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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 28, 1997
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to __________________
Commission file number: 1-13044
COOKER RESTAURANT CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
OHIO 62-1292102
- ----------------------------------- ---------------------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
5500 Village Boulevard, West Palm Beach, Florida 33407
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (561) 615-6000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Exchange on Which Registered
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Common Shares, without par value The New York Stock Exchange
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Rights to Purchase Class A Junior Trades with the Common Shares
Participating Preferred Shares,
without par value
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Securities registered pursuant to Section 12(g) of the Act:
6-3/4% Convertible Subordinated Debentures Due 2002
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(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No | |
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
The aggregate market value of Common Shares held by non-affiliates of the
registrant on March 12, 1998 was $75,860,000.
The number of Common Shares outstanding on March 12, 1998 was 10,023,000.
The following documents have been incorporated by reference into this Form
10-K:
Document Part of Form 10-K
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The Registrant's definitive Proxy Statement for
its 1998 Annual Meeting of Shareholders Part III
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PART I
ITEM 1. BUSINESS.
GENERAL
At March 29, 1998 the Registrant owned and operated 62 full-service
"Cooker(sm)" restaurants (the "Restaurants") in Florida, Georgia, Indiana,
Kentucky, Maryland, Michigan, North Carolina, Ohio, Tennessee and Virginia.
Restaurants average approximately 7,900 square feet and 255 seats, and are
designed to provide traditional and comfortable dining experiences rather than a
theme atmosphere or menu. The Registrant provides an attractive value to
customers by offering a moderately-priced, full menu of high quality food served
in generous portions. The menu includes appetizers, soups, salads, chicken,
fish, beef and pasta entrees, sandwiches, burgers and desserts, most of which
are created from original recipes and prepared from scratch using fresh
ingredients. Entree selections generally range in price from $4.49 to $14.99
and, in 1997, the average check per person was approximately $10.97. The
Registrant is committed to providing prompt, friendly and efficient customer
service as reflected by its "100% Satisfaction Guarantee" policy and by its
having what the Registrant believes is a higher ratio of service personnel to
customers and a greater number of managers per Restaurant than many of its
competitors.
THE COOKER CONCEPT
The key features of the Cooker concept include the following:
"100% Satisfaction Guarantee." The Registrant is committed to providing
high quality food, friendly and efficient service and comfortable, clean
surroundings. Restaurant managers visit tables to make sure every customer is
satisfied with the Cooker experience. If a customer is not satisfied with any
part of the visit, particularly the food and service, the Restaurant staff is
authorized to provide that customer with a free meal.
Original Recipes Made From Scratch. Cooker provides an attractive value to
customers by offering a moderately-priced, full menu of high quality food served
in generous portions. Most of the items on Cooker's menu are created from
original recipes and prepared from scratch using fresh ingredients, which the
Registrant believes results in more flavorful food. The menu is re-evaluated in
June and December of each year when the least popular items from each category
(appetizers, entrees and desserts) are removed from the menu and replaced with
new items created by the Registrant's culinary team. Each menu item is
researched and tested in the Registrant's test kitchen and in Restaurants to
ensure customer acceptance.
Commitment to Staffing. The Registrant's commitment to meeting the highest
standards of customer service is reflected in having what the Registrant
believes is a higher ratio of service personnel to customers and having a
greater number of managers per Restaurant than many of its competitors. The
Registrant believes that higher staffing levels permit its staff to interact
with customers, resulting in an enhanced dining experience. This strategy
results in repeat customer visits, as well as "word-of-mouth" advertising by
current customers that attracts new customers.
Timeless Atmosphere. The Restaurants are designed to create a traditional
and comfortable atmosphere suitable for any occasion. This atmosphere is
enhanced by friendly service and a menu that appeals to a broad segment of the
population and encourages customers to visit the Restaurants more often. Unlike
many casual dining restaurants that center around a "theme," the Registrant
believes its Restaurants are not as sensitive to changing customer preferences
and trends.
Dedicated Employees. The Registrant hires its personnel only after
extensive interviews, and seeks to recruit employees who share the Registrant's
commitment to high standards of customer service. Each new non-management
employee is initially trained for a minimum of seven to ten days or longer if
hired for a new Restaurant. Regardless of their background, new management
personnel undergo 90 to 120 days of training that includes gaining exposure to
all areas of Restaurant operations and attending training classes at the
Registrant's headquarters. The Registrant
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encourages a sense of personal commitment from its employees at every level by
providing extensive training, employee development and competitive compensation.
Management believes its personnel policies result in a low rate of employee
turnover.
MENU
Cooker provides an attractive value to customers by offering a
moderately-priced, full menu of high quality food and beverage items served in
generous portions. The menu features 66 dishes including appetizers, soups,
salads, chicken, fish, beef and pasta entrees, sandwiches, burgers and desserts.
Most of the items on the menu are created from original recipes and prepared
from scratch using fresh ingredients, which the Registrant believes results in
more flavorful food. Lunch and dinner entrees generally range in price from
$4.49 to $14.99 and in 1997 lunch accounted for approximately 40% of sales. The
average check per person in 1997 was approximately $10.97. Each Restaurant
offers alcoholic beverages including liquor, wine and beer, which constituted
approximately 10.5% of sales in 1997. The Registrant re-evaluates its menu in
June and December of each year, and the least popular items from each category
are removed from the menu and replaced with new items created by the
Registrant's culinary team. Each menu item and recipe is researched and tested
in the Registrant's test kitchen and in the Restaurants to ensure customer
acceptance.
DESIGN
The Restaurants are designed to be comfortable and functional, with a decor
that includes materials such as mahogany, slate, marble and tile. The average
Restaurant is approximately 7,900 square feet (of which approximately 40% is
devoted to kitchen and services areas) with seating for approximately 255
customers. Most of the Restaurants opened in 1997 have in excess of 8,000 square
feet and seat approximately 260 customers. The majority of the seating is in
booths, which enhances customer privacy and comfort. Each Restaurant also has a
separate bar area which has stool and booth seating. The Registrant believes
that the typical Restaurant kitchen is comparatively large by industry standards
and is designed for quality and speed of food preparation. These kitchens permit
the Registrant to be flexible in the types of food items which can be prepared
and to adapt to changing customer tastes and preferences.
DEVELOPMENT AND EXPANSION
The Registrant is an Ohio corporation which was the surviving corporation
of the merger of affiliated corporations in 1988. At that time the Registrant
operated six restaurants. By 1990, the Registrant increased its total number of
units to 10. The following table sets forth the Registrant's unit
growth since 1990:
<TABLE>
<CAPTION>
YEAR 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RESTAURANTS OPEN AT
START OF YEAR 10 12 15 20 29 35 37 47
RESTAURANTS OPENED
DURING YEAR 2 3 5 9 6 3* 11* 13
</TABLE>
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* The Registrant closed one Restaurant in Florence, Kentucky in 1995 and one
in Palm Harbor, Florida in 1996. Both locations have been leased to third
parties.
The Registrant opened 13 Restaurants in 1997 and has opened 2 Restaurants
to date in 1998.
The Registrant intends to open an additional 6 Restaurants in 1998 which
would result in the Registrant opening a total of 8 new Restaurants in 1998. The
Registrant had previously planned to open a total of 12 Restaurants in 1998 but,
in January, 1998, after reviewing the results of 1997 including lower earnings
per share in 1997 as compared to 1996 and a consequent decline in Common Share
prices, the Board of Directors determined to delay the opening of 4 Restaurants
in order to allow senior management to focus their efforts on rebuilding average
unit volumes and shareholder value. A majority of potential future locations for
openings in 1998 are either under construction or negotiations for those
locations are currently in progress. The Registrant anticipates that cash on
hand along with funds generated from operations and bank borrowings will be
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sufficient to finance these Restaurants. Further expansion will be dependent on,
among other things, the Registrant's future operations, the availability of
capital, desirable site locations, the ability to attract qualified employees,
securing appropriate local government approvals, and future economic conditions.
The Registrant has no definite commitments to develop Restaurants after 1998 and
there can be no assurance that the Registrant will be able to locate and acquire
suitable sites for expansion. There can be no assurance that the Registrant will
be able to open the number of Restaurants planned to be opened by it or that
such Restaurants will be opened on schedule.
The Registrant considers the specific location of a Restaurant to be
critical to its long-term success and devotes significant effort to the
investigation and evaluation of potential sites. In order to effectively control
its operational and administrative costs, as well as take advantage of name
recognition, the Registrant anticipates that further expansion will be in medium
to large metropolitan areas in the Midwest, East and Southeast regions of the
United States, primarily in freestanding buildings and in retail developments in
proximity to high density, high traffic, office, residential and retail areas.
The Registrant owns and leases the sites for its existing facilities, although
the Registrant prefers to own the property.
RESTAURANT OPERATIONS
Management and Employees. The Registrant currently has 11 regional managers
who are each responsible for supervising between 4 and 7 Restaurants and
continuing the development of their management teams. Through regular visits to
the Restaurants, the regional managers ensure that the Registrant's concept,
strategy and standards of quality are being adhered to in all aspects of
restaurant operations. Each of the Restaurants typically has one general
manager, one assistant general manager, one kitchen manager and between two and
four assistant managers. The general manager of each Restaurant has primary
responsibility for the day-to-day operations of the entire Restaurant and is
responsible for maintaining the standards of quality and performance established
by the Registrant. The average number of management employees in each restaurant
is 5.5 and the average number of hourly employees in each Restaurant is
approximately 85. Management believes that its success is in part attributable
to its high level of service and interaction between its employees and guests.
The Registrant seeks to attract and retain high quality managers and hourly
employees by providing attractive financial incentives and flexible working
schedules. Financial incentives provided to attract high quality managers
include competitive salaries, bonuses and stock options based upon position,
seniority and performance criteria. Also, management believes that the
Registrant attracts qualified managers by providing a higher overall quality of
life characterized by a five-day work schedule.
Training and Development. The Registrant hires its personnel only after
extensive interviews, and seeks to recruit employees who share the Registrant's
commitment to high standards of customer service. Each new non-management
employee is initially trained for a minimum of 7 to 10 days or longer if hired
for a new Restaurant. Regardless of their background, new management personnel
undergo 90 to 120 days of training that includes gaining exposure to all areas
of Restaurant operations and attending training classes at the Registrant's
headquarters. The Registrant encourages a sense of personal commitment from its
employees at every level by providing extensive training, employee development
and competitive compensation. Management believes its personnel policies result
in a low rate of employee turnover.
Restaurant Reporting Systems. The Registrant uses integrated management
information systems that include a point-of-sale system to facilitate the
movement of food and beverage orders between the customer areas and kitchen
operations, control cash, handle credit card authorizations, and gather data on
sales by menu item and hours worked by employees. In addition, Restaurant
systems have been developed to record accounts payable and inventories. Sales,
cash control, and summary payroll data are transferred to the Registrant's
headquarters nightly. Detailed payroll, accounts payable and inventory data are
transferred to the Registrant's headquarters weekly. These Restaurant
information systems provide data for posting directly to the Registrant's
general ledger, to other accounts subsystems and to other systems developed to
evaluate Restaurant performance.
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The Restaurant system also provides hourly, daily and weekly reports for
each Restaurant manager to evaluate current performance and to plan for future
staffing and food production needs. The headquarters' systems also provide a
variety of management reports comparing current results to prior periods and
predetermined operating budgets. The results are reported to and reviewed with
Registrant management by accounting personnel. Included among the reports
produced are (i) daily reports of revenue and labor cost by Restaurant, (ii)
weekly summary profit and loss statements by Restaurant and an analysis of sales
by menu item, and (iii) monthly detailed profit and loss statements by
Restaurant as well as analytical reports on a variety of Restaurant performance
characteristics.
Purchasing. Purchasing specifications are determined by the Registrant's
corporate offices. Each Restaurant's management team determines the daily
quantities of food items needed and orders such quantities from major suppliers
at prices often negotiated directly with the Registrant's corporate offices. The
Registrant purchases its food products and supplies from a variety of national,
regional and local suppliers. The Registrant is not dependent upon any one
supplier and has not experienced significant delays in receiving its food and
beverage inventories, restaurant supplies or equipment. Management believes that
the diversity of the Registrant's menu enables its overall food costs to be less
dependent upon the price of a particular product. The Registrant also tests
various new products in an effort to obtain the highest quality products
possible and to be responsive to changing customer tastes.
Advertising and Marketing. The Registrant relies primarily on "word of
mouth" advertising to attract customers to its Restaurants. Management believes
the "100% Satisfaction Guarantee," made-from-scratch menu items and focus on
high-quality service generates a high level of repeat customers and new customer
visits. The Registrant did test the use of radio advertising in three markets
during 1997. The Registrant will continue testing radio advertising in 1998;
however, the Registrant will continue to have the primary focus of its limited
advertising expenses on local promotions and public relations efforts.
Hours of Operation. The Restaurants generally offer food service from 11:00
a.m. to 11:00 p.m., Sunday through Thursday, and 11:00 a.m. to midnight on
Friday and Saturday. All menu items (other than alcoholic beverages) are
available for carry-out.
COMPETITION
The restaurant and food service industry is highly competitive and
fragmented. There are numerous restaurants and other food service operations
that compete directly and indirectly with the Registrant. Many competitors have
been in existence longer, have a more established market presence and have
significantly greater financial, marketing and other resources and higher total
sales volume and profits than does the Registrant. In addition to other
restaurant companies, the Registrant competes with numerous other businesses for
suitable locations for its Restaurants.
The restaurant industry may be adversely affected by changes in consumer
tastes, discretionary spending priorities, national, regional or local economic
conditions, demographic trends, consumer confidence in the economy, traffic
patterns, weather conditions, employee availability and the type, number and
location of competing restaurants. Changes in any of these factors could
adversely affect the Registrant. In addition, factors such as inflation and
increased food, liquor, labor and other costs could adversely affect the
Registrant.
GOVERNMENT REGULATIONS
The Registrant's business is subject to various federal, state and local
government regulations, including those relating to the sale of food and
alcoholic beverages. While the Registrant to date has not experienced an
inability to obtain or maintain any necessary governmental licenses, permits or
approvals, the failure to maintain food and liquor licenses could have a
material adverse effect on the Registrant's operating results. In addition,
Restaurant operating costs are affected by increases in the minimum hourly wage,
unemployment tax rates, sales taxes and similar costs over which the Registrant
has no control. Since many of the Registrant's employees are paid at rates based
on the federal minimum wage, increases in the minimum wage may result in an
increase in the Registrant's labor costs. Some states have set minimum wage
requirements higher than the federal level. The Registrant is subject to "dram
shop" statutes in certain states which generally provide a person injured by an
intoxicated person with the right to recover damages from an establishment that
served alcoholic beverages to the intoxicated person. Difficulties or failure in
obtaining required licenses and approvals will result in delays in, or
cancellation of, the opening of new Restaurants. Although
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the Registrant has satisfied restaurant, liquor and retail licensing for its
existing Restaurants, no assurance can be given that the Registrant will be able
to maintain existing approvals or obtain such further approvals at other
locations. The development and construction of additional Restaurants will be
subject to compliance with applicable zoning, land use and environmental
regulations. There can be no assurance that the Registrant will be able to
obtain necessary variances or other approvals on a cost effective and timely
basis in order to construct and develop Restaurants in the future.
