<SEQUENCE>1
[DESCRIPTION]COOKER RESTAURANT CORPORATION FORM 10-K
<PAGE> 1
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: January 3, 1999
| | 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
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
OHIO 62-1292102
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(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
- ------------------------ ------------------------------------
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. | |
The aggregate market value of Common Shares held by non-affiliates of the
Registrant on April 2, 1999, was $28,105,000.
The number of Common Shares outstanding on April 2, 1999, was 6,177,000.
The following documents have been incorporated by reference into this Form
10-K:
Document Part of Form 10-K
-------- -----------------
The Registrant's definitive Proxy Statement for
its 1999 Annual Meeting of Shareholders Part III
<PAGE> 2
PART I
Item 1. Business.
General
At April 3, 1999, the Registrant owned and operated 68 full-service
"Cooker (sm)" restaurants (the "Restaurants") located in Florida, Georgia,
Indiana, Kentucky, 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 1998, the average check per person was approximately $11.34.
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 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 1998 lunch accounted for approximately 40% of
sales. The average check per person in 1998 was approximately $11.34. Each
Restaurant offers alcoholic beverages including liquor, wine and beer, which
constituted approximately 10.2% of sales in 1998. 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.
<PAGE> 3
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 1998 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 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Restaurants Open
at Start of Year 10 12 15 20 29 35 37 47 60
Restaurants Opened
During Year 2 3 5 9 6 3* 11* 13 7
</TABLE>
___________________
* 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 7 Restaurants in 1998 and has opened 2 Restaurants
to date in 1999. Additionally, the Registrant has closed one Restaurant in
1999 in Bethesda, Maryland. The Registrant currently does not plan to close
any additional Restaurants during 1999.
The Registrant intends to open an additional 3 Restaurants in 1999 which
would result in the Registrant opening a total of 5 new Restaurants in 1999. A
majority of potential future locations for openings in 1999 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 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 1999 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 12 regional managers
who are each responsible for supervising between 5 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.
<PAGE> 4
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. 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.
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 certain select
markets during 1998. The Registrant will continue testing radio advertising in
1999 and will also begin testing television advertising; 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.
<PAGE> 5
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. 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 April 3, 1999, the Registrant had 6,516 employees, of which 6,067 were
Restaurant employees, 408 were Restaurant management personnel, and 41 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.
<PAGE> 6
Item 2. Properties.
At April 3, 1999, the Registrant operated 68 Restaurants. The following
chart shows each of their locations:
Metropolitan Area Location Metropolitan Area Location
Florida Ohio
Ft. Myers-Cape Coral Ft. Myers Cincinnati Beechmont
Gainesville Gainesville Cincinnati Governor's Hill
Melbourne-Titusville
-Palm Bay Melbourne Cincinnati Paxton Road
Orlando Altamonte Springs Cincinnati Springdale
Orlando East Colonial Cleveland Rockside
Tallahassee Tallahassee Cleveland Beachwood
Tampa-St. Petersburg-
Clearwater Busch Blvd. Cleveland Cuyahoga Falls
West Palm Beach Boynton Beach Cleveland Mentor
West Palm Beach Villages Cleveland Westlake
Cleveland Solon
Georgia Columbus Bethel Road
Atlanta Alpharetta Columbus Cleveland Avenue
Atlanta Gwinnett Columbus East Main Street
Atlanta Kennesaw Columbus Hamilton Road
Atlanta Wildwood Columbus Lane Avenue
Augusta Augusta Columbus Morse Road
Columbus North High Street
Indiana Dayton Beaver Creek
Evansville Evansville Dayton Miamisburg-
Centerville
Indianapolis Keystone Dayton Vandalia
Indianapolis Willow Lake Dublin Dublin
Toledo Toledo
Kentucky Toledo Sylvania
Lexington Lexington Youngstown Boardman Township
Lexington Harrodsburg
Louisville Hurstbourne
Plaza Tennessee
Chattanooga Chattanooga
Michigan Green Hills Green Hills
Detroit Ann Arbor Johnson City Johnson City
Detroit Auburn Hills Knoxville Knoxville
Detroit Canton Memphis Memphis
Detroit Livonia Memphis Regalia Center
Detroit Novi Nashville Hermitage
Detroit Sterling Heights Nashville Murfreesboro
Detroit Troy Nashville Parkway
Grand Rapids Grand Rapids Nashville Rivergate
Flint-Saginaw Saginaw Nashville West End
North Carolina Virginia
Charlotte Southpark Norfolk Chesapeake
Raleigh-Durham-
Chapel Hill Raleigh Washington, D.C. Fairfax
The Registrant leases 23 Restaurants from unaffiliated lessors with base
terms ranging from 7 to 40 years, that include options to extend such leases
exercisable by the Registrant. See Note 13 to the Financial Statements for
information relating to the lease commitments. The Registrant owns the
remaining Restaurants, 36 of which are secured under the Term and Revolving
Loan agreement with First Union National Bank and NationsBank of Tennessee.
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.
<PAGE> 7
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 January 3, 1999:
G. ARTHUR SEELBINDER, age 55, 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 49, 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. On March 24, 1999, Mr. Pritchard resigned as a Director
and President and Chief Operating Officer of the Registrant effective April 4,
1999.
MARK W. MIKOSZ, age 50, has been Vice President - Chief Financial Officer of the
Registrant since June 1998. Prior to joining the Registrant, Mr. Mikosz was with
Roundy's Inc. from 1989 through 1994 where he served in various capacities,
including Vice President of Finance, Vice President of Marketing, Division
President, and Corporate Director of Financial and Retail Services. Mr. Mikosz
has been in the food industry since 1972.
GLENN W. COCKBURN, age 43, 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 53, has been Secretary and Treasurer of the Registrant
since 1986.
<PAGE> 8
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 1997 and 1998 as reported by the NYSE.
1998 High Low
1st Quarter $9-7/8 $8-3/16
2nd Quarter $12-1/8 $9-3/8
3rd Quarter $10-7/16 $8-3/8
4th Quarter $9-3/4 $5-1/2
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
On March 29, 1999, the Registrant had approximately 2,100 shareholders
of record.
The Company declared and paid an annual cash dividend of $.10 per Common
Share for fiscal 1998 and of $.07 per Common Share for fiscal 1997, in each
case, in February of the following year. Under the Company's loan agreements,
dividends may be declared in any fiscal year providing such dividends do not
cause the Company to be in default on the loans.
<PAGE> 9
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
independent auditors' 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.
<TABLE>
<CAPTION>
Fiscal Year (d)
1998 1997 1996 1995 1994
-----------------------------------------
<S> <C> <C> <C> <C> <C>
Sales 160,546 135,458 110,273 91,678 84,169
Income before cumulative
effect of a change in
accounting principle and
extraordinary item 6,027 6,452 6,732 4,432 2,481
Cumulative effect of
accounting change,
net of tax (a) - (496) - - -
Extraordinary gain, net
of tax (b) - - - - 484
Net income 6,027 5,956 6,732 4,432 2,965
=========================================
Basic earnings per
common share (c):
Income before cumulative
effect of change
in accounting principle
and extraordinary item 0.66 0.64 0.75 0.62 0.35
Cumulative effect of change
in accounting for
preoperational costs - (0.05) - - -
Extraordinary item - - - - 0.07
Net income 0.66 0.59 0.75 0.62 0.42
=========================================
Diluted earnings per
common share (c):
Income before cumulative
effect of change
in accounting principle
and extraordinary item 0.65 0.63 0.72 0.61 0.34
Cumulative effect of change
in accounting for
preoperational costs - (0.05) - - -
Extraordinary item - - - - 0.07
Net income 0.65 0.58 0.72 0.61 0.41
=========================================
Long-term obligations 82,712 42,917 16,822 35,975 28,600
Total assets 153,267 142,921 114,633 83,181 70,852
Dividends per share 0.10 0.07 0.06 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
Earnings per share - basic - 0.64 0.72 0.65 0.50
Earnings per share - diluted - 0.63 0.69 0.64 0.49
</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 prior periods have
been restated to reflect the provision of this Statement.
