<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 August 6, 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
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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 September 7, 1995, there were 41,497,288 shares of
Shoney's, Inc. $1 par value common stock outstanding.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
SHONEY'S, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
August 6, October 30,
1995 1994
--------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,654,028 $ 4,229,784
Notes and accounts receivable, less allowance for doubtful
accounts of $1,745,000 in 1995 and $1,276,000 in 1994 12,656,392 16,936,307
Inventories 35,950,248 37,787,689
Deferred income taxes and other current assets 28,954,133 27,896,933
Net current assets of discontinued operations 8,499,896 7,814,401
----------- -----------
Total current assets 91,714,697 94,665,114
Property, plant and equipment, at cost 722,896,454 697,131,862
Less accumulated depreciation and amortization (301,144,930) (278,529,473)
----------- -----------
Net property, plant and equipment 421,751,524 418,602,389
Other assets:
Net non-current assets of discontinued operations 30,228,114 31,916,261
Deferred charges and other intangible assets 7,690,827 6,650,229
Other assets 5,972,617 5,738,592
----------- -----------
Total other assets 43,891,558 44,305,082
----------- -----------
$ 557,357,779 $ 557,572,585
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 30,756,043 $ 41,789,157
Federal and state income taxes 6,026,643 3,764,329
Other accrued liabilities 70,284,230 60,805,868
Reserve for litigation settlement 23,514,889 23,803,836
Debt and capital lease obligations due within one year 23,438,767 66,692,163
----------- -----------
Total current liabilities 154,020,572 196,855,353
Long-term senior debt and capital lease obligations 351,289,718 333,235,215
Zero coupon subordinated convertible debentures 86,129,883 80,790,563
Reserve for litigation settlement 44,415,434 61,673,834
Deferred credits:
Income taxes 19,075,405 15,477,405
Income and other liabilities 6,586,042 6,304,456
Shareholders' equity (deficit):
Common stock, $1 par value: authorized 100,000,000 shares;
issued 41,495,288 in 1995 and 41,185,290 in 1994 41,495,288 41,185,290
Additional paid-in capital 60,447,676 57,509,644
Retained earnings (deficit) (206,102,239) (235,459,175)
----------- -----------
Total shareholders' equity (deficit) (104,159,275) (136,764,241)
----------- -----------
$ 557,357,779 $ 557,572,585
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
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SHONEY'S, INC. AND SUBSIDIARIES
Consolidated Condensed Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Forty Weeks Ended
August 6, August 7,
1995 1994
--------------- --------------
<S> <C> <C>
Revenues
Net sales $ 797,213,267 $ 797,778,697
Franchise fees 18,513,020 19,960,989
Other income 1,750,483 8,798,555
----------- -----------
817,476,770 826,538,241
Costs and expenses
Cost of sales 701,368,283 687,011,374
General and administrative expenses 47,219,607 42,933,240
Interest expense 31,007,162 33,038,369
Restructuring expenses 1,785,915
----------- -----------
Total costs and expenses 781,380,967 762,982,983
Income from continuing operations before income taxes, extraordinary
charge and cumulative effect of change in accounting principle 36,095,803 63,555,258
Provision for income taxes 13,716,000 23,833,000
----------- -----------
Income from continuing operations before extraordinary charge
and cumulative effect of change in accounting principle 22,379,803 39,722,258
Income from discontinued operations, net of income tax 6,977,133 8,600,071
Extraordinary charge on early extinguishment of debt,
net of income taxes of $623,000 (1,037,808)
Cumulative effect of change in accounting for income taxes 4,468,386
----------- -----------
Net income $ 29,356,936 $ 51,752,907
=========== ===========
Earnings per common share
Primary:
Income from continuing operations before extraordinary charge
and cumulative effect of change in accounting principle $ 0.54 $ 0.96
Income from discontinued operations 0.17 0.21
Extraordinary charge on early extinguishment of debt (0.03)
Cumulative effect of change in accounting for income taxes 0.11
---- ----
Net income $ 0.71 $ 1.25
==== ====
Fully diluted:
Income from continuing operations before extraordinary charge
and cumulative effect of change in accounting principle $ 0.54 $ 0.92
Income from discontinued operations 0.17 0.18
Extraordinary charge on early extinguishment of debt (0.02)
Cumulative effect of change in accounting for income taxes 0.10
---- ----
Net income $ 0.71 $ 1.18
==== ====
Weighted average shares outstanding
Primary 41,495,234 41,313,285
Fully diluted 41.495,234 46,536,916
Common shares outstanding 41,495,288 41,155,722
Dividends per share NONE NONE
</TABLE>
See notes to consolidated condensed financial statements.
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SHONEY'S, INC. AND SUBSIDIARIES
Consolidated Condensed Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Twelve Weeks Ended
August 6, August 7,
1995 1994
--------------- --------------
<S> <C> <C>
Revenues
Net sales $ 247,348,015 $ 250,695,166
Franchise fees 5,702,615 6,192,374
Other income 846,417 2,593,988
----------- -----------
253,897,047 259,481,528
Costs and expenses
Cost of sales 217,164,419 213,815,550
General and administrative expenses 14,070,280 12,164,172
Interest expense 9,406,788 9,482,727
Restructuring expenses 86,042
----------- -----------
Total costs and expenses 240,727,529 235,462,449
Income from continuing operations before income taxes
and extraordinary charge 13,169,518 24,019,079
Provision for income taxes 5,004,000 9,007,000
----------- -----------
Income from continuing operations before
extraordinary charge 8,165,518 15,012,079
Income from discontinued operations, net of income tax 2,034,226 2,241,531
Extraordinary charge on early extinguishment of debt,
net of income taxes of $623,000 (1,037,808)
----------- -----------
Net income $ 10,199,744 $ 16,215,802
=========== ===========
Earnings per common share
Primary:
Income from continuing operations before extraordinary charge $ 0.20 $ 0.36
Income from discontinued operations 0.05 0.05
Extraordinary charge on early extinguishment of debt (0.03)
---- ----
Net income $ 0.25 $ 0.39
==== ====
Fully diluted:
Income from continuing operations before extraordinary charge $ 0.20 $ 0.34
Income from discontinued operations 0.05 0.05
Extraordinary charge on early extinguishment of debt (0.02)
---- ----
Net income $ 0.25 $ 0.37
==== ====
Weighted average shares outstanding
Primary 41.613,498 41,303,046
Fully diluted 41,613,498 46,509,110
Common shares outstanding 41,495,288 41,155,722
Dividends per share NONE NONE
</TABLE>
See notes to consolidated condensed financial statements.
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SHONEY'S, INC. AND SUBSIDIARIES
Consolidated Condensed Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Forty Weeks Ended
August 6, August 7,
1995 1994
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<S> <C> <C>
Operating activities
Net income $ 29,356,936 $ 51,752,907
Adjustments to reconcile net income
to net cash provided by operating
activities:
Income from discontinued
operations, net of tax (6,977,133) (8,600,071)
Depreciation and amortization 33,641,554 31,411,985
Amortization of deferred charges
and other non-cash charges 6,460,368 7,628,172
Realized and unrealized loss (gain)
on marketable securities and
sale of other assets 1,392,202 (3,177,926)
Cumulative effect of change
in accounting for income taxes (4,468,386)
Change in deferred income taxes 3,598,000 5,798,000
Changes in operating assets and
liabilities 11,605,146 10,761,425
---------- ----------
Net cash provided by continuing
operating activities 79,077,073 91,106,106
Net cash provided by discontinued
operating activities 9,364,007 12,425,288
---------- ----------
Net cash provided by operating activities 88,441,080 103,531,394
Investing activities
Cash required for property, plant and equipment (45,763,816) (64,406,273)
Cash required for assets held for sale (1,291,322) (4,065,722)
Proceeds from disposal of property, plant
and equipment 3,500,850 4,374,908
Cash (required for) provided by other assets (796,965) 162,824
----------- ----------
Net cash used by investing activities (44,351,253) (63,934,263)
Financing activities
Payments on long-term debt and
capital lease obligations (107,677,744) (213,298,590)
Proceeds from long-term debt 78,000,000 195,681,800
Net proceeds from (payments on)
short-term borrowings 4,918,000 (6,292,000)
Payments on litigation settlement (17,547,347) (19,026,648)
Cash required for debt issue costs (2,033,827) (1,707,101)
Proceeds from exercise of employee stock options 1,675,335 3,151,435
---------- ----------
Net cash used by financing activities (42,665,583) (41,491,104)
---------- ----------
Change in cash $ 1,424,244 $ (1,893,973)
========== ==========
</TABLE>
See notes to consolidated condensed financial statements.
-5-
<PAGE>
SHONEY'S, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
August 6, 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 twelve and forty week periods ended August 6,
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 AND RESTRUCTURING
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 included 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.