EMPLOYEES
At March 29, 1998, the Registrant had approximately 5,527 employees, of
which approximately 5,100 were Restaurant employees, approximately 395 were
Restaurant management personnel, and approximately 32 were corporate staff
personnel. None of the Registrant's employees is represented by a labor union or
a collective bargaining unit. The Registrant considers relations with its
employees to be satisfactory.
MARKS
The Registrant has registered the service mark "Cooker Bar and Grille" and
Design with the United States Patent and Trademark Office. The Registrant
previously registered the service mark "The Southern Cooker - Home Style
Restaurant & Bar" and Design with the United States Patent and Trademark Office
but did not renew the registration when its initial term expired. The Registrant
also uses the word Cooker as a service mark in combination with words and
designs other than those used in the registered marks. Other providers of
restaurant services use trade names that include the word "cooker." Some of
these users may resist the Registrant's use of its marks, as it expands into new
territories. However, in view of the extensive third party use of such trade
names, management believes that the Registrant should be in a reasonably good
position to resist adverse claims. This same extensive third party use means,
however, that the Registrant may in the future have difficulty blocking use by
others of marks incorporating the word "cooker." It is possible for prior users
to develop rights in such marks in their geographic territories and it would be
difficult for the Registrant to limit such use, even though the Registrant has a
federal registration.
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ITEM 2. PROPERTIES.
At March 29, 1998, the Registrant operated 62 Restaurants in the following
locations:
METROPOLITAN AREA LOCATION
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FLORIDA
Ft. Myers-Cape Coral............................................Ft. Myers
Gainesville...................................................Gainesville
Melbourne-Titusville-Palm Bay...................................Melbourne
Orlando.................................................Altamonte Springs
Orlando.....................................................East Colonial
Tampa-St. Petersburg-Clearwater...............................Busch Blvd.
West Palm Beach.............................................Boynton Beach
GEORGIA
Atlanta........................................................Alpharetta
Atlanta..........................................................Gwinnett
Atlanta..........................................................Kennesaw
Atlanta..........................................................Wildwood
Augusta...........................................................Augusta
INDIANA
Evansville.....................................................Evansville
Indianapolis.....................................................Keystone
Indianapolis..................................................Willow Lake
KENTUCKY
Lexington.......................................................Lexington
Louisville..............................................Hurstbourne Plaza
MARYLAND
Washington, D.C. ................................................Bethesda
MICHIGAN
Detroit.........................................................Ann Arbor
Detroit......................................................Auburn Hills
Detroit............................................................Canton
Detroit...........................................................Livonia
Detroit..............................................................Novi
Detroit..................................................Sterling Heights
Detroit..............................................................Troy
Grand Rapids.................................................Grand Rapids
Flint-Saginaw.....................................................Saginaw
METROPOLITAN AREA LOCATION
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NORTH CAROLINA
Raleigh-Durham-Chapel Hill........................................Raleigh
OHIO
Cincinnati......................................................Beechmont
Cincinnati................................................Governor's Hill
Cincinnati ...................................................Paxton Road
Cincinnati.....................................................Springdale
Cleveland........................................................Rockside
Cleveland.......................................................Beachwood
Cleveland..................................................Cuyahoga Falls
Cleveland..........................................................Mentor
Cleveland........................................................Westlake
Cleveland...........................................................Solon
Columbus......................................................Bethel Road
Columbus.................................................Cleveland Avenue
Columbus.................................................East Main Street
Columbus....................................................Hamilton Road
Columbus......................................................Lane Avenue
Columbus.......................................................Morse Road
Columbus................................................North High Street
Dayton.......................................................Beaver Creek
Dayton.............................................Miamisburg-Centerville
Dayton...........................................................Vandalia
Toledo.............................................................Toledo
Toledo...........................................................Sylvania
Youngstown..............................................Boardman Township
TENNESSEE
Chattanooga...................................................Chattanooga
Johnson City.................................................Johnson City
Memphis...........................................................Memphis
Memphis....................................................Regalia Center
Nashville.......................................................Hermitage
Nashville....................................................Murfreesboro
Nashville.........................................................Parkway
Nashville.......................................................Rivergate
Nashville........................................................West End
VIRGINIA
Norfolk........................................................Chesapeake
Washington, D.C. .................................................Fairfax
The Registrant leases 19 Restaurants from unaffiliated lessors with terms
ranging from 15 to 40 years, that include options to extend such leases
exercisable by the Registrant. See Note 13a to the Financial Statements for
information relating to the lease commitments. The Registrant owns the remaining
Restaurants, 6 of which are subject to a mortgage granted to the First Union
National Bank of Tennessee.
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The Registrant owns a 32,000 square foot office building in West Palm
Beach, Florida where its executive offices are located. Currently the Registrant
leases 50 percent of that facility to an unaffiliated lessee. The lease term
runs through May, 2003. The Registrant closed a restaurant in Florence, Kentucky
in 1995 and a restaurant in Palm Harbor, Florida in 1996 and is currently
leasing the sites to unaffiliated third parties.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT.
Set forth below is information regarding the executive officers of the
Registrant as of December 28, 1997:
G. ARTHUR SEELBINDER, age 54, is a founder of the Registrant. He has been
Chairman of the Board, Chief Executive Officer and a director of the Registrant
since 1986 and served as President from September 1989 until December 1994. He
was Chairman of the Board of Cooker Corporation (a predecessor of the
Registrant) from 1984 until 1988 when it was merged into the Registrant. Mr.
Seelbinder is also a director and the President of Financial Land Corporation, a
real estate holding company. Mr. Seelbinder was a general partner in a
single-asset real estate limited partnership that owned and managed an office
building in central Ohio. As part of the foreclosure process, a state court
appointed a receiver to take over the property owned by the Partnership in
December, 1994. The Partnership filed a Chapter 11 petition in the United States
Bankruptcy Court for the Southern District of Ohio, Eastern Division, in
December, 1995. The Bankruptcy Court dismissed the case in December, 1996.
PHILLIP L. PRITCHARD, age 48, has been a director of the Registrant since
1994 and has served as the President and Chief Operating Officer of the
Registrant since December 1994. Prior to joining the Registrant, Mr. Pritchard
spent 22 years with GMRI. Most recently, Mr. Pritchard served as Executive Vice
President, Operations for GMRI's Red Lobster restaurants from 1986 through 1992
and Executive Vice President, Operations for GMRI's China Coast restaurants from
1992 to 1993. He has an MBA degree from Rollins College Graduate School of
Business Administration.
DAVID C. SEVIG, age 54, has been Vice President - Chief Financial Officer
of the Registrant since June 1995. Prior to joining the Registrant, Mr. Sevig
was with GMRI from 1967 through 1994 where he served as Vice President
Controller of international restaurants for six years and Vice President -
Controller of Red Lobster restaurants for 10 years before that. From May 1994
through May 1995, he was with Blockbuster Entertainment developing the Block
Party entertainment concept.
GLENN W. COCKBURN, age 42, is a founder of the Registrant. He has been a
director of the Registrant since 1989. In 1991, he was elected Senior Vice
President - Operations of the Registrant. He was Vice President - Food Services
of the Registrant from 1988 to 1991 and was Vice President of Food Operations of
Cooker Corporation from 1986 to 1988 when it was merged into the Registrant. He
is a graduate of the Culinary Institute of America in Hyde Park, New York.
MARGARET A. EPPERSON, age 52, has been Secretary and Treasurer of the
Registrant since 1986.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Common Shares are traded on the New York Stock Exchange ("NYSE") under the
symbol "CGR". The prices set forth below reflect high and low sale prices for
Common Shares in each of the quarters of 1996 and 1997 as reported by the NYSE.
1997 HIGH LOW
1st Quarter $12-1/8 $10-1/8
2nd Quarter $11-1/2 $9-1/8
3rd Quarter $11-3/16 $9-3/4
4th Quarter $10-7/8 $9-1/2
1996 HIGH LOW
1st Quarter $14 $11
2nd Quarter $15-1/4 $12-1/8
3rd Quarter $13-3/8 $10-3/8
4th Quarter $12-1/2 $10-1/4
On March 12, 1998, the Registrant had approximately 2,100 shareholders of
record.
The Registrant declared and paid an annual cash dividend of $.07 per Common
Share for fiscal 1997 and of $.07 per Common Share for fiscal 1996, in each
case, in February of the following year. Under the Registrant's bank revolving
credit/term loan agreement, dividends may be declared in any fiscal year during
which the Registrant's net income for that year exceeds $2,000,000 and such
dividends, together with all other dividends paid within such fiscal year, do
not exceed 15% of the Registrant's net income for the previous fiscal year.
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ITEM 6. SELECTED FINANCIAL DATA.
The selected financial data presented below should be read in conjunction
with the Company's Consolidated Financial Statements, the related notes and
audit report, which refers to a change in accounting for preoperational costs,
and Management's Discussion and Analysis of Financial Condition and results of
Operations included elsewhere in this filing. The selected financial data for
1997 through 1994 have been derived from the financial statements audited by
KPMG Peat Marwick LLP, the Company's independent accountants, and for 1993 have
been derived from the financial statements audited by another firm of
independent accountants.
<TABLE>
<CAPTION>
(in thousands, except per share data)
FISCAL YEAR (d)
----------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales 135,458 110,273 91,678 84,169 66,688
Income before cumulative effect of a change in
accounting principle and extraordinary item 6,452 6,732 4,432 2,481 3,494
Cumulative effect of accounting change,
net of tax (a) 496 -- -- -- --
Extraordinary gain, net of tax (b) -- -- -- 484 --
Net Income 5,956 6,732 4,432 2,965 3,494
========== ========== ========= ========= =========
Basic earnings per common share (c):
Income before cumulative effect of change
in accounting principle and
extraordinary item 0.64 0.75 0.62 0.35 0.46
Cumulative effect of change in
accounting for preoperational costs (0.05) -- -- -- --
Extraordinary item -- -- -- 0.07 --
Net income 0.59 0.75 0.62 0.42 0.46
========== ========== ========= ========= =========
Diluted earnings per common share (c):
Income before cumulative effect of change in
accounting principle and extraordinary item 0.63 0.72 0.61 0.34 0.45
Cumulative effect of change in accounting for
preoperational costs (0.05) -- -- -- --
Extraordinary item -- -- -- 0.07 --
Net income 0.58 0.72 0.61 0.41 0.45
========== ========== ========= ========= =========
Long-term obligations 42,917 16,822 35,975 28,600 23,000
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C>
Total assets 142,921 114,633 83,181 70,852 66,598
Dividends per share 0.07 0.06 0.05 0.05 0.05
Proforma amounts assuming change in accounting
principle is applied retroactively: (a)(c)
Net income 6,452 6,442 4,667 3,561 2,480
Earnings per share - basic 0.64 0.72 0.65 0.50 0.33
Earnings per share - diluted 0.63 0.69 0.64 0.49 0.32
</TABLE>
(a) Effective December 30, 1996, the Company changed its method of
accounting for preoperational costs, costs for employee training and
relocation, and supplies incurred in the connection with the opening of
a restaurant to expense these costs as incurred (see note 2 to the
consolidated financial statements).
(b) The extraordinary gain represents the repurchase of debentures in the
principal amount of $2,500,000 financed through funds available under
the revolving line of credit.
(c) In December 1997, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share"
which establishes new guidelines for the calculation of earnings per
share. Basic earnings per share have been computed by dividing net
income by the weighted average number of shares outstanding during the
year. Diluted earnings per share have been computed assuming the
exercise of stock options, as well as their related income tax effects.
Earnings per share for all periods have been restated to reflect the
provision of this Statement.
(d) The fiscal years ended on December 28, 1997, December 29, 1996, December
31, 1995, January 1, 1995 and January 2, 1994, respectively.
10
<PAGE> 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following should be read in conjunction with the Company's
Consolidated Financial Statements and the related noted thereto included
elsewhere herein.
RESULTS OF OPERATIONS
The following table sets forth as a percentage of sales certain items
appearing in the Registrant's statement of income.
<TABLE>
<CAPTION>
FISCAL YEAR (a)
----------------------------------------------
1997 1996 1995
----------------------------------------------
<S> <C> <C> <C>
Sales 100.0% 100.0% 100.0%
Cost of sales:
Food and beverages 28.6 28.4 28.6
Labor 34.5 34.5 34.9
Restaurant operating expenses 17.5 16.8 16.4
Restaurant depreciation and amortization 3.7 3.3 3.4
General and administrative 5.5 5.5 6.2
Preoperational costs 1.6 0.9 0.9
Impairment of long-lived assets 0.3 -- --
Interest expense 1.3 1.3 2.1
Loss (gain) on sale of property (0.1) -- (0.3)
Interest and other income (0.1) (0.2) --
----------------------------------------------
92.8 90.5 92.2
Income before income taxes and cumulative effect
of a change in accounting principle 7.2 9.5 7.8
Provision for income taxes before cumulative
effect of a change in accounting principle 2.5 3.4 3.0
----------- ----------- -----------
Income before cumulative effect of accounting
change in accounting principle 4.7 6.1 4.8
Cumulative effect of accounting change for
preoperational costs, net of tax 0.4 -- --
----------- ----------- -----------
Net Income 4.3 6.1 4.8
=========== =========== ===========
</TABLE>
- -----------------
(a) The fiscal years ended on December 28, 1997, December 29, 1996 and
December 31, 1995, respectively.
11
<PAGE> 13
FORWARD LOOKING INFORMATION
Statements contained in the foregoing discussion and elsewhere in this
report that are not based on historical fact are considered "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are based on management's present assumptions as to
future trends, including economic trends, prevailing interest rates, the
availability and cost of raw materials, the availability of the capital
resources necessary to complete the Company's expansion plans, government
regulations, especially regulations regarding taxes, labor and alcoholic
beverages, competition, consumer preferences and similar factors. Changes in
these factors could affect the validity of such assumptions and could have a
materially adverse effect on the Company's business.
1997 COMPARED WITH 1996
Sales in 1997 of $135,458,000 were $25,185,000 (22.8%) more than sales
in 1996. The increase was primarily due to sales from new restaurants opened
during fiscal 1997 and from a full year of operation for restaurants opened
during 1996. The 1997 openings included restaurants in: Boynton Beach, Orlando
and Tampa, Florida; Evansville, Indiana; Lexington, Kentucky; Detroit, Grand
Rapids and Saginaw, Michigan; Cleveland (2) and Cincinnati, Ohio; Chattanooga,
Tennessee; and Chesapeake, Virginia. Same store sales for the year were down
1.26% from the prior year.