(d) The fiscal years ended on January 3, 1999, December 28, 1997, December
29, 1996, December 31, 1995, and January 1, 1995, respectively.
<PAGE> 10
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)
1998 1997 1996
-----------------------
<S> <C> <C> <C>
Sales 100.0% 100.0% 100.0%
Cost of Sales:
Food and beverage 28.7 28.6 28.4
Labor 35.0 34.5 34.5
Restaurant operating expenses 18.4 17.5 16.8
Restaurant depreciation 3.9 3.7 3.3
General and administrative 5.9 5.5 5.5
Preoperational costs 0.6 1.6 0.9
Impairment of long-lived assets - 0.3 -
Interest expense 2.5 1.3 1.3
Loss (gain) on sale of property (0.1) (0.1) -
Interest and other income (0.2) (0.1) (0.2)
-----------------------
94.7 92.8 90.5
Income before income taxes and
cumulative effect of a change
in accounting principle 5.3 7.2 9.5
Provision for income taxes before
cumulative effect of a change
in accounting principle 1.6 2.5 3.4
----------------------
Income before cumulative effect of
a change in accounting principle 3.7 4.7 6.1
Cumulative effect of a change in
accounting for preoperational
costs, net of tax - 0.4 -
----------------------
Net income 3.7 4.3 6.1
======================
</TABLE>
(a) The fiscal years ended on January 3, 1999, December 28, 1997, and
December 29, 1996, respectively.
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.
1998 Compared with 1997
Sales in 1998 of $160,546,000 were $25,088,000 (18.5%) more than sales in
1997. The increase was primarily due to sales from new restaurants opened
during fiscal 1998 and from a full year of operation for restaurants opened
during 1997. The 1998 openings included restaurants in: West Palm Beach and
Tallahassee, Florida; Lexington, Kentucky (2); Evansville, Indiana; Troy,
Michigan; Cuyahoga Falls, Ohio; Nashville and Knoxville, Tennessee; and
Augusta, Georgia. Same store sales for the year were down 1.2% from the prior
year primarily due to increased competition in the Company's market areas.
The food and beverage costs in 1998 of $46,067,000 increased to 28.7% of
sales as compared to 28.6% in the prior year. The increase is primarily due
to higher poultry, dairy, and potato prices for the latter part of the year.
Other ingredient costs increases were offset by price increases taken during
the year.
<PAGE> 11
Labor cost in 1998 of $56,252,000 increased to 35% of sales as compared to
34.5% in the prior year. The increase was due mainly to decreased sales for
certain periods during the year, particularly the third quarter, which were
not offset by decreased staffing levels, as well as increased bonus costs.
Average hourly wage rate increase were offset by slightly lower hours.
Restaurant operating expenses in 1998 of $29,519,000 increased to 18.4% of
sales as compared to 17.5% in the prior year. Areas showing increased spending
were utilities, marketing and administration, due to additional store openings,
continued marketing efforts, and a much hotter than normal summer. In addition,
percentages were affected by decreased average unit volume for the latter half
of the 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 $9,431,000 were $2,063,000 (28%) more
than last year's $7,368,000. The majority of the increase was due to increased
marketing expenses incurred as a result of the Company's expanded test-market
media advertising during the year.
The decrease in preoperational expenses of $1,288,000 to $896,000 in 1998
versus $2,184,000 in 1997 was due to a decrease in the number of stores opened
in 1998 compared to 1997.
Interest expense increased $2,234,000 to $4,022,000 from the prior year.
During 1998, the Company entered into a new Term Loan agreement with
NationsBank of Tennessee and First Union National Bank and a Term Loan with the
CIT/Equipment Financing Group, Inc. in conjunction with its repurchase of
common stock pursuant to theTender Offer (the "Offer") which was completed on
October 5, 1998. The increase in interest expense was due to the additional
financing required to complete the Offer purchase of approximately 4,006,000
shares of the Company's common stock.
The 1998 provision for income taxes decreased to 30.1% from 34.3% in 1997.
The decrease in the overall tax rate is the result a reversal in the current
year of a previously accrued tax liability for an IRS examination in the amount
of $335,000.
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 offset 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, in accordance with new accounting
guidance.
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.
<PAGE> 12
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 loan agreement (the "Revolver"), which provides a
$10,000,000 line of credit, through March 24, 2004, at which time any
outstanding principal balance will be due. As of April 3, 1999, the Company
had borrowed $5,500,000 of the $10,000,000 available under the Revolver.
During 1998, the Company opened 7 new units. Capital expenditures for
these new units and the refurbishing and remodeling of existing units totaled
$17,518,000 and were funded by cash flows of $12,117,000 from operations and
borrowings under prior revolving credit agreements. The Company has opened 2
Restaurants to date in 1999. The Company intends to open an additional 3
Restaurants in 1999 for a total of 5 new restaurants. Total cash
expenditures for the 1999 expansion are estimated to be approximately $7.5
million. The Company believes that cash flow from operations together with
borrowings from the Revolver will be sufficient to fund the planned
expansion, ongoing maintenance and remodeling of existing restaurants as
well as other working capital requirements.
Repayments of principal and interest on the loans acquired in conjunction
with the Offer are expected to be financed through normal operating cash
flows generated by the Company.
The Company has developed a plan 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 on all critical systems
by the end of 1999. The Company expects that the maximum cost which could be
incurred in conjunction with the testing and remediation of all hardware and
software systems and applications would be approximately $500,000 through
completion in fiscal year 1999, of which, approximately $10,000 has been
incurred to date. Such costs have been and will be funded by the Company's
operating cash flows.
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 January 3, 1999, 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 $27,500,000 of its total LIBOR-based floating rate debt (including the
$10,000,000 Revolver and two additional term loans with NationsBank and
First Union totaling $52,500,000) exceed 6.25 percent through the
termination date. No amounts were received by the Company during the year
ended January 3, 1999.
The fair value of the interest swap agreement approximated $(867,000) at
January 3, 1999. 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 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 "Loan"), 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"). As refinanced and
extended, the Loan from the Bank bears interest at the Bank's prime rate or
LIBOR plus 2%, and was 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 has been extended until
January 31, 2000.
<PAGE> 13
Pursuant to the Offer, Mr. Seelbinder tendered 737,562 shares,
approximately 99% of the outstanding Common shares that he owned, including
all 570,000 shares which secured the Loan. Approximately 414,555 shares were
taken up in the Offer for a total price of approximately $4,352,827.
Pursuant to Mr. Seelbinder's letter to the Company dated September 17, 1998,
the net after tax proceeds of the sale of 167,652 shares or approximately
$1,408,276 were applied by Mr. Seelbinder to the repayment of certain
personal indebtedness and tax liabilities, the remaining net after tax
proceeds (approximately $2,073,985) were applied to the Loan and the
remaining 323,007 Common shares were returned to the Bank.
As of February 10, 1999, the amount of the Loan outstanding, including
capitalized and accrued interest, was approximately $3,457,569 and the
undiscounted fair market value of the pledged shares was approximately
$1,898,676, based upon a market price of $6.1875 per common share. The
guaranty secures the loan until it is paid or refinanced without a guaranty.
The Company would fund any obligation it incurs under the terms of its
guaranty from additional borrowing under its Revolver. 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 on-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 1999.
Because the value of the shares pledged to secure the Loan at February
10, 1999, and on the date of this filing was less than the amount required
under the terms of the Loan, the Bank required the Company to make a cash
deposit in such amount to satisfy the collateral shortfall as a result of
the decreased price of the Company's common stock. The Bank, the Company
and Mr. Seelbinder reached a preliminary agreement concerning such deposit
under which Mr. Seelbinder paid $150,000 to the Bank, the Bank extended
their maturity of the Loan to January 31, 2000, the Company made a cash
deposit of approximately $1,600,000 in the Bank which will be revalued
monthly, and Mr. Seelbinder will reimburse the Company for the amount by
which the interest on the deposit is less than the interest the Company
pays for funds under its Term Loan and Revolver. This use of the
Company's funds will not materially affect its working capital or its
ability to implement its capital expenditure plan or make improvements and
betterments on its property. Mr. Seelbinder has also informed the Company
that he intends to discuss with the Bank or other financing sources the
refinancing of the balance of the Loan. There can be no assurance that
such refinancing will occur or that, if the Loan is refinanced, the
guaranty will not remain outstanding or that the deposit will be returned
to the Company.