On July 28, 1995, the Company announced a change in its divestiture
plans which calls for the Company to retain its Fifth Quarter and
Pargo's restaurants. These two restaurant concepts will be combined
with BarbWire's Steakhouses to form a thirty-two unit casual dining
group with shared management and administrative support services to
achieve improved operating and supervisory efficiencies.
On July 10, 1995, the Company and RTM Restaurant Group announced they
had entered into a definitive asset purchase agreement whereby RTM will
purchase the assets of Lee's Famous Recipe. On August 3, 1995, the
Company and Levmark Capital Corporation announced they had entered into
a definitive purchase agreement for Levmark to acquire Mike Rose Foods,
Inc. The Company expects the Lee's Famous Recipe and Mike Rose Foods,
Inc. sales to be completed by the end of fiscal 1995. Both the Lee's
and Mike Rose Foods agreements are subject to usual and customary
conditions for such sales.
For the quarter ended August 6, 1995, the discontinued businesses
represented 6.7% of consolidated net property, plant and equipment, 7.9%
of consolidated revenues, and 14.4% 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.
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<PAGE>
Severance pay of $1.5 million was included in restructuring expenses for
the forty weeks ended August 6, 1995. There were no comparable expenses
in the first three quarters 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. Pargo's and
Fifth Quarter restaurants were included in the results of discontinued
operations in the first and second quarters of 1995, but have been
reclassified to continuing operations following the Company's decision
to retain these businesses during the third quarter. Accordingly, the
results of continuing and discontinued operations for the third quarter
and for the forty weeks ended August 6, 1995 are not comparable to
previously reported operating results for the first and second quarter
of 1995.
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 third quarter
and first three quarters 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 third quarter and first
three quarters of 1995 were computed using the weighted average number
of shares of common stock and common stock equivalents outstanding
during the period. No consideration was given to the convertible
debentures for either the third quarter or the first three quarters of
1995 since they were not considered dilutive.
-7-
<PAGE>
NOTE 5 - INCOME TAXES
Income taxes for the twelve and forty week periods ended August 6, 1995
and August 7, 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.
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 were as follows:
<TABLE>
<S> <C>
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
==========
</TABLE>
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
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. With the exception of
approximately $104 million of property available to collateralize future
financing activities of the Company, all material assets of the Company not
otherwise pledged (including all common shares of a wholly-owned real estate
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<PAGE>
company which owns 183 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
August 6, 1995, the Company had borrowed $245 million under this
facility and the interest rate was 8.0%.
During the third quarter of fiscal 1995, the Company received a
modification of its lending agreements which permits the divestiture of
Mike Rose Foods, Inc. and Lee's Famous Recipe. The modification
requires that 35% of the net proceeds received from the divestiture of
these businesses be used to permanently reduce the credit facility. In
addition, approximately $51 million of properties that previously served
as collateral for the Company's Tranche C debt were substituted for
collateral to be released upon the sale of Mike Rose Foods, Inc. and
Lee's Famous Recipe. The lenders also agreed to release a negative
pledge they held on approximately $104 million of collateral previously
used to secure the Company's Tranche C debt to permit alternative uses
by the Company.
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,
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<PAGE>
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 federal complaint has been amended to add one
additional plaintiff, a former franchisee, and to add an additional
consumer protection act claim.
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 Restaurant
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. In the first case
mentioned, the plaintiffs now have filed a motion to certify the case as
a class action. There has been no motion filed to certify the second
case as a class action. Neither of the cases has yet been certified as
a class action.
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 two quarters of both 1994 and 1995 and adjusted to their fair value.
The resulting gains
-10-
<PAGE>
of approximately $1.1 million and $.6 million in the first and second
quarters of 1994, respectively, and gains of approximately $.9 million
and $.2 million in the first and second quarters of 1995, respectively,
are 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 declined by approximately
$81,000 during the first quarter and by approximately $2.5 million
during the second quarter of 1995. In the third quarter of 1995, the
fair value of the ShoLodge warrants and the ShoLodge common stock held
by the Company increased by approximately $100,000. The fair value of
the ShoLodge common stock and the ShoLodge warrants classified as
trading securities was $3.4 million at August 6, 1995.
NOTE 10 - SUBSEQUENT EVENT
On September 5, 1995, the Company and TPI Enterprises, Inc. announced
the signing of a letter of intent to merge TPI Enterprises, Inc. with a
subsidiary of Shoney's, Inc. TPI Enterprises is the Company's largest
franchisee and operates 188 Shoney's and 69 Captain D's Seafood
restaurants. The letter of intent indicates that the Company will merge
with TPI through an exchange of .28 shares of its stock for each
outstanding share of TPI and one Shoney's warrant for each 3.125 shares
of TPI. The Shoney's warrant will be exercisable within five years and
will permit the holder to acquire one share of Shoney's common stock at
$21.50 per share. In addition, TPI shareholders will have the right to
receive contingent shares of Shoney's common stock that will permit TPI
shareholders to receive, on a pro rata basis, any net cash proceeds
resulting from the ultimate settlement of TPI's ongoing litigation,
through its Maxcell Telecom Plus, Inc. subsidiary, against McCaw
Cellular Communications, Inc. The contingent shares are limited to a
maximum of the aggregate shares issued pursuant to the .28 exchange
ratio for TPI's outstanding shares. In addition, Shoney's will assume
approximately $95 million of net debt from TPI.
The proposed transaction is subject to a number of conditions, including
the execution of a definitive merger agreement, approval by the
shareholders and lenders of both companies, and clearance by
governmental regulatory authorities.
-11-
<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 third quarter and first three quarters of both fiscal
1995 and 1994 covered periods of twelve and forty weeks, respectively.
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 included the planned
divestitures 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. On
July 28, 1995, the Company announced it had decided to retain its Pargo's
and Fifth Quarter restaurants and combine them with the Company's
BarbWire's Steakhouse restaurants to form a thirty-two unit casual dining
group. The Company plans to combine the corporate management and
administrative support functions for the three casual dining concepts to
achieve greater operational efficiencies. The Company signed definitive
agreements for the sales of Mike Rose Foods, Inc. and the Lee's Famous
Recipe division during the third quarter of 1995 and both sales are
expected to close before the end of the fiscal year.
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. During the first
and second quarters, Pargo's and Fifth Quarter operating results had been
included in discontinued operations. However, for the third quarter,
their results have been reclassified to continuing operations following
the July 1995 decision to retain these two restaurant concepts.
Accordingly, results of continuing and discontinued operations for the
first two quarters of fiscal 1995 are not comparable with the third quarter
and first three quarters of 1995.
For the third quarter of fiscal 1995, the discontinued lines of
business represented 6.7% of consolidated net property, plant and equipment,
7.9% of consolidated revenues and 14.4% of consolidated earnings before
interest and taxes if the Company had not adopted the discontinued
operations accounting treatment. 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.
In connection with the reorganization, the Company has obtained
modifications to certain of its credit agreements that permit the Company
to utilize a significant portion of the divestiture proceeds to fund the
planned improvements and growth of the Shoney's Restaurant concept. The
modifications require the Company to apply 35% of the net divestiture
proceeds to permanently reduce the commitment available under the $270
million revolving credit facility.
Following the reorganization announcement, the Company has focused on
development and implementation of the performance improvement plan for the
Shoney's Restaurant concept. The performance improvement plan is directed
at all aspects of restaurant operations and restaurant support functions
including distribution, purchasing, restaurant development and general
corporate services. The
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<PAGE>
Shoney's Restaurants experienced declines in comparable store sales which
resulted in lower operating margins in both the third quarter and first
three quarters of fiscal 1995 when compared to the same periods of fiscal
1994. The Company anticipates Shoney's Restaurants operating margins will
be less than the prior year for the remainder of fiscal 1995, or until the
benefits of the performance improvement plan begin to have a positive effect
on overall comparable store sales and operating margins.
Revenues from continuing operations for the third quarter of fiscal
1995 decreased 2.2% ($5.6 million) to $253.9 million as compared to the
third quarter of fiscal 1994. For the first three quarters of fiscal 1995,
revenues from continuing operations decreased 1.1% ($9.1 million) to $817.5
million as compared to the same period of fiscal 1994. An analysis of the
decrease in revenues is shown below.
<TABLE>
<CAPTION>
12 Weeks Ended 40 Weeks Ended
August 6, 1995 August 6, 1995
$ Millions $ Millions
----------------- ----------------
<S> <C> <C>
Restaurant revenue $ 3.5 $ 19.2
Commissary and other sales ( 6.8) ( 19.8)
Franchise fees ( .5) ( 1.5)
Other Income ( 1.8) ( 7.0)
------ ------
$( 5.6) $( 9.1)
====== ======
</TABLE>
The Company's continuing operations opened 23 restaurants during
the first three quarters of fiscal 1995, including 17 Shoney's (with
eleven units purchased from franchisees), four Pargo's and two Barbwire's,
and closed three Shoney's units. Franchisees for the Company's continuing
operations opened 15 units during the first three quarters of fiscal 1995
and closed 53 units (including the eleven units purchased by the Company).
