<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended February 19, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period to
----------- -----------
Commission file number 0-4377
--------------
SHONEY'S, INC.
(Exact name of registrant as specified in its charter)
Tennessee 62-0799798
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1727 Elm Hill Pike, Nashville, TN 37210
(Address of principal executive (Zip Code)
offices)
Registrants telephone number, including area code (615)391-5201
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
------ ----
As of March 19, 1995, there were 41,410,188 shares of
Shoney's, Inc. $1 par value common stock outstanding.
==================================================================<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
SHONEY'S, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
February 19, October 30,
1995 1994
--------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,651,200 $ 4,229,784
Notes and accounts receivable, less allowance for doubtful
accounts of $1,639,000 in 1995 and $1,276,000 in 1994 17,092,655 16,541,039
Inventories 33,535,475 37,434,318
Deferred income taxes and other current assets 28,111,403 27,676,167
Net current assets of discontinued operations 9,695,448 8,690,783
----------- -----------
Total current assets 92,086,181 94,572,091
Property, plant and equipment, at cost 668,744,239 656,002,252
Less accumulated depreciation and amortization (269,620,025) (262,824,928)
----------- -----------
Net property, plant and equipment 399,124,214 393,177,324
Other assets:
Net non-current assets of discontinued operations 57,718,406 56,836,660
Deferred charges and other intangible assets 7,047,443 6,512,591
Other assets 5,357,746 5,631,788
----------- -----------
Total other assets 70,123,595 68,981,039
----------- -----------
$ 561,333,990 $ 556,730,454
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 28,127,031 $ 41,789,157
Federal and state income taxes 1,727,717 3,764,329
Other accrued liabilities 63,276,022 60,805,868
Reserve for litigation settlement 23,206,977 23,803,836
Debt and capital lease obligations due within one year 78,548,968 66,599,140
----------- -----------
Total current liabilities 194,886,715 196,762,330
Long-term senior debt and capital lease obligations 327,194,960 332,486,107
Zero coupon subordinated convertible debentures 82,893,899 80,790,563
Reserve for litigation settlement 56,328,634 61,673,834
Deferred credits:
Income taxes 16,784,405 15,477,405
Income and other liabilities 6,854,895 6,304,456
Shareholders' equity (deficit):
Common stock, $1 par value: authorized 100,000,000 shares;
issued 41,405,113 in 1995 and 41,185,290 in 1994 41,405,113 41,185,290
Additional paid-in capital 59,780,954 57,509,644
Retained earnings (deficit) (224,795,585) (235,459,175)
----------- -----------
Total shareholders' equity (deficit) (123,609,518) (136,764,241)
----------- -----------
$ 561,333,990 $ 556,730,454
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
-2-
<PAGE>
SHONEY'S, INC. AND SUBSIDIARIES
Consolidated Condensed Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Sixteen Weeks Ended
February 19, February 20,
1995 1994
--------------- --------------
<S> <C> <C>
Revenues
Net sales $ 284,547,192 $ 284,513,389
Franchise fees 7,081,919 7,738,313
Other income 1,579,812 4,908,252
----------- -----------
293,208,923 297,159,954
Costs and expenses
Cost of sales 251,750,161 250,846,884
General and administrative expenses 17,684,198 17,258,899
Interest expense 12,166,539 13,458,540
Restructuring expenses 558,325
----------- -----------
Total costs and expenses 282,159,223 281,564,323
Income from continuing operations before income taxes and
cumulative effect of change in accounting principle 11,049,700 15,595,631
Provision for income taxes 4,199,000 5,848,000
----------- -----------
Income from continuing operations before cumulative
effect of change in accounting principle 6,850,700 9,747,631
Income from discontinued operations, net of tax 3,812,890 4,456,411
Cumulative effect of change in accounting for income taxes 4,468,386
----------- -----------
Net income $ 10,663,590 $ 18,672,428
=========== ===========
Earnings per common share
Primary:
Income from continuing operations before cumulative
effect of change in accounting principle $ 0.17 $ 0.24
Income from discontinued operations, net of tax 0.09 0.11
Cumulative effect of change in accounting for income taxes 0.11
---- ----
Net income $ 0.26 $ 0.45
==== ====
Fully diluted:
Income from continuing operations before cumulative
effect of change in accounting principle $ 0.17 $ 0.24
Income from discontinued operations, net of tax 0.09 0.10
Cumulative effect of change in accounting for income taxes 0.10
---- ----
Net income $ 0.26 $ 0.43
==== ====
Weighted average shares outstanding
Primary 41,401,040 41,287,317
Fully diluted 41,401,040 46,526,938
Common shares outstanding 41,405,113 41,048,262
Dividends per share NONE NONE
</TABLE>
See notes to consolidated condensed financial statements.
-3-
<PAGE>
SHONEY'S, INC. AND SUBSIDIARIES
Consolidated Condensed Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Sixteen Weeks Ended
February 19, February 20,
1995 1994
-------------- -------------
<S> <C> <C>
Operating activities
Net income $ 10,663,590 $ 18,672,428
Adjustments to reconcile net income
to net cash provided by operating
activities:
Income from discontinued
operations, net of tax (3,812,890) (4,456,411)
Depreciation and amortization 12,367,810 11,620,488
Amortization of deferred charges
and other non-cash charges 2,786,544 3,534,203
Gain on marketable securities
and sale of other assets (783,950) (2,781,051)
Cumulative effect of change
in accounting for income taxes (4,468,386)
Change in deferred income taxes 1,307,000 1,704,200
Changes in operating assets and
liabilities (2,532,385) (2,112,325)
---------- ----------
Net cash provided by continuing
operating activities 19,995,719 21,713,146
Net cash provided by discontinued
operating activities 5,368,484 7,201,778
---------- ----------
Net cash provided by operating activities 25,364,203 28,914,924
Investing activities
Cash required for property, plant and equipment (24,126,005) (24,324,145)
Cash required for assets held for sale (3,431,135) (4,422,330)
Proceeds from disposal of property, plant
and equipment 693,520 1,511,161
Cash required for other assets (378,963) (613)
---------- ----------
Net cash used by investing activities (27,242,583) (27,235,927)
Financing activities
Payments on long-term debt and
capital lease obligations (32,876,787) (586,340)
Proceeds from long-term debt 28,000,000
Net proceeds from short-term borrowings 11,926,000 5,360,000
Payments on litigation settlement (5,942,059) (6,963,024)
Cash required for debt issue costs (874,276) (345,198)
Proceeds from exercise of employee stock options 1,066,918 2,187,933
---------- ----------
Net cash provided (used)
by financing activities 1,299,796 (346,629)
---------- ----------
Change in cash $ (578,584) $ 1,332,368
========== ==========
</TABLE>
See notes to consolidated condensed financial statements.
-4-
<PAGE>
SHONEY'S, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
February 19, 1995
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and the
instructions to Form 10-Q. As a result, they do not include all of
the information and footnotes required by generally accepted
accounting principles for complete financial statements.
The Company, in management's opinion, has included all adjustments
(consisting of normal recurring accruals) necessary for a fair
presentation of the results of operations. Certain
reclassifications have been made in the consolidated condensed
financial statements to conform to the 1995 presentation.