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. The change was based
upon new accounting guidance. 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 in the process of 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 not currently able to fully function in
the Year 2000 either have new versions available which are Year 2000
compliant, or the vendor has committed to a Year 2000 compliant release in
sufficient time to allow installation and testing prior to critical cutover
dates. The Company is also in the process of completing its inventory of
computer information technology and non-information technology hardware
systems to assess Year 2000 compliance. In addition to the Company's internal
systems and hardware, the Company is preparing to assess the Year 2000
readiness of its vendors. As a part of this assessment, the Company is asking
each major vendor to inform the Company of its (the vendor's) Year 2000
readiness and initiatives. Currently, the Company purchases approximately 95%
of its food products from one vendor. The Company is receiving monthly
updates from this significant vendor regarding its Year 2000 readiness. To
the extent that this vendor or the Company's other vendors do not provide the
Company with satisfactory evidence of their readiness for the Year 2000 issue,
contingency plans will be developed. Currently, the Company does not have a
formal contingency plan in place, however, a Year 2000 Committee has been
formed and is in the process of developing a Company-wide Year 2000
contingency plan.
The Company has developed a plan 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 on all critical systems by
the end of 1999. The Company expects that the maximum cost which could be
incurred in conjunction with the testing and remediation of all hardware and
software systems and applications would be approximately $500,000 through
completion in fiscal year 1999, of which, approximately $10,000 has been
incurred to date. Such costs have been and will be funded by the Company's
operating cash flows.
The cost of the Company's plan to address the Year 2000 issue and the
anticipated date on which the Company plans to complete the necessary Year
2000 conversion efforts are based on management's best estimates, which were
derived from numerous assumptions of future events, including the availability
of resources, vendor remediation plans, and other factors. As a result, there
can be no assurance
<PAGE> 14
that the Company, or other companies with whom the Company conducts business,
will successfully address the Year 2000 problem in a timely manner, or at all,
or that the Year 2000 problem will not have a material adverse effect on the
Company's business or operations. The Company believes that the most
reasonably likely worst-case scenario resulting from noncompliance with the
Year 2000 by the Company or other third parties would be the temporary
shutdown of some or all of the Company's restaurants due to the lack of gas,
electricity, or supplies from certain key vendors. Such a shut down, if it
were to occur for any substantial period of time, would result in the loss of
sales revenue to the Company. Additionally, certain fixed expenses of the
Company would still be incurred during this time. As such, a situation such
as that described herein could have a material adverse effect on the
Company's results of operations.
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
Effective December 29, 1997, the Company adopted SFAS No. 130 "Reporting
Comprehensive Income," and No. 131 "Disclosure about Segments of an
Enterprise and Related Information." The adoption of these pronouncements did
not have a significant impact on the Company's consolidated financial
position, results of operations or cash flows.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. If certain conditions are met, a derivative may be
specifically designated as (a) a hedge of the exposure to changes in fair
value of a recognized asset, (b) a hedge of the exposure to variable cash
flows of a forecasted transaction, or (c) a hedge of the foreign currency
exposure of a net investment in a foreign operation, an unrecognized firm
commitment, an available-for-sale security, or a foreign-currency-denominated
forecasted transaction. The accounting for the changes in the fair value of a
derivative (this is, gains and losses) depends on the intended use of the
derivative and the resulting designation. This statement shall be effective
for all fiscal quarters of all fiscal years beginning after June 15, 1999.
The Company has not determined the effect of the adoption of SFAS No. 133
on the Company's results of operations or statement of financial position.
Forward Looking Statements
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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk Analysis
The Company continually monitors and considers methods to manage the rate
sensitivity of the Company's derivative and other financial instruments. Such
monitoring processes are designed to minimize the impact of sudden and
sustained changes in interest rates which could have a material effect on the
fair value of the Company's derivative and other financial instruments. Interest
rate risk exposure is measured using interest rate sensitivity analysis to
determine the effect on the fair value of the Company's derivative and other
fixed rate financial instruments in the event of hypothetical changes in
interest rates. For the Company's variable rate financial instruments, the
analysis is performed to determine the effect on the cash flows of the
instrument. Such hypothetical changes reflect management's best estimate of
reasonably possible, near-term changes. Based upon such, actual values may
differ from those projections calculated by the Company.
Fair Value Analysis
The carrying amounts reflected in the consolidated balance sheets for cash
and cash equivalents, accounts receivable, current portion of long-term debt,
and accounts payable approximate fair value due to the short maturities of
these instruments. The fair values for the Company's fixed rate long-term debt
and hedging instruments are based on dealer quotes for those instruments. The
fair values represent estimates of possible value which may not be realized in
the future. The face amount of hedging instruments does not necessarily
represent amounts exchanged by the parties and thus is not a direct measure of
the exposure of the Company through its use of hedging instruments. The amounts
exchanged are calculated on the basis of face amounts and other terms of the
hedging instruments.
The fair values of the Company's fixed rate long-term debt and interest rate
swap agreement are subject to change as a result of potential changes in market
rates and prices. The potential change in fair value for interest rate sensitive
instruments is based on a hypothetical immediate 1% point increase in interest
rates across all maturities. The Company's use of this methodology to quantify
the market risk of such instruments should not be construed as an endorsement of
its accuracy or the accuracy of the related assumptions. As a result of this
analysis, the fair value of the Company's term loan with CIT would decrease from
$17,110,000 to $16,579,000; the fair value of the Cooker Bonds would decrease
from $12,306,000 to $11,957,000; and the fair value of the Company's interest
rate swap agreement would change from ($867,000) to $(196,807).
<PAGE> 15
Cash Flow Analysis
The Company has a term loan in the amount of $52,000,000 with First Union
National Bank and NationsBank of Tennessee, N.A. The interest on this loan is
based upon the London Interbank Offering Rate (LIBOR), plus an applicable margin
based upon certain criteria. For this variable rate debt, the Company performed
an analysis to determine the effect of an immediate 1% point increase on the
cash flows of the instruments. Based upon the analysis, such an increase in the
interest rate applicable to this loan would result in an increase in payments
per the stated terms of $362,000 in 1999. The Company also has a revolving loan
agreement which allows the Company to borrow up to $10,000,000 with interest
terms identical to the terms of the above loan. The analysis performed by the
Company indicated that an increase in the applicable interest rate of 1% would
not have a material effect on the cash flows under the loan agreement.
Item 8. Financial Statements and Supplementary Data.
The financial statements of the Registrant, and the related notes, together
with the report of KPMG LLP dated January 27, 1999, are set forth at pages F-1
through F-20 attached hereto.
The supplementary data of the Registrant is contained in note 16 of the
notes to the report of KPMG LLP set forth at page F-20 attached hereto.
Quarterly amounts for 1997 have been restated to reflect the change in
accounting for preoperational costs (see rule 2).
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
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 2000 Annual Meeting and Directors Whose Terms
Continue Until the 2001 Annual Meeting" in the Registrant's Proxy Statement
for its 1999 Annual Meeting of Shareholders (the "1999 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 1999 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
1999 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 1999 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 Form10-K.