The food and beverage costs in 1997 at 28.6% of sales was 20 basis
points higher than the previous year. The increase is due to a shift in menu mix
to the Combination Platters introduced late in 1996, these entrees have an above
average dollar margin, however, their cost as a percent of sales is also higher
than average. Other ingredient costs increases were covered by price increases
taken during the year.
Labor cost at 34.5% of sales was unchanged from the previous year.
Average hourly wage rate increase were offset by slightly lower hours; the cost
of manager compensation per store was unchanged from the prior year due to lower
bonuses.
Restaurant operating expenses at 17.5% was 70 basis points above the
prior year. Seventy percent of the increase (i.e. 50 of the 70 basis points) is
due to the reduction in average unit sales. Actual dollars spent per store were
up less than 1% from the prior year. Depreciation and amortization as a percent
of sales increased 40 basis points over last year as a result of lower average
unit sales and higher expense levels at new units.
General and administrative expense of $7,368,000 were 22.4% more than
last year. However, as a percent of sales these expenses remained unchanged from
the prior year at 5.5% of sales.
The increase in preoperational expenses of $1,235,000 was due to a
change in the method of accounting for preoperational costs effective December
30, 1996. The change is to expense costs as incurred, rather than capitalizing
and then amortizing these costs over future periods. Management believes the
change is preferable because of recent accounting trends.
A $472,000 pre-tax impaired asset charge was made in the fourth quarter.
This charge relates to two units that have experienced sales declines and
corresponding earning declines. The write down represents a reduction of the
carrying amounts of the impaired assets to their estimated fair value, as
determined by using discounted estimated future cash flows.
Interest expense remained unchanged from prior year at 1.3% of sales.
However, the increased dollar amount is the result of additional borrowings to
fund the growth of new units.
The 1997 provision for income taxes decreased to 34.3% from 36.0% in
1996. The decrease in the overall tax rate is the result of lower state income
taxes.
12
<PAGE> 14
1996 COMPARED WITH 1995
Sales increased $18,595,000 or 20.3% in 1996 over 1995. The increase was
primarily due to sales generated from new Restaurants opened during fiscal 1996
and those opened late in fiscal 1995. The 1996 openings included Restaurants in:
Dayton, Ohio (2); Atlanta, Georgia (2); Columbus, Ohio (3); Detroit, Michigan;
Johnson City, Tennessee; Nashville, Tennessee; and Boardman Township, Ohio. Same
store sales declined 1.2% for the year. This decline was caused by a combination
of new stores drawing sales away from older stores in the same store base, first
quarter sales being lower than normal due to harsh weather in the first quarter
and lower third quarter sales during the two weeks of the Olympics.
Food and beverage costs as a percentage of sales decreased from 28.6% in
1995 to 28.4% in 1996 primarily as a result of menu mix changes.
Labor costs decreased from 34.9% in 1995 to 34.5% in 1996, because of
the impact of changes in Restaurant management staffing policies made in 1995.
Restaurant operating expenses increased to 16.8% in fiscal 1996 from
16.4% in 1995. Most of this increase was the result of higher repair and
maintenance spending (much of this was weather related in the first quarter) and
increased paper costs that resulted from changes made to the Registrant's
electronic point of sales system to improve kitchen efficiency.
Restaurant depreciation and amortization decreased as a percent of sales
from 3.4% in 1995 to 3.3% in 1996.
General and administrative expenses declined from 6.2% of sales in 1995
to 5.5% in 1996 primarily due to the increased number of Restaurants over which
these expenses are spread.
Interest expense decreased from 2.1% of sales in 1995 to 1.3% of sales
in 1996. The decrease is the result of paying off the revolving term loan
agreement in mid-May with the proceeds of a public offering of Common Shares.
The 1996 provision for income taxes before extraordinary items decreased
to 36.0% of income before income taxes from 38.1% in 1995. The 1995 provision
included a $205,000 provision for the Company's estimate of additional tax
liability.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements are for working capital,
new restaurant openings and improvements to existing restaurants. The majority
of the Company's financing for operations, expansion and working capital is
provided by internally generated cash flows from operations and borrowings under
a revolving term loan agreement, which provides a $33,000,000 line of credit,
through January 4, 1999 with maximum quarterly principal payments of $1,650,000
due January 4, 1999 and April 1, 1999 and the remaining outstanding balance due
June 30, 1999.
During 1997, the Company opened thirteen new units. Capital expenditures
for these new units and the refurbishing and remodeling of existing units
totaled $33,109,000 and were funded by cash flows of $13,702,000 from operations
and borrowings under the revolving line of credit. The Company has opened 2
Restaurants to date in 1998. The Company intends to open an additional 6
Restaurants in 1998 for a total of 8 new restaurants. The Company had previously
planned to open a total of 12 Restaurants in 1998 but, in January, 1998, after
reviewing the results of 1997 including lower earnings per share in 1997 as
compared to 1996 and a consequent decline in Common Share prices, the Board of
Directors determined to delay the opening of 4 Restaurants in order to allow
senior management to focus their efforts on rebuilding average unit volumes and
Shareholder value. Total cash expenditures for the 1998 expansion are estimated
to be approximately $14.5 million. The Company believes that cash flow from
operations together with borrowings from revolving term loan agreement will be
sufficient to fund the planned expansion, ongoing maintenance and remoldeling of
existing restaurants as well as other working capital requirements. As of March
27, 1998 the Company had borrowed $27,500,000 of the $33,000,000 available under
its revolving term loan agreement.
13
<PAGE> 15
The Company's operations are subject to factors outside its control. Any
one, or combination, of these factors could materially affect the results of the
Company's operations. These factors include: (a) Changes in the general economic
conditions in the United States, (b) changes in prevailing interest rates, (c)
changes in the availability and cost of raw materials, (d) changes in the
availability of the capital resources necessary to complete the Company's
expansion plans, (e) changes in Federal and State regulations or interpretations
of existing legislation, especially concerning taxes, labor and alcoholic
beverages, (f) changes in the levels of competition from current competitors and
potential new competition, and (g) changes in the levels of consumer spending
and customer preferences. The foregoing should not be construed as an exhaustive
list of all factors which could cause actual results to differ materially from
those expressed in forward-looking statements made by the Company.
Forward-looking statements made by or on behalf of the Company are based on a
knowledge of its business and the environment in which it operations, but
because of the factors listed above, actual results may differ from those
anticipated results described in those forward-looking statements. Consequently,
all of the forward-looking statements made are qualified by these cautionary
statements and there can be no assurance that the actual results or developments
anticipated by the registrant will be realized or, even if substantially
realized, that they will have the expected consequences to or effects on the
Company or its business or operations.
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are used to manage
well-defined interest rate risk. Interest rate swap agreements are used to
reduce the potential impact of increases in interest rates on floating-rate
long-term debt. At December 28, 1997, the Company was a party to an interest
rate swap agreement with a termination date of September 28, 2001. The agreement
entitles the Company to receive from the counterparty (a major bank), the
amounts, if any, by which the Company's interest payments on its $27,500,000
line of credit (included in the $33,000,000 line of credit) exceed 6.25 percent
through the termination date. No amounts were received by the Company during the
year ended December 28, 1997.
The fair value of the interest swap agreement approximated $(486,000) at
December 28, 1997. The fair value is estimated using option pricing models that
value the potential for the swaps to become in-the-money (liability) through
changes in interest rates during the remaining term of the agreement.
The Company is exposed to credit losses in the event of nonperformance
by the counterparties to its interest rate swap agreements. The Company
anticipates, however, that counterparties will be able to fully satisfy their
obligations under the contracts. The Company does not obtain collateral to
support financial instruments but monitors the credit standing of the
counterparties.
In 1994, the Board of Directors approved a guaranty by the Company of a
loan of $5,000,000 to G. Arthur Seelbinder, the Chairman of the Board. In
January, 1997, the Board approved a refinancing of the loan with The Chase
Manhattan Bank of New York (the "Bank"). The loan (the "Loan") from the Bank
bears interest at the Bank's prime rate or LIBOR plus 2%, is secured by 570,000
Common Shares and is guaranteed by the Company in the principal amount up to
$6,250,000 including capitalized interest. Pursuant to the loan agreement
between Mr. Seelbinder and the Bank, any reduction of the principal amount
outstanding under the Loan shall not entitle Mr. Seelbinder to the advancement
of additional funds under the Loan. 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. The term of the Loan was scheduled to
expire in the first quarter of 1998. The term of the Loan has been extended
until August 28, 1998. At March 24, 1998, the amount of the Loan outstanding,
including capitalized and accrued interest, was approximately $5,330,000 and the
undiscounted fair market value of the pledged shares was approximately
$5,344,000. The guaranty secures the Loan until it is repaid or refinanced
without a guaranty. The Company would fund any obligation it incurs under the
terms of its guaranty from additional borrowings under its Credit Agreement.
There can be no assurance that the Loan will be repaid or refinanced at August
28, 1998 on terms that will not result in continuing the guaranty or in a
material payment. Mr. Seelbinder agreed to pay to the Company a guaranty fee
each year that the guaranty remains outstanding beginning on March 9, 1994, the
date the Company first issued its guaranty of the loan. The amount of the
guaranty fee is 1/4 percent of the outstanding principal amount of the
guaranteed loan on the date that the guaranty fee becomes due. Mr. Seelbinder
has agreed to use at least one-half of any incentive bonus paid to him by the
Company to pay principal and interest on the Loan beginning with any incentive
bonus paid for fiscal year 1998. Mr. Seelbinder has also agreed to make payments
on the Loan in amounts sufficient to ensure that the Loan balance on January 31,
1999 does not exceed 90 percent of the Loan balance on January 31, 1998.
ACCOUNTING CHANGES
Effective December 30, 1996, the Company changed its method of
accounting for preoperational costs, costs for employee training and relocation
and supplies incurred in connection with the opening of a restaurant to expense
these costs as incurred. The Company formerly capitalized these costs and
amortized them over a one-year period commencing from the date the restaurant
was opened. Management believes the change is preferable because of recent
accounting trends. The accounting change resulted in a one-time after-tax charge
of $496,000 or $.05 per share (diluted) and is presented on the statement of
operations as the cumulative effect of a change in accounting for preoperational
costs.
YEAR 2000 ISSUE
The Year 2000 problem is the result of computer programs being written
using two digits rather than four to define the applicable year. The majority of
the Company's systems are purchased from outside vendors. The Company is
currently assessing whether it will be required to modify or replace significant
portions of its software so that its computer systems will properly utilize
dates beyond December 31, 1999. Those installed systems which are
14
<PAGE> 16
not currently able to fully function in the Year 2000, either have new versions
which are Year 2000 compliant, or the vendor has committed to a Year 2000
complaint release in sufficient time to allow installation and testing prior to
critical cutover dates. The Company has developed plans to address the possible
exposures related to the impact on its computer systems of the Year 2000
problem. The plan provides for the conversion efforts to be completed by the end
of 1999. Management does not expect the financial impact of making the required
system changes to be material to the Company's consolidated financial position,
results of operations or cash flows which are being funded through operating
cash flows. There can be no assurance that the Company's systems nor the
computer systems of other companies with whom the Company conducts business will
be Year 2000 compliant prior to December 31, 1999.
EARNINGS PER SHARE
In December 1997, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share" which
establishes new guidelines for the calculation of earnings per share. Basic
earnings per share have been computed by dividing net income by the weighted
average number of shares outstanding during the year. Diluted earnings per share
have been computed assuming the exercise of stock options, as well as their
related income tax effects. Earnings per share for all periods have been
restated to reflect the provision of this Statement.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 130 - "Reporting Comprehensive Income." SFAS No. 130 establishes
standards for the reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. SFAS No. 130
is effective for fiscal years beginning after December 31, 1997. Management does
not anticipate a significant impact of the adoption of SFAS No. 130 on the
Company's consolidated financial position, results of operations or cash flows.
In June 1997, the FASB issued SFAS No. 131 - "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 131 establishes standards
for the way that public business enterprises report information about operating
segments in annual financial statements and requires that these enterprises
report selected information about operating segments in interim financial
reports to shareholders. SFAS No. 131 is effective for financial statements for
periods beginning after December 15, 1997. Management does not anticipate a
significant impact of the adoption of SFAS No. 131 on the Company's consolidated
financial position, results of operations or cash flows.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements of the Registrant, and the related notes, together
with the report of KPMG Peat Marwick LLP dated January 30, 1998, are set forth
at pages F-1 through F-22 attached hereto.
The supplementary data of the Registrant is contained in note 16 of the
notes to the report of KPMG Peat Marwick LLP set forth at page F-22 attached
hereto. Quarterly amounts have been restated to reflect the change in
accounting for preoperational costs (see note 2).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The information required by this item was previously reported by the
Registrant in Item 5 of Part II of the Registrant's quarterly report on Form
10-Q for the fiscal quarter ended June 30, 1996 (Commission File No. 1-13044).
15
<PAGE> 17
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding the Registrant's directors is set forth at "ELECTION
OF DIRECTORS; Nominees for Election as Directors, Directors Whose Terms Continue
Until the 1999 Annual Meeting and Directors Whose Terms Continue Until the 2000
Annual Meeting" in the Registrant's Proxy Statement for its 1998 Annual Meeting
of Shareholders (the "1998 Proxy Statement") which information is incorporated
herein by reference. Information regarding the Registrant's executive officers
is set forth in PART I of this report at "Supplemental Item. Executive Officers
of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is set forth at "COMPENSATION OF
MANAGEMENT" in the 1998 Proxy Statement which information is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item is set forth at "SECURITY OWNERSHIP
OF PRINCIPAL SHAREHOLDERS, DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS" in the
1998 Proxy Statement which information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is set forth at "COMPENSATION OF
MANAGEMENT" in the 1998 Proxy Statement which information is incorporated herein
by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) DOCUMENTS FILED AS PART OF THIS FORM 10-K.
(1) CONSOLIDATED FINANCIAL STATEMENTS:
Independent Auditors' Report
Consolidated Balance Sheet as of December 28, 1997 and
December 29, 1996
Consolidated Statement of Income for the Fiscal Years
Ended December 28, 1997, December 29, 1996 and December
31, 1995
Consolidated Statement of Changes in Shareholders' Equity
for the Fiscal Years Ended December 28, 1997, December 29,
1996 and December 31, 1995
Consolidated Statement of Cash Flows for the Fiscal Years
Ended December 28, 1997, December 29, 1996, and December
31, 1995
Notes to Consolidated Financial Statements for the Fiscal
Years Ended December 28, 1997, December 29, 1996, and
December 31, 1995
16
<PAGE> 18
(3) THE FOLLOWING EXHIBITS ARE FILED AS PART OF THIS FORM 10-K.
(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 quarterly period ended March
29, 1992; Commission File Number 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.
4.1. See Articles FOURTH, FIFTH and SIXTH of the
Amended and Restated Articles of Incorporation of
the Registrant (see 3.1 above).