Operating results for the sixteen week period ended February 19,
1995 are not necessarily indicative of the results that may be
expected for all or any balance of the fiscal year ending October
29, 1995.
NOTE 2 -- DISCONTINUED OPERATIONS
On January 16, 1995, the Company's Board of Directors announced a
reorganization designed to improve the performance and growth of the
Shoney's Restaurant concept. The reorganization includes the
divestiture of certain non-core lines of business including Lee's
Famous Recipe, Pargo's and Fifth Quarter restaurants, as well as
Mike Rose Foods, Inc., a private label manufacturer of food products.
The divestiture process is expected to be completed by January 1996.
For the quarter ended February 19, 1995, the discontinued businesses
represented 13.3% of consolidated net property, plant and equipment,
13.0% of consolidated revenues, and 20.9% of consolidated earnings
before interest and taxes. The Company expects that these
discontinued lines of business will be disposed of for amounts in
excess of their carrying values. Certain one-time charges associated
with the reorganization will be accrued as they are incurred. However,
the Company expects the net result of the divestitures and the
restructuring will be a gain once the sales are consummated.
Severance pay of $.5 million incurred as a result of the management
reorganization was included in restructuring expenses in the first
quarter of 1995. There were no comparable expenses in the first
quarter of 1994.
For financial reporting purposes, the results of operations of the
lines of business to be divested have been treated as discontinued
operations in the accompanying financial statements and are presented
net of any related income tax expense. Prior year financial statements
have been reclassified to conform to this method of presentation.
-5-
<PAGE>
NOTE 3 - CHANGES IN ACCOUNTING POLICIES
Effective November 1, 1993, the Company adopted FASB Statement No.
109 "Accounting for Income Taxes" through a cumulative effect
adjustment resulting in an increase to net income of approximately
$4.5 million or $.10 per share (fully diluted). Statement No. 109
changes the Company's method of accounting for income taxes from the
deferred method to the liability method. The liability method
requires the recognition of deferred income tax liabilities and
assets for the expected future tax consequences of temporary
differences between the tax bases and financial reporting bases of
assets and liabilities (see Note 5).
Effective November 1, 1993, the Company also adopted FASB Statement
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". This Statement requires that debt and equity
securities be carried at fair value unless the Company has the
positive intent and ability to hold debt securities to maturity.
Debt and equity securities must be classified into one of three
categories: 1) held-to maturity, 2) available-for-sale or 3) trading
securities. Each category has different accounting treatment for
the change in fair values. There was no cumulative effect from the
adoption of Statement No. 115, since at the time of adoption, the
Company held no investments in debt or equity securities.
NOTE 4 - EARNINGS PER SHARE
Primary earnings per share have been computed using the weighted
average number of shares of common stock and common stock equivalents
outstanding during each period presented. Common stock equivalents
include all dilutive outstanding stock options. For the first quarter
of 1994, fully diluted earnings per share also includes the assumed
conversion of the zero coupon subordinated convertible debentures.
This calculation adjusts earnings for interest that would not be paid
if the debentures were converted. The primary and fully diluted
earnings per share for the first quarter of 1995 were computed using
the weighted average number of shares of common stock and common
stock equivalents outstanding during the quarter. No consideration
was given to the convertible debentures for this quarter as they had
an anti-dilutive effect.
NOTE 5 - INCOME TAXES
Income taxes for the sixteen week period ended February 19, 1995
and February 20, 1994 were provided based on the Company's estimate
of its effective tax rates (38.0% and 37.5%, respectively) for the
entire respective fiscal years. The Company's estimate of its
effective tax rate for the 1995 fiscal year increased from 1994 due
primarily to the expiration of the Targeted Jobs Tax Credit in
December 1994. The statutory federal income tax rate was 35% for both
periods presented.
Effective November 1, 1993, the Company changed its method of
accounting for income taxes from the deferred method to the
liability method as required by FASB Statement No. 109, "Accounting
for Income Taxes" (see Note 3). As permitted under the new rules,
prior years' financial statements were not restated. The cumulative
effect of adoption of the Statement increased deferred tax assets and
net income by $4.5 million or $.10 per common share. This amount was
reflected in the first quarter of fiscal 1994 as the cumulative effect
of a change in accounting for income taxes.
-6-
<PAGE>
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes. Significant components of the Company's deferred tax
assets and liabilities as of October 30, 1994 are as follows:
Deferred tax assets:
Reserve for lawsuit settlement $ 31,420,209
Reserves for self insurance 9,449,874
Other - net 4,287,636
----------
Deferred tax assets - net 45,157,719
----------
Deferred tax liabilities:
Tax over book depreciation 19,244,064
Capital contribution 22,501,840
Other - net 1,067,275
----------
Deferred tax liability 42,813,179
----------
Net deferred tax asset $ 2,344,540
==========
No valuation allowance is considered necessary, as management believes
that the deferred tax assets will ultimately be realized. Management's
conclusion is based, in part, on future taxable income that will
result from the reversal of existing taxable temporary differences.
Additionally, management expects to have future taxable income from
operations, excluding the reversal of temporary differences.
NOTE 6 - SENIOR DEBT
Debt and capital lease obligations due within one year includes $60
million of senior debt-fixed rate which is due in April 1995 and is
collateralized by certain land and buildings. As of February 19,
1995, this indebtedness had a fixed rate of interest (9.78%) to
maturity in April 1995. The Company has interest rate swap
agreements, which expire at varying dates to April 1995, which
effectively convert the interest rate on this indebtedness to 6.3%.
In July 1993, the Company entered into a $125 million reducing
revolving credit facility with a syndicate of financial institutions.
The facility had a four year, three month term expiring October 22,
1997, with reductions in the aggregate credit facility beginning in
1995. All material assets of the Company not otherwise pledged
(including all common shares of a wholly-owned real estate company
which owns 107 of the Company's restaurant properties) have been
pledged as collateral for the facility. The interest rate for this
facility was at floating rates (the London Interbank Offered Rate
("LIBOR") plus 2%).
During the third quarter of fiscal 1994, the Company and the
financial institutions amended this credit facility to allow the
Company to redeem its 12% subordinated debentures issued in the
Company's 1988 recapitalization. The credit facility was increased
to a maximum of $270 million, the interest rate remained at LIBOR
plus 2% and the maturity was extended to October 1999. The
Company redeemed the $145.7 million of 12% subordinated debentures
at par on July 2, 1994. At February 19, 1995, the Company had
borrowed $207.5 million under this facility and the interest rate was
8.2%.
-7-
<PAGE>
The Company's senior debt requires satisfaction of certain
financial ratios and tests; imposes limitations on capital
expenditures; limits the ability to incur additional debt,
leasehold obligations and contingent liabilities; prohibits
dividends and distributions on common stock; prohibits mergers,
consolidations or similar transactions; and includes other
affirmative and negative covenants.