(1) Consolidated Financial Statements:
Independent Auditors' Report
Consolidated Balance Sheet as of January 3, 1999 and December 28, 1997
Consolidated Statement of Income for the Fiscal Years Ended January
3, 1999, December 28, 1997 and December 29, 1996
<PAGE> 16
Consolidated Statement of Changes in Shareholders' Equity for the Fiscal
Years Ended January 3, 1999, December 28, 1997 and December 29, 1996
Consolidated Statement of Cash Flows for the Fiscal Years Ended January
3, 1999, December 28, 1997 and December 29, 1996
Notes to Consolidated Financial Statements for the Fiscal Years Ended
January 3, 1999, December 28, 1997 and December 29, 1996
(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 April1, 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 February1, 1990 between the Registrant and
National City Bank (incorporated by reference to Exhibit1 of the Registrant's
Form 8-A filed with the Commission on February9, 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 Exhibit4.5 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 Exhibit4.6 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
December22, 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 Form8-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.
10.4. Amended and Restated Loan Agreement dated December22, 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).*
<PAGE> 17
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 Exhibit10.5 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 (incorporated by reference to Exhibit 10.14 to the 1997 Form 10-K;
Commission File No. 0-13044).
10.15 Second Amendment to Amended and Restated Loan Agreement dated as of
January 1,1998 between the Registrant and First Union National Bank, a national
banking association, as successor in interest to First Union National Bank of
Tennessee (incorporated by reference to Exhibit 10.15 to the 1997 Form 10-K;
Commission File No. 0-13044).
10.16 Fourth Amendment to Revolving/Term Loan Note dated as of January 1,
1998 betweenthe Registrant and First Union National Bank, a national banking
association, assuccessor in interest to First Union National Bank of Tennessee
(incorporated by reference to Exhibit 10.16 to the 1997 Form 10-K; Commission
File No. 0-13044).
10.17 Reaffirmation of Amended and Restated Guaranty made by the Registrant
on April 20, 1998 to the Chase Manhattan Bank (incorporated by reference to
Exhibit 10.17 to the 1997 Form 10-K; Commission File No. 0-13044).
10.18 Letter agreement dated March 26, 1998 between The Chase Manhattan Bank
and G.Arthur Seelbinder (incorporated by reference to Exhibit 10.18 to the
1997 Form 10-K; Commission File No. 0-13044).
10.19 Amendment to Grid Time Promissory Note dated March 26, 1998 between
The ChaseManhattan Bank and G. Arthur Seelbinder (incorporated by reference
to Exhibit 10.19 to the 1997 Form 10-K; Commission File No. 0-13044).
10.20 Loan Agreement dated September 24, 1998, between the Registrant and
First Union National Bank and NationsBank of Tennessee, N.A., both national
banking associations (incorporated by reference to Exhibit 10.20 of the
Registrant's Quarterly Report on Form10-Q for the quarterly period ended
September 27, 1998; Commission File No.1-13044).
10.21 Loan Agreement dated September 24, 1998, between the Registrant and
The CIT Group/Equipment Financing, Inc. (incorporated by reference to
Exhibit 10.21 of the Registrant's Quarterly Report on Form10-Q for the
quarterly period ended September 27, 1998; Commission File No.1-13044).
10.22 Letter dated September 17, 1998 from G. Arthur Seelbinder to the
Registrant (incorporated by reference to Exhibit (c)(10) to Amendment
No. 3 to the Registrant's Schedule 13E-4 filed on September 18, 1998;
Commission File No. 0-16806).
(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).
(21) Subsidiaries of Registrant.
21.1 Subsidiaries of Registrant.
(23) Consents of Experts and Counsel.
23.1 Consent of KPMG LLP.
<PAGE> 18
(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 1998.
<PAGE> 19
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: April 2, 1999
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 April 2, 1999.
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/ Mark W. Mikosz * Vice President - Chief Financial Officer
- ------------------------ (principal financial and accounting officer)
Mark W. Mikosz
/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/ Lehr Jackson * Director
- ------------------------
Lehr Jackson
/s/ Harvey Palash * Director
- ------------------------
Harvey Palash
* By: /s/ G. Arthur Seelbinder
G. Arthur Seelbinder Attorney-in-Fact
<PAGE> 20
_______________________________________________________________________________
_______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
COOKER RESTAURANT CORPORATION
_______________________
FORM 10-K ANNUAL REPORT
FOR THE FISCAL YEAR ENDED:
January 3, 1999
_______________________
CONSOLIDATED FINANCIAL STATEMENTS
_______________________
________________________________________________________________________________
________________________________________________________________________________
<PAGE> 21
COOKER RESTAURANT CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
<TABLE>
<CAPTION>
<S> <C>
Independent Auditors' Report F-2
Consolidated Balance Sheet as of January 3, 1999 and
December 28, 1997 F-3
Consolidated Statements of Income for the fiscal years
ended January 3, 1999, December 28, 1997 and
December 29, 1996 F-4
Consolidated Statements of Changes in Shareholders' Equity
for the fiscal years ended January 3, 1999, December 28, 1997
and December 29, 1996 F-5
Consolidated Statement of Cash Flows for the fiscal years
ended January 3, 1999, December 28, 1997 and December 29, 1996 F-6
Notes to Consolidated Financial Statements F-7
</TABLE>
<PAGE> 22
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
January 3, 1999 and December 28, 1997, 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 January 3, 1999. 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 January 3, 1999 and
December 28, 1997, and the results of their operations and their cash flows
for each of the years in the three-year period ended January 3, 1999 in
conformity with generally accepted accounting principles.
As discussed in note 2 to the consolidated financial s1tatements, the
Company changed its method of accounting for preoperational costs in 1997.
/s/ KPMG LLP
January 27, 1999
Fort Lauderdale, Florida
F-2
<PAGE> 23
COOKER RESTAURANT CORPORATION
Consolidated Balance Sheets
(Dollar amounts in thousands)
January 3, 1999 and December 28, 1997
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 2,520 4,685
Inventory 1,650 1,509
Land held for sale 55 55
Prepaid and other current assets 763 1,057
Income tax receivable 242 -
-------- --------
Total current assets 5,230 7,306
Property and equipment 144,025 134,190
Restricted cash 1,600 -
Other assets 2,412 1,425
-------- --------
Total assets $ 153,267 142,921
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debt $ 6,015 -
Accounts payable 3,357 4,668
Accrued liabilities 7,154 6,684
Capital lease obligation, current 173 173
Income taxes payable - 61
-------- --------
Total current liabilities 16,699 11,586
Long-term debt 82,385 42,415
Capital lease obligation, long-term 327 502
Deferred income taxes 3,406 1,813
Other liabilities 298 133
-------- --------
Total liabilities 103,115 56,449
Shareholders' equity:
Common Shares-without par value:
authorized 30,000,000 shares; issued
10,548,000 at January 3, 1999 and
December 28, 1997 62,460 63,039
Retained earnings 34,895 29,570
Treasury stock, at cost, 4,371,000 and
526,000 shares at January 3, 1999 and
December 28, 1997, respectively (47,203) (6,137)
-------- --------
50,152 86,472
Commitments and contingencies
-------- --------
$ 153,267 142,921
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
F-3
<PAGE> 24
COOKER RESTAURANT CORPORATION
Consolidated Statements of Income
(In thousands, except per share data)
Fiscal years ended January 3, 1999, December 28, 1997 and
December 29, 1996
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Sales $ 160,546 135,458 110,273
Cost of Sales:
Food and beverage 46,067 38,762 31,322
Labor 56,252 46,711 38,074
Restaurant operating expenses 29,519 23,662 18,470
Restaurant depreciation 6,210 4,966 3,675
General and administrative 9,431 7,368 6,019
Preoperational costs 896 2,184 949
Impairment of long-lived assets - 472 -
Interest expense 4,022 1,788 1,408
Loss (gain) on sale of property (223) (170) 2
Interest and other income (256) (99) (167)
-------- -------- --------
151,918 125,644 99,752
Income before income taxes and
cumulative effect of a change in
accounting principle 8,628 9,814 10,521
Provision for income taxes before
cumulative effect of a change in
accounting principle 2,601 3,362 3,789
-------- -------- --------
Income before cumulative effect of