4.2. See Articles One, Four, Seven and Eight of the
Amended and Restated Code of Regulations of the
Registrant (see 3.2 above).
4.3. Rights Agreement dated as of February 1, 1990
between the Registrant and National City Bank
(incorporated by reference to Exhibit 1 of the
Registrant's Form 8-A filed with the Commission
on February 9, 1990; Commission File No.
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).
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; Commission File No. 0-16806).
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; Commission
File No. 0-16806).
4.7. See Section 7.4 of the Amended and Restated Loan
Agreement dated December 22, 1995 between
Registrant and First Union National Bank of
Tennessee. (see 10.4 below).
4.8. Indenture dated as of October 28, 1992 between
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).
(10) MATERIAL CONTRACTS (*Management contract or
compensatory plan or arrangement.)
10.1.-10.3. Reserved.
17
<PAGE> 19
10.4. Amended and Restated Loan Agreement dated
December 22, 1995 between Registrant and First
Union National Bank of Tennessee (incorporated by
reference to Exhibit 10.4 of the Registrant's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 (the "1995 Form 10-K"),
Commission File No. 0-16806).
10.5. Underwriting Agreement dated May 7, 1996 with
Montgomery Securities and Equitable Securities
Corporation (incorporated by reference to Exhibit
10.1 to the Registrant's quarterly report on Form
10-Q for the quarter ended June 30, 1996 (the
"June 1996 Form 10-Q"), Commission File No.
0-16806).
10.6. Form of Contingent Employment Agreement and
schedule of executed Agreements (incorporated by
reference to Exhibit 10.5 of the 1995 Form 10-K;
Commission File No. 0-16806).*
10.7. The Registrant's 1988 Employee Stock Option Plan
and 1992 Employee Stock Option Plan, Amended and
Restated April 22, 1996, (incorporated by
reference to Exhibit 10.2 to the June 1996 Form
10-Q, Commission File No. 0-16806).*
10.8. The Registrant's 1988 Directors Stock Option
Plan, as amended and restated. (incorporated by
reference to Exhibit 10.8 to the Registrant's
annual report on Form 10-K for the fiscal year
ended December 29, 1996 (the "1996 Form 10-K");
Commission File No. 0-13044).*
10.9. The Registrant's 1992 Directors Stock Option
Plan, as amended and restated. (incorporated by
reference to Exhibit 10.9 to the 1996 Form 10-K;
Commission File No. 0-13044).*
10.10. The Registrant's 1996 Officers' Stock Option Plan
(incorporated by reference to Exhibit 10.10 of
the 1995 Form 10-K; Commission File No.
0-16806).*
10.11. Reaffirmation and Amendment to Guaranty and
Suretyship Agreement between Registrant and
NationsBank of Tennessee, N.A. dated July 24,
1995 (incorporated by reference to Exhibit 10.5
of the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended July 2, 1995;
Commission File No. 1-13044).
10.12. Amended and Restated Guaranty between Registrant
and Chase Manhattan Bank dated January 31, 1997
(incorporated by reference to Exhibit 10.12 to
the 1996 Form 10-K; Commission File No. 0-13044).
10.13. Letter dated February 3, 1997 from G. Arthur
Seelbinder to the Registrant (incorporated by
reference to Exhibit 10.13 to the 1996 Form 10-K;
Commission File No. 0-13044).
10.14. Letter dated January 30, 1998 from G. Arthur
Seelbinder to the Registrant.
18
<PAGE> 20
(16) LETTER REGARDING CHANGE IN CERTIFYING ACCOUNTANT.
16.1. Letter dated August 14, 1996 from Price
Waterhouse LLP to the Securities and Exchange
Commission (incorporated by reference to Exhibit
16.1 to the Registrant's Quarterly Report on Form
10-Q for the quarterly period ended June 30,
1996; Commission File No. 1-13044).
(18) LETTER REGARDING CHANGE IN ACCOUNTING PRINCIPLES.
18.1 Letter dated March 27, 1998 from KPMG Peat
Marwick LLP.
(21) SUBSIDIARIES OF REGISTRANT.
21.1 Subsidiaries of Registrant.
(23) CONSENTS OF EXPERTS AND COUNSEL.
23.1 Consent of KPMG Peat Marwick LLP.
(24) POWERS OF ATTORNEY.
24.1. Powers of Attorney.
24.2. Certified resolution of the Registrant's Board of
Directors authorizing officers and directors
signing on behalf of the Registrant to sign
pursuant to a power of attorney.
(27) FINANCIAL DATA SCHEDULE.
27.1. Financial Data Schedule (submitted electronically
for SEC information only).
(b) REPORTS ON FORM 8-K.
No current report on Form 8-K was filed by the Registrant during the
fourth quarter of fiscal 1997.
19
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: March 27, 1998
COOKER RESTAURANT CORPORATION
(the "Registrant")
By: /s/ G. ARTHUR SEELBINDER
------------------------------
G. Arthur Seelbinder
Chairman of the Board,
Chief Executive Officer and Director
(principal executive officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 27, 1998.
SIGNATURE TITLE
/s/ G. ARTHUR SEELBINDER Chairman of the Board, Chief Executive
- -------------------------------- Officer and Director (principal executive
G. Arthur Seelbinder officer)
/s/ PHILLIP L. PRITCHARD * President, Chief Operating Officer and
- -------------------------------- Director
Phillip L. Pritchard
/s/ GLENN W. COCKBURN * Senior Vice President - Operations and
- -------------------------------- Director
Glenn W. Cockburn
/s/ DAVID C. SEVIG * Vice President - Chief Financial Officer
- -------------------------------- (principal financial and accounting officer)
David C. Sevig
/s/ ROBIN V. HOLDERMAN * Director
- --------------------------------
Robin V. Holderman
/s/ DAVID T. KOLLAT * Director
- --------------------------------
David T. Kollat
/s/ DAVID L. HOBSON * Director
- --------------------------------
David L. Hobson
/s/ HENRY R. HILLENMEYER * Director
- --------------------------------
Henry R. Hillenmeyer
/s/ MARGARET T. MONACO * Director
- --------------------------------
Margaret T. Monaco
/s/ HARVEY PALASH * Director
- --------------------------------
Harvey Palash
* By: /s/ G. ARTHUR SEELBINDER
- --------------------------------
G. Arthur Seelbinder
Attorney-in-Fact
20
<PAGE> 22
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
COOKER RESTAURANT CORPORATION
-----------------------
FORM 10-K ANNUAL REPORT
FOR THE FISCAL YEAR ENDED:
DECEMBER 28, 1997
-----------------------
CONSOLIDATED FINANCIAL STATEMENTS
-----------------------
================================================================================
<PAGE> 23
COOKER RESTAURANT CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report...............................................................................F-2
Consolidated Balance Sheets as of December 28, 1997 and December 29, 1996..................................F-3
Consolidated Statements of Income for the fiscal years ended December 28, 1997,
December 29, 1996 and December 31, 1995...............................................................F-4
Consolidated Statements of Changes in Shareholders' Equity for the fiscal years ended
December 28, 1997, December 29, 1996 and December 31, 1995............................................F-5
Consolidated Statements of Cash Flows for the fiscal years ended December 28, 1997,
December 29, 1996 and December 31, 1995...............................................................F-6
Notes to Consolidated Financial Statements.................................................................F-7
</TABLE>
F-1
<PAGE> 24
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Cooker Restaurant Corporation:
We have audited the accompanying consolidated balance sheets of Cooker
Restaurant Corporation and subsidiaries (the "Company") as of December 28, 1997
and December 29, 1996, and the related consolidated statements of income,
changes in shareholders' equity and cash flows for each of the years in the
three-year period ended December 28, 1997. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Cooker Restaurant
Corporation and subsidiaries as of December 28, 1997 and December 29, 1996, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 28, 1997 in conformity with generally
accepted accounting principles.
As discussed in note 2 to the consolidated financial statements, the Company
changed its method of accounting for preoperational costs in 1997.
KPMG PEAT MARWICK LLP
January 30, 1998
Fort Lauderdale, Florida
F-2
<PAGE> 25
COOKER RESTAURANT CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
December 28, 1997 and December 29, 1996
<TABLE>
<CAPTION>
Assets 1997 1996
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,685 2,009
Inventory 1,509 1,128
Land held for sale 55 1,560
Preoperational costs -- 749
Prepaid expenses and other current assets 1,057 527
--------- --------
Total current assets 7,306 5,973
Property and equipment, net 134,190 107,010
Other assets 1,425 1,650
--------- --------
$ 142,921 114,633
========= ========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Note payable $ -- 4,613
Accounts payable 4,668 3,845
Accrued liabilities 6,684 6,030
Capital lease obligation, current 173 --
Income taxes payable 61 991
--------- --------
Total current liabilities 11,586 15,479
Long-term debt, excluding current maturities 42,415 16,822
Capital lease obligation, long-term 502 --
Deferred income taxes 1,813 582
Other liabilities 133 --
--------- --------
Total liabilities 56,449 32,883
--------- --------
Shareholders' equity:
Common share-without par value; authorized, 30,000,000
shares; issued 10,548,000 and 10,548,000 shares at
December 28, 1997 and December 29, 1996, respectively 63,039 63,583
Retained earnings 29,570 24,316
Treasury stock, at cost, 526,000 and 513,000 shares at
December 28, 1997 and December 29, 1996, respectively (6,137) (6,149)
--------- --------
86,472 81,750
--------- --------
Commitments and contingencies
$ 142,921 114,633
========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 26
COOKER RESTAURANT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Fiscal years ended December 28, 1997, December 29, 1996 and December 31, 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Sales $ 135,458 110,273 91,678
--------- -------- -------
Cost of sales:
Food and beverage 38,762 31,322 26,218
Labor 46,711 38,074 31,977
Restaurant operating expenses 23,662 18,470 15,065
Restaurant depreciation and amortization 4,966 3,675 3,134
General and administrative 7,368 6,019 5,655
Preoperational costs 2,184 949 823
Impairment of long-lived assets 472 -- --
Interest expense 1,788 1,408 1, 978
Loss (gain) on sale of property (170) 2 (305)
Interest and other income (99) (167) (30)
--------- -------- -------
125,644 99,752 84,515
--------- -------- -------
Income before income taxes and cumulative effect of a
change in accounting principle 9,814 10,521 7,163
Provision for income taxes before cumulative effect
of a change in accounting principle 3,362 3,789 2,731
--------- -------- -------
Income before cumulative effect of a change in
accounting principle 6,452 6,732 4,432
Cumulative effect of change in accounting for
preoperational costs (less tax of $253) 496 -- --
--------- -------- -------
Net income $ 5,956 6,732 4,432
========= ======== =======
Basic earnings per common share:
Income before cumulative effect of change in
accounting principle $ 0.64 0.75 0.62
Cumulative effect of change in accounting
for preoperational costs (0.05) -- --
--------- -------- -------
Net income $ 0.59 0.75 0.62
========= ======== =======
Diluted earnings per common share:
Income before cumulative effect of change
in accounting principle $ 0.63 0.72 0.61
Cumulative effect of change in accounting
for preoperational costs (0.05) -- --
--------- -------- -------
Net income $ 0.58 0.72 0.61
========= ======== =======
Pro forma amounts assuming change in accounting
principle is applied retroactively:
Net income $ 6,452 6,442 4,667
========= ======== =======
Earnings per share - basic $ 0.64 0.72 0.65
========= ======== =======
Earnings per share - diluted $ 0.63 0.69 0.64
========= ======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 27
COOKER RESTAURANT CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollar and share amounts in thousands)
Fiscal years ended December 28, 1997, December 29, 1996 and December 31, 1995
<TABLE>
<CAPTION>
Common shares Treasury stock
----------------------- Retained -----------------------
Shares Amounts earnings Shares Amounts Total
------ ------- -------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995 7,651 $ 26,003 $ 13,939 500 $ (6,034) $ 33,908
Shares repurchased -- -- -- 13 (115) (115)
Issuance of common shares under
stock option plans 12 52 -- -- -- 52
Tax benefits of stock options
exercised -- 27 -- -- -- 27
Dividends paid $.05 per share -- -- (358) -- -- (358)
Net income -- -- 4,432 -- -- 4,432
------ -------- -------- ------ -------- --------
Balance, December 31, 1995 7,663 26,082 18,013 513 (6,149) 37,946
Issuance of common shares under
stock option plans 10 59 -- -- -- 59
Proceeds from secondary offering 2,875 37,442 -- -- -- 37,442
Dividends paid $.06 per share -- -- (429) -- -- (429)
Net income -- -- 6,732 -- -- 6,732
------ -------- -------- ------ -------- --------
10,548 63,583 24,316 513 (6,149) 81,750
Balance, December 29, 1996
Shares repurchased -- -- -- 122 (1,361) (1,361)
Issuance of shares under stock
option plans -- (751) -- (109) 1,373 622
Tax benefits of stock options
exercised -- 207 -- -- -- 207
Dividends paid $.07 per share -- -- (702) -- -- (702)
Net income -- -- 5,956 -- -- 5,956
------ -------- -------- ------ -------- --------
Balance, December 28, 1997 10,548 $ 63,039 29,570 526 (6,137) 86,472
====== ======== ======== ====== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 28
COOKER RESTAURANT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
Fiscal years ended December 28, 1997, December 29, 1996 and December 31, 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 5,956 6,732 4,432
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of change in accounting principle 496 -- --
Depreciation and amortization 5,470 4,026 3,552
Amortization of preoperational costs -- 949 823
Impairment of assets 472 -- --
Deferred income taxes 1,484 70 (162)
(Gain) loss on sale of property (170) 2 (305)
Gain on repurchase of debentures, net of income taxes -- -- (23)
(Increase) decrease in:
Inventory (381) (214) (84)
Preoperational costs -- (1,402) (444)
Prepaid expenses and other current assets (530) (74) 237
Other assets 225 436 (276)
Increase (decrease) in:
Accounts payable 823 1,424 460
Accrued liabilities 654 487 1,110
Income taxes payable (930) 208 175
Deferred rent 133 -- --
-------- ------- -------
Net cash provided by operating activities 13,702 12,644 9,495
-------- ------- -------
Cash flows from investing activities:
Purchases of property and equipment (33,109) (34,997) (17,200)
Proceeds from sale of property and equipment 2,375 532 459
-------- ------- -------
Net cash used in investing activities (30,734) (34,465) (16,741)
-------- ------- -------
Cash flows from financing activities:
Proceeds from note payable -- 6,150 --
Payment on note payable (4,613) (1,537) --
Borrowings under revolving line of credit 49,199 21,469 23,124
Repayments under revolving line of credit (22,408) (38,866) (14,313)
Redemption of debentures (1,198) (1,357) (1,180)
Repurchase of debentures -- (400) (893)
Exercise of stock options 829 59 78
Proceeds from secondary offering -- 37,442 --
Purchases of treasury stock (1,361) -- --
Capital lease obligations (38) -- --
Dividends paid (702) (429) (358)
-------- ------- -------
Net cash provided by financing activities 19,708 22,531 6,458
-------- ------- -------
Net increase (decrease) in cash and cash equivalents 2,676 710 (788)
Cash and cash equivalents, at beginning of year 2,009 1,299 2,087
-------- ------- -------
Cash and cash equivalents, at end of year $ 4,685 2,009 1,299
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 29
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 28, 1997, December 29, 1996 and December 31, 1995
(1) DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Cooker Restaurant Corporation and subsidiaries (the "Company") owns and
operates 60 restaurants in Tennessee, Ohio, Indiana, Kentucky,
Michigan, Florida, Georgia, North Carolina, Virginia and Maryland which
have been developed under the Cooker concept.