NOTE 7 - RESERVE FOR LITIGATION SETTLEMENT
On January 25, 1993, the Company received final court approval of
a settlement of a three and one-half year old class action race
discrimination lawsuit against the Company and its former senior
chairman. Under the terms of the settlement, the Company has
agreed to pay $105 million in claims. In addition, the Company
agreed to pay $25.5 million in plaintiffs' attorneys fees and an
estimated $4 million in applicable payroll taxes and administrative
costs. Under the terms of the consent decree, payments are made
quarterly and substantially all payments will be completed by March
1, 1998.
During 1994, the Company obtained an IRS private letter ruling which
clarified that certain portions of the settlement payments were not
subject to federal payroll taxes that had been previously accrued by
the Company. The reserve for litigation settlement was reduced by
$1.7 million in the fourth quarter of fiscal 1994 to adjust for this
change in estimate for accrued payroll taxes due on the settlement.
NOTE 8 - LITIGATION
The Company is a defendant in a federal court suit filed on
December 19, 1994 by one of its Captain D's franchisees who claims
that the Company imposes a "tying" arrangement by requiring
franchisees to purchase food products from the Company's
commissary. The complaint seeks damages for an alleged class of
similarly situated plaintiffs in an amount not to exceed $500
million and treble damages. The same plaintiff has also filed a
state court suit making essentially the same claims; however, in
that suit, the plaintiff did not make a class action claim. On
December 16, 1994 counsel for the plaintiff advised the Company that
the federal court case described above would be filed unless the
Company settled the pending state court case by purchasing the
plaintiff's franchised Captain D's restaurant for $1.65 million,
plus assumption of certain equipment leases. The Company rejected
the demand and the federal court lawsuit was filed.
The Company also is a defendant in a federal court suit filed on
December 30, 1994 by two plaintiffs who are franchisees of six
Shoney's Restaurants. The complaint alleges that the Company
imposes a "tying" arrangement by requiring Shoney's Restaurant
franchisees to purchase their food products from the Company's
commissary by not providing product specifications in order to
select alternative vendors. They further allege that the Company
has engaged in fraud, breach of contract, and violations of the
Tennessee Consumer Protection Act regarding the establishment and
operation of the Shoney's Restaurants cooperative advertising
program. One of the plaintiffs also individually asserts a breach
of contract claim regarding a franchise territory transfer. The
complaint does not specify the amount of damages sought; however,
the plaintiffs seek treble damages for both their anti-trust claims
and Tennessee Consumer Protection Act claims. They also seek
punitive damages on their fraud claim.
The plaintiffs in each of these federal court suits purport to act
on behalf of similarly situated classes of plaintiffs; however,
there has been no motion filed to certify either of the cases as a
class action nor has either case been certified as a class action.
-8-
<PAGE>
Management believes it has substantial defenses to the claims made
in each of these cases and intends to vigorously defend both cases.
In the opinion of management, the ultimate liability with respect to
either case will not materially affect the operating results or the
financial position of the Company.
The Company is a party to other legal proceedings incidental to its
business. In the opinion of management, the ultimate liability with
respect to these actions will not materially affect the operating
results or the financial position of the Company.
NOTE 9 - SALE OF SHONEY'S LODGING, INC. AND RELATED INVESTMENTS
Effective February 16, 1994, the Company sold its minority
ownership interests in four Shoney's Inns to ShoLodge, Inc.
("ShoLodge") in exchange for 90,909 common shares of ShoLodge. The
shares received were recorded at their fair value on the date of
the transaction of approximately $2.4 million resulting in a gain
of $1.7 million in the quarter ended February 20, 1994. The ShoLodge
common shares were classified as trading securities under FASB
Statement No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" (see Note 3). The change in fair value of the
ShoLodge common shares subsequent to the transaction is reflected in
the results of operations.
The Company also owns certain warrants to acquire ShoLodge common
stock which were obtained in the 1992 sale of the Company's lodging
division to ShoLodge. In connection with the sale of the Company's
minority motel interests described in the preceding paragraph, the
Company received future registration rights with respect to the
shares that may be acquired upon exercise of the warrants. Under
the provisions of FASB Statement No. 115, certain of these warrants
were classified as trading securities during the first quarters of
1994 and 1995 and adjusted to their fair value. The resulting gains
of approximately $1.1 million in the first quarter of 1994 and $.8
million in the first quarter of 1995 were reflected in the results of
operations.
Once classified as a trading security, the warrants are carried at
fair value with increases and decreases in fair value reflected in
the results of operations. The fair value of the ShoLodge warrants
and the ShoLodge common stock held by the Company as of the beginning
of the first quarter of 1995 declined by approximately $81,000 during
the quarter. The fair value of the ShoLodge common stock and the
ShoLodge warrants classified as trading securities was $5.6 million at
February 19, 1995. Subsequent to February 19, 1995, the fair value of
the ShoLodge common stock (and the related warrants classified as
trading securities) declined significantly. As of March 30, 1995, the
fair value of the ShoLodge common stock and the ShoLodge warrants
classified as trading securities was $3.2 million.
-9-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis provides information
which management believes is relevant to an assessment and
understanding of the Company's consolidated results of operations and
financial condition. The discussion should be read in conjunction with
the consolidated condensed financial statements and notes thereto. The
first quarters of fiscal 1995 and 1994 covered periods of sixteen
weeks.
On January 16, 1995, the Company's Board of Directors
announced a reorganization designed to improve the performance and
growth of the Shoney's Restaurant concept. The reorganization includes
the divestiture of certain non-core lines of business including Lee's
Famous Recipe, Pargo's and Fifth Quarter restaurants, as well as Mike
Rose Foods, Inc., a private label manufacturer of food products. The
divestiture process is progressing on schedule and is expected to be
completed by January, 1996.
For financial reporting purposes, the results of operations of
the lines of business to be divested have been treated as discontinued
operations in the accompanying financial statements and are presented
net of related income tax expense. Prior year financial statements have
been reclassified to conform to this method of presentation.
For the quarter ended February 19, 1995, the discontinued
lines of business represented 13.3% of consolidated net property, plant
and equipment, 13.0% of consolidated revenues and 20.9% of consolidated
earnings before interest and taxes. The Company expects that these
discontinued lines of business will be disposed of for amounts in
excess of their carrying values. Certain one-time charges associated
with the reorganization will be accrued as they are incurred. However,
the Company expects the net result of the divestitures and the
restructuring will be a gain once the sales of these lines of business
are consummated.
Under the terms of the Company's various lending agreements,
proceeds from the divestitures of these businesses generally would be
required to be used to reduce the Company's existing senior
indebtedness. As part of the divestiture process, the Company intends
to request modifications to certain of its credit agreements that would
permit the Company to utilize the divestiture proceeds to (1) fund the
planned improvements and growth of the Shoney's Restaurants, (2) retire
existing senior indebtedness and (3) repurchase shares of the Company's
stock.
Since the reorganization announcement, the Company has focused
on development of the performance improvement plan for the Shoney's
Restaurant concept. The performance improvement plan is focusing on all
aspects of restaurant operations and restaurant support functions
including commissary operations, purchasing and general corporate
services. The Shoney's Restaurants had declines in comparable store
sales and resulting lower operating margins in the first quarter of
1995. The Company anticipates Shoney's Restaurants operating margins
will be lower until the benefits of the performance improvement plan
begin to have a positive effect on comparable store sales and operating
margins.