Sixteen of the franchise closures were in the Chicago-area where the
Shoney's Restaurant franchisee filed Chapter 11 bankruptcy. Comparable
store sales of Company-owned restaurants in the Company's continuing
operations decreased 3.3% for the third quarter, including a menu price
increase of .3%. For the first three quarters of fiscal 1995, comparable
store sales of Company-owned restaurants in the Company's continuing
operations declined 1.9%, including a menu price increase of .4%.
Commissary sales decreased 14.9% ($6.6 million) and 12.4%
($18.2 million), respectively, during the third quarter and first
three quarters of 1995 as compared to the corresponding periods 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 commissary sales.
Franchise fees relating to the Company's continuing operations also
declined $.5 million (7.9%) and $1.5 million (7.2%) in the third
quarter and first three quarters of 1995 when compared to the prior
year. The decreases in both commissary sales and franchise fees are
primarily the result of a net decrease in the number of franchised
restaurants and a decline in comparable store sales at franchised
Shoney's Restaurants which more than offset comparable store sales
gains at franchised Captain D's units.
Other income decreased $7.0 million in the first three quarters
of 1995 when compared with the first three quarters of 1994 as the
result of several specific items. 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. In
addition, during the first quarter of fiscal 1994, the Company sold its
minority ownership interests in four Shoney's Inns to ShoLodge, Inc.
("ShoLodge") and the resulting gain
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<PAGE>
of $1.7 million was included in other income. 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 gains of $1.1 million and $ .1
million for the first and second quarters of fiscal 1994, respectively,
which were included in other income (see Note 9--Sale of Shoney's Lodging,
Inc. and Related Investments). During 1995, the value of the ShoLodge
shares and warrants increased $.8 million during the first quarter,
declined $2.3 million in the second quarter and increased by $ .1 million
in the third quarter, resulting in a decrease in other income in 1995
relating to valuation of ShoLodge shares and warrants of approximately
$2.6 million as compared to the first three periods of 1994. The third
quarter of 1994 also included approximately $1.6 million of other income
from gains on certain real estate transactions.
Cost of sales for continuing operations for the third quarter of
fiscal 1995 increased $3.3 million over the same quarter in fiscal 1994
and, as a percentage of revenues, were 85.5% in 1995 as compared to 82.4%
in the third quarter of 1994. Cost of sales for continuing operations
for the first three quarters of 1995 increased $14.4 million over the
same period in 1994 and, as a percentage of revenues, were 85.8% in 1995 as
compared to 83.1% for the same period of 1994. Food and supplies decreased
as a percentage of revenues principally due to the decline in commissary
sales. Restaurant food costs, as a percentage of revenues, were
principally unchanged for both the third quarter and first three quarters
of 1995 compared to the same periods of 1994. Restaurant labor increased
as a percentage of revenues in the third quarter and for the first three
quarters because of higher labor cost at the restaurant level and the
decline in commissary sales (which have no restaurant labor in cost of
sales). The higher restaurant labor cost is due to increases in payroll
costs stemming from competitive labor markets as well as higher levels of
staffing to implement the Shoney's Restaurant improvement plan. During
the third quarter and for the first three quarters of fiscal 1995,
operating expenses increased as a percentage of revenues when compared to
the same periods of 1994. The increased costs were primarily due to higher
depreciation expense and property taxes as well as various costs related
to the implementation of the Shoney's improvement plan in fiscal 1995.
In addition, during the second quarter of 1994, the settlement of a
lawsuit against a former insurance carrier for the Company reduced
insurance expense by $1.5 million and there was no comparable item in 1995.
General and administrative expenses increased as a percentage of
revenues from 4.7% in the third quarter of 1994 to 5.5% in the third
quarter of 1995. General and administrative expenses as a percentage of
revenues for the first three quarters of 1995 were 5.8%, as compared to
5.2% in the first three quarters of 1994. For the first three quarters
of fiscal 1995, this increase was primarily due to expenses for
consulting services related to assisting management with the development
of the Shoney's Restaurant performance improvement program (for which
there was no comparable item in the same period of the prior year) and
compensation expenses related to the performance improvement plan.
Restructuring charges of $1.8 million in the first three quarters
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 third quarter of 1995, as compared to
the same period last year, declined approximately $.1 million. This
decline was the net effect of higher effective interest rates ($.1
million) offset by a reduction in interest expense from a decline in
the average debt outstanding ($.2 million). For the first three
quarters of 1995, interest expense declined approximately $2.0 million
principally due to lower interest rates ($.9 million) and a decline in
the average outstanding debt ($1.0 million).
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<PAGE>
The effective income tax rates for the third quarter and first
three quarters 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.
Revenues of the discontinued operations for the first three
quarters of 1995 declined 3.2% principally due to a 6.5% decline in
comparable store sales in the Lee's Famous Recipe division. Net income
from discontinued operations for the first three quarters of 1995 declined
19% principally due to lower operating margins for Lee's Famous Recipe
and Mike Rose Foods, Inc.
Cash provided from continuing operations decreased $12.0 million to
$79.1 million for the first three quarters of 1995 compared to $91.1
million for the first three quarters of 1994. This decrease was due
primarily to a reduction in net income, after adjustments for differences
in non-cash gains and losses. Cash used by investing activities in 1995
was $19.5 million less than 1994 as cash expenditures for property, plant
and equipment were reduced beginning in the second quarter of 1995 as the
Company focused greater attention on implementation of the Shoney's
Restaurant improvement plan. The fiscal 1995 remodels have been
significantly less costly than remodels in fiscal 1994 and new unit
construction for 1995 has been curtailed to focus on the performance
improvement program. Cash provided by discontinued operations was $3.1
million lower in the first three quarters of 1995 ($9.3 million as
compared to $12.4 million in 1994) due primarily to a reduction in net
income and an increase in working capital for the discontinued operations.
Significant financing activities during fiscal 1995 included
completion of a $28 million mortgage financing during the first quarter,
the payment of the final installment of $60 million on the senior fixed
rate debt in the second quarter, a $4.9 million net increase in short-term
borrowings under the Company's unsecured lines of credit, and payments of
$17.5 million under the terms of the Company's litigation settlement (see
Note 7--Reserve for Litigation Settlement). During the first three
quarters of fiscal 1995, the Company had net borrowings of $5.0 million on
the Company's $270 million Reducing Revolving Credit Facility ("Revolver")
and had outstanding borrowings of $245.0 million under the Revolver as of
August 6, 1995.
At August 6, 1995, the Company had cash and cash equivalents of
approximately $5.6 million and unsecured lines of credit totaling $30
million under which the Company had borrowings of $8.7 million outstanding.
Capital expenditures for fiscal 1995 are expected to be approximately $68
million including expenditures committed for restaurant properties included
in net assets of discontinued operations.
As part of the overall Shoney's Restaurant improvement plan the
Company has obtained various modifications to its credit agreements.
These modifications include amendments to various financial and other
loan covenants to reflect elements of the Company's strategic plan and
the planned divestiture of the two non-core businesses. Management
expects the implementation of the Shoney's Restaurants improvement plan
will result in a continuation of the trend of lower margins in the Shoney's
Restaurants until overall improvements in comparable store sales and
operating margins are achieved. Management
-15-
<PAGE>
and its lenders have considered these trends in the modifications of
its debt covenants. 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 other general corporate purposes through cash
generated by the Company's operations and from the Company's Revolver
(see Note 6--Senior Debt).
-16-
<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 9-10 of this Quarterly Report
on Form 10-Q.
ITEM 5. OTHER INFORMATION.
On September 4, 1995, the Company entered into a letter of intent
to merge a subsidiary of the Company with TPI Enterprises, Inc. ("TPI"),
the Company's largest franchisee.
For a further description of this event, reference is made to the
letter of intent entered into between the Company and TPI and to the
press release announcing the letter of intent, copies of which are
incorporated by reference as Exhibits 99.1 and 99.2, respectively to
this Quarterly Report on Form 10-Q. See also Note 10 to the Notes to
Consolidated Condensed Financial Statements at page 11 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.
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 Amendment No. 1 dated as of April 18, 1995 to
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 May 4, 1995 and
incorporated herein by this reference.
4.5 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
-17-
<PAGE>
Statement on Form S-3 filed with the Commission on
April 3, 1989 (No. 33-27571), and incorporated herein
by this reference.
4.6 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.
4.7 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.
4.8 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.
4.9 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.
4.10 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.
4.11 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.
4.12 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
-18-<PAGE>
filed with the Commission on January 30, 1995, and
incorporated herein by this reference.
4.13 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.
4.14 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.
4.15 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.
4.16 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.
4.17 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.