(a) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the financial
statements of Cooker Restaurant Corporation and its
majority-owned subsidiaries, CGR Management Corporation and
Southern Cooker Partnership. All significant intercompany
balances and transactions have been eliminated in the
consolidation.
(b) FISCAL YEAR
The Company's fiscal year ends on the Sunday closest to December
31 of each year. Fiscal years 1997, 1996 and 1995 consisted of
52 weeks.
(c) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents. Cash equivalents of $3,695,732 and $657,590 at
December 28, 1997 and December 29, 1996, respectively, consist
of overnight repurchase agreements and credit card receivables
and short-term investment with a maturity of three months or
less. Credit card receivables are considered cash equivalents
because of their short collection period. The carrying amount of
cash equivalents approximates fair value.
(d) INVENTORIES
Inventories consist primarily of food and beverages and are
stated at the lower of cost or market. Cost is determined using
the first-in, first-out (FIFO) method.
(e) PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Equipment under
capital leases are stated at the lower of the present value of
the minimum lease payments or the fair value of the leased
property. Depreciation is calculated on the straight-line method
over the estimated useful lives of the assets. Equipment held
under capital leases and leasehold improvements are amortized
using the straight-line method over the shorter of the estimated
useful life of the asset or the remaining lease term.
F-7
<PAGE> 30
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Maintenance and repairs are charged directly to expense as
incurred. When property and equipment are sold or otherwise
disposed of, the related cost and accumulated depreciation are
removed from the accounts and the resulting gains or losses are
reported in operations.
Interest is capitalized primarily in connection with the
construction of new restaurants. Capitalized interest is
amortized over the estimated useful life of the asset. Interest
costs of $445,800 and $618,000 were capitalized in fiscal 1997
and 1996, respectively.
(f) DEFERRED FINANCING COSTS
Deferred financing costs are being amortized on a straight line
basis which approximates the effective interest rate implicit
in the borrowing transaction. Amortization expense was $130,000,
$130,000, and $130,368 for the years ended December 28, 1997,
December 29, 1996 and December 31, 1995, respectively.
(g) PREPAID LEASE
Prepaid lease represents prepayment of a long-term land lease
and is being amortized over the lease term.
(h) INCOME TAXES
The Company accounts for income taxes under the provisions of
Financial Accounting Standards ("SFAS") No. 109, Accounting for
Income Taxes, which generally requires recognition of deferred
tax assets and liabilities for the expected future tax
consequences of events that have been included in the
consolidated financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based
on differences between the financial reporting and tax bases of
assets and liabilities, and are measured by applying enacted tax
rates and laws for the taxable years in which those differences
are expected to reverse. In addition, SFAS No. 109 requires
adjustment of previously deferred income taxes for changes in
tax rates under the liability method.
(i) EARNINGS PER SHARE
In December 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 128,
Earnings per Share, which establishes new guidelines for the
calculation of earnings per share. Basic earnings per share have
been computed by dividing net income by the weighted average
number of shares outstanding during the year. Diluted earnings
per share have been computed assuming the excercise of stock
options, as well as their related income tax effects. Earnings
per share for all prior periods have been restated to reflect
the provisions of this Statement.
F-8
<PAGE> 31
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basic and diluted share data are as follows (in thousands):
1997 1996 1995
---- ---- ----
Weighted average shares outstanding - basic 10,024 8,980 7,151
Effect of dilutive securities:
Options 263 404 172
------ ----- -----
Diluted shares 10,287 9,384 7,323
====== ===== =====
Convertible subordinated debentures outstanding as of December
28, 1997 are convertible into 691,710 shares of common stock at
$21.5625 per share and due October 2002, were not included in
the computation of diluted EPS for each of the years in the
three-year period ended December 28, 1997 as the inclusion of
the convertible subordinated debentures would be antidilutive.
Options to purchase 840,215 shares of common stock, at prices
ranging from $10.875 to $21.75 per share, were outstanding for
the year ended December 28, 1997, but were not included in the
computation of diluted EPS because the options' excercise prices
were greater than the average market price of the common shares
for the year ended December 28, 1997. The options expire between
October 2001 and March 2007.
Options to purchase 95,340 shares of common stock, at prices
ranging from $12.875 to $21.75 per share, were outstanding for
the year ended December 27, 1996, but were not included in the
computation of diluted EPS because the options' excercise prices
were greater than the average market price of the common shares
for the year ended December 27, 1996. The options expire between
April 2002 and April 2006.
(j) USE OF ESTIMATES
The preparation of 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
disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts
of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
(k) FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents, accounts
payable and other current liabilities, and the revolving line of
credit approximates fair value because of the short maturity of
these instruments. The fair value of the convertible
subordinated debentures is estimated by discounting future cash
flows at rates currently offered to the Company for similar
types of borrowing arrangements. The carrying amount and fair
value of the convertible subordinated debentures is $14,915,000
and $13,573,000, respectively, at December 28, 1997 and
$16,113,000 and $14,660,000, respectively, at December 29, 1996.
F-9
<PAGE> 32
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(l) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE
DISPOSED OF
Annually, or more frequently if events or circumstances change,
a determination is made by management to ascertain whether
property and equipment and other intangibles have been impaired
based on the sum of expected future undiscounted cash flows from
operating activities. If the estimated net cash flows are less
than the carrying amount of such assets, the Company will
recognize an impairment loss in an amount necessary to write
down the assets to a fair value as determined from expected
future discounted cash flows. Based upon its most recent
analysis, the Company determined that an impairment write down
was necessary for certain locations due to a decline in sales
and corresponding trend of increasing operating expenses at
certain locations. As a result of this analysis, the Company
recognized an impairment write down of $472,000 for two
restaurant locations during the fourth quarter ended December
28, 1997.
(m) STOCK OPTION PLAN
Prior to January 1, 1996, the Company accounted for its
stock-option plans in accordance with the provisions of
Accounting Principles Board ("APB") Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations. As
such, compensation expense would be recorded on the date of
grant only if the current market price of the underlying stock
exceeded the exercise price. On January 1, 1996, the Company
adopted SFAS No. 123, Accounting for Stock-Based Compensation,
which permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of
grant. Alternatively, SFAS No. 123 also allows entities to
continue to apply the provisions of APB Opinion No. 25 and
provide pro forma net income and pro forma earnings per share
disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method defined in SFAS
No. 123 had been applied. The Company has elected to continue to
apply the provisions of APB Opinion No. 25 and provide the pro
forma disclosure provisions of SFAS No. 123.
(n) RECENT ACCOUNTING PRONOUNCEMENT
In June 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 130 - "Reporting Comprehensive Income." SFAS No.
130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general
purpose financial statements. SFAS No. 130 is effective for
fiscal years beginning after December 31, 1997. Management does
not anticipate a significant impact of the adoption of SFAS No.
130 on the Company's consolidated financial position, results of
operations or cash flows.
In June 1997, the FASB issued SFAS No. 131 - "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 131
establishes standards for the way that public business
enterprises report information about operating segments in
annual financial statements and requires that these enterprises
report selected information about operating segments in interim
financial reports to shareholders. SFAS No. 131 is effective for
financial statements for periods beginning after December 15,
1997. Management does not anticipate a significant impact of the
adoption of SFAS No. 131 on the Company's consolidated financial
position, results of operations or cash flows.
F-10
<PAGE> 33
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(O) RECLASSIFICATIONS
Certain amounts in the 1996 and 1995 financial statements have
been reclassified to conform to the 1997 presentation.
(2) PREOPERATIONAL COSTS
Effective December 30, 1996, the Company changed its method of
accounting for preoperational costs, costs for employee training and
relocation, and supplies incurred in connection with the opening of a
restaurant to expense these costs as incurred. The Company formerly
capitalized these costs and amortized them over one year, commencing
from the date the restaurant is opened. The expensing method is the
preferable method based on recent accounting trends.
The Company restated 1997 first quarter results to record a pre-tax
charge of $749,000 [$496,000 after taxes or $.05 per share (diluted)]
as the cumulative effect of the change in accounting for preoperational
costs. Quarterly earnings were restated to reflect the cumulative
effect charge and the additional current-year expense (see note 16).
(3) PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consists of the following:
<TABLE>
<CAPTION>
December 28, December 29,
1997 1996 Useful life
---- ---- -----------
(in thousands)
<S> <C> <C> <C>
Land $ 36,470 26,997 --
Buildings and leasehold 20-40 years, or
improvements 84,150 59,244 shorter of lease term
Furniture, fixtures and equipment 28,486 21,169 5-8 years
Construction in progress 6,145 16,916 --
Capital lease 713 -- 4 years
-------- --------
155,964 124,326
Less accumulated depreciation and amortization
(21,774) (17,316)
-------- --------
Property and equipment, net $ 134,190 107,010
======= =======
</TABLE>
Depreciation and amortization expense of property and equipment
approximated $5,470,000, $4,026,000 and $3,552,000 for the years ended
December 27, 1997, December 29, 1996, and December 31, 1995,
respectively.
F-11
<PAGE> 34
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
December 28, December 29,
1997 1996
---- ----
(in thousands)
<S> <C> <C>
Deferred financing costs, net of accumulated
amortization of $833,000 and $703,000 $ 480 $ 603
Prepaid lease, net of accumulated amortization
of $74,000 and $60,000 615 629
Liquor licenses 185 234
Deposits 89 58
Other 56 126
------ ------
$1,425 $1,650
====== ======
</TABLE>
(5) ACCRUED LIABILITIES
Accrued liabilities consist of the following:
December 28, December 29,
1997 1996
---- ----
(in thousands)
Salaries, wages and benefits $3,394 $3,073
Gift certificates payable 1,064 728
Sales tax payable 651 738
Property taxes 194 214
Insurance 604 743
Other 777 534
------ ------
$6,684 $6,030
====== ======
(6) NOTE PAYABLE
On September 20, 1996, the Company issued a promissory note to finance
the purchase of property in the amount of $6,150,000, payable in four
equal installments of $1,537,500 through May 1997, and secured by an
irrevocable standby letter of credit. The note was repaid during fiscal
1997.
F-12
<PAGE> 35
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(7) LONG-TERM DEBT
Long-term debt consists of the following:
December 28, December 29,
1997 1996
---- ----
(in thousands)
Convertible subordinated debentures $ 14,915 $ 16,113
Revolving line of credit 27,500 709
------ -------
42,415 16,822
Less current maturities of long-term debt -- --
------ -------
Long-term debt, excluding current maturities $ 42,415 $ 16,822
====== ======
The convertible subordinated debentures (the "Debentures") mature
October 1, 2002, with interest payable quarterly at 6.75 percent. The
Debentures are convertible at any time before maturity, unless
previously redeemed, into common shares of the Company at a conversion
price of $21.5625 per share, subject to adjustment for stock splits.
The Debentures are subordinated to all existing and future senior
indebtedness of the Company as defined in the indenture agreement.
At the debenture holder's option, the Company is obligated to redeem
debentures tendered during the period from August 1 through October 1
of each year, commencing August 1, 1994, at 100 percent of their
principal amount plus accrued interest, subject to an annual aggregate
maximum (excluding the redemption option on the death of the holder) of
$1,150,000. During fiscal years 1997 and 1996, the Company redeemed the
annual aggregate maximum amount required by the holder's option. The
Company is also required to redeem debentures at 100 percent of their
principal plus accrued interest in the event of death of a debenture
holder up to a maximum of $25,000 per year per deceased debenture
holder. During fiscal years 1997 and 1996, the Company redeemed
debentures subject to this provision of $48,000 and $207,000,
respectively.
The Debentures are redeemable at any time on or after October 1, 1994
at the option of the Company, in whole or in part, at declining
premiums. In addition, upon the occurrence of certain changes of
control of the Company, the Company is obligated to purchase Debentures
at the holder's option at par plus accrued interest.
On December 22, 1995, as amended, the Company entered into a
revolving/term loan under an amended and restated loan agreement (the
"Agreement") with a bank for borrowings up to $33,000,000 through
January 4, 1999, with maximum quarterly principal payments of
$1,650,000 due January 4, 1999 and April 1, 1999 and the remaining
outstanding balance due June 30, 1999. Borrowings under the Agreement
may be used for general working capital purposes and costs incurred in
expansion of the restaurant business. The Agreement is secured by
certain properties owned by the Company and guaranteed by the
subsidiaries.
The Agreement through May 1998 bears quarterly interest payments at the
Company's option of LIBOR plus 1.25 percent up to LIBOR plus 2.00
percent or prime up to prime plus 0.50 percent, based on a financial
ratio as defined in the Agreement. Effective May 31, 1997, the Company
entered into an interest swap agreement (note 8). Interest on
borrowings at December 28, 1997 ranged from 6.25 percent to 6.48
percent.
F-13
<PAGE> 36
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Agreement contains certain restrictive covenants, including
maintenance of a minimum tangible net worth and fixed charge coverage
ratio and limitations on indebtedness, stock acquisitions, encumbrances
and new restaurant expansion. In addition, provided that net income of
the prior year exceeds $2,000,000, dividends can be declared but cannot
exceed 15 percent of the prior year's net income.
(8) DERIVATIVE FINANCIAL INSTRUMENTS
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are used
to manage well-defined interest rate risk.
Interest rate swap agreements are used to reduce the potential impact
of increases in interest rates on floating-rate long-term debt. At
December 28, 1997, the Company was a party to an interest rate swap
agreement with a termination date of September 28, 2001. The agreement
entitles the Company to receive from the counterparty (a major bank),
the amounts, if any, by which the Company's interest payments on its
$27,500,000 line of credit (included in the $33,000,000 line of credit)
exceed 6.25 percent through the termination date. No amounts were
received by the Company during the year ended December 28, 1997.
The fair value of the interest swap agreement approximated $(486,000)
at December 28, 1997. The fair value is estimated using option pricing
models that value the potential for the swaps to become in-the-money
(liability) through changes in interest rates during the remaining term
of the agreement.
The Company is exposed to credit losses in the event of nonperformance
by the counterparties to its interest rate swap agreements. The Company
anticipates, however, that counterparties will be able to fully satisfy
their obligations under the contracts. The Company does not obtain
collateral to support financial instruments but monitors the credit
standing of the counterparties.
