expansion as well as
ongoing maintenance and remodeling of existing units.
In October 1992, the Company sold $23,000,000 of 6 3/4% Convertible
Subordinated Debentures Due 2002. During December 1994, the Company
repurchased $2,500,000 in principal of these convertible subordinated
debentures in the open market for a discounted purchase price of $1,617,500,
with settlement dates in December 1994 and January 1995. The Company expended
$642,500 in January to complete this repurchase transaction. These debentures
are subject to limited annual redemption by the bondholders and to limited
redemption on the death of a beneficial owner. The annual redemption is capped
at 5% of the original gross proceeds and occurs on each November 1.
Redemptions on death are subject to a cap of $25,000 per holder per year.
Pursuant to these two redemption options, the Company expects additional
principal redemptions of approximately $1,200,000 of the Debentures during the
fourth quarter of 1995. The Company believes that cash flows from operations
and additional borrowings from the revolving term note will be sufficient to
fund these expected principal reductions.
In October 1995, the Company entered into a contract with Darden
Restaurants, Inc., to purchase six restaurants for approximately $11.2 million.
The Company is now in the process of raising its line of credit to $33,000,000
and extending the revolving period of the agreement to December 31, 1997 (which
will then convert to a five year term loan) in order to provide the funds to
complete this contract and for additional expansion in 1996 and 1997.
During the first quarter of 1994, the Board of Directors approved a
guaranty by the Company of a loan of $5,000,000 to the Chairman of the Board
from the First Union National Bank of Tennessee. The loan bears interest at
such Bank's prime rate plus 1/4%, had an initial term of 18 months and is
secured by a pledge of 570,000 Common Shares (owned by the Chairman) to the
Bank. In the third quarter of 1995 the loan was acquired by NationsBank of
Tennessee and its maturity was extended for an additional 24 months. The
guaranty provides that the Bank will sell the pledged shares and apply the
proceeds thereof to the loan prior to calling on the Company for its guaranty.
At November 6, 1995, the
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<PAGE> 8
undiscounted fair market value of the pledged shares was approximately
$5,771,250. The loan is scheduled to mature in the third quarter of 1997. The
guaranty secures the loan until it is repaid or refinanced without a guaranty.
The Company expects the Chairman will repay or refinance the loan before its
presently scheduled maturity. If the loan is not so repaid or refinanced, the
Company would fund any obligation it incurs under the terms of its guaranty
from additional borrowings under its line of credit. The Company does not
believe that it will be required to make any material payment under the
guaranty in 1995 or 1996; however, there can be no assurance that the loan will
be repaid or refinanced on terms that will not result in continuing the
guaranty or in a material payment.
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<PAGE> 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) THE FOLLOWING EXHIBITS ARE FILED AS PART OF THIS REPORT.
3. ARTICLES OF INCORPORATION AND BY-LAWS.
3.1. Amended and Restated Articles of Incorporation of the
Registrant (incorporated by reference to Exhibit 28.2 of
Registrant's quarterly report on Form 10-Q for the fiscal
quarter ended March 29, 1992; Commission File No. 0-16806).
3.2. Amended and Restated Code of Regulations of the Registrant
(incorporated by reference to Exhibit 4.5 of the Registrant's
quarterly report on Form 10-Q for the fiscal quarter ended
April 1, 1990; Commission File No. 0- 16806).
4. INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES.
4.1 See Articles FOURTH, FIFTH and SIXTH of the Amended and
Restated Articles of Incorporation of Registrant (see 3.1
above).
4.2 See Articles One, Four, Seven and Eight of the Amended and
Restated Code of Regulations of Registrant (see 3.2 above).
4.3 Rights Agreement dated as of February 1, 1990 between
Registrant and National City Bank (incorporated by reference
to Exhibit 1 of Registrant's Form 8-A filed with the
Commission on February 9, 1990; Commission File Number 0-
16806).
4.4 Amendment to Rights Agreement dated as of November 1, 1992
between the Registrant and National City Bank (incorporated by
reference to Exhibit 4.4 of Registrant's annual report on Form
10-K for the fiscal year ended January 3, 1993 (the "1992 Form
10-K"); Commission File No. 0-16806).