4.18 Reimbursement Agreement, dated as of October 1, 1991,
together with the Standby Note relating thereto, between
the Company and National 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.
4.19 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.
4.20 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
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<PAGE>
Registration Statement on Form S-8 (File No. 2-64257)
filed with the Commission on January 25, 1993, and
incorporated herein by this reference.
4.21 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.
4.22 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.
4.23 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.
4.24 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.
4.25 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.
4.26 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
Sept. 15, 1993, and incorporated herein by this reference.
4.27 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.
4.28 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
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<PAGE>
10-K for the fiscal year ended October 31, 1993, filed
with the Commission on January 31, 1994, and
incorporated herein by this reference.
4.29 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.
4.30 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.
4.31 Modification Agreement No. 5 dated as of January
18, 1995 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 4.49 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.
4.32 Modification Agreement No. 6 dated as of April 1, 1995
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 4.32 to the Company's Quarterly Report
on Form 10-Q for the quarter ended May 14, 1995 filed with
the Commission on June 28, 1995, and incorporated herein
by this reference.
4.33 Modification Agreement No. 7 dated as of July 28, 1995
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.
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.
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<PAGE>
10.3 Amendment No. 2 dated as of March 18, 1994 to License
Agreement, dated as of October 28, 1991, between Shoney's
Investments, Inc. and ShoLodge Franchise Systems, Inc.,
filed as Exhibit 10.3 to the Company's Quarterly Report
on Form 10-Q for the quarter ended May 14, 1995 filed
with the Commission on June 28, 1995, and incorporated
herein by this reference.
10.4 Amendment No. 3 dated as of March 13, 1995 to License
Agreement, dated as of October 28, 1991, between Shoney's
Investments, Inc. and ShoLodge Franchise Systems, Inc.,
filed as Exhibit 10.4 to the Company's Quarterly Report
on Form 10-Q for the quarter ended May 14, 1995 filed
with the Commission on June 28, 1995, and incorporated
herein by this reference.
10.5 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.
10.6 Agreement dated as of September 8, 1992 between the
Company and R. 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.
10.7 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.
10.8 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.
10.9 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.
10.10 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.
10.11 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.
10.12 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.
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10.13 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.
10.14 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.
10.15 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.
10.16 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.
10.17 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.
10.18 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.
10.19 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.
10.20 Employment Agreement dated as of April 11, 1995,
between the Company and C. Stephen Lynn, filed as
Exhibit 4.32 to the Company's Quarterly Report on Form
10-Q for the quarter ended May 14, 1995 filed with the
Commission on June 28, 1995, and incorporated herein
by this reference.
11 Statement regarding computation of per share earnings.
27 Financial Data Schedule.
99.1 Letter of Intent between the Company and TPI
Enterprises, Inc. , filed as Exhibit 99.1 to the Current
Report on Form 8-K filed with the Commission by TPI
Enterprises, Inc. (File No. 0-07961) on September 7, 1995,
and incorporated herein by this reference.
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<PAGE>
99.2 Press Release regarding letter of intent between the
Company and TPI Enterprises, Inc., filed as Exhibit 99.2
to the Current Report on Form 8-K filed with the
Commission by TPI Enterprises, Inc. (File No. 0-07961)
on September 7, 1995, and incorporated herein by this
reference.
(b) During the quarter ended August 6, 1995, the were no
Current Reports on Form 8-K filed by the Company
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<PAGE>
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: September 18, 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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09/1/95
RESTATED BY-LAWS
OF
SHONEY'S, INC.
ARTICLE I
OFFICES
The executive offices of the Corporation shall be in Davidson
County, Tennessee, but the Corporation may have other offices at
such places as the Board of Directors may from time to time decide
or as the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the
shareholders shall be held at the call of the Board of Directors on
a date and at a time and place, either within or without the State
of Tennessee, as may be selected by the Board of Directors.
Section 2. Special Meeting. Special Meetings of the
shareholders may be called at any time by the Chairman of the
Board, the Board of Directors or the holder or holders of not less
than one tenth (1/10) of all the shares entitled to vote at such
meeting, to be held at such time and place, either within or
without the State of Tennessee, as may be designated in the call of
the meeting.
Section 3. Notice of Meeting. Written Notice stating the
place, day and hour of annual and special meetings of shareholders
shall be given to each shareholder, either personally or by mail to
his last address of record with the Corporation, not less than ten
(10) nor more than sixty (60) days before the date of the meeting.
Notice of any special meeting of shareholders shall state the
purpose or purposes for which the meeting is called and the person
or persons calling the meeting. Notice of any annual or special
meeting of shareholders may be waived by the person or persons
entitled thereto by signing a written waiver of notice at any time
before or after the meeting is completed, which waiver may be
signed by a shareholder or by his attorney-in-fact or proxy holder.
Section 4. Voting. At all meetings of shareholders, all
shareholders of record shall be entitled to one vote for each share
<PAGE>
of stock standing in their name and may vote either in person or by
proxy. Proxies shall be filed with the Secretary of the meeting
before being voted or counted for the purpose of determining the
presence of a quorum.
Section 5. Quorum. At all meetings of shareholders, a majority
of the outstanding shares of stock entitled to vote, represented in
person or by proxy, shall constitute a quorum for the transaction
of business; and the vote or authorization of a majority of the
shares represented at any meeting at which a quorum is present or
represented shall determine the action taken on any matter that may
come before the meeting unless otherwise specifically required by
law or by express provision of the charter or By-laws of the
Corporation. If, however, such majority shall not be present or
represented by proxy at any meeting of the stockholders, the
presiding officer or stockholders present in person or represented
by proxy shall have the power to adjourn from time to time without
notice other than announcement at the meeting, until the requisite
number of shares shall be represented when any business may be
transacted which might have been transacted at the meeting as
provided in the original notice.
Section 6. Action by Consent. Whenever the shareholders of the
Corporation are required or permitted to take any action by vote,
such action may be taken without a meeting on written consent,
setting forth the action so taken, signed by all of the persons or
entities entitled to vote thereon.
Section 7. Advance Notice of Shareholder Proposals. At any
annual or special meeting of shareholders, proposals by
shareholders and persons nominated for election as Directors by
shareholders shall be considered only if advance notice thereof has
been timely given as provided herein and such proposals or
nominations are otherwise proper for consideration under applicable
law and the Charter and By-Laws of the Corporation. Notice of any
proposal to be presented by any shareholder or of the name of any
person to be nominated by any shareholder for election as a
Director of the Corporation at any meeting of shareholders shall be
delivered to the Secretary of the Corporation at its principal
executive office not less than 60 nor more than 90 days prior to
the date of the meeting; provided, however, that if the date of the
meeting is first publicly announced or disclosed (in a public
filing or otherwise) less than 70 days prior to the date of the
meeting, such notice shall be given not more than ten days after
such date is first so announced or disclosed. Public notice shall
be deemed to have been given more than 70 days in advance of the
annual meeting if the Corporation shall have previously disclosed,
in these ByLaws or otherwise, that the annual meeting in each year
is to be held on a determinable date, unless and until the Board
determines to hold the meeting on a different date. Any shareholder
who gives notice of any such proposal shall deliver therewith the
text of the proposal to be presented and a brief written statement
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of the reasons why such shareholder favors the proposal and setting
forth such shareholder's name and address, the number and class of
all shares of each class of stock of the Corporation beneficially
owned by such shareholder and any material interest of such
shareholder in the proposal (other than as a shareholder). Any
shareholder desiring to nominate any person for election as a
Director of the Corporation shall deliver with such notice a
statement in writing setting forth the name of the person to be
nominated, the number and class of all shares of each class of
stock of the Corporation beneficially owned by such person, the
information regarding such person required by paragraphs (a), (e)
and (f) of Item 401 of Regulation S-K adopted by the Securities and
Exchange Commission (or the corresponding provisions of any
regulation subsequently adopted by the Securities and Exchange
Commission applicable to the Corporation), such person's signed
consent to serve as a Director of the Corporation if elected, such
shareholder's name and address and the number and class of all
shares of each class of stock of the Corporation beneficially owned
by such shareholder. As used herein, shares "beneficially owned"
shall mean all shares as to which such person, together with such
person's affiliates and associates (as defined in Rule 12b-2 under
the Securities Exchange Act of 1934), may be deemed to beneficially
own pursuant to Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934, as well as all shares as to which such person,
together with such person's affiliates and associates, has the
right to become the beneficial owner pursuant to any agreement
or understanding, or upon the exercise of warrants, options or
rights to convert or exchange (whether such rights are exercisable
immediately or only after the passage of time or the occurrence of
conditions). The person presiding at the meeting, in addition to
making any other determinations that may be appropriate to the
conduct of the meeting, shall determine whether such notice has
been duly given and shall direct that proposals and nominees not be
considered if such notice has not been given.