-10-
<PAGE>
Revenues from continuing operations for the first quarter of
1995 decreased 1.3% ($4.0 million) to $293.2 million as compared to the
first quarter of 1994. An analysis of the decrease in revenues is shown
below.
<TABLE>
<CAPTION>
16 Weeks Ended
Feb. 19, 1995
$ Millions
--------------
<S> <C>
Restaurant revenue $ 6.7
Commissary and other sales (6.7)
Franchise fees (.7)
Other income (3.3)
----
$(4.0)
====
</TABLE>
The Company's continuing operations opened 11 restaurants
during the first quarter of 1995, including ten Shoney's and one
Barbwires, and closed two Shoney's units. Franchisees for the Company's
continuing operations opened 6 units during the quarter and closed 26
units (including six units purchased by the Company). Comparable store
sales of restaurants in the Company's continuing operations decreased
1.3%, including a menu price increase of .7%.
Commissary sales decreased 10% ($5.5 million) during the first
quarter of 1995 as compared to the first quarter of 1994. When
compared to restaurant sales, these sales have a higher percentage of
food costs and a lower percentage of operating expenses. There is no
restaurant labor associated with these sales. Franchise fees relating
to the Company's continuing operations also declined $.7 million or
8% in the first quarter of 1995 compared to the prior year. The
decreases in Commissary sales and franchise fees during first quarter
of 1995 are primarily the result of a net decrease in franchised
restaurants relating to the Company's continuing operations and a
decline in comparable store sales at franchised restaurants of the
Shoney's concept.
Other income decreased $3.3 million in the first quarter of
1995 as compared with the first quarter of 1994 as the result of
several factors. During 1994, the Company sold its minority ownership
interests in four Shoney's Inns to ShoLodge, Inc. ("ShoLodge"). The
sale resulted in a $1.7 million gain, which was included in other
income in the first quarter of 1994. In conjunction with this sale, the
Company also received future registration rights for shares of ShoLodge
stock that may be acquired by the Company upon the exercise of certain
warrants that it owns. Under the provisions of FASB Statement No. 115,
certain of these warrants were classified as trading securities and
adjusted to fair value resulting in a gain of $1.1 million which was
included in other income in the first quarter of 1994 (see Note 9--Sale
of Shoney's Lodging, Inc. and Related Investments). In addition, during
the first quarter of 1994, the Company received $.9 million from the
settlement of certain class action securities litigation against RJR
Nabisco, Inc. and others.
-11-
<PAGE>
Cost of sales for continuing operations for the first quarter
of 1995 increased $.9 million over the same quarter in 1994 and as a
percentage of revenues were 85.9% in 1995 as compared to 84.4% in 1994.
The decline in revenues from 1994 to 1995 impacted the comparison as
a percentage of revenues. If 1994 franchise fees and other income were
equal to the 1995 amounts, 1994 cost of sales would have been 85.6%.
Food and supplies decreased as a percentage of revenues due to the
decline in sales and lower cost of sales in the Commissary division.
Restaurant labor increased as a percentage of revenues because of the
decline in Commissary sales (which have no restaurant labor in cost of
sales) and higher labor cost at the restaurant level. Operating
expenses increased as a percentage of revenues primarily due to higher
depreciation expense and other costs related to the extensive
remodeling program for Shoney's Restaurants coupled with a decline in
comparable store sales.
General and administrative expenses increased as a percentage
of revenues from 5.8% in the first quarter of 1994 to 6.0% in the
first quarter of 1995. This increase was primarily due to higher
consulting fees related to the Shoney's Restaurant performance
improvement program which are included in general and administrative
costs.
Restructuring charges of $ .6 million in the first quarter of
1995 were principally related to severance pay incurred as part of the
Company's overall restructuring plan. Other restructuring charges will
be accrued as they are incurred or when they can be reasonably
estimated.
Interest expense for the first quarter of 1995 declined
approximately $1.3 million due to lower effective interest rates ($.8
million) and a decline in the average debt outstanding ($.5 million).
The effective income tax rates for the first quarter of 1995
and 1994 were 38% and 37.5%, respectively. The increase in the
effective tax rate for fiscal 1995 is primarily due to the expiration
of the Targeted Jobs Tax Credit in December 1994. Effective November
1, 1993, the Company changed its method of accounting for income taxes
from the deferred method to the liability method required by FASB
Statement No. 109, "Accounting for Income Taxes" (see Note 3--Changes
in Accounting Policies). As permitted under the new rules, prior years'
financial statements were not restated. The cumulative effect of
adoption of the Statement in the first quarter of 1994 was to increase
deferred tax assets and net income by $4.5 million or $.10 per common
share.
Following the reorganization announcement in January,
management elected to complete construction of new restaurants in
process for the restaurant concepts to be divested. The Company opened
two Pargo's restaurants in the first quarter and will open one
additional Pargo's in the second quarter. Revenues of the discontinued
operations increased 4% as a result of the additional store openings
and was partially offset by comparable store sales declines in the
divested restaurant concepts. Net income from discontinued operations
declined 14% principally due to lower operating margins for Lee's
Famous Recipe and Mike Rose Foods, Inc.
Cash provided from continuing operations decreased $1.7
million to $20.0 million for the first quarter of 1995 compared to
$21.7 million for the first quarter of 1994. This decrease was due
primarily to a reduction in net income, after adjustments for non-cash
gains in 1994. Cash used by investing activities in 1995 was comparable
to 1994 as the cash expenditures for property, plant and equipment were
consistent in each year. Cash from discontinued operations was $1.8
million lower in 1995 as compared to $7.2 million in 1994 due primarily
to a reduction in net income and higher inventory for the discontinued
operations.
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<PAGE>
Significant financing activities in the first quarter of 1995
included completion of a $28 million mortgage financing, a $5.4 million
increase in short-term borrowings under the Company's unsecured lines
of credit, along with payments of $5.9 million under the terms of the
litigation settlement (see Note 7--Reserve for Litigation Settlement),
and $32.5 million on the Company's $270 million Reducing Revolving
Credit Facility ("Revolver"). The Company had borrowed $207.5 million
under the Revolver on February 19, 1995.
At February 19, 1995, the Company had cash and cash
equivalents of approximately $3.7 million and unsecured lines of
credit totalling $30 million under which the Company had borrowings of
$15.8 million outstanding. Capital expenditures for fiscal 1995 are
expected to be approximately $80 million including expenditures
committed for restaurants properties included in net assets of
discontinued operations. The Company expects to meet its needs for debt
service, capital expenditures (excluding those for land and buildings
which are expected to be met through mortgage financing arrangements),
the payments required by the settlement of the class action litigation
and general corporate purposes through cash generated by the Company's
operations and from the Company's Revolver (see Note 6--Senior
Debt).
-13-
<PAGE>
PART II- OTHER INFORMATION.
ITEM 1. LEGAL PROCEEDINGS.