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<PAGE> 10
4.5 Letter dated October 29, 1992 from the Registrant to First
Union National Bank of North Carolina (incorporated by
reference to Exhibit 4.5 to the 1992 Form 10-K).
4.6 Letter dated October 29, 1992 from National City Bank to the
Registrant (incorporated by reference to Exhibit 4.6 to the
1992 Form 10-K).
4.7 See Section 7.4 of the Loan Agreement dated as of August 26,
1991 between the Registrant and First Union National Bank of
Tennessee, as amended (see Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended
September 29, 1991, Exhibit 10.2 to the Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended July 4,
1993 and Exhibit 10.4 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended January 1, 1995).
4.8 Indenture dated as of October 28, 1992 between the Registrant
and First Union National Bank of North Carolina, as Trustee
(incorporated by reference to Exhibit 2.5 of Registrant's Form
8-A filed with the Commission on November 10, 1992; Commission
File Number 0-16806).
27. FINANCIAL DATA SCHEDULE
27.1. Financial Data Schedule.
(B) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed by Registrant during the fiscal quarter
ended October 1, 1995.
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<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COOKER RESTAURANT CORPORATION
(Registrant)
Date: November 14, 1995
By: /s/ G. Arthur Seelbinder
-------------------------------------------------
G. Arthur Seelbinder
Chairman of the Board and Chief Executive Officer
By: /s/ David C. Sevig
-------------------------------------------------
David C. Sevig
Vice President - Chief Financial Officer
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE IN MANUALLY
EXHIBIT NO. DOCUMENT SIGNED ORIGINAL
- ----------- -------- ---------------
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation of the Registrant. *
3.2 Amended and Restated Code of Regulations of the Registrant. *
4.1 See Articles FOURTH, FIFTH and SIXTH of the Amended and Restated
Articles of Incorporation of Registrant. See Exhibit 3.1
4.2 See Articles One, Four, Seven and Eight of the Amended and Restated
Code of Regulations of Registrant. See Exhibit 3.2
4.3 Rights Agreement dated as of February 1, 1990 between Registrant and
National City Bank. *
4.4 Amendment to Rights Agreement dated as of November 1, 1992 between
the Registrant and National City Bank. *
4.5 Letter dated October 29, 1992 from the Registrant to First Union
National Bank of North Carolina. *
4.6 Letter dated October 29, 1992 from National City Bank to the
Registrant. *
4.7 See Section 7.4 of the Loan Agreement dated as of August 26, 1991
between Registrant and First Union National Bank of Tennessee, as
amended (Exhibit 10.1 to the Registrant's Quarterly Report on Form *
10-Q for the quarterly period ended September 29, 1991, Exhibit 10.2
to the Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended July 4, 1993 and Exhibit 10.4 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 1, 1995).
4.8 Indenture dated as of October 28, 1992 between Registrant and First
Union National Bank of North Carolina, as Trustee. *
27.1 Financial Data Schedule (submitted electronically for SEC information
only).
</TABLE>
*Incorporated by reference.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000832412
<NAME> COOKER RESTAURANT
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-03-1995
<PERIOD-END> OCT-01-1995
<CASH> 789,000
<SECURITIES> 0
<RECEIVABLES> 208,000
<ALLOWANCES> 0
<INVENTORY> 801,000
<CURRENT-ASSETS> 2,303,000
<PP&E> 70,044,000
<DEPRECIATION> (12,447,000)
<TOTAL-ASSETS> 74,125,000
<CURRENT-LIABILITIES> 6,812,000
<BONDS> 29,924,000
<COMMON> 26,030,000
0
0
<OTHER-SE> 10,764,000
<TOTAL-LIABILITY-AND-EQUITY> 74,125,000
<SALES> 22,758,000
<TOTAL-REVENUES> 22,758,000
<CGS> 19,143,000
<TOTAL-COSTS> 19,143,000
<OTHER-EXPENSES> 1,882,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 403,000
<INCOME-PRETAX> 1,733,000
<INCOME-TAX> 624,000
<INCOME-CONTINUING> 1,109,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,109,000
<EPS-PRIMARY> .15
<EPS-DILUTED> 0
</TABLE>