ARTICLE III
DIRECTORS
Section 1. Number of Qualifications. The business and affairs
of the Corporation shall be managed and controlled by a Board of
Directors, of not less than three nor more than fifteen in number.
The number of Directors shall be set by the Board of Directors.
Directors need not be shareholders of the Corporation. In addition
to the Directors who are elected by the shareholders, the Board of
Directors, from time to time, may appoint persons as advisory
directors, to serve such terms and perform such duties as the Board
of Directors shall determine upon appointing any person as an
advisory director. Advisory directors shall not be entitled to vote
on any matter to come before the Board of Directors. Advisory
directors may be removed at any time by a vote of the Board of
Directors. The provisions of Article III, Sections 2 through 11 of
these Bylaws shall not apply to Advisory directors.
Section 2. Nominations by Shareholders. Shareholders who wish
to nominate persons for election as Directors of the Corporation
shall comply with the requirements of ARTICLE II, Section 7 of
these By-Laws.
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<PAGE>
Section 3. Election and Term of Office. The Directors shall be
elected at the annual meeting of shareholders; but if any such
annual meeting is not held or if the Directors are not elected at
any such annual meeting, the Directors may be elected at any
special meeting of the shareholders. Directors shall be elected by
a plurality of the votes cast. The Directors shall hold office
until the next annual meeting of shareholders and thereafter until
their respective successors have been elected and qualified.
Section 4. Meetings. Regular meetings of the Directors shall
be held annually following the annual meeting of the shareholders
and may be held without notice at such other places and times as
may be determined by the Board of Directors. Special meetings of
the Directors may be called at any time by the Chairman of the
Board or by a majority of the Directors on at least one day's
notice sent by any usual means of communication. Notice of any such
meeting may be waived by the person or persons entitled thereto by
signing a written waiver of notice at any time before or after the
meeting is completed. Attendance of a Director at a meeting shall
constitute a waiver of notice thereof unless such attendance is for
the express purpose of objecting to such meeting. Any meeting of
the Board of Directors may be held within or without the State of
Tennessee at such place as may be determined by the person or
persons calling the meeting.
Section 5. Quorum. A majority of the total number of Directors
then in office shall constitute a quorum for the transaction of
business; and the vote or action of a majority of the Directors
present at any meeting at which a quorum is had shall decide any
matter that may come before the meeting and shall be the act of the
Board unless otherwise specifically required by law or by express
provision of the charter or By-laws of the Corporation.
Section 6. Action by Consent. Any action required or permitted
to be taken by the Directors of the Corporation may be taken
without a meeting on written consent, setting forth the action so
taken, signed by all the Directors entitled to vote thereon.
Section 7. Vacancies. Vacancies in the Board of Directors
occurring for any reason, including an increase in the number of
Directors, resignation, or the removal of any Director with or
without cause, may be filled by vote of a majority of the Directors
then in office although less than a quorum exists; but if the
offices of a majority of the entire Board of Directors shall be
vacant at the same time, such vacancies shall be filled only by
vote of the shareholders. A director elected to fill any vacancy
shall hold office until the next annual meeting of shareholders and
thereafter until his successor has been elected and qualified.
Section 8. Removal and Resignation. Any or all of the
Directors may be removed with or without cause, at any time, by
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<PAGE>
vote of the shareholders. Any Director may resign at any time, such
resignation to be made in writing and to take effect immediately or
on such later date as may be specified therein without acceptance.
Section 9. Committees. From time to time, a majority of the
entire Board of Directors may by resolution appoint an executive
committee or any other committee or committees for the purpose or
purposes to the extent permitted by law, which committee or
committees shall have such powers as shall be specified in the
resolution of appointment.
Section 10. Participation in Meetings. The members of the
Board of Directors, or any committee appointed by the Board, may
participate in a meeting of the Board or of such committee by means
of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to such means
shall constitute presence in person at such meeting. The Directors
shall be promptly furnished a copy of the minutes of the Board of
Directors' meetings.
Section 11. Compensation. The Directors shall receive
compensation or salary for their services as Directors, said sum to
be fixed by proper resolution of the Board of Directors, and said
salary and compensation may include a fixed sum for expenses of
attending the meetings of the Board of Directors. A Director may
serve the Corporation in a capacity other than that of a Director
and receive compensation for services rendered in such other
capacity.
ARTICLE IV
OFFICERS
Section 1. Designation. The officers of the Corporation shall
be a Chairman Emeritus of the Board (which office shall be optional
with the Board of Directors), a Chairman of the Board, a President,
one or more Division Presidents, one or more Vice Presidents, a
Secretary and a Treasurer and such other officers, agents and
employees as may from time to time be elected, chosen or appointed
by the Board of Directors. Any Vice President may be designated as
Executive Vice President or Senior Vice President or such other
title as the Board may determine. Any two or more of such offices
may be held by the same person except the offices of President and
Secretary.
Section 2. Chairman Emeritus. The Chairman Emeritus of the
Board shall be an honorary and optional position. The Chairman
Emeritus shall be an Advisory director of the Corporation pursuant
to Article III of these Bylaws. In addition, the Chairman Emeritus
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<PAGE>
shall have such duties with regard to the general and active management
of the Corporation as may be prescribed from time to time by the Board
of Directors or by the By-laws.
Section 3. Chairman of the Board of Directors. The Chairman of
the Board of Directors shall preside at all meetings of the
shareholders and the Board of Directors, and he shall call regular
and special meetings of the shareholders and Board of Directors in
accordance with these By-laws. He shall perform such other duties
as may be prescribed by the Board. The Board may designate the
Chairman chief executive officer of the Corporation.
Section 4. President. The President shall have general
supervision of the affairs and property of the Corporation, subject
to the direction of the Board of Directors and the Chairman of the
Board. He shall manage and control the regular business of the
Corporation; and he may appoint agents and employees of the
Corporation, other than officers elected or appointed by the Board,
subject to the approval of the Board. In the absence of the
Chairman of the Board, the President shall preside at any meeting
of the shareholders or the Board of Directors. He shall perform
such other duties as may from time to time be prescribed by the
Board.
Section 5. Division President. The Division President or
Division Presidents shall assist the President in the management of
the Corporation, shall have general supervision of the affairs and
property of that division of the Corporation over which he is
President, and shall have such other duties as may from time to
time be prescribed by the Board, the Chairman of the Board, or
President. In the absence, disqualification or incapacity of the
President, the senior Division President, if senior to the senior
Vice President, shall perform the duties and exercise the powers of
the President.
Section 6. Vice President. The Vice President or Vice
Presidents shall assist the President in the management of the
Corporation and shall have such other powers and perform such other
duties as may from time to time be prescribed by the Board, or
President. In the absence, disqualification or incapacity of the
President, the senior Vice President shall perform the duties and
exercise the powers of the President.
Section 7. Secretary. The Secretary shall keep the minutes of
all meetings of the shareholders and the Board of Directors in
appropriate books, and he shall attend to the giving of all notices
for the Corporation. He shall have charge of the seal and stock
books of the Corporation and such other books and papers as the
Board may direct, and he shall in general perform all duties
incident to the office of Secretary of the Corporation. He shall
perform such other duties as may from time to time be prescribed by
the Board, the Chairman of the Board, or President.
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<PAGE>
Section 8. Treasurer. The Treasurer shall have the care and
custody of all funds and securities of the Corporation, and he
shall in general perform all duties incident to the office of
Treasurer of the Corporation. He shall perform such other duties as
may from time to time be prescribed by the Board, the Chairman of
the Board, or President.
Section 9. Other Officers. The Board of Directors may appoint,
or may authorize the Chairman of the Board or President to appoint,
assistant secretaries and assistant treasurers and such other
officers as the Board may from time to time decide, who shall have
such authority and perform such duties as may from time to time be
prescribed by the Board or designated by the President.
Section 10. Election and Term of Office. The officers shall be
elected or appointed at the regular meeting of the Board of
Directors following the annual meeting of shareholders, provided
that any vacancy or newly created office may be filled at a special
meeting or other regular meeting of the Board. Unless otherwise
determined by the Board, each officer shall hold office until the
next regular meeting of the Board following the annual meeting of
shareholders and thereafter until his successor has been elected or
appointed and qualified.
Section 11. Compensation. The Board of Directors, or one of
its duly appointed committees, shall fix the salaries of the
officers of the Corporation. The compensation of other agents and
employees of the Corporation may be fixed by the Board of Directors
or by an officer or officers for whom that function has been
delegated by the Board.
ARTICLE V
SHARES
Section 1. Certificates. The shares of the Corporation shall
be represented by certificates in such form as the Board of
Directors may from time to time prescribe. Such certificates shall
be numbered consecutively in the order in which they are issued,
which numbering system may be separated by class or series if there
shall be more than one class or series of shares. The certificates
shall be signed by the Chairman of the Board and Secretary unless
the Board of Directors shall otherwise designate any two officers
of the Corporation for such purpose.