Item 3 of Amendment No. 1 to the Company's Annual Report on
Form 10-K, filed with the Commission on February 27, 1995 is
incorporated herein by this reference. See also Note 8 to the Notes
to Consolidated Condensed Financial Statements at pages 8-9 of this
Quarterly Report on Form 10-Q.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) In accordance with the provisions of Item 601 of
Regulation S-K, the following have been furnished as Exhibits to
this Quarterly Report on Form 10-Q:
3(i), 4.1 Charter of Shoney's, Inc., as amended, filed as
Exhibit 4.1 to Post Effective Amendment No. 3 to
the Company's Registration Statement on Form S-8
(File No. 33-605) filed with the Commission on
October 31, 1988, and incorporated herein by this
reference.
3(ii), 4.2 Amended and Restated Bylaws of Shoney's, Inc., filed
as Exhibit 3(ii) and 4.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended
October 30, 1994 filed with the Commission on
January 30, 1995, and incorporated herein by this
reference.
4.3 Amended and Restated Rights Agreement, dated as
of May 25, 1994, between Shoney's, Inc. (the
"Company") and Harris Trust and Savings Bank, as
Rights Agent, filed as Exhibit 4 to the Company's
Current Report on Form 8-K filed with the
Commission on June 9, 1994 and incorporated
herein by this reference.
4.4 Indenture dated as of April 1, 1989 between the
Company and Sovran Bank/Central South, as Trustee
relating to $201,250,000 in principal amount of
liquid yield option notes due 2004, filed as
Exhibit 4.8 to Amendment No. 1 to the Company's
Registration Statement on Form S-3 filed with the
Commission on April 3, 1989 (No. 33-27571), and
incorporated herein by this reference.
4.5 Transfer Agreement dated as of May 15, 1990 among
the Company, The Travelers Corporation, CIBC Inc.
and Canadian Imperial Bank of Commerce, New York
Agency, filed as Exhibit 4.3 and 19.3 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended August 5, 1990 filed with the
Commission on September 19, 1990, and
incorporated herein by this reference.
4.6 Transfer Agreement dated as of May 15, 1990 among
the Company, Equitable Variable Life Insurance
Company, CIBC Inc. and Canadian Imperial Bank of
Commerce, New York Agency, filed as Exhibit 4.4
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<PAGE>
and 19.4 to the Company's Quarterly Report on
Form 10-Q for the quarter ended August 5, 1990
filed with the Commission on September 19, 1990,
and incorporated herein by this reference.**
4.7 Transfer Agreement dated as of May 15, 1990 among
the Company, National Integrity Life Insurance
Company, CIBC Inc. and Canadian Imperial Bank of
Commerce, New York Agency, filed as Exhibit 4.5
and 19.5 to the Company's Quarterly Report on
Form 10-Q for the quarter ended August 5, 1990
filed with the Commission on September 19, 1990,
and incorporated herein by this reference.**
4.8 Transfer Agreement dated as of May 15, 1990 among
the Company, Integrity Life Insurance Company,
CIBC Inc. and Canadian Imperial Bank of Commerce,
New York Agency, filed as Exhibit 4.6 and 19.6 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended August 5, 1990 filed with the
Commission on September 19, 1990, and
incorporated herein by this reference.**
4.9 Transfer Agreement dated as of May 15, 1990 among
the Company, The Equitable of Colorado, Inc.,
CIBC Inc. and Canadian Imperial Bank of Commerce,
New York Agency, filed as Exhibit 4.7 and 19.7 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended August 5, 1990 filed with the
Commission on September 19, 1990, and
incorporated herein by this reference.**
4.10 Transfer Agreement dated as of May 15, 1990 among
the Company, The Travelers Insurance Company,
CIBC Inc. and Canadian Imperial Bank of Commerce,
New York Agency, filed as Exhibit 4.8 and 19.8 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended August 5, 1990 filed with the
Commission on September 19, 1990, and
incorporated herein by this reference.**
4.11 Transfer Agreement dated as of May 15, 1990 among
the Company, The Travelers Indemnity Company,
CIBC Inc. and Canadian Imperial Bank of Commerce,
New York Agency, filed as Exhibit 4.9 and 19.9 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended August 5, 1990 filed with the
Commission on September 19, 1990, and
incorporated herein by this reference.**
4.12 Transfer Agreement dated as of May 15, 1990 among
the Company, The Equitable Life Assurance Society
of the United States, CIBC Inc. and Canadian
Imperial Bank of Commerce, New York Agency, filed
as Exhibit 4.10 and 19.10 to the Company's
Quarterly Report on Form
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<PAGE>
10-Q for the quarter ended August 5, 1990 filed
with the Commission on September 19, 1990, and
incorporated herein by this reference.**
4.13 Transfer Agreement dated as of May 15, 1990 among
the Company, Canadian Imperial Bank of Commerce,
Atlanta Agency, CIBC Inc. and Canadian Imperial
Bank of Commerce, New York Agency, filed as
Exhibit 4.11 and 19.11 to the Company's Quarterly
Report on Form 10-Q for the quarter ended August
5, 1990 filed with the Commission on September 19,
1990, and incorporated herein by this reference.**
4.14 Transfer Agreement dated as of May 15, 1990 among
the Company, LTCB Trust Company, CIBC Inc. and
Canadian Imperial Bank of Commerce, New York
Agency, filed as Exhibit 4.12 and 19.12 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended August 5, 1990 filed with the
Commission on September 19, 1990, and incorporated
herein by this reference.**
4.15 Transfer Agreement dated as of May 15, 1990 among
the Company, Oesterreichische Laenderbank, AG,
Grand Cayman Branch, CIBC Inc. and Canadian
Imperial Bank of Commerce, New York Agency, filed
as Exhibit 4.13 and 19.13 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended August 5, 1990 filed with the Commission on
September 19, 1990, and incorporated herein by
this reference.**
4.16 Transfer Agreement dated as of May 15, 1990 among
the Company, The Daiwa Bank, Limited, CIBC Inc.
and Canadian Imperial Bank of Commerce, New York
Agency, filed as Exhibit 4.14 and 19.14 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended August 5, 1990 filed with the
Commission on September 19, 1990, and incorporated
herein by this reference.**
4.17 Transfer Agreement dated as of May 15, 1990 among
the Company, The Bank of Tokyo Trust Company, CIBC
Inc. and Canadian Imperial Bank of Commerce, New
York Agency, filed as Exhibit 4.15 and 19.15 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended August 5, 1990 filed with the
Commission on September 19, 1990, and incorporated
herein by this reference.**
4.18 Transfer Agreement dated as of May 15, 1990 among
the Company, Pan-American Life Insurance Company,
CIBC Inc. and Canadian Imperial Bank of Commerce,
New York Agency, filed as Exhibit 4.16 and 19.16
to the Company's Quarterly Report on Form 10-Q for
the quarter ended August 5, 1990 filed with the
Commission on September 19, 1990, and incorporated
herein by this reference.**
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<PAGE>
4.19 Modification and Waiver Agreement No. 1 dated as
of September 25, 1991 to Transfer Agreements,
dated as of May 15, 1990 among the Company,
various financial institutions now or hereafter
parties thereto and Canadian Imperial Bank of
Commerce, New York Agency, as agent, filed as
Exhibit 4.6 and 28.2 to the Company's Current
Report on Form 8-K filed with the Commission on
December 3, 1991, and incorporated herein by this
reference.
