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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Act of 1934
Date of Report (Date of earliest event reported): March 26, 1999
BOSTON CHICKEN, INC.
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(Exact name of registrant as specified in this charter)
Delaware 0-22802 36-3904053
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(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
14123 Denver West Parkway, P.O. Box 4086, Golden, Colorado 80401-4086
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(Address of principal executive offices)
(303) 278-9500
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(Registrant's telephone number, including area code)
Not applicable
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(Former name or former address, if changes since last report)
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Item 5. Other Events.
Restatement of Financial Results. In the course of performing the 1998
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year-end financial audit, management of the Company has determined it will be
necessary to re-audit and restate 1997 fiscal year-end financial statements.
PricewaterhouseCoopers, LLP ("PWC"), the Company's recently appointed
independent auditors, had advised the Company that, absent sufficient competent
evidential matter to support both the appropriateness of certain accounting
methods and principles and the reasonableness of certain assumptions used by
prior management in reporting certain estimates, PWC would likely be unable to
opine on the Company's fiscal 1998 financial statements. While the Company's
present management recognizes that such information and evidence was scrutinized
by prior management and by the Company's former independent auditors, it has
been unable to provide PWC sufficient information and evidence to permit PWC to
opine on the Company's fiscal 1998 financial statements. Therefore, the Company
must revise and restate 1997 fiscal year-end financial results based on
information presently available to it, which will also result in restatements of
interim period financial reports for fiscal 1998. The Company believes that any
restatement of historical financial results will have no direct impact on its
cash and liquidity positions, its debtor-in-possession credit facility or on
current operations. None of the restatements are related to, or impact, the
financial results of Einstein/Noah Bagel Corp., a majority-owned subsidiary of
the Company.
The Company expects to file amended reports on Form 10-Q for the quarterly
periods ended April 19, 1998, July 12, 1998 and October 4, 1998. The amended
reports are expected to contain restated financial statements and revised
management's discussion and analysis reflecting, among other things, a
substantial material increase in area developer loan loss reserves recognized in
1997. The Company is currently reviewing and evaluating the Company's
historical accounting policies and practices, which could result in additional
material adjustments to 1997 year-end and 1998 interim net losses. The Company
is unable to determine at this time whether its review and evaluation of
historical accounting policies and practices will result in revisions to
additional historical financial statements. The examination and evaluation of
matters relating to both current period and prior period financial statements
will not be completed prior to March 29, 1999, the date on which the Company is
required to file its Annual Report on Form 10-K for the fiscal year ended
December 27, 1998 and the Company is currently unable to estimate the date on
which the applicable filings will be made.
Engagement of Financial Advisor. The Company has engaged BT Alex.Brown
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Incorporated to assist the Company in formulating alternative plans of
reorganization in connection with the Company's Chapter 11 reorganization
proceedings under the jurisdiction of the United States Bankruptcy Court in the
District of Arizona. BT Alex.Brown will also be available to provide financial
advice and assistance in a number of other matters related to the Company's
reorganization, including assisting in determining an appropriate capital
structure for the Company and analyzing current or potential reorganization
plans. BT Alex.Brown is also advising and assisting the Company in preparing
the documentation necessary to permit the Company to explore strategic
alternatives, including any potential investment proposals from strategic or
financial investors or buyers. The Company is currently unable to predict the
outcome of these strategic alternatives or the terms of any reorganization plan
that may be submitted to the Bankruptcy Court for approval.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements in this Form 8-K constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company, its subsidiaries and their stores, to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements.
On October 5, 1998, the Company and its Boston Market-related subsidiaries
filed voluntary petitions for protection under Chapter 11 of the Federal
Bankruptcy Code and are operating as debtors-in possession. The Company's
success is dependent upon, among other things, further improvements in Boston
Market store-level operating performance, approval of various plans and
initiatives by the Bankruptcy Court, the formulation of an acceptable
reorganization plan and Bankruptcy Court approval of the reorganization plan.
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In general, the results, performance or achievements of the Company, its
subsidiaries and their stores are dependent upon a number of factors including,
without limitation, the following: store performance (including sales and
profit margins); competition; success of operating initiatives; development and
operating costs; retention of employees; advertising and promotional efforts;
brand awareness; adverse publicity; acceptance of new product offerings (e.g.,
menu items and pricing structures); changes in business strategy; changes in
development plans; availability and cost of capital; food, labor and employee
benefit costs; changes in government regulations; regional weather conditions;
compliance with Year 2000 requirements by the Company and its third party
vendors; and other factors referenced in the Company's filings with the
Securities and Exchange Commission ("Commission"). These cautionary statements
by the Company should not be construed as exhaustive or as any admission
regarding the adequacy of disclosures made by the Company. The Company cannot
always predict or determine after the fact what factors would cause actual
results to differ materially from those indicated by the forward-looking
statements or other statements. In addition, readers are urged to consider
statements that include the terms "believes", "expects", "plans", or the like to
be uncertain and forward-looking. All cautionary statements should be read as
being applicable to all forward-looking statements wherever they appear.
The Company is in the process of resolving comments of the Commission Staff
with respect to certain reports filed under the Securities Exchange Act of 1934.
The Company hopes to resolve these comments in connection with the restatement
of its historical financial statements, although there can be no assurance it
will be able to do so.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Dated: March 26, 1999
BOSTON CHICKEN, INC.
By: /s/Lawrence E. White
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Lawrence E. White
Executive Vice President and
Chief Financial Officer