Section 2. Record. The name and address of all persons to whom
the shares of the Corporation are issued, the number of shares, and
the date of issue shall be entered on the books of the Corporation.
It shall be the duty of each shareholder to notify the Corporation
of his address.
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Section 3. Transfers. The shares of the Corporation are
transferable only on the books of the Corporation by the registered
holder thereof, either in person or by power of attorney, and upon
delivery and surrender of the certificate representing such shares
properly endorsed for transfer. Certificates exchanged or
surrendered shall be cancelled by the Secretary and placed in the
corporate records.
Section 4. Loss of Certificates. In case of the loss,
mutilation or destruction of a certificate representing shares of
the Corporation, a duplicate certificate may be issued on such
terms as the Board of Directors shall prescribe.
Section 5. Transfer Agent, Registrar. The Board of Directors
may appoint a transfer agent or agents and/or a registrar, and a
dividend disbursing agent for the Corporation.
ARTICLE VI
SEAL
Section 1. Authority to Adopt. The Corporation may have a seal
in such form as the Board of Directors may adopt, and the Board of
Directors may from time to time change the form of the seal of the
Corporation.
Section 2. Scroll Seal. In the event the Board shall not have
adopted a seal or if it is inconvenient to use the adopted seal at
any time, an authorized signature made in the name of and on behalf
of the Corporation followed by the word "Seal" enclosed in
parentheses or scroll shall be deemed the seal of the Corporation.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall end on the last
Sunday of October of each year, but the Board of Directors may from
time to time change the fiscal year of the Corporation.
ARTICLE VIII
DIVIDENDS, SURPLUS AND RESERVES
Section 1. Dividends. The Board of Directors may declare
dividends from the Corporation's net earnings, or from the surplus
of its assets over its liabilities, including capital, but not
otherwise. The Board of Directors may issue stock dividends,
provided the Corporation has a surplus equal in value, at a fair
valuation, to such stock issued as a dividend; and provided,
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<PAGE>
further, that the surplus of the Corporation is reduced in an
amount equal to the value of the stock issued as a stock dividend.
Section 2. Surplus and Reserves. Before making any
distribution of proceeds, there may be set aside out of the net
proceeds of the Corporation such sums for maintaining any property
of the Corporation, or for any other purpose, and any profits of
any year not distributed as dividends shall be deemed to have been
thus set aside until otherwise disposed of by the Board of
Directors, and the Board of Directors may abolish any such reserve
in its absolute discretion.
ARTICLE IX
INDEMNITY
Any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (including any action by or in the right of the
Corporation) by reason of the fact that he is or was serving as an
officer or director or employee of the Corporation or is or was
serving at the request of the Corporation as a Director or officer
of the Corporation, partnership, joint venture, trust or other
enterprise, shall be indemnified by the Corporation against
expenses (including reasonable attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he acted
in good faith for a purpose which he reasonably believed to be in
the best interest of the corporation, and, in criminal proceedings,
in addition, had no reasonable cause to believe that his conduct
was
unlawful, to the maximum extent permitted by, and in the manner
provided by, the Tennessee Business Corporation Act. In the event
of a settlement, however, the indemnification herein shall apply
only when the Board of Directors approves such settlement and
reimbursement as being in the best interest of the Corporation. The
foregoing right of indemnification shall be in addition to and not
exclusive of all rights to which said Directors, officers or
employees may be entitled.
ARTICLE X
AMENDMENTS
The shareholders of the Corporation may adopt new By-laws and
may amend or repeal any or all of these By-laws at any annual or
special meeting provided, however, that notice of intention to
amend shall have been contained in the notice of any special
meeting called for that purpose; and also the Board of Directors
may adopt new by-laws and may be amend or repeal any or all of
these By-laws by the vote of a majority of the entire Board, and
provided further that any by-law adopted by the Board may be
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amended or repealed by the shareholders. The Board of Directors may
amend by-laws adopted by the shareholders, provided that
shareholders may from time to time specify particular provisions of
these By-laws which shall not be amended by the Board of Directors.
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<PAGE>
EXECUTION COPY
MODIFICATION AGREEMENT NO. 7
TO
REDUCING REVOLVING
CREDIT AGREEMENT
THIS MODIFICATION AGREEMENT NO. 7 (the "Modification Agreement No.
7"), dated as of July 28, 1995, to the Reducing Revolving Credit Agreement,
dated as of July 21, 1993, as amended by Modification Agreement No. 1 to
Reducing Revolving Credit Agreement, dated as of July 21, 1993, by
Modification Agreement No. 2 to Reducing Revolving Credit Agreement, dated
as of December 21, 1993, by Modification Agreement No. 3 to Reducing
Revolving Credit Agreement, dated as of May 3, 1994, by Modification
Agreement No. 4 to Reducing Revolving Credit Agreement, dated as of October
27, 1994, by Modification Agreement No. 5 to Reducing Revolving Credit
Agreement, dated as of January 18, 1995, and by Modification Agreement No.
6 to Reducing Revolving Credit Agreement, dated as of April 1, 1995
(collectively, the "Existing Credit Agreement"), among SHONEY'S, INC., a
Tennessee corporation (the "Borrower"), CIBC INC., acting through its
Atlanta Office and various other financial institutions, which are now, or
in accordance with Section 10.10 of the Existing Credit Agreement hereafter
become, parties thereto (collectively, the "Lenders" and, individually, a
"Lender"), and CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian chartered
bank acting through its New York Agency, as Agent and Collateral Agent (the
"Agent" and the "Collateral Agent", respectively) for the Lenders,
W I T N E S S E T H:
WHEREAS, the Borrower has requested that certain provisions of the
Existing Credit Agreement be amended in certain respects as set forth
herein; and
WHEREAS, the Lenders are willing to amend certain provisions of
the Existing Credit Agreement and to take or permit the taking of certain
actions as set forth herein, but only on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the agreements herein
contained, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Definitions. Unless otherwise
defined herein or the context otherwise requires, capitalized
terms used in this Modification Agreement No. 7, including its
preamble and recitals, have the following meanings (such meanings
to be equally applicable to the singular and plural forms
thereof):
"Agent" has the meaning assigned to such term in the
preamble.
"Borrower" has the meaning assigned to such term in the
preamble.
"Collateral Agent" has the meaning assigned to such term
in the preamble.
"Existing Credit Agreement" has the meaning assigned to
such term in the preamble.
"Lenders" and "Lender" have the respective meanings
assigned to such terms in the preamble.
"Modification Agreement No. 7" has the meaning assigned to
such term in the preamble.
"Modification Effective Date" has the meaning assigned to
such term in Section 3.1.
SECTION 1.2 Other Definitions. Unless otherwise
defined herein or the context otherwise requires, capitalized
terms used in this Modification Agreement No. 7, including its
preamble and recitals, have the meanings provided in the Existing
Credit Agreement.
ARTICLE II
AMENDMENT OF EXISTING CREDIT AGREEMENT
AS OF THE MODIFICATION EFFECTIVE DATE
Effective on (and subject to the occurrence of) the Modification
Effective Date, the provisions of the Existing Credit Agreement referred to
below are hereby amended in accordance with this Article II. Except as
expressly so amended, the Existing Credit Agreement shall continue in full
force and effect in accordance with its terms.
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<PAGE>
SECTION 2.1 Modification of Article I (Definitions).
Article I of the Existing Credit Agreement is hereby modified as
follows:
SECTION 2.1.1 Section 1.1 of the Existing Credit
Agreement is hereby amended by deleting clause (h) of the
definition of "Concept" in its entirety and substituting therefor
the words "(h) BarbWire's".
SECTION 2.1.2 Section 1.1 of the Existing Credit
Agreement is hereby further amended by deleting the definition of
"Closing Date" in its entirety and substituting the following in
its place:
"'Closing Date' means July 21, 1993."
SECTION 2.1.3 Section 1.1 of the Existing Credit
Agreement is hereby amended by (a) deleting the parenthetical of
clause (a) of the definition of "EBITDA" in its entirety and
substituting the following: "((i) excluding extraordinary items of
gain and including extraordinary items of loss, in each case as
determined in accordance with GAAP consistently applied, (ii)
excluding any non-cash portion of restructuring charges accrued by
the Borrower on its consolidated income statements in respect of
its 1995 and 1996 Fiscal Years and (iii) excluding any ordinary
gains arising from the Divestitures)" and (b) deleting the
parenthetical in clause (b) of the definition of "EBITDA" and
substituting the following in its place: "(excluding the effects
of any non-cash portion of restructuring charges accrued by the
Borrower on its consolidated income statements in respect of its
1995 and 1996 Fiscal Years)".