a change in accounting principle 6,027 6,452 6,732
Cumulative effect of a change in
accounting for preoperational costs
(less tax of $253) - 496 -
-------- -------- --------
Net income $ 6,027 5,956 6,732
======== ======== ========
Basic earnings per common share:
Income before cumulative effect of
change in accounting principle $ 0.66 0.64 0.75
Cumulative effect of change in
accounting for preoperational costs - (0.05) -
-------- -------- --------
Net income $ 0.66 0.59 0.75
======== ======== ========
Diluted earnings per common share:
Income before cumulative effect of
change in accounting principle $ 0.65 0.63 0.72
Cumulative effect of change in
accounting for preoperational costs - (0.05) -
-------- -------- --------
Net income $ 0.65 0.58 0.72
======== ======== ========
Pro forma amounts assuming change in
accounting principle is applied
retroactively:
Net Income - $ 6,452 6,442
Earnings per share - basic - $ 0.64 0.72
Earnings per share - diluted - $ 0.63 0.69
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
F-4
<PAGE> 25
COOKER RESTAURANT CORPORATION
Consolidated Statements of Changes in Shareholders' Equity
(Dollar and share amounts in thousands)
Fiscal years ended January 3, 1999, December 28, 1997 and
December 29, 1996
<TABLE>
<CAPTION>
Common shares Retained Treasury stock
Shares Amounts earnings Shares Amounts Total
-------------------- --------- ----------------- -----
<S> <C> <C> <C> <C> <C> <C>
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
------- ------ ------- ------ ------- -------
Balance,
December 29, 1996 10,548 63,583 24,316 513 (6,149) 81,750
Shares repurchased - - - 122 (1,361) (1,361)
Issuance of common 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
Shares repurchased - - - 4,006 (42,954) (42,954)
Issuance of common shares
under stock option
plans - (771) - (161) 1,888 1,117
Tax benefits of stock
options exercised - 192 - - - 192
Dividends paid $.07 per
share - - (702) - - (702)
Net income - - 6,027 - - 6,027
------- ------- ------- ------ ------- -------
Balance,
January 3, 1999 10,548 $ 62,460 $ 34,895 4,371 $(47,203) $50,152
======= ======= ======= ====== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements
F-5
<PAGE> 26
COOKER RESTAURANT CORPORATION
Consolidated Statements of Cash Flows
(Dollar amounts in thousands)
Fiscal years ended January 3, 1999, December 28, 1997
and December 29, 1996
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net Income $ 6,027 5,956 6,732
Adjustments to reconcile net
income to net cash provided by
operating activities:
Cumulative effect of change
in accounting principle - 496 -
Depreciation and amortization 6,533 5,470 4,026
Amortization of preoperational
costs - - 949
Impairment of assets - 472 -
Deferred income taxes 1,593 1,484 70
Gain on sale of property (223) (170) 2
(Increase) decrease in:
Inventory (141) (381) (214)
Preoperational costs - - (1,402)
Prepaid expenses and other
current assets 294 (530) (74)
Other assets cash (987) 225 436
Increase (decrease) in:
Accounts payable (1,311) 823 1,424
Accrued liabilities 470 654 487
Income taxes payable/receivable (303) (930) 208
Deferred rent 165 133 -
-------- -------- --------
Net cash provided by operating
activities 12,117 13,702 12,644
Cash flows from investing
activities:
Purchases of property and
equipment (17,518) (33,109) (34,997)
Proceeds from sale of
property and equipment 1,374 2,375 532
Restricted cash deposits (1,600) - -
-------- -------- --------
Net cash used in investing
activities (17,744) (30,734) (34,465)
Cash flows from financing
activities:
Proceeds from notes payable 425 - 6,150
Payment on note payable (425) (4,613) (1,537)
Proceeds from borrowings 83,765 49,199 21,469
Repayments of borrowings (36,605) (22,408) (38,866)
Redemption of debentures (1,175) (1,198) (1,357)
Repurchase of debentures - - (400)
Exercise of stock options 1,308 829 59
Proceeds from secondary offering - - 37,442
Purchases of treasury stock (42,954) (1,361) -
Capital lease obligations (175) (38) -
Dividends paid (702) (702) (429)
-------- -------- --------
Net cash provided by financing
activities 3,462 19,708 22,531
Net (decrease) increase in cash
and cash equivalents (2,165) 2,676 710
Cash and cash equivalents,
at beginning of period 4,685 2,009 1,299
Cash and cash equivalents,
at end of period $ 2,520 4,685 2,009
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
F-6
<PAGE> 27
COOKER RESTAURANT CORPORATION
Notes to Consolidated Financial Statements
(1) Description of the Business and Summary of Significant Accounting
Policies
Cooker Restaurant Corporation and subsidiaries (the "Company") owns and
operates 67 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 Limited 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 year 1998 consisted of 53 weeks, and fiscal years 1997 and 1996
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
$2,240,457 and $3,695,732 at January 3, 1999 and December 28, 1997,
respectively, consist of overnight repurchase agreements and credit card
receivables and short-term investments with a maturity of three months or less.
Credit card receivables are considered cash equivalents because of the 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.
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 $256,500 and $445,800 were capitalized in
fiscal 1998 and 1997, 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 $151,000, $130,000, and $130,000 for
the years ended January 3, 1999, December 28, 1997, and December 29, 1996,
respectively.
F-7
<PAGE> 28
COOKER RESTAURANT CORPORATION
Notes to Consolidated Financial Statements
(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 Statement of
Financial Accounting Standard ("SFAS") No. 109, Accounting for Income Taxes,
which generally requires recognition of deferred tax assets and liabilities
for the expected future tax benefits or 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 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 prior
periods have been restated to reflect the provisions of this statement.
Basic and diluted share data are as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Weighted average shares
outstanding - basic 9,145 10,024 8,980
Effect of dilutive
securities:
Options 191 263 404
------ ------ ------
Diluted shares 9,336 10,287 9,384
====== ====== ======
</TABLE>
Convertible subordinated debentures outstanding as of January 3, 1999 are
convertible into 637,217 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 January 3, 1999 as the inclusion of
the convertible subordinated debentures would be antidilutive.
Options to purchase 207,665 shares of common stock, at prices ranging from
$10.375 to $21.75 per share, were outstanding for the year ended January 3,
1999, but were not included in the computation of diluted EPS because the
options' exercise prices were greater than the average market price of the
common shares for the year ended January 3, 1999. The options expire between
October 2001 and May 2008.
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' exercise 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' exercise prices were greater than the average market price of the
F-8
<PAGE> 29
COOKER RESTAURANT CORPORATION
Notes to Consolidated Financial Statements
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 revenues 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 approximates fair value because of the short maturity of
these instruments. The carrying amount of the Company's Term Loan and
Revolver of $57,000,000, in total, approximates fair value as the base
interest charged on these loans is at the London Inter-Bank Offering Rate
("LIBOR") and is reset to reflect changes in LIBOR. The fair value of the
convertible subordinated debentures and the Company's loan with the CIT
Group/Equipment Financing, Inc. is estimated by discounting future cash flows
at rates offered to the Company for similar types of borrowing arrangements.
The carrying amount and fair value of the debentures is $13,740,000 and
$12,306,000, respectively, at January 3, 1999, and $14,915,000 and
$13,573,000, respectively, at December 28, 1997. The carrying amount and fair
value of the CIT loan is $17,489,000 and $17,110,000, respectively, at
January 3, 1999. The loan was not outstanding at December 28, 1997. The fair
value of the debentures and the CIT loan was determined based upon current
borrowing rates available to the Company for loans of similar types and
maturities.
(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 upon the sum of
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 no impairment
write down was necessary for the year ended January 3, 1999. For the year
ended December 28, 1997, the Company recorded an impairment write down of
$472,000 for two restaurant locations.
(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 the provisions of 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.