(9) SHAREHOLDERS' EQUITY
The Company has authorized 300,000 shares of Class A Junior
participating preferred shares, without par value and 4,700,000 Class B
preferred shares, without par value, none of which have been issued.
Holders of Class A Junior participating preferred shares are entitled
to quarterly dividends equal to the greater of $.05 or 100 times the
aggregate per share amount of all cash and noncash dividends and
holders of Class B are entitled to dividends before distribution to
holders of common shares. Each Class A Junior participating preferred
share entitles the holder to 100 votes on all matters submitted to vote
by the shareholders. Holders of Class B preferred shares are entitled
to one vote for each share on matters requiring approval. The
liquidating value for Class A Junior participating preferred shares is
$.10 per share, plus all accrued and unpaid dividends.
In January 1990, the board of directors approved a shareholder rights
plan, as amended, which provides that, in the event that a third party
purchases 20 percent or more of total outstanding stock of the Company,
a dividend distribution of one and one-half rights for each
outstanding common share will be made. These rights expire ten years
from date of issuance, if not earlier, redeemed by the Company, and
entitle the holder to purchase, under certain conditions, preferred
shares or common shares of the Company. As of December 28, 1997,
approximately 15,183,000 rights were outstanding.
F-14
<PAGE> 37
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In March 1997, the board of directors approved a plan to repurchase
122,000 common shares. Repurchase under this program was completed in
March at a cost of approximately $1,361,000. When treasury shares are
reissued, any excess of the average acquisition cost of the shares over
the proceeds from reissuance is charged to common stock.
(10) INCOME TAXES
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
December 28, December 29, December 31,
1997 1996 1995
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Current taxes:
Federal $ 1,545 2,975 2,412
State and local 333 744 481
------- ----- ------
1,878 3,719 2,893
Deferred taxes 1,484 70 (162)
------- ----- ------
Provision before cumulative effect of
change in accounting principle 3,362 3,789 2,731
Benefit from cumulative effect of
change in accounting principle (253) -- --
------- ----- ------
Provision for income taxes $ 3,109 3,789 2,731
======= ===== ======
</TABLE>
The provision (benefit) for deferred income taxes consists of the
following:
December 28, December 29,
1997 1996
---- ----
(in thousands)
Accelerated depreciation $ 1,466 14
Impairment of long-lived assets (179) --
Preoperational costs (253) 121
Accrued health (3) (14)
Accrued vacation (13) (18)
Provision for asset disposal 95 (12)
Other accrued expenses 173 (27)
Other (55) 6
------- ----
Total $ 1,231 70
======= ====
F-15
<PAGE> 38
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the differences between income taxes calculated at
the federal statutory tax rate and the provision for income taxes
before extraordinary item is as follows:
<TABLE>
<CAPTION>
December 28, December 29, December 31,
1997 1996 1995
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Income tax at statutory rates before
extraordinary item 34.0% 34.0% 34.0%
State and local income taxes, net
of federal tax benefit 4.0% 4.7% 4.4%
Reserve for tax examination -- -- 2.9%
FICA tip tax credit (4.1)% (4.6)% (5.2)%
Other nondeductible items 0.4% 1.9% 2.0%
---- ---- ----
34.3% 36.0% 38.1%
==== ==== ====
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities are as
follows:
December 28, December 29,
1997 1996
---- ----
(in thousands)
Accelerated depreciation $ 2,193 738
Impairment of long-lived assets (179) --
Preoperational costs -- 289
Accrued health (115) (114)
Accrued vacation (138) (126)
Provision for asset disposal -- (96)
Other accrued expenses 71 (104)
Other (19) (5)
------- ----
$ 1,813 582
======= ====
The Internal Revenue Service (IRS) has completed its examination of the
Company's income tax returns for the years 1990 through 1993. The
Company has received statutory notices of deficiencies for the 1990 and
1991 years, and has filed a petition in the United States Tax Court
contesting these deficiencies. Statutory notices of deficiencies for
the 1992 and 1993 years are forthcoming. Once received, the Company
intends to file a petition in the United States Tax Court contesting
the deficiencies for these two years also. The deficiencies claimed by
the IRS for the 1990-1993 years approximate $900,000, exclusive of
interest and penalties. The Company believes that the accruals it has
provided in connection with this matter are adequate, and that the
resolution of the case in the United States Tax Court will not have a
material adverse effect on the Company's financial condition or results
of operations.
(11) EMPLOYEE STOCK OWNERSHIP PLAN
In 1989, the Company established an employee stock ownership plan (the
"ESOP" or the "Plan"). All employees who have reached the age of 21
years are participants in the Plan. Participants vest in the Plan,
based upon a graduated schedule providing 20 percent after three years
of service and each year thereafter, with full vesting after seven
years.
F-16
<PAGE> 39
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The amount and frequency of contributions to the Plan are at the
discretion of the Company. There were no contributions made to the ESOP
during fiscal 1996 and 1997. Dividends on shares held by the ESOP are
used to reduce the Company's receivable from the ESOP prior to
allocation to ESOP participant accounts.
As of December 28, 1997 and December 29, 1996, the ESOP owns 239,000
and 272,000, respectively, of the Company's common shares, all of which
are allocated to eligible participants. In 1997, the Company expressed
an intention to terminate the Plan, subject to Plan provisions.
(12) STOCK OPTION PLANS
The Company has stock option plans adopted in 1988 ("1988 Plan") and
1992 ("1992 Plan"), as amended. Under these plans, employees and
nonmanagement directors are granted stock options as determined by a
committee appointed by the board of directors at an exercise price no
less than fair market value at the date of grant. Each option permits
the holder to purchase one share of common stock of the Company at the
stated exercise price up to ten years from the date of grant. Options
vest at a rate of 25 percent per year or, if there is substantial
change in control of the Company, the options become fully vested and
exercisable. The Company has reserved 682,000 and 718,000 common shares
for issuance to employees and 73,332 and 200,000 for issuance to
nonmanagement directors under the 1988 Plan and 1992 Plan,
respectively. No further options can be granted under the 1988 Plan for
employees and nonmanagement directors and under the 1992 Plan for
employees. The granting of options under the 1992 Plan for directors
expires April 13, 2002.
In April 1996, the board of directors and shareholders approved the
1996 officer option plan (the "1996 Plan") which provides for the grant
of nonqualified options to officers and employee-directors of the
Company. The number of shares is limited to fifteen percent of the
issued and outstanding shares of common stock, less shares subject to
options issued to officers and employee-directors. The recipients of
the options granted under the 1996 Plan, the number of shares to be
covered by each option, and the exercise price, vesting terms, if any,
duration and other terms of each option shall be determined by the
committee of the Company's board of directors. Each option permits the
holder to purchase one share of common stock of the Company at the
stated exercise price up to ten years from the date of grant. The
exercise price shall be determined by the committee at the time of
grant, but in no event shall the exercise price be less than the fair
market value of a share on the date of grant. These options become
vested over various periods not to exceed four years from the date of
grant or, if there is substantial change in control of the Company, the
options become fully vested and exercised. The maximum number of shares
granted during any fiscal year by the Company shall be 500,000 to any
one officer. The Plan expires April 22, 2006.
F-17
<PAGE> 40
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Changes in the number of shares under the stock option plans are
summarized as follows:
<TABLE>
<CAPTION>
Weighted-average
Options Price exercise price
------- ----------------------------- --------------
<S> <C> <C> <C> <C>
Balance at January 1, 1995 894,000 $ 4.03 -- 21.75 $ 7.63
Granted 65,000 6.75 -- 11.00 8.02
Canceled (17,000) 6.75 -- 11.19 8.96
Exercised (11,000) 4.03 -- 7.63 4.64
--------- ----------------------------- ------
Balance at December 31, 1995 931,000 $ 4.03 -- 21.75 7.68
Granted 373,000 11.25 -- 13.87 11.77
Canceled (23,000) 6.75 -- 11.62 10.82
Exercised (10,000) 4.04 -- 11.19 5.62
--------- ----------------------------- ------
Balance at December 29, 1996 1,271,000 $ 4.04 -- 21.75 8.77
Granted 373,000 10.37 -- 11.50 10.97
Canceled (19,000) 6.75 -- 11.62 10.95
Exercised (109,000) 4.03 -- 7.63 5.78
--------- ----------------------------- ------
Balance at December 28,1997 1,516,000 $ 4.03 -- 21.75 $ 9.48
========= ============================= ======
</TABLE>
The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock
options in the consolidated financial statements. Had the Company
determined compensation cost based on the fair value at the grant date
for its stock options under SFAS No. 123, the Company's net income
would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(in thousands, except
per share data)
<S> <C> <C> <C>
Net income: As reported $ 5,956 $ 6,732 $ 4,432
Pro forma $ 5,395 $ 6,413 $ 4,397
Diluted earnings per share: As reported $ .58 $ .72 $ .61
Pro forma .54 .71 .61
</TABLE>
Pro forma net income reflects only options granted since January 1,
1995. Therefore, the full impact of calculating compensation cost for
stock options under SFAS No. 123 is not reflected in the pro forma net
income amounts presented above because compensation cost is reflected
over the options' vesting period of four years and compensation cost
for options granted prior to January 2, 1995 is not considered.
F-18
<PAGE> 41
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The per share weighted-average fair value of stock options granted
during 1997, 1996 and 1995 was $5.04, $5.56 and $3.89, respectively, on
the date of grant using the Black Scholes option-pricing model with the
following weighted-average assumptions: dividend yield .61 percent, .49
percent and .65 percent; risk-free interest rates of 6.5 percent, 5.6
percent and 6.67 percent; expected lives of 7 years for all years, and
expected volatility of 33 percent, 37 percent and 37 percent,
respectively.
At December 28, 1997, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $6.71-$11.85 and
7.4 years, respectively.
At December 28, 1997, December 29, 1996 and December 31, 1995, the
number of options exercisable was 717,000, 583,000 and 417,000,
respectively, and the weighted-average exercise price of those options
was $8.50, $7.91 and $7.86, respectively.
(13) COMMITMENT AND CONTINGENCIES
(a) Leases
The Company leases buildings for certain of its restaurants
under long-term operating leases which expire over the next
twenty-five years. In addition to the minimum rental for these
leases, the Company also pays, in certain instances, additional
rent based on a percentage of sales, and its pro rata share of
the lessor's direct operating expenditures. Several of the
leases provide for option renewal periods and scheduled rent
increases. Rental expense totaled $2,022,000, $1,549,000 and
$1,378,000, including percentage rent of $231,000, $231,000 and
$262,000 for the fiscal years ended December 28, 1997, December
29, 1996 and December 31, 1995, respectively.
F-19
<PAGE> 42
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During August 1997, the Company entered into an agreement for the sale
and leaseback of the point of sale terminal system and software under a
sale/leaseback arrangement. The system was sold for $713,000. The
transaction was accounted for as a financing wherein the property with
a net book value of $713,000 remained on the books and continues to be
depreciated. A finance obligation representing the proceeds was
recorded and is reduced based on payments under the lease. The lease
has a term of four years and requires annual rental payments of
$210,000 in 1998, 1999 and 2000 and $167,000 in 2001.
Future minimum rental commitments for noncancelable operating leases
(with initial or remaining lease terms in excess of one year) and
future minimum capital lease payments as of December 28, 1997 are as
follows:
Capital Operating
Fiscal year ending Leases Leases
- ------------------ ------ ------
1998 $210,000 $ 2,258,744
1999 210,000 2,290,499
2000 210,000 2,282,782
2001 167,000 2,305,400
2002 -- 2,384,056
Thereafter -- 22,955,897
-------- ------------
Total minimum lease payments $797,000 $ 34,477,378
============
Less amounts representing
interest 122,000
--------
Present value of net minimum
lease payments 675,000
Less current installments 173,000
--------
Capital lease obligation,
excluding current installments $502,000
========
(b) LEGAL MATTERS
The Company is a party to various claims and legal actions
arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not
have a material adverse effect on the Company's financial
position, results of operations or liquidity.
(c) EMPLOYMENT AGREEMENTS
The Company and five of its officers have entered into
employment agreements which become effective upon a change in
control of the Company not approved by the board of directors,
as defined in the agreement and subject to certain criteria. The
agreement entitles the officers to a base salary, bonus and
benefits at not less than the rate the officer was receiving
prior to the change in control, limits discharge except for
cause, and provides for severance payment equal to the maximum
amount under IRS regulations.
(d) RETIREMENT SAVINGS PLAN
Effective January 1, 1997, the Company established a 401(k)
retirement savings plan for the benefit of substantially all
employees who have attained the age 21 and worked 1,000 hours.
Employees may contribute between 1 to 15 percent of eligible
compensation. The Company's discretionary match is based on the
Company's performance. The Company's contribution will vest 20
percent per year beginning after the third year. There were no
contributions made by the Company in 1997.
F-20
<PAGE> 43
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(e) LEASE GUARANTEE
The Company subleased its previous headquarters location and has
guaranteed the minimum rent due. At December 28, 1997, the
outstanding balance on this guarantee was $172,500.
(14) SUPPLEMENTAL CASH FLOW INFORMATION
During 1995, the Company received $115,000 of its common stock from the
ESOP for partial repayment of the advances to the ESOP. The common
stock received was recorded as treasury stock.
During fiscal 1995, the Company repurchased $643,000 of debentures,
which was included in accounts payable at January 1, 1995, and was paid
during fiscal 1995.
Cash paid for interest for fiscal 1997, 1996 and 1995 was $2,094,000,
$2,004,000 and $1,489,000, respectively. Cash paid for taxes for fiscal
1997, 1996 and 1995 was $2,808,000, $3,511,000 and $2,581,000,
respectively.
(15) RELATED PARTIES
In 1994, the Board of Directors approved a guaranty by the Company of a
loan of $5,000,000 to the Chairman of the Board. In January, 1997, the
Board approved a refinancing of the loan with The Chase Manhattan Bank
of New York (the "Bank"). The loan (the "Loan") from the Bank bears
interest at the Bank's prime rate or LIBOR plus 2%, is secured by
570,000 common shares and is guaranteed by the Company in the principal
amount up to $6,250,000 including capitalized interest. Pursuant to the
loan agreement between The Chairman and the Bank, any reduction of the
principal amount outstanding under the Loan shall not entitle The
Chairman to the advancement of additional funds under the Loan. 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. The term of the Loan was scheduled to expire in the first
quarter of 1998. The term of the loan has been extended until August
28, 1998. At December 27, 1997, the amount of the Loan outstanding,
including capitalized and accrued interest, was approximately $5.2
million and the undiscounted fair market value of the pledged shares
was approximately $5.4 million. The guaranty secures the Loan until it
is repaid or refinanced without a guaranty. The Company would fund any
obligation it incurs under the terms of its guaranty from additional
borrowings under its revolving credit/term loan agreement. There can be
no assurance that the Loan will be repaid or refinanced at August 28,
1998 on terms that will not result in continuing the guaranty or in
material payment. The Chairman has agreed to pay to the Company a
guaranty fee each year that the guaranty remains outstanding beginning
on March 9, 1994, the date the Company first issued its guaranty of the
loan. The amount of the guaranty fee is 1/4 percent of the outstanding
principal amount of the guaranteed loan on the date that the guaranty
fee becomes due. The Chairman has agreed to use at least one-half of
any incentive bonus paid to him by the Company to pay principal and
interest on the Loan beginning with any incentive bonus paid for fiscal
year 1998. The Chairman has also agreed to make payments on the Loan in
amounts sufficient to ensure that the Loan balance on January 31, 1999
does not exceed 90 percent of the Loan balance on January 31, 1998.