4.20 Modification and Waiver Agreement No. 2 dated as
of May 15, 1992 to Transfer Agreements, dated as
of May 15, 1990 among the Company, various
financial institutions now or hereafter parties
thereto and Canadian Imperial Bank of Commerce,
New York Agency, as agent, filed as Exhibit 4.32
and 10.25 to Post Effective Amendment No. 5 to the
Company's Registration Statement on Form S-8 (File
No. 2-64257) filed with Commission on January 25,
1993, and incorporated herein by this reference.
4.21 Modification and Waiver Agreement No. 3 dated as
of October 25, 1992 to Transfer Agreements, dated
as of May 15, 1990 among the Company, various
financial institutions now or hereafter parties
thereto and Canadian Imperial Bank of Commerce,
New York Agency, as agent, filed as Exhibit 4.33
and 10.26 to Post Effective Amendment No. 5 to the
Company's Registration Statement on Form S-8 (File
No. 2-64257) filed with the Commission on January
25, 1993, and incorporated herein by this
reference.
4.22 Modification and Waiver Agreement No. 4 dated as
of July 21, 1993 to Transfer Agreements, dated as
of May 15, 1990 among the Company, various
financial institutions now or hereafter parties
thereto and Canadian Imperial Bank of Commerce,
New York Agency, as agent, filed as Exhibit 4.3 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended August 1, 1993 filed with the
Commission on September 15, 1993, and incorporated
herein by this reference.
4.23 Modification and Waiver Agreement No. 5 dated as
of December 31, 1993 to Transfer Agreements, dated
as of May 15, 1990 among the Company, various
financial institutions now or hereafter parties
thereto and Canadian Imperial Bank of Commerce,
New York Agency, as agent, filed as Exhibit 4.26
to the Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1993 filed with
the Commission on January 31, 1994, and
incorporated herein by this reference.
-17-
<PAGE>
4.24 Revolving Credit Agreement dated as of July 13,
1988 between the Company and First American
National Bank, filed as Exhibit 4.1 and 19.1 to
the Company's Current Report on Form 8-K filed
with the Commission on December 3, 1991, and
incorporated herein by this reference.
4.25 Modification Agreement No. 1 dated as of March 5,
1991 to Revolving Credit Agreement, dated as of
July 13, 1988 between the Company and First
American National Bank, filed as Exhibit 4.2 and
19.2 to the Company's Current Report on Form 8-K
filed with the Commission on December 3, 1991, and
incorporated herein by this reference.
4.26 Alternative Rate Agreement dated as of June 4,
1992 supplementing that certain Revolving Credit
Agreement dated as of July 13, 1988 between the
Company and First American National Bank, filed as
Exhibit 4.36 and 10.29 to Post Effective Amendment
No. 5 to the Company's Registration Statement on
Form S-8 (File No. 2-64257) filed with the
Commission on January 25, 1993, and incorporated
herein by this reference.
4.27 Note Issuance Agreement, dated as of October 1,
1989, among the Company, Sovran Bank, N.A., as
Note Agent and Placement Agent and Sovran Bank /
Central South, as Escrow Agent, filed as Exhibit
19.3 and 28.3 to the Company's Current Report on
Form 8-K filed with the Commission on December 3,
1991, and incorporated herein by this reference.
4.28 Reimbursement Agreement, dated as of October 1,
1989, together with the Standby Note relating
thereto, among the Company, Sovran Bank / Central
South, Long Term Credit Bank of Japan, Limited,
New York Branch, Kredeitbank, N.V., New York
Branch and Sovran Bank / Central South, as Agent,
filed as Exhibit 19.4 and 28.4 to the Company's
Current Report on Form 8-K filed with the
Commission on December 3, 1991, and incorporated
herein by this reference.
4.29 Modification Agreement No. 1 dated as of July 21,
1993 to Reimbursement Agreement, dated as of
October 1, 1989, together with the Standby Note
relating thereto, among the Company, Sovran Bank
/ Central South, Long Term Credit Bank of Japan,
Limited, New York Branch, Kredeitbank, N.V., New
York Branch and Sovran Bank / Central South, as
Agent, filed as Exhibit 4.4 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended August 1, 1993 filed with the Commission on
September 15, 1993, and incorporated herein by
this reference.
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<PAGE>
4.30 Modification Agreement No. 2 dated as of June 8,
1994 to Reimbursement Agreement, dated as of
October 1, 1989, together with the Standby Note
relating thereto, among the Company, NationsBank
of Tennessee, N.A. (formerly Sovran Bank / Central
South), Long Term Credit Bank of Japan, Limited,
New York Branch, Kredeitbank, N.V., New York
Branch and NationsBank of Tennessee, N.A., as
Agent, filed as Exhibit 4.30 to the Company's Annual
Report on Form 10-K for the fiscal year ended October
30, 1994 filed with the Commission on January 30,
1995, and incorporated herein by this reference.
4.31 Note Issuance Agreement, dated as of October 1,
1990, among the Company, Sovran Bank, N.A., as
Note Agent and Placement Agent and Sovran Bank /
Central South, as Escrow Agent, filed as Exhibit
19.5 and 28.5 to the Company's Current Report on
Form 8-K filed with the Commission on December 3,
1991, and incorporated herein by this reference.
4.32 Reimbursement Agreement, dated as of October 1,
1990, together with the Standby Note relating
thereto, between the Company and Sovran Bank /
Central South, filed as Exhibit 19.6 and 28.6 to
the Company's Current Report on Form 8-K filed
with the Commission on December 3, 1991, and
incorporated herein by this reference.
4.33 Modification Agreement No. 1 dated as of July 21,
1993 to Reimbursement Agreement, dated as of
October 1, 1990, together with the Standby Note
relating thereto, between the Company and Sovran
Bank / Central South, filed as Exhibit 4.5 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended August 1, 1993 filed with the
Commission on September 15, 1993, and incorporated
herein by this reference.
4.34 Modification Agreement No. 2 dated as of April 1,
1994 to Reimbursement Agreement, dated as of
October 1, 1990, together with the Standby Note
relating thereto, between the Company and
NationsBank of Tennessee, N.A. (formerly Sovran
Bank / Central South), filed as Exhibit 4.34 to the
Company's Annual Report on Form 10-K for the fiscal
year ended October 30, 1994 filed with the Commission
on January 30, 1995, and incorporated herein by this
reference.
4.35 Amended and Restated Note Issuance Agreement,
dated as of November 1, 1993, among the Company,
NationsBank of Virginia, N.A., as Note Agent and
Placement Agent and NationsBank of Tennessee, as
Escrow Agent, filed as Exhibit 4.36 to the
Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1993 filed with the
Commission on January 31, 1994, and incorporated
herein by this reference.
4.36 Reimbursement Agreement, dated as of October 1,
1991, together with the Standby Note relating
thereto, between the Company and National
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<PAGE>
Bank of Canada, New York Branch, filed as Exhibit
28.10 to the Company's Current Report on Form 8-K
filed with the Commission on December 3, 1991, and
incorporated herein by this reference.