F-9
<PAGE> 30
COOKER RESTAURANT CORPORATION
Notes to Consolidated Financial Statements
(n) Recent Accounting Pronouncements
Effective December 29, 1997, the Company adopted the provisions of SFAS
No. 130, Reporting Comprehensive Income, and SFAS No. 131, Disclosures About
Segments of an Enterprise. The adoption of these pronouncements did not have
a significant effect on the Company's consolidated financial position, results
of operations or cash flows. The Company does not have "Other Comprehensive
Income" within the definition of SFAS No. 130. Additionally, the Company
operates in one definable segment as determined under the guidance in SFAS.
No 131.
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, Accounting for Derivatives and Hedging Activities. This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. If certain conditions are met, a derivative may
be specifically designated as (a) a hedge of the exposure to changes in fair
value of a recognized asset, (b) a hedge of the exposure to variable cash
flows of a forecasted transaction, or (c) a hedge of the foreign currency
exposure of a net investment in a foreign operation, an unrecognized firm
commitment, an available-for-sale security, or a foreign-currency-denominated
forecasted transaction. The accounting for the changes in the fair value of a
derivative (this is, gains and losses) depends on the intended use of the
derivative and the resulting designation. This statement shall be effective
for all fiscal quarters of all fiscal years beginning after June 15, 1999.
The Company has not determined the effect of the adoption of SFAS No. 133 on
the Company's results of operations or statement of financial position.
(o) Reclassifications
Certain amounts in the 1997 and 1996 financial statements have been
reclassified to conform to the 1998 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. Previously, the Company capitalized these costs and amortized them
over one year, commencing from the date the restaurant was opened. The
expensing method is the preferable method based on new accounting guidance.
The Company restated 1997 first quarter results to record a pretax 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
expense (see note 16).
F-10
<PAGE> 31,
COOKER RESTAURANT CORPORATION
Notes to Consolidated Financial Statements
(3) Property and Equipment, Net
Property and equipment, net, consists of the following:
<TABLE>
<CAPTION> January 3, December 28,
1999 1997 Useful Life
--------- ----------- -----------
(in thousands)
<S> <C> <C> <C>
Land $ 40,991 36,470 --
Buildings and leasehold 20-40 years or
improvements 94,165 84,150 shorter of lease term
Furniture, fixtures and
equipment 32,882 28,486 5 - 8 years
Construction in progress 3,110 6,145 --
Capital lease 713 713 4 years
--------- ----------
171,861 155,964
Less accumulated depreciation
and amortization (27,836) (21,774)
--------- ----------
Property and equipment, net $ 144,025 134,190
</TABLE>
Depreciation and amortization expense of property and equipment approximated
$6,533,000, $5,470,000 and $4,026,000 for the years ended January 3, 1999,
December 28, 1997, and December 29, 1996, respectively.
(4) Other Assets
Other assets consist of the following:
<TABLE>
<CAPTION>
January 3, December 28,
1999 1997
---------- -----------
<S> <C> <C>
Deferred financing costs, net of
accumulated amortization of
$985,000 and $833,000 $ 1,250 480
Prepaid lease, net of accumulated
amortization of $88,000
and $74,000 601 615
Liquor licenses 290 185
Deposits 214 89
Other 57 56
---------- -----------
$ 2,412 1,425
========== ===========
</TABLE>
(5) Accrued Liabilities
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
January 3, December 28,
1999 1997
---------- -----------
<S> <C> <C>
Salaries, wages and benefits $ 2,763 3,394
Gift certificates payable 1,062 1,064
Sales tax payable 926 651
Property taxes 349 194
Insurance 867 604
Other 1,187 777
---------- -----------
$ 7,154 6,684
========== ===========
</TABLE>
F-11
<PAGE> 32
COOKER RESTAURANT CORPORATION
Notes to Consolidated Financial Statements
(6) Note Payable
On April 13, 1998, the Company issued a promissory note to finance the purchase
of land for its restaurant in Knoxville, Tennessee in the amount of $425,000.
The note was repaid in full during fiscal 1998.
(7) Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
January 3, December 28,
1999 1997
---------- -----------
<S> <C> <C>
Nations Bank term loan $ 30,000 -
First Union term loan 22,500 -
CIT Group/Equipment Financing, Inc.
term loan 17,660 -
Nations Bank revolving line
of credit 4,500 -
Revolving line of credit - 27,500
Convertible subordinated debentures 13,740 14,915
---------- -----------
88,400 42,415
Less current maturities of
long-term debt 6,015 -
---------- -----------
Long-term debt, excluding
current maturities $ 82,385 42,415
========== ===========
</TABLE>
In conjunction with the repurchase of approximately 4,000,000 shares of the
Company's common stock, pursuant to the Tender Offer (the "Offer") completed in
October 1998 (see note 9), the Company entered into debt finance agreements
with Nations Bank of Tennessee, N.A. ("Nations Bank"), First Union National
Bank ("First Union"), and The CIT Group/Equipment Financing, Inc. ("CIT"). The
agreement with Nations Bank and First Union provides for a credit facility of
$62,500,000, of which $52,500,000 is a term loan (the "Term Loan") with Nations
Bank and First Union and $10,000,000 is a revolving loan (the "Revolver") with
Nations Bank only. The agreement is secured by 36 properties owned by the
Company. The outstanding balance of the Revolver at January 3, 1999 was
$4,500,000.
Under the terms of the agreement, the Term Loan will mature on March 24, 2004.
Interest on the Term Loan and Revolver is LIBOR plus an applicable margin,
which, per the terms of the agreement, may vary between 1.0% and 2.25%,
depending on the Company's ratio of funded debt to Earnings before Interest,
Taxes, Depreciation, and Amortization (EBITDA). Commencing October 1, 1998, the
Company began making interest-only payments on the Term Loan and any
outstanding amounts against the Revolver, which will continue through March
24, 1999. Subsequent to March 24, 1999, the Company may enter into a second
closing with First Union and Nations Bank, at which time the Term Loan and the
Revolver may be renewed at $62,500,000 or 70% of the value of the properties
pledged as collateral, whichever is less. Commencing in March of 1999, the
Company will make equal monthly payments of approximately $356,000 on the
First Union debt amount, representing principal and interest, and principal
payments of approximately $167,000, plus interest, on the Nations Bank debt
through March 24,2004, at which time, all remaining amounts, principal and
interest, on the Term Loan and the Revolver will be due in full.
In addition to the loans from First Union and Nations Bank, the Company entered
into a loan agreement with CIT in the amount of $18,000,000. This loan is
secured by certain equipment owned by the Company. Interest on the loan with CIT
is at LIBOR plus 1.85%. Monthly payments of approximately $268,000, including
principal and interest, began in October of the current year and will continue
through September 2003, at which time the remaining principal balance, plus
accrued interest, will be due in full.
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
F-12
<PAGE> 33
COOKER RESTAURANT CORPORATION
Notes to Consolidated Financial Statements
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 1998 and
1997, 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 1998 and 1997, the Company redeemed debentures
subject to this provision of $25,000 and $48,000, 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.
The net proceeds from the above loans were used to purchase the shares tendered
as a result of the Offer, as well as for normal capital requirements of the
Company. Aggregate annual principal payments for the Company's loans over the
next five years are as follows: $6,015,000 in 1999, $6,505,000 in 2000,
$7,278,000 in 2001, $21,434,000 in 2002, and $47,168,000 in 2003 and
thereafter.
(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 January 3,
1999, 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 $27,500,000 of its total Term Loan exceed
6.25 percent through the termination date. No amounts were received by the
Company during the year ended January 3, 1999.
The fair value of the interest swap agreement approximated $(867,000) at
January 3, 1999. 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 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
F-13
<PAGE> 34
COOKER RESTAURANT CORPORATION
Notes to Consolidated Financial Statements
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 January 3, 1999, approximately
9,265,500 rights were outstanding.
On October 5, 1998, the Company purchased 4,006,298 of its common stock,
without par value, at a price of $10.50 per share Pursuant to the terms of
the Issue Tender Offer Statement on Schedule 13-E4 (the "Offer"). The
shares of stock purchased in the Offer represented approximately 39% of
the 10,159,354 shares of common stock issued and outstanding immediately
prior to the Offer on August 11,1998. The shares purchased are included in
Treasury Stock at January 3, 1999.