SECTION 2.1.4 Section 1.1 of the Existing Credit
Agreement is hereby further amended by deleting the definition of
"Memorandum" in its entirety and substituting the following in its
place:
"'Memorandum' means the Confidential Information
Memorandum dated May, 1995, compiled by Canadian Imperial Bank of
Commerce based on information provided by the Borrower, as
supplemented by a memorandum of the Borrower (and the attachments
and enclosures thereto) dated July 10, 1995."
SECTION 2.1.5 Section 1.1 of the Existing Credit
Agreement is hereby further amended by deleting the definitions of
"Mortgage Financing Collateral" and "Mortgage Financing
Transactions" in their entirety and substituting the following in
their place:
-3-
<PAGE>
"'Mortgage Financing Collateral' means (a) those
properties listed on Item 1.1 ("Mortgage Financing Collateral") of
the Disclosure Schedule (including buildings placed thereon) that
have been or are to be used to collateralize the debt incurred by
the Borrower in the Mortgage Financing Transactions; and (b)(i)
certain parcels of undeveloped real property and buildings placed
thereon owned or acquired by the Borrower or its Subsidiaries
which will be identified, promptly upon the acquisition thereof,
as "Mortgage Financing Collateral Property" and (ii) properties
owned by the Borrower or its Subsidiaries (other than Realco)
formerly constituting Tranche C Collateral which are identified as
"Mortgage Financing Collateral Property", in the case of clauses
(i) and (ii), in a written notice to be provided to the Agent
(which written notice may be provided pursuant to a Compliance
Certificate); provided, that at no time shall there be designated
as Mortgage Financing Collateral properties under clause (b)(i)
undeveloped properties which have a cost (excluding any
construction costs relating to such properties) in excess of
$50,000,000. Mortgage Financing Collateral includes properties to
be used for the purpose of engaging in new Mortgage Financing
Transactions or to be used in substitution for existing Mortgage
Financing Collateral subject to Mortgage Financing Transactions,
in each case, as permitted by clause (a) of Section 7.2.20.
"Mortgage Financing Transaction" means any program of
acquiring or financing
(a) land and buildings for restaurant
facilities (i) either listed on Item 1.1 ("Mortgage
Financing Collateral") of the Disclosure Schedule or
opened after the date hereof, to be owned and operated by
the Borrower or its Subsidiaries or (ii) formerly
constituting Tranche C Collateral; and
(b) land, buildings and/or equipment for
manufacturing and distribution facilities to be owned and
operated by the Borrower or its Subsidiaries,
in each case in which the lenders granting such financing will be
granted Security Interests in the land and/or buildings and/or
fixtures acquired or financed on terms and conditions (which may
include, without limitation, through the issuance and guarantee by
the Borrower or its Subsidiaries of industrial revenue bonds)
satisfactory to the Agent and evidenced by Mortgage Financing
Transaction Documents."
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<PAGE>
SECTION 2.1.6 Section 1.1 of the Existing Credit
Agreement is hereby further amended by deleting the proviso to the
definition of "Net Proceeds" and replacing it with the following:
"provided, further, that "Net Proceeds" shall be deemed not to
include (a) an amount equal to the first $5,000,000 in proceeds
(determined by aggregating the gross proceeds from applicable
asset sales and dispositions and subtracting therefrom customary
selling expenses incurred in connection therewith and good faith
estimated taxes payable as a result thereof) realized during each
Fiscal Year of sales other than the Divestitures and (b) any
rental payments made to the Borrower or Realco under a lease or
sublease of Lee's Famous Recipe restaurants permitted under clause
(l) of Section 7.2.11."
SECTION 2.1.7 Section 1.1 of the Existing Credit
Agreement is hereby further amended by deleting the definition of
"Permitted Subleases" in its entirety and substituting the
following in its place:
"'Permitted Subleases' means the subleases by the Borrower
of real properties (and related equipment and fixtures) owned by
Realco pursuant to clauses (j) or (l) of Section 7.2.11."
SECTION 2.1.8 Section 1.1 of the Existing Credit
Agreement is hereby further amended by adding each of the
following new definitions in their appropriate alphabetical order:
"Divestitures" means the sale and/or other disposition of
the assets and the related businesses of the Lee's Famous Recipe
Concept, the Pargo's Concept, the Fifth Quarter Concept and/or the
Mike Rose Foods Concept in accordance with the terms of clause (h)
of Section 7.2.11 or as otherwise agreed to by the Required
Lenders.
"Modification No. 7" means the Modification Agreement
No. 7, dated as of July 28, 1995, to this Agreement, among the
Borrower, the Lenders, the Agent and the Collateral Agent.
"Modification No. 7 Effective Date" has the meaning
assigned to the term "Modification Effective Date" in Modification
No. 7.
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<PAGE>
SECTION 2.2 Modification of Article II (Commitments, Borrowing
Procedures and Notes). Article II of the Existing Credit Agreement is
hereby modified as follows:
SECTION 2.2.1 Clause (b) of Section 2.2.2 of the Existing
Credit Agreement is hereby amended in its entirety to read as
follows:
"(b) On the day immediately following the date of
the receipt by the Borrower or any Subsidiary of Net
Proceeds, the Commitment Amount shall be immediately and
permanently reduced by an amount equal to (i) in the case
of Net Proceeds other than Net Proceeds of Divestitures,
such Net Proceeds and (ii) in the case of Net Proceeds of
Divestitures, 35% of the amount of such Net Proceeds."
SECTION 2.3 Modification of Article III (Repayments, Prepayments,
Interest and Fees). Article III of the Existing Credit Agreement is hereby
amended as follows:
SECTION 2.3.1 Section 3.1.2 of the Existing Credit
Agreement is hereby amended as follows: (i) the word "and" is
deleted at the end of clause (c) thereof, (ii) the "." at the end
of clause (d) thereof is hereby changed to "; and" and (iii) a new
clause (e) is added thereto as follows:
"(e) shall, on the day immediately following the
date of receipt by the Borrower or any Subsidiary of
proceeds of any Divestiture, make a mandatory prepayment
of the Loans in an aggregate principal amount equal to the
cash Net Proceeds received or receivable by the Borrower
or any Subsidiary on the date of consummation of such
Divestiture."
SECTION 2.3.2 Section 3.3.2 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"SECTION 3.3.2 Modification Agreement No. 7 Upfront Fees.
The Borrower agrees to pay to each Lender which executes
Modification Agreement No. 7 on or prior to the Modification No. 7
Effective Date an upfront fee equal to 1/4 of 1% of such Lender's
Commitment, payable on the Modification No. 7 Effective Date."
SECTION 2.4 Modification of Article V (Conditions to Initial
Borrowing). Article V of the Existing Credit Agreement is hereby modified
as follows:
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<PAGE>
Section 2.4.1 Section 5.1 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"SECTION 5.1 Closing Date. All of the conditions
precedent to the effectiveness of the Closing Date were
met or properly waived on July 21, 1993."
SECTION 2.5 Modification of Article VII (Covenants). Article VII
of the Existing Credit Agreement is hereby modified as follows:
SECTION 2.5.1 Section 7.1.12 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"SECTION 7.1.12. Substitution of Realco Properties;
Disposition of Realco Properties. The Borrower may, and may
permit Realco to, in any Fiscal Year:
(a) substitute operating restaurant properties of the
Borrower for properties of Realco constituting up to 20% of the
aggregate net book value of Realco's assets, such substituted
properties to be of equal or greater value than the properties of
Realco being so exchanged, in each case as determined by the
valuations described below; provided, that the Agent shall have
received between sixty and thirty days prior to such substitution
of such properties, for its benefit and the benefit of the
Lenders, addressed to the Agent and the Lenders, in reasonable
detail and otherwise in form and substance satisfactory to the
Agent and the Required Lenders, valuations conducted by Marshall &
Stevens, or other independent appraisers satisfactory to the
Agent, of the properties to be transferred to Realco and the
properties of Realco to be transferred to the Borrower, provided,
however, that if a property of the Borrower to be substituted was
built within one year of the proposed substitution for a Realco
property, the substituted property shall be valued at the actual
cost of such property to be so substituted;
(b) dispose of assets owned by Realco having an aggregate
net book value not in excess of $100,000; and
(c) dispose of restaurants owned by Realco as permitted
pursuant to clause (h) or (k) of Section 7.2.11."