4.37 Assignment, Assumption and Modification Agreement
dated as of November 4, 1993 relating to
Reimbursement Agreement, dated as of October 1,
1991, among the Company, NationsBank of Georgia,
N.A. and National Bank of Canada, New York Branch,
filed as Exhibit 4.38 to the Company's Annual
Report on Form 10-K for the fiscal year ended
October 31, 1993 filed with the Commission on
January 31, 1994, and incorporated herein by this
reference.
4.38 Loan Agreement dated as of September 24, 1992
between the Company and CIBC, Inc., filed as
Exhibit 4.43 and 10.36 to Post Effective Amendment
No. 5 to the Company's Registration Statement on
Form S-8 (File No. 2-64257) filed with the
Commission on January 25, 1993, and incorporated
herein by this reference.
4.39 Modification Agreement No. 1 dated as of October
25, 1992 to Loan Agreement dated as of September
24, 1992 between the Company and CIBC, Inc., filed
as Exhibit 4.44 and 10.37 to Post Effective
Amendment No. 5 to the Company's Registration
Statement on Form S-8 (File No. 2-64257) filed
with the Commission on January 25, 1993, and
incorporated herein by this reference.
4.40 Modification Agreement No. 2 dated as of July 21,
1993 to Loan Agreement dated as of September 24,
1992 between the Company and CIBC, Inc., filed as
Exhibit 4.6 to the Company's Quarterly Report on
Form 10-Q for the quarter ended August 1, 1993
filed with the Commission on September 15, 1993,
and incorporated herein by this reference.
4.41 Loan Agreement dated as of April 21, 1993 between
the Company and NationsBank of Tennessee, N.A.,
filed as Exhibit 4 to the Company's Quarterly
Report on Form 10-Q for the quarter ended May 9,
1993 filed with the Commission on June 23, 1993,
and incorporated herein by this reference.
4.42 Modification Agreement No. 1 dated as of July 21,
1993 to Loan Agreement dated as of April 21, 1993
between the Company and NationsBank of Tennessee,
N.A., filed as Exhibit 4.7 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended August 1, 1993 filed with the Commission on
September 15, 1993, and incorporated herein by
this reference.
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<PAGE>
4.43 Loan Agreement dated as of December 1, 1994
between the Company and NationsBank of Tennessee,
N.A., filed as Exhibit 4.43 to the Company's Annual
Report on Form 10-K for the fiscal year ended October
30, 1994 filed with the Commission on January 30,
1995, and incorporated herein by this reference.
4.44 Reducing Revolving Credit Agreement, dated as of
July 21, 1993, among the Company, various
financial institutions now or hereafter parties
thereto and Canadian Imperial Bank of Commerce,
New York Agency, as agent, filed as Exhibit 4.1 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended August 1, 1993 filed with the
Commission on September 15, 1993, and incorporated
herein by this reference.
4.45 Modification Agreement No. 1 dated as of July 21,
1993 to Reducing Revolving Credit Agreement, dated
as of July 21, 1993, among the Company, various
financial institutions now or hereafter parties
thereto and Canadian Imperial Bank of Commerce,
New York Agency, as agent, filed as Exhibit 4.8 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended August 1, 1993 filed with the
Commission on September 15, 1993, and incorporated
herein by this reference.
4.46 Modification Agreement No. 2 dated as of December
21, 1993 to Reducing Revolving Credit Agreement,
dated as of July 21, 1993, among the Company,
various financial institutions now or hereafter
parties thereto and Canadian Imperial Bank of
Commerce, New York Agency. Filed as Exhibit 4.46
to the Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1993, filed with
the Commission on January 31, 1994, and
incorporated herein by this reference.
4.47 Modification Agreement No. 3 dated as of May 3,
1994 to Reducing Revolving Credit Agreement, dated
as of July 21, 1993, among the Company, various
financial institutions now or hereafter parties
thereto and Canadian Imperial Bank of Commerce,
New York Agency, filed as Exhibit 99.1 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended May 15, 1994 filed with the
Commission on June 29, 1994 and incorporated
herein by this reference.
4.48 Modification Agreement No. 4 dated as of October
27, 1994 to Reducing Revolving Credit Agreement,
dated as of July 21, 1993, among the Company,
various financial institutions now or hereafter
parties thereto and Canadian Imperial Bank of
Commerce, New York Agency, filed as Exhibit 4.48
to the Company's Annual Report on Form 10-K for the
fiscal year ended October 30, 1994 filed with the
Commission on January 30, 1995, and incorporated
herein by this reference.
4.49 Modification Agreement No. 5 dated as of January
18, 1995 to Reducing Revolving Credit Agreement,
dated as of July 21, 1993,
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<PAGE>
among the Company, various financial institutions
now or hereafter parties thereto and Canadian
Imperial Bank of Commerce, New York Agency, filed
as Exhibit 4.49 to the Company's Annual Report on
Form 10-K for the fiscal year ended October 30, 1994
filed with the Commission on January 30, 1995, and
incorporated herein by this reference.
10.1 License Agreement, dated as of October 28, 1991,
between Shoney's Investments, Inc. and Shoney's
Lodging, Inc., filed as Exhibit 28.7 to the
Company's Current Report on Form 8-K filed with
the Commission on December 3, 1991, and
incorporated herein by this reference.
10.2 Amendment No. 1 dated as of September 16, 1992 to
License Agreement, dated as of October 28, 1991,
between Shoney's Investments, Inc. and ShoLodge
Franchise Systems, Inc. (formerly Shoney's
Lodging, Inc.), filed as Exhibit 10.2 to the
Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1993 filed with the
Commission on January 31, 1994, and incorporated
herein by this reference.
10.3 Stock Purchase and Warrant Agreement, dated as of
October 28, 1991, between Shoney's Investments,
Inc. and Gulf Coast Development, Inc., filed as
Exhibit 28.8 to the Company's Current Report on
Form 8-K filed with the Commission on December 3,
1991, and incorporated herein by this reference.
10.4 Agreement dated as of September 8, 1992 between
the Company and Raymond L. Danner, filed as
Exhibit 10.41 to Post Effective Amendment No. 5 to
the Company's Registration Statement on Form S-8
(File No. 2-64257) filed with the Commission on
January 25, 1993, and incorporated herein by this
reference.
10.5 Consent Decree entered by the United States
District Court for the Northern District of
Florida on January 25, 1993 in Haynes, et. al v.
Shoney's, Inc., et. al, filed as Exhibit 28 to the
Company's Current Report on Form 8-K filed with
the Commission on February 3, 1993, and
incorporated herein by this reference.
10.6 Shoney's, Inc. 1981 Stock Option Plan, filed as
Exhibit 4.7 to Post Effective Amendment No. 3 to
the Company's Registration Statement on Form S-8
(File No. 2-84763) filed with the Commission on
January 25, 1993, and incorporated herein by this
reference.
10.7 Shoney's, Inc. Stock Option Plan, filed as Exhibit
4.7 to Post Effective Amendment No. 4 to the
Company's Registration Statement on Form
S-8 (File No. 2-64257) filed with the Commission
on April 11, 1990, and incorporated herein by this
reference.