(10) Income Taxes
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
January 3, December 28, December 29,
1999 1997 1996
--------- ----------- -----------
(in thousands)
<S> <C> <C> <C>
Current Taxes:
Federal $ 644 1,545 2,975
State and local 364 333 744
--------- ----------- -----------
1,008 1,878 3,719
Deferred Taxes 1,593 1,484 70
--------- ----------- -----------
Provision before cumulative
effect of change in accounting
principle 2,601 3,362 3,789
Benefit from cumulative effect
of change in accounting principle - (253) -
--------- ----------- -----------
Provision for income taxes $ 2,601 3,109 3,789
========= =========== ===========
</TABLE>
The provision for deferred income taxes consists of the
following:
<TABLE>
<CAPTION>
January 3, December 28,
1999 1997
---------- -----------
(in thousands)
<S> <C> <C>
Accelerated depreciation $ 2,744 1,466
Impairment of long-lived assets 4 (179)
Preoperational costs - (253)
Accrued health (39) (3)
Accrued vacation (3) (13)
Provision for asset disposal - 95
Other accrued expenses (159) 173
Business credit carry forward (954) -
Other - (55)
---------- -----------
Total $ 1,593 1,231
========== ===========
</TABLE>
F-14
<PAGE> 35
COOKER RESTAURANT CORPORATION
Notes to Consolidated Financial Statements
A reconciliation of the differences between income taxes calculated at the
federal statutory rate and the provision for income taxes before
extraordinary item is as follows:
<TABLE>
<CAPTION>
January 3, December 28, December 29,
1999 1997 1996
---------- ----------- -----------
<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 3.6% 4.0% 4.7%
Reserve for tax examination (3.9%) - -
FICA tip tax credit (5.7%) (4.1%) (4.6%)
Other nondeductible items 2.1% 0.4% 1.9%
---------- ----------- -----------
30.1% 34.3% 36.0%
</TABLE>
The tax effects of temporary differences that give rise to
significant portions of deferred tax assets and deferred tax
liabilities are as follows:
<TABLE>
<CAPTION>
January 3, December 28,
1999 1997
---------- -----------
(in thousands)
<S> <C> <C>
Accelerated depreciation $ 4,937 2,193
Impairment of long-lived assets (175) (179)
Accrued health (154) (115)
Accrued vacation (141) (138)
Other accrued expenses (90) 71
Business credit carry forward (954) -
Other (17) (19)
---------- -----------
$ 3,406 1,813
========== ===========
</TABLE>
The Internal Revenue Service (IRS) has completed its examination of the
Company's income tax returns for the years 1990 through 1993. During fiscal
1998, the Company paid a total of approximately $265,000 in taxes and
interest. Accordingly, the Company reversed approximately $335,000 of a
previously recorded liability in 1998.
(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.
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
1997 and 1998. 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 January 3, 1999, and December 28, 1997, the ESOP owns 272,000
of the Company's common shares, all of which are allocated to eligible
participants.
During the third quarter the Board of Directors approved the termination of
the Cooker Restaurant Corporation Employee Stock Ownership Plan (the
"Plan"). The effective date of the termination was June 30, 1998. The Plan
termination did not have a significant impact on the Company's consolidated
financial position, results of operations, or cash flows.
F-15
<PAGE> 36
COOKER RESTAURANT CORPORATION
Notes to Consolidated Financial Statements
(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 non
management 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 non management directors under the 1988 Plan and 1992
Plan, respectively. No further options can be granted under the 1988 Plan for
employees and non management 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 non
qualified 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.
On December 14, 1998, the Company's Board of Directors offered to exchange
880,000 outstanding stock options issued to officers and employees in
fiscal years 1996, 1997, and 1998 for 567,837 stock options at a new option
price of $5.50 per share, the closing market price on the date of the
exchange offer. All options subject to the exchange offer were exchanged
for the new options at the new price.
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>
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
Granted 326,000 8.50 -- 12.13 9.39
Surrendered (880,000) 12.13 -- 8.50 10.65
Converted 568,000 5.50 -- 5.50 5.50
Canceled (79,000) 6.00 -- 17.75 9.96
Exercised (162,000) 4.03 -- 8.75 6.89
------- --------------- --------------
Balance at January 3, 1999 1,289,000 $ 4.03 -- 21.75 $ 7.16
</TABLE>
F-16
<PAGE> 37
COOKER RESTAURANT CORPORATION
Notes to Consolidated Financial Statements
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>
1998 1997 1996
(in thousands, except per share data)
------ ------ ------
<S> <C> <C> <C>
Net Income:
As reported $ 6,027 $ 5,956 $ 6,732
Pro forma $ 5,179 $ 5,395 $ 6,413
Diluted earnings per share:
As reported $ 0.65 $ 0.58 $ 0.72
Pro forma $ 0.55 $ 0.54 $ 0.71
</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.
The per share weighted-average fair value of stock options granted during
1998, 1997 and 1996 was $4.80, $5.04, and $5.56, respectively, on the
date of grant using the Black Scholes option-pricing model with the
following weighted-average assumptions: dividend yield 1.05 percent,
.61 percent and .49 percent; risk-free interest rates of 4.54 percent,
6.5 percent and 5.6 percent; expected lives of 7 years for all years,
and expected volatility of 35 percent, 33 percent and 37 percent,
respectively. At January 3, 1999, the range of exercise prices and
weighted-average remaining contractual life of outstanding options was
$4.04-$21.75 and 6.4 years, respectively. At January 3, 1999, December
28, 1997, and December 29, 1996, the number of options exercisable was
768,235, 717,000, and 583,000, respectively, and the weighted-average
exercise price of those options was $7.73, $8.50, and $7.91, respectively.
(13) Commitments 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 $2,660,000, $2,022,000, and $1,549,000,
including percentage rent of $237,000, $231,000, and $231,000 for the
fiscal years ended January 3, 1999, December 28, 1997, and December 29,
1996, respectively.
F-17
<PAGE> 38
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 had an initial
term of four years and requires annual rental payments of $210,000 in 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 January 3, 1999 are as follows:
<TABLE>
<CAPTION>
Capital Operating
Fiscal Year Ending Leases Leases
- ------------------ -------- ---------
<S> <C> <C>
1999 $ 210,000 2,616,605
2000 210,000 2,678,572
2001 167,000 2,694,874
2002 2,765,645
2003 2,809,416
Thereafter 30,660,278
-------- ---------
Total minimum lease payments $ 587,000 44,225,391
=========
Less amount representing interest 87,000
--------
Present value of net minimum
lease payments 500,000
Less current installments 173,000
--------
Capital lease obligation,
excluding current installments $ 327,000
========
</TABLE>
(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. The Company contributed $38,000 to
the plan in 1998.
(e) Lease Guarantee
The Company subleased its previous headquarters location and has guaranteed
the minimum rent due. At January 3, 1999, the outstanding balance on this
guarantee was $82,500.
F-18
<PAGE> 39
COOKER RESTAURANT CORPORATION
Notes to Consolidated Financial Statements
(14) Supplemental Cash Flow Information
Cash paid for interest for fiscal 1998, 1997 and 1996 was $3,585,000,
$2,094,000 and $2,004,000, respectively. Cash paid for taxes for fiscal
1998, 1997 and 1996 was $1,311,000, $2,808,000 and $3,511,000.
(15) Related Parties
In 1994, the Board of Directors approved a guaranty by the Company of a
loan of $5,000,000 to G. Arthur Seelbinder (the "Loan"), 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"). As refinanced and
extended, the Loan from the Bank bears interest at the Bank's prime rate or
LIBOR plus 2%, and was 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 has been extended until January 31, 2000.
Pursuant to the Offer, Mr. Seelbinder tendered 737,562 shares, approximately
99% of the outstanding Common shares that he owned, including all 570,000
shares which secured the Loan. Approximately 414,555 shares were taken up in
the Offer for a total price of approximately $4,352,827. Pursuant to Mr.