F-21
<PAGE> 44
COOKER RESTAURANT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(16) QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly financial data (unaudited) for fiscal year 1997 and 1996 are
summarized as follows:
<TABLE>
<CAPTION>
First Second Third Fourth
quarter quarter quarter quarter
------- ------- ------- -------
1997 (in thousands, except per share data)
----
<S> <C> <C> <C> <C>
Sales $32,507 33,221 34,167 35,563
Income before income taxes and cumulative effect (a) 2,907 3,376 2,356 1,175
Cumulative effect of a change in accounting principle
(net of tax) (a) 496 -- -- --
Net income (a) 1,415 2,219 1,548 774(b)
Earnings per share (a):
Basic $ 0.14 0.22 0.15 0.08
======= ====== ====== ======
Diluted $ 0.14 0.22 0.15 0.08
======= ====== ====== ======
1996
----
Sales $25,486 26,919 29,183 28,685
Income before income taxes 2,125 2,575 2,934 2,887
Net income 1,360 1,648 1,878 1,846
Earnings per share:
Basic $ 0.19 0.19 0.19 0.18
======= ====== ====== ======
Diluted $ 0.19 0.18 0.18 0.18
======= ====== ====== ======
Pro forma amounts assuming change in accounting for preoperational
costs applied retroactively:
Net income $ 1,380 1,382 1,914 1,766
Earnings per share:
Basic $ .19 .16 .19 .18
Diluted $ .19 .15 .19 .17
</TABLE>
(a) Quarterly amounts have been restated to reflect the change in
accounting for preoperational costs. The additional
benefit/charge in each quarter is as follows: first quarter,
charge of $1,042,000 ($649,000 after taxes) or $0.06 per share;
second quarter, benefit of $134,000 ($94,000 after taxes) or
$.01 per share; and third quarter, charge of $447,000 ($287,000
after taxes) or $.03 per share.
(b) Includes an impairment of long-lived assets charge of $472,000
($310,000 after taxes).
F-22
<PAGE> 45
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
COOKER RESTAURANT CORPORATION
-----------------------
FORM 10-K ANNUAL REPORT
FOR THE FISCAL YEAR ENDED:
DECEMBER 28, 1997
-----------------------
EXHIBITS
-----------------------
================================================================================
<PAGE> 46
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT NUMBER OF PAGES INCORPORATED
NUMBER DESCRIPTION IN ORIGINAL DOCUMENT + BY
REFERENCE
<S> <C> <C> <C>
3.1. Amended and Restated Articles of Incorporation of the
Registrant. 13 *
------------------
3.2. Amended and Restated Code of Regulations of the
Registrant. 12 *
------------------
4.1. See Articles FOURTH, FIFTH and SIXTH of the
Amended and Restated Articles of Incorporation of the
Registrant (see 3.1 above). 13 *
------------------
4.2. See Articles One, Four, Seven and Eight of the Amended
and Restated Code of Regulations of the Registrant (see
3.2 above). 12 *
------------------
4.3. Rights Agreement dated as of February 1, 1990 between
the Registrant and National City Bank. 65 *
------------------
4.4. Amendment to Rights Agreement dated as of November
1, 1992 between the Registrant and National City Bank. 1 *
------------------
4.5. Letter dated October 29, 1992 from the Registrant to First
Union National Bank of North Carolina. 1 *
------------------
4.6. Letter dated October 29, 1992 from National City Bank
to the Registrant. 1 *
------------------
4.7. See Section 7.4 of the Amended and Restated Loan
Agreement dated December 22, 1995 between Registrant
and First Union National Bank of Tennessee (see 10.4
below). 31 *
------------------
4.8. Indenture dated as of October 28, 1992 between
Registrant and First Union National Bank of North
Carolina, as Trustee. 61 *
------------------
10.1.-10.3. Reserved.
10.4. Amended and Restated Loan Agreement dated *
December 22, 1995 between Registrant and First Union
National Bank of Tennessee. 31
------------------
10.5. Underwriting Agreement dated May 7, 1996 with
Montgomery Securities and Equitable Securities
Corporation. 28 *
------------------
10.6. Form of Contingent Employment Agreement and
schedule of executed Agreements. 10 *
------------------
</TABLE>
<PAGE> 47
<TABLE>
<S> <C> <C> <C>
10.7. The Registrant's 1988 Employee Stock Option Plan and
1992 Employee Stock Option Plan, Amended and
Restated April 22, 1996. 11 *
------------------
10.8. The Registrant's 1988 Directors Stock Option Plan, as
amended and restated. 6 *
------------------
10.9. The Registrant's 1992 Directors Stock Option Plan, as
amended and restated. 6 *
------------------
10.10. The Registrant's 1996 Officers' Stock Option Plan. 10 *
------------------
10.11. Reaffirmation and Amendment to Guaranty and
Suretyship Agreement between Registrant and
NationsBank of Tennessee, N.A. dated July 24, 1995. 2 *
------------------
10.12. Amended and Restated Guaranty between Registrant and
Chase Manhattan Bank dated January 31, 1997. 7 *
------------------
10.13. Letter dated February 3, 1997 from G. Arthur Seelbinder
to the Registrant. 1 *
------------------
10.14. Letter dated January 30, 1998 from G. Arthur Seelbinder
to the Registrant. 1
------------------
16.1. Letter dated August 14, 1996 from Price Waterhouse LLP
to the Securities and Exchange Commission. 1 *
------------------
18.1 Letter dated March 27, 1998 from KPMG Peat Marwick 1
LLP.
------------------
21.1 Subsidiaries of Registrant. 1
------------------
23.1 Consent of KPMG Peat Marwick LLP. 1
------------------
24.1. Powers of Attorney. 9
------------------
24.2. Certified resolution of the Registrant's Board of Directors
authorizing officers and directors signing on behalf of the
Registrant to sign pursuant to a power of attorney. 1
------------------
27.1. Financial Data Schedules (submitted electronically for
SEC information only). 3
------------------
</TABLE>
+ The Registrant will furnish a copy of any exhibit to a beneficial owner of
its securities or to any person from whom a proxy was solicited in connection
with the Registrant's most recent Annual Meeting of Shareholders upon the
payment of a fee of fifty cents ($.50) per page.
* Incorporated by reference.
<PAGE> 1
Exhibit 10.14
G. ARTHUR SEELBINDER
148 SEAGATE
PALM BEACH, FLORIDA 33480
January 30, 1998
Board of Directors
Cooker Restaurant Corporation
5500 Village Boulevard
West Palm Beach, Florida 33407
Re: Reaffirmation of Amended and Restated Guaranty to
The Chase Manhattan Bank
Dear Sirs:
You have at my request executed the above-referenced guaranty (the
"Guaranty") in order to secure the debt that I, jointly and severally with my
wife, owe to The Chase Manhattan Bank pursuant to the Amended and Restated Grid
Time Promissory Note (Eurodollar/Prime Rate) which is in the initial amount of
approximately $5 million and which with capitalized interest may become as much
as $6.25 million (the "Guaranteed Loan").
In return for the issuance of the Guaranty, I hereby agree as follows:
1. On or before January 31, 1999, I will pay down the principal
amount of the Guaranteed Loan so that it does not exceed 90%
of the January 31, 1998 balance on January 31, 1999. I will
take such steps as may be reasonably required to pay off the
Guaranteed Loan on a ten year schedule in approximately equal
installments. I understand that I may sell up to ten percent
of the Common Shares currently pledged to secure the
Guaranteed Loan in order to make this payment and I will do so
if requested by the Board. I will use at least one-half of any
incentive bonus paid to me to pay principal and interest on
the Guaranteed Loan.
2. I will pay a guaranty fee of 1/4% of the principal amount of
the Guaranteed Loan, to Cooker upon the issuance of the
Guaranty.
3. I will use my best efforts to obtain the release of the
Guaranty, as soon as possible, by executing the instruments
referred to in the letter from The Chase Manhattan Bank to you
dated January 29, 1997 as a "monetized equity collar," or if
other lending facilities become available, such as a margin
loan or otherwise that would not require a guaranty, by
refinancing the loan through such a facility.
4. I will indemnify Cooker against, and hold it harmless from,
any losses, liabilities or obligations arising out of or
related to, the Guaranty, including, but not limited to, any
payment of the principal of or any interest on the Guaranteed
Loan or any fees related thereto.
The purpose of this letter agreement is to provide additional comfort
to the Board of Directors of Cooker Restaurant Corporation in connection with
their approval of the execution, delivery and performance of the Guaranty. My
delivery of this letter to Cooker shall not in any way diminish its rights as a
guarantor; including any rights of subrogation, reimbursement or exoneration.
Sincerely,
/s/ G. ARTHUR SEELBINDER
- --------------------------
G. Arthur Seelbinder
<PAGE> 1
Exhibit 18.1
January 30, 1998
Cooker Restaurant Corporation
5500 Village Boulevard
West Palm Beach, Florida 33419-1448
Ladies and Gentleman:
We have audited the consolidated balance sheets of Cooker Restaurant Corporation
and subsidiaries (the "Company") as of December 28, 1997 and December 29, 1996,
and the related consolidated statements of income, shareholders' equity and cash
flows for each of the years in the three-year period ended December 28, 1997 and
have reported thereon under date of January 30, 1998. The aforementioned
consolidated financial statements and our audit report thereon are included in
the Company's annual report on Form 10-K for the year ended December 28, 1997.
As stated in note 2 to those consolidated financial statements, the Company
changed its method of accounting for restaurant preoperational costs from
capitalization and amortization to expense as incurred and states that the newly
adopted accounting principle is preferable in the circumstances because of
recent accounting trends. In accordance with your request, we have reviewed and
discussed with Company officials the circumstances and business judgement and
planning upon which the decision to make this change in the method of accounting
was based.
With regard to the aforementioned accounting change, authoritative criteria have
not been established for evaluating the preferability of one acceptable method
of accounting over another acceptable method. However, for purposes of the
Company's compliance with the requirements of the Securities and Exchange
Commission, we are furnishing this letter.
Based on our review and discussion, with reliance on management's business
judgement and planning, we concur that the newly adopted method of accounting is
preferable in the Company's circumstances.
Very truly yours,
KPMG Peat Marwick LLP
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES OF COOKER RESTAURANT CORPORATION
Cooker Restaurant Corporation directly or indirectly owns all of
the outstanding interests in the following subsidiaries:
CGR Management Corporation, a Florida corporation
Florida Cooker LP, Inc., a Florida Corporation
Southern Cooker Limited Partnership, an Ohio limited partnership
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Cooker Restaurant Corporation
We consent to the incorporation by reference in the registration statements on
Form S-8 (Nos. 33-45467, 33-46475, 33-46965, 33-48396 and 33-48397) of Cooker
Restaurant Corporation of our report dated January 30, 1998, relating to the
consolidated balance sheets of Cooker Restaurant Corporation and subsidiaries as
of December 28, 1997 and December 29, 1996, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for each of
the years in the three-year period ended December 28, 1997, which report appears
in the December 28, 1997 annual report on Form 10-K of Cooker Restaurant
Corporation. Our report refers to a change in method of accounting for
preoperational costs in 1997.
KPMG PEAT MARWICK LLP
Fort Lauderdale, Florida
March 30, 1998
<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY
The undersigned who is a director or officer of Cooker Restaurant Corporation,
an Ohio corporation (the "Company");
Does hereby constitute and appoint G. Arthur Seelbinder to be his agent
and attorney-in-fact with the power to act fully hereunder and with full
power of substitution to act in the name and on behalf of the undersigned;
To sign and file with the Securities and Exchange Commission the Annual
Report of the Company on Form 10-K for the fiscal year ended December 28,
1997, and any amendments or supplements to such Annual Report; and
To execute and deliver any instruments, certificates or other documents
which he shall deem necessary or proper in connection with the filing of
such Annual Report, and generally to act for and in the name of the
undersigned with respect to such filings as fully as could the undersigned
if then personally present and acting.
The agent named above is hereby empowered to determine in his discretion
the times when, the purposes for, and the names in which, any power
conferred upon him herein shall be exercised and the terms and conditions
of any instrument, certificate or document which may be executed by him
pursuant to this instrument.
This Power of Attorney shall not be affected by the disability of the
undersigned nor by the lapse of time.
The validity, terms and enforcement of this Power of Attorney shall be
governed by those laws of the State of Ohio that apply to instruments
negotiated, executed, delivered and performed solely within the State of
Ohio.
This Power of Attorney may be executed in any number of counterparts, each
of which shall have the same effect as if it were the original instrument
and all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 25th day of
January, 1998.
/s/ PHILLIP L. PRITCHARD
--------------------------
Phillip L. Pritchard
<PAGE> 2
POWER OF ATTORNEY
The undersigned who is a director or officer of Cooker Restaurant Corporation,
an Ohio corporation (the "Company");
Does hereby constitute and appoint G. Arthur Seelbinder and Phillip L. Pritchard
to be his agents and attorneys-in-fact;
Each with the power to act fully hereunder without the other and with full power
of substitution to act in the name and on behalf of the undersigned;
To sign and file with the Securities and Exchange Commission the Annual Report
of the Company on Form 10-K for the fiscal year ended December 28, 1997, and any
amendments or supplements to such Annual Report; and
To execute and deliver any instruments, certificates or other documents which
they shall deem necessary or proper in connection with the filing of such Annual
Report, and generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally present and
acting.
Each agent named above is hereby empowered to determine in his discretion the
times when, the purposes for, and the names in which, any power conferred upon
him herein shall be exercised and the terms and conditions of any instrument,
certificate or document which may be executed by him pursuant to this
instrument.
This Power of Attorney shall not be affected by the disability of the
undersigned nor by the lapse of time.
The validity, terms and enforcement of this Power of Attorney shall be governed
by those laws of the State of Ohio that apply to instruments negotiated,
executed, delivered and performed solely within the State of Ohio.
This Power of Attorney may be executed in any number of counterparts, each of
which shall have the same effect as if it were the original instrument and all
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 27th day of
January, 1998.