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<PAGE>
10.8 Shoney's, Inc. Employee Stock Purchase Plan, filed
as Exhibit 4.7 to Post Effective Amendment No. 4
to the Company's Registration Statement on Form
S-8 (File No. 33-605) filed with the Commission
on October 26, 1989, and incorporated herein by
this reference.
10.9 Shoney's, Inc. Employee Stock Bonus Plan, filed as
Exhibit 10.9 to the Company's Annual Report on
Form 10-K for the fiscal year ended October 31,
1993 filed with the Commission on January 31,
1994, and incorporated herein by this reference.
10.10 Shoney's, Inc. Directors' Stock Option Plan, filed
as Exhibit 4.38 to the Company's Registration
Statement on Form S-8 (File No. 33-45076) filed
with the Commission on January 14, 1992, and
incorporated herein by this reference.
10.11 Shoney's Ownership Plan 1977, filed as Exhibit
10.47 to Post Effective Amendment No. 5 to the
Company's Registration Statement on Form S-8 (File
No. 2-64257) filed with the Commission on January
25, 1993, and incorporated herein by this
reference.
10.12 Captain D's Ownership Plan 1976, filed as Exhibit
10.48 to Post Effective Amendment No. 5 to the
Company's Registration Statement on Form S-8 (File
No. 2-64257) filed with the Commission on January
25, 1993, and incorporated herein by this
reference.
10.13 Captain D's Ownership Plan 1978-1979, filed as
Exhibit 10.49 to Post Effective Amendment No. 5 to
the Company's Registration Statement on Form S-8
(File No. 2-64257) filed with the Commission on
January 25, 1993, and incorporated herein by this
reference.
10.14 Shoney's, Inc. Supplemental Executive Retirement
Plan, filed as Exhibit 10.14 to the Company's Annual
Report on Form 10-K for the fiscal year ended October
30, 1994 filed with the Commission on January 30,
1995, and incorporated herein by this reference.
10.15 Employment Agreement dated as of January 13, 1995
between the Company and Taylor H. Henry, filed
as Exhibit 10.15 to the Company's Annual Report on
Form 10-K for the fiscal year ended October 30, 1994
filed with the Commission on January 30, 1995, and
incorporated herein by this reference.
10.16 Employment Agreement dated as of January 17, 1995
between the Company and Charles E. Porter, filed
as Exhibit 10.16 to the Company's Annual Report on
Form 10-K for the fiscal year ended October 30, 1994
filed with the Commission on January 30, 1995, and
incorporated herein by this reference.
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<PAGE>
10.17 Employment Agreement dated as of January 17, 1995,
between the Company and W. Craig Barber, filed
as Exhibit 10.17 to Amendment No. 1 to the Company's
Annual Report on Form 10-K for the fiscal year ended
October 30, 1994 filed with the Commission on February
27, 1995, and incorporated herein by this reference.
11 Statement regarding computation of per share earnings.
27 Financial Data Schedule.
** Document not filed because substantially identical to filed
document identified as Exhibit 4.5.
(b) No reports on Form 8-K have been filed during the
quarterly period covered by this Quarterly Report on Form 10-Q.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized both on
behalf of the registrant and in his capacity as principal financial
officer of the registrant.
SHONEY'S, INC.
Date: April 5, 1995 By:/s/ W. Craig Barber
---------------------------
W. Craig Barber
Senior Executive Vice President
and Chief Financial Officer
(Principal Financial and
Chief Accounting Officer)
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<TABLE>
<CAPTION>
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE - EXHIBIT 11
Sixteen Weeks Ended
February 19, February 20,
1995 1994
------------ ------------
<S> <C> <C>
Earnings per Common Share - Primary
Average Shares outstanding 41,289,203 40,856,711
Net effect of dilutive stock options-based on the treasury
stock method using average market price 111,837 430,606
---------- ----------
Totals 41,401,040 41,287,317
========== ==========
Income from continuing operations before cumulative
effect of change in accounting principle $ 6,850,700 $ 9,747,631
Income from discontinued operations 3,812,890 4,456,411
Cumulative effect of change in accounting for income taxes 4,468,386
---------- ----------
Net income $10,663,590 $18,672,428
========== ==========
Per Share amount:
Income from continuing operations before cumulative
effect of change in accounting principle $ .17 $ .24
Income from discontinued operations .09 .11
Cumulative effect of change in accounting for income taxes .11
---------- ----------
Net income $ .26 $ .45
========== ==========
Earnings per Common Share - Fully Diluted:
Average shares outstanding 41,289,203 40,856,711
Net effect of dilutive stock options-based on the treasury
stock method using the average market price 111,837 446,464
Assumed conversion of 8.5% zero coupon convertible debentures (A) 5,223,763
---------- ----------
Totals 41,401,040 46,526,938
========== ==========
Income from continuing operations before cumulative effect
of change in accounting principle $ 6,850,700 $ 9,747,631
Add 8.5% zero coupon convertible debentures interest,
net of income tax (A) 1,213,687
---------- ----------
Total from continuing operations before cumulative effect
of change in accounting principle 6,850,700 10,961,318
Income from discontinued operations 3,812,890 4,456,411
Cumulative effect of change in accounting for income taxes 4,468,386
---------- ----------
Net income $10,663,590 $19,886,115
========== ==========
Per Share amount:
Income from continuing operations before cumulative
effect of change in accounting principle $ .17 $ .24
Income from discontinued operations .09 .10
Cumulative effect of change in accounting for income taxes .10
---------- ----------
Net income $ .26 $ .43
========== ==========
(A) For the first quarter of fiscal 1995, both primary and fully diluted earnings per share utilized
average shares outstanding and common stock equivalents. No consideration was given to the convertible
debentures as they had an anti-dilutive effect.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS
SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE FINANCIAL
STATEMENTS OF SHONEY'S, INC.
FOR THE PERIOD ENDED FEBRUARY
19, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1
<S> <S>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-29-1995
<PERIOD-START> OCT-31-1994
<PERIOD-END> FEB-19-1995
<CASH> 3,651,200
<SECURITIES> 0
<RECEIVABLES> 18,731,588
<ALLOWANCES> 1,638,933
<INVENTORY> 33,535,475
<CURRENT-ASSETS> 92,086,181
<PP&E> 668,744,239
<DEPRECIATION> 269,620,025
<TOTAL-ASSETS> 561,333,990
<CURRENT-LIABILITIES> 194,886,715
<BONDS> 0
<COMMON> 41,405,113
0
0
<OTHER-SE> (165,014,631)
<TOTAL-LIABILITY-AND-EQUITY> 561,333,990
<SALES> 284,547,192
<TOTAL-REVENUES> 293,208,923
<CGS> 251,750,161
<TOTAL-COSTS> 282,159,223
<OTHER-EXPENSES> 18,242,523
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,166,539
<INCOME-PRETAX> 11,049,700
<INCOME-TAX> 4,199,000
<INCOME-CONTINUING> 6,850,700
<DISCONTINUED> 3,812,890
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,663,590
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.26
</TABLE>