Seelbinder's letter to the Company dated September 17, 1998, the net after
tax proceeds of the sale of 167,652 shares or approximately $1,408,276 were
applied by Mr. Seelbinder to the repayment of certain personal indebtedness
and tax liabilities, the remaining net after tax proceeds (approximately
$2,073,985) were applied to the Loan and the remaining 323,007 Common shares
were returned to the Bank.
As of February 10, 1999, the amount of the Loan outstanding, including
capitalized and accrued interest, was approximately $3,457,569 and the
undiscounted fair market value of the pledged shares was approximately
$1,898,676, based upon a market price of $6.1875 per common share. The
guaranty secures the loan until it is paid or refinanced without a guaranty.
The Company would fund any obligation it incurs under the terms of its guaranty
from additional borrowing under its Revolver.
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 1999.
Because the value of the shares pledged to secure the Loan at February 10,
1999, and on the date of this filing was less than the amount required under
the terms of the Loan, the Bank required the Company to make a cash deposit in
such amount to satisfy the collateral shortfall as a result of the decreased
price of the Company's common stock. The Bank, the Company and Mr. Seelbinder
reached a preliminary agreement concerning such deposit under which Mr.
Seelbinder paid $150,000 to the Bank, the Bank extended their maturity of the
Loan to January 31, 2000, the Company made a cash deposit of approximately
$1,600,000, reflected as "Restricted cash" on the balance sheet, in the Bank
which will be revalued monthly, and Mr. Seelbinder will reimburse the Company
for the amount by which the interest on the deposit is less than the interest
the Company pays for funds under its Term Loan and Revolver. Management
believes that this use of the Company's funds will not materially affect its
working capital or its ability to implement its capital expenditure plan or
make improvements and betterments on its property. Mr. Seelbinder has also
informed the Company that he intends to discuss with the Bank or other
financing sources the refinancing of the balance of the Loan. There can be no
assurance that such refinancing will occur or that, if the Loan is refinanced,
the guaranty will not remain outstanding or that the deposit will be returned
to the Company.
F-19
<PAGE> 40
COOKER RESTAURANT CORPORATION
Notes to Consolidated Financial Statements
(16) Quarterly Financial Date (Unaudited)
Quarterly financial data (unaudited) for fiscal year 1998 and 1997 are
summarized as follows:
<TABLE>
<CAPTION>
First Second Third Fourth
quarter quarter quarter quarter
------- ------- ------- -------
1998 (in thousands, except per share data)
<S> <C> <C> <C> <C>
Sales $ 40,434 39,955 38,018 42,139
Income before income taxes 3,569 2,499 1,208 1,352
Net income 2,338 1,840 797 1,052
Earnings per share:
Basic $ 0.23 0.18 0.08 0.16
Diluted $ 0.23 0.18 0.08 0.16
1997
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 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
</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
$0.01 per share; and third quarter, charge of $447,000 ($287,000
after taxes) or $0.03 per share.
(b) Includes an impairment of long-lived assets charge of
$472,000 ($310,000 after taxes).
F-20
<PAGE> 41
_______________________________________________________________________________
_______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
COOKER RESTAURANT CORPORATION
_______________________
FORM 10-K ANNUAL REPORT
FOR THE FISCAL YEAR ENDED:
JANUARY 3, 1999
_______________________
EXHIBITS
_______________________
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE> 42
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number of Pages
Exhibit in Original Incorporaed
Number Description Document (a) 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 *
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 *
</TABLE>
<PAGE> 43
<TABLE>
<S> <C> <C> <C>
10.14. Letter dated January 30, 1998 from G. Arthur
Seelbinder to the Registrant. 1 *
10.15 Second Amendment to Amended and Restated
Loan Agreement dated as of January 1,1998
between the Registrant and First Union
National Bank, a national banking association,
as successor in interest to First Union
National Bank of Tennessee. 7 *
10.16 Fourth Amendment to Revolving/Term Loan
Note dated as of January 1, 1998 between
the Registrant and First Union National Bank,
a national banking association, a ssuccessor
in interest to First Union National Bank of
Tennessee. 1 *
10.17 Reaffirmation of Amended and Restated
Guaranty made by the Registrant on April 20,
1998 to the Chase Manhattan Bank. 3 *
10.18 Letter agreement dated March 26, 1998 between
The Chase Manhattan Bank and G.Arthur
Seelbinder. 2 *
10.19 Amendment to Grid Time Promissory Note dated
March 26, 1998 between The ChaseManhattan Bank and
G. Arthur Seelbinder. 1 *
10.20 Loan Agreement dated September 24, 1998,
between the Registrant and First Union
National Bank and NationsBank of Tennessee,
N.A., both national banking associations. 69 *
10.21 Loan Agreement dated September 24, 1998,
between the Registrant and The CIT
Group/Equipment Financing, Inc. 8 *
10.22 Letter dated September 17, 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 *
21.1 Subsidiaries of Registrant 1 43
23.1 Consent of KPMG LLP. 1 44
24.1. Powers of Attorney. 9 45
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 54
27.1. Financial Data Schedules (submitted
electronically for SEC information only). 3 55
</TABLE>
(a) 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 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 27, 1999, relating to the consolidated
balance sheets of Cooker Restaurant Corporation and subsidiaries
as of January 3, 1999 and December 28, 1997, 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 January 3, 1999, which report appears in the
January 3, 1999 annual report on Form 10-K of Cooker Restaurant
Corporation. Our report refers to a change in method of
accounting for preoperational costs in fiscal year 1997.
/s/ KPMG LLP
Fort Lauderdale, Florida
April 3, 1999
<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 January 3, 1999, 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, 1999.
/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 January 3, 1999, 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
25th day of January, 1999.
/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 January 3, 1999, 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
25th day of January, 1999.
/s/ MARK W. MIKOSZ
------------------
Mark W. Mikosz
<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 January 3, 1999, 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
25th day of January, 1999.
/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 January 3, 1999, 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 April, 1999.
/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 January 3, 1999, 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
25th day of January, 1999.
/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 January 3, 1999, 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
25th day of January, 1999.
/s/ LEHR JACKSON
------------------
Lehr Jackson
<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 January 3, 1999, 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
25th day of January, 1999.
/s/ HARVEY M. PALASH
--------------------
Harvey M. Palash
<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 January 3, 1999, 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
25th day of January, 1999.
/s/ HENRY R. HILLENMEYER
------------------------
Henry R. Hillenmeyer
<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 25, 1999, 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 2nd day of
April, 1999.
/s/ MARGARET A. EPPERSON
------------------------
Margaret A. Epperson, Secretary
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-28-1997
<PERIOD-END> JAN-03-1999
<CASH> 2,520,000
<SECURITIES> 0
<RECEIVABLES> 398,000
<ALLOWANCES> 0
<INVENTORY> 1,650,000
<CURRENT-ASSETS> 5,230,000
<PP&E> 171,861,000
<DEPRECIATION> 27,836,000
<TOTAL-ASSETS> 153,267,000
<CURRENT-LIABILITIES> 16,699,000
<BONDS> 82,712,000
0
0
<COMMON> 62,460,000
<OTHER-SE> (12,308,000)
<TOTAL-LIABILITY-AND-EQUITY> 153,267,000
<SALES> 160,546,000
<TOTAL-REVENUES> 160,546,000
<CGS> 138,048,000
<TOTAL-COSTS> 138,048,000
<OTHER-EXPENSES> 10,104,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,022,000
<INCOME-PRETAX> 8,628,000
<INCOME-TAX> 2,601,000
<INCOME-CONTINUING> 6,027,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,027,000
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.65
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM COOKER RESTAURANT CORPORATION 1997 ANNUAL REPORT AND IS
QUALIFIED IN ITS ENTIRETY BYREFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000832412
<NAME> COOKER RESTAURANT CORPORATION
<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>
<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>
<RESTATED>
<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>