/s/ GLENN W. COCKBURN
-------------------------
Glenn W. Cockburn
<PAGE> 3
POWER OF ATTORNEY
The undersigned who is a director or officer of Cooker Restaurant Corporation,
an Ohio corporation (the "Company");
Does hereby constitute and appoint G. Arthur Seelbinder and Phillip L. Pritchard
to be his agents and attorneys-in-fact;
Each with the power to act fully hereunder without the other and with full power
of substitution to act in the name and on behalf of the undersigned;
To sign and file with the Securities and Exchange Commission the Annual Report
of the Company on Form 10-K for the fiscal year ended December 28, 1997, and any
amendments or supplements to such Annual Report; and
To execute and deliver any instruments, certificates or other documents which
they shall deem necessary or proper in connection with the filing of such Annual
Report, and generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally present and
acting.
Each agent named above is hereby empowered to determine in his discretion the
times when, the purposes for, and the names in which, any power conferred upon
him herein shall be exercised and the terms and conditions of any instrument,
certificate or document which may be executed by him pursuant to this
instrument.
This Power of Attorney shall not be affected by the disability of the
undersigned nor by the lapse of time.
The validity, terms and enforcement of this Power of Attorney shall be governed
by those laws of the State of Ohio that apply to instruments negotiated,
executed, delivered and performed solely within the State of Ohio.
This Power of Attorney may be executed in any number of counterparts, each of
which shall have the same effect as if it were the original instrument and all
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 28th day of
January, 1998.
/s/ DAVID C. SEVIG
--------------------------
David C. Sevig
<PAGE> 4
POWER OF ATTORNEY
The undersigned who is a director or officer of Cooker Restaurant Corporation,
an Ohio corporation (the "Company");
Does hereby constitute and appoint G. Arthur Seelbinder and Phillip L. Pritchard
to be his agents and attorneys-in-fact;
Each with the power to act fully hereunder without the other and with full power
of substitution to act in the name and on behalf of the undersigned;
To sign and file with the Securities and Exchange Commission the Annual Report
of the Company on Form 10-K for the fiscal year ended December 28, 1997, and any
amendments or supplements to such Annual Report; and
To execute and deliver any instruments, certificates or other documents which
they shall deem necessary or proper in connection with the filing of such Annual
Report, and generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally present and
acting.
Each agent named above is hereby empowered to determine in his discretion the
times when, the purposes for, and the names in which, any power conferred upon
him herein shall be exercised and the terms and conditions of any instrument,
certificate or document which may be executed by him pursuant to this
instrument.
This Power of Attorney shall not be affected by the disability of the
undersigned nor by the lapse of time.
The validity, terms and enforcement of this Power of Attorney shall be governed
by those laws of the State of Ohio that apply to instruments negotiated,
executed, delivered and performed solely within the State of Ohio.
This Power of Attorney may be executed in any number of counterparts, each of
which shall have the same effect as if it were the original instrument and all
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 3rd day of
February, 1998.
/s/ ROBIN V. HOLDERMAN
----------------------------
Robin V. Holderman
<PAGE> 5
POWER OF ATTORNEY
The undersigned who is a director or officer of Cooker Restaurant Corporation,
an Ohio corporation (the "Company");
Does hereby constitute and appoint G. Arthur Seelbinder and Phillip L. Pritchard
to be his agents and attorneys-in-fact;
Each with the power to act fully hereunder without the other and with full power
of substitution to act in the name and on behalf of the undersigned;
To sign and file with the Securities and Exchange Commission the Annual Report
of the Company on Form 10-K for the fiscal year ended December 28, 1997, and any
amendments or supplements to such Annual Report; and
To execute and deliver any instruments, certificates or other documents which
they shall deem necessary or proper in connection with the filing of such Annual
Report, and generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally present and
acting.
Each agent named above is hereby empowered to determine in his discretion the
times when, the purposes for, and the names in which, any power conferred upon
him herein shall be exercised and the terms and conditions of any instrument,
certificate or document which may be executed by him pursuant to this
instrument.
This Power of Attorney shall not be affected by the disability of the
undersigned nor by the lapse of time.
The validity, terms and enforcement of this Power of Attorney shall be governed
by those laws of the State of Ohio that apply to instruments negotiated,
executed, delivered and performed solely within the State of Ohio.
This Power of Attorney may be executed in any number of counterparts, each of
which shall have the same effect as if it were the original instrument and all
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 28th day of
January, 1998.
/s/ DAVID T. KOLLAT
-------------------------
David T. Kollat
<PAGE> 6
POWER OF ATTORNEY
The undersigned who is a director or officer of Cooker Restaurant Corporation,
an Ohio corporation (the "Company");
Does hereby constitute and appoint G. Arthur Seelbinder and Phillip L.
Pritchard to be his agents and attorneys-in-fact;
Each with the power to act fully hereunder without the other and with full
power of substitution to act in the name and on behalf of the undersigned;
To sign and file with the Securities and Exchange Commission the Annual
Report of the Company on Form 10-K for the fiscal year ended December 28,
1997, and any amendments or supplements to such Annual Report; and
To execute and deliver any instruments, certificates or other documents
which they shall deem necessary or proper in connection with the filing of
such Annual Report, and generally to act for and in the name of the
undersigned with respect to such filings as fully as could the undersigned
if then personally present and acting.
Each agent named above is hereby empowered to determine in his discretion
the times when, the purposes for, and the names in which, any power
conferred upon him herein shall be exercised and the terms and conditions
of any instrument, certificate or document which may be executed by him
pursuant to this instrument.
This Power of Attorney shall not be affected by the disability of the
undersigned nor by the lapse of time.
The validity, terms and enforcement of this Power of Attorney shall be
governed by those laws of the State of Ohio that apply to instruments
negotiated, executed, delivered and performed solely within the State of Ohio.
This Power of Attorney may be executed in any number of counterparts, each
of which shall have the same effect as if it were the original instrument
and all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 2nd day of
March, 1998.
/s/ DAVID L. HOBSON
-------------------------
David L. Hobson
<PAGE> 7
POWER OF ATTORNEY
The undersigned who is a director or officer of Cooker Restaurant Corporation,
an Ohio corporation (the "Company");
Does hereby constitute and appoint G. Arthur Seelbinder and Phillip L. Pritchard
to be his agents and attorneys-in-fact;
Each with the power to act fully hereunder without the other and with full power
of substitution to act in the name and on behalf of the undersigned;
To sign and file with the Securities and Exchange Commission the Annual Report
of the Company on Form 10-K for the fiscal year ended December 28, 1997, and any
amendments or supplements to such Annual Report; and
To execute and deliver any instruments, certificates or other documents which
they shall deem necessary or proper in connection with the filing of such Annual
Report, and generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally present and
acting.
Each agent named above is hereby empowered to determine in his discretion the
times when, the purposes for, and the names in which, any power conferred upon
him herein shall be exercised and the terms and conditions of any instrument,
certificate or document which may be executed by him pursuant to this
instrument.
This Power of Attorney shall not be affected by the disability of the
undersigned nor by the lapse of time.
The validity, terms and enforcement of this Power of Attorney shall be governed
by those laws of the State of Ohio that apply to instruments negotiated,
executed, delivered and performed solely within the State of Ohio.
This Power of Attorney may be executed in any number of counterparts, each of
which shall have the same effect as if it were the original instrument and all
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 26th day of
January, 1998.
/s/ HENRY R. HILLENMEYER
----------------------------
Henry R. Hillenmeyer
<PAGE> 8
POWER OF ATTORNEY
The undersigned who is a director or officer of Cooker Restaurant Corporation,
an Ohio corporation (the "Company");
Does hereby constitute and appoint G. Arthur Seelbinder and Phillip L. Pritchard
to be his agents and attorneys-in-fact;
Each with the power to act fully hereunder without the other and with full power
of substitution to act in the name and on behalf of the undersigned;
To sign and file with the Securities and Exchange Commission the Annual Report
of the Company on Form 10-K for the fiscal year ended December 28, 1997, and any
amendments or supplements to such Annual Report; and
To execute and deliver any instruments, certificates or other documents which
they shall deem necessary or proper in connection with the filing of such Annual
Report, and generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally present and
acting.
Each agent named above is hereby empowered to determine in his discretion the
times when, the purposes for, and the names in which, any power conferred upon
him herein shall be exercised and the terms and conditions of any instrument,
certificate or document which may be executed by him pursuant to this
instrument.
This Power of Attorney shall not be affected by the disability of the
undersigned nor by the lapse of time.
The validity, terms and enforcement of this Power of Attorney shall be governed
by those laws of the State of Ohio that apply to instruments negotiated,
executed, delivered and performed solely within the State of Ohio.
This Power of Attorney may be executed in any number of counterparts, each of
which shall have the same effect as if it were the original instrument and all
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 29th day of
January, 1998.
/s/ MARGARET T. MONACO
--------------------------
Margaret T. Monaco
<PAGE> 9
POWER OF ATTORNEY
The undersigned who is a director or officer of Cooker Restaurant Corporation,
an Ohio corporation (the "Company");
Does hereby constitute and appoint G. Arthur Seelbinder and Phillip L. Pritchard
to be his agents and attorneys-in-fact;
Each with the power to act fully hereunder without the other and with full power
of substitution to act in the name and on behalf of the undersigned;
To sign and file with the Securities and Exchange Commission the Annual Report
of the Company on Form 10-K for the fiscal year ended December 28, 1997, and any
amendments or supplements to such Annual Report; and
To execute and deliver any instruments, certificates or other documents which
they shall deem necessary or proper in connection with the filing of such Annual
Report, and generally to act for and in the name of the undersigned with respect
to such filings as fully as could the undersigned if then personally present and
acting.
Each agent named above is hereby empowered to determine in his discretion the
times when, the purposes for, and the names in which, any power conferred upon
him herein shall be exercised and the terms and conditions of any instrument,
certificate or document which may be executed by him pursuant to this
instrument.
This Power of Attorney shall not be affected by the disability of the
undersigned nor by the lapse of time.
The validity, terms and enforcement of this Power of Attorney shall be governed
by those laws of the State of Ohio that apply to instruments negotiated,
executed, delivered and performed solely within the State of Ohio.
This Power of Attorney may be executed in any number of counterparts, each of
which shall have the same effect as if it were the original instrument and all
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, I have executed this Power of Attorney this 27th day of
January, 1998.
/s/ HARVEY M. PALASH
---------------------------
Harvey M. Palash
<PAGE> 1
Exhibit 24.2
SECRETARY'S CERTIFICATE
I, Margaret A. Epperson, certify that I am the duly elected, qualified and
acting Secretary of Cooker Restaurant Corporation, an Ohio corporation (the
"Corporation"), that I am authorized and empowered to execute this Certificate
on behalf of the Corporation with respect to the Annual Report on Form 10-K and
further certify that the following is a true, complete and correct copy of a
resolution adopted by the Board of Directors of the Corporation on January 26,
1998, which resolution has not been amended, modified or rescinded:
RESOLVED, that each officer and director who may be required to
execute an annual report on Form 10-K or any amendment or supplement
thereto (whether on behalf of the Corporation or as an officer or director
thereof or otherwise) be, and each of them hereby is, authorized to execute
a power of attorney appointing G. Arthur Seelbinder and Phillip L.
Pritchard and each of them severally, his true and lawful attorneys and
agents to execute in his name, place and stead (in any such capacity) said
Form 10-K and all instruments or reports necessary or in connection
therewith, and to file the same with the Securities and Exchange
Commission, each of said attorneys and agents to have the power to act with
or without the other, to have full power and authority to do and to perform
in the name and on behalf of each of said officers and directors, or both,
as the case may be, every act which is necessary or advisable to be done as
fully, and to all intents and purposes, as any such officer or director
might or could do in person.
IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of March, 1998.
/s/ MARGARET A. EPPERSON
------------------------------------
Margaret A. Epperson, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> DEC-28-1997
<CASH> 4,685,000
<SECURITIES> 0
<RECEIVABLES> 759,000
<ALLOWANCES> 0
<INVENTORY> 1,509,000
<CURRENT-ASSETS> 7,306,000
<PP&E> 155,964,000
<DEPRECIATION> 21,774,000
<TOTAL-ASSETS> 142,921,000
<CURRENT-LIABILITIES> 11,586,000
<BONDS> 42,917,000
0
0
<COMMON> 63,039,000
<OTHER-SE> 23,433,000
<TOTAL-LIABILITY-AND-EQUITY> 142,921,000
<SALES> 135,458,000
<TOTAL-REVENUES> 135,458,000
<CGS> 114,101,000
<TOTAL-COSTS> 114,101,000
<OTHER-EXPENSES> 9,854,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,788,000
<INCOME-PRETAX> 9,814,000
<INCOME-TAX> 3,362,000
<INCOME-CONTINUING> 6,452,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 496,000
<NET-INCOME> 5,956,000
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.58
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM COOKER
RESTAURANT CORPORATION 1996 ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000832412
<NAME> COOKER RESTAURANT CORPORATION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-29-1996
<CASH> 2,009,000
<SECURITIES> 0
<RECEIVABLES> 173,000
<ALLOWANCES> 0
<INVENTORY> 1,128,000
<CURRENT-ASSETS> 5,973,000
<PP&E> 124,326,000
<DEPRECIATION> 17,316,000
<TOTAL-ASSETS> 114,633,000
<CURRENT-LIABILITIES> 15,479,000
<BONDS> 16,822,000
0
0
<COMMON> 63,583,000
<OTHER-SE> 18,167,000
<TOTAL-LIABILITY-AND-EQUITY> 114,633,000
<SALES> 110,273,000
<TOTAL-REVENUES> 110,273,000
<CGS> 91,541,000
<TOTAL-COSTS> 91,541,000
<OTHER-EXPENSES> 6,970,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,408,000
<INCOME-PRETAX> 10,521,000
<INCOME-TAX> 3,789,000
<INCOME-CONTINUING> 6,732,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,732,000
<EPS-PRIMARY> 0.75
<EPS-DILUTED> 0.72
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Cooker
Restaurant Corporation 1994 Annual Report and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<RESTATED>
<CIK> 0000832412
<NAME> COOKER RESTAURANT CORPORATION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-02-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,299,000
<SECURITIES> 0
<RECEIVABLES> 229,000
<ALLOWANCES> 0
<INVENTORY> 914,000
<CURRENT-ASSETS> 3,908,000
<PP&E> 90,541,000
<DEPRECIATION> 13,296,000
<TOTAL-ASSETS> 83,181,000
<CURRENT-LIABILITIES> 8,826,000
<BONDS> 35,976,000
0
0
<COMMON> 26,082,000
<OTHER-SE> 11,864,000
<TOTAL-LIABILITY-AND-EQUITY> 83,181,000
<SALES> 91,678,000
<TOTAL-REVENUES> 91,678,000
<CGS> 76,394,000
<TOTAL-COSTS> 76,394,000
<OTHER-EXPENSES> 6,173,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,978,000
<INCOME-PRETAX> 7,163,000
<INCOME-TAX> 2,731,000
<INCOME-CONTINUING> 4,432,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,432,000
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.61
</TABLE>