SECTION 2.5.2 Clause (g) of Section 7.2.2 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
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<PAGE>
"(g) Indebtedness of the Borrower in respect of trade or
commercial letters of credit and standby letters of credit (other
than any standby letter of credit issued in connection with the
Mortgage Financing Transactions to directly support Indebtedness
permitted under clause (i) below) in an aggregate amount not to
exceed (i) $40,000,000 at any one time outstanding for all such
letters of credit and (ii) $30,000,000 at any one time outstanding
for all standby letters of credit;"
SECTION 2.5.3 Clause (i) of Section 7.2.2 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"(i) Indebtedness incurred by the Borrower under and in
connection with the Mortgage Financing Transactions and
refinancings thereof (A) made pursuant to Mortgage Financing
Transaction Documents and (B) in which the principal amount of
such Indebtedness is not increased thereby; provided, however,
that the Borrower may not incur any such new, non-refinanced
Indebtedness in connection with Mortgage Financing Transactions in
any Fiscal Year in excess of the amount of Indebtedness set forth
opposite such Fiscal Year below:
Fiscal Year Principal Amount
----------- ----------------
1995 $30,000,000
1996 $30,000,000
1997 $30,000,000
1998 $50,000,000
1999 $24,000,000
; provided, however, to the extent that the maximum amount of
Indebtedness in connection with Mortgage Financing Transactions
permitted to be incurred by the Borrower, without giving effect to
this proviso, exceeds the aggregate amount actually incurred
during such Fiscal Year, one hundred percent of the amount of such
excess may be carried over to succeeding Fiscal Years;"
SECTION 2.5.4 Section 7.2.3 of the Existing Credit Agreement is
hereby amended by (a) changing the period at the end of clause (j) thereof
to "; and" and (b) adding the following new clause (k) thereto:
"(k) the license for the use of the "Shoney's Inn" service mark
granted to ShoLodge, Inc. by the Borrower pursuant to the License
Agreement dated October 25, 1991."
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<PAGE>
SECTION 2.5.5 Section 7.2.4 of the Existing Credit Agreement is
hereby amended in its entirety to read as follows:
"SECTION 7.2.4. Financial Condition. The Borrower will
not permit:
(a) Consolidated Net Worth on the last day of
any Fiscal Quarter occurring during any period set forth
below to be less than the amount set forth below:
Minimum Consolidated
Period Net Worth
------ --------------------
First Three Fiscal Quarters
of Fiscal Year 1995 $(145,000,000)
Fourth Fiscal Quarter of
Fiscal Year 1995 $(120,000,000)
First Three Fiscal Quarters
of Fiscal Year 1996 $(120,000,000)
Fourth Fiscal Quarter of
Fiscal Year 1996 $(75,000,000)
First Three Fiscal Quarters
of Fiscal Year 1997 $(75,000,000)
Fourth Fiscal Quarter of
Fiscal Year 1997 $(25,000,000)
First Three Fiscal Quarters
of Fiscal Year 1998 $(25,000,000)
Fourth Fiscal Quarter of
Fiscal Year 1998 $50,000,000
First Three Fiscal Quarters
of Fiscal Year 1999 $50,000,000
Fourth Fiscal Quarter of
Fiscal Year 1999 and
thereafter $140,000,000
(b) the Funded Debt Ratio on the last day of any Fiscal Quarter
occurring during any period set forth below to be greater than the
ratio set forth below opposite such period:
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<PAGE>
Maximum Funded
Period Debt Ratio
------ --------------
Third Fiscal Quarter
of Fiscal Year 1995 4.50:1.00
Fourth Fiscal Quarter of
Fiscal Year 1995 4.50:1.00
First Three Fiscal Quarters
of Fiscal Year 1996 4.50:1.00
Fourth Fiscal Quarter of
Fiscal Year 1996 4.25:1.00
First Three Fiscal Quarters
of Fiscal Year 1997 4.25:1.00
Fourth Fiscal Quarter of
Fiscal Year 1997 3.25:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 3.25:1.00
Fourth Fiscal Quarter of
Fiscal Year 1998 2.50:1.00
First Three Fiscal Quarters
of Fiscal Year 1999 2.50:1.00
Fourth Fiscal Quarter of
Fiscal Year 1999 and
thereafter 2.00:1.00
(c) Consolidated Funded Debt as of the end of any Fiscal Quarter during
any period set forth below to be more than the amount set forth below
opposite such period:
Maximum
Period Consolidated Debt
------ -----------------
Third Fiscal Quarter
of Fiscal Year 1995 $585,000,000
Fourth Fiscal Quarter of
Fiscal Year 1995 $585,000,000
First Three Fiscal Quarters
of Fiscal Year 1996 $585,000,000
Fourth Fiscal Quarter of
Fiscal Year 1996 $520,000,000
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<PAGE>
Maximum
Period Consolidated Debt
------ -----------------
First Three Fiscal Quarters
of Fiscal Year 1997 $520,000,000
Fourth Fiscal Quarter of
Fiscal Year 1997 $495,000,000
First Three Fiscal Quarters
of Fiscal Year 1998 $495,000,000
Fourth Fiscal Quarter of
Fiscal Year 1998 $460,000,000
First Three Fiscal Quarters
of Fiscal Year 1999 $460,000,000
Fourth Fiscal Quarter of
Fiscal Year 1999 and
thereafter $460,000,000
(d) the Adjusted Interest Coverage Ratio to be
less than the ratio set forth below as of the end of
any Fiscal Quarter during any period set forth below
set forth opposite such ratio:
Minimum Adjusted
Period Interest Coverage Ratio
------ -----------------------
Third Fiscal Quarter
of Fiscal Year 1995 1.50:1.00
Fourth Fiscal Quarter
of Fiscal Year 1995 1.50:1.00
First and Second Fiscal Quarters
of Fiscal Year 1996 1.25:1.00
Third and Fourth Fiscal Quarters
of Fiscal Year 1996 1.00:1.00
First Fiscal Quarter
of Fiscal Year 1997 1.20:1.00
Second Fiscal Quarter
of Fiscal Year 1997 1.40:1.00
Third Fiscal Quarter
of Fiscal Year 1997 1.60:1.00
Fourth Fiscal Quarter
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<PAGE>
of Fiscal Year 1997 2.10:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 2.10:1.00
Fourth Fiscal Quarter
of Fiscal Year 1998 3.20:1.00
First Three Fiscal Quarters
of Fiscal Year 1999 3.20:1.00
Fourth Fiscal Quarter
of Fiscal Year 1999
and thereafter 4.00:1.00; and
(e) the Consolidated Fixed Charge Coverage Ratio
on the last day of any Fiscal Quarter occurring during
any period set forth below to be less than the ratio set
forth opposite such period below:
Minimum Consolidated Fixed
Period Charge Coverage Ratio
------ --------------------------
Second Fiscal Quarter
of Fiscal Year 1995 .80:1.00
Third Fiscal Quarter
of Fiscal Year 1995 .75:1.00
Fourth Fiscal Quarter
of Fiscal Year 1995 .90:1.00
First Three Fiscal Quarters
of Fiscal Year 1996 .90:1.00
Fourth Fiscal Quarter
of Fiscal Year 1996 1.00:1.00
First Three Fiscal Quarters
of Fiscal Year 1997 1.00:1.00
Fourth Fiscal Quarter
of Fiscal Year 1997 1.00:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 1.00:1.00
Fourth Fiscal Quarter
of Fiscal Year 1998 1.10:1.00
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<PAGE>
First Three Fiscal Quarters
of Fiscal Year 1999 1.10:1.00
Fourth Fiscal Quarter of Fiscal
Year 1999 and thereafter 1.50:1.00.
SECTION 2.5.6 Section 7.2.5 of the Existing Credit Agreement is
hereby amended by (a) deleting clause (c)(i) of Section 7.2.5 in its
entirety and substituting therefor the words "(i) the aggregate amount of
all such Investments made after the Closing Date in all wholly-owned
Subsidiaries (other than Commissary Operations, Inc., Mike Rose Foods,
Inc., Realco, BarbWire's of Kansas, Inc. and Shoney's of Michigan, Inc.)
shall not exceed $2,500,000 at any one time,", (b) adding the word "and"
immediately following the ";" appearing in clause (i) of such Section and
(c) adding the following new clause (j) thereto: "(j) non-cash proceeds of
Divestitures and the promissory note described in clause (h)(ii)(C) of
Section 7.2.11;".
SECTION 2.5.7 Section 7.2.7 of the Existing Credit Agreement is
hereby amended in its entirety to read as follows:
"SECTION 7.2.7. Consolidated Capital Expenditures, etc.
The Borrower will not, and will not permit any of its Subsidiaries
to, make any Consolidated Capital Expenditures, except the
Borrower and its Subsidiaries may make Consolidated Capital
Expenditures during any Fiscal Year (including, without
duplication, in connection with expenditures made pursuant to and
permitted by clauses (c) and (d) of Section 7.2.11) which do not
exceed, in the aggregate, the amount set forth opposite such
Fiscal Year below:
Fiscal Year Maximum Amount
----------- --------------
1995 Fiscal Year $ 78,000,000
1996 Fiscal Year $ 91,000,000
1997 Fiscal Year $ 95,000,000
1998 Fiscal Year $100,000,000
1999 Fiscal Year $125,000,000
provided, however, that (i) to the extent that the maximum amount
of Consolidated Capital Expenditures permitted to be made by the
Borrower and its Subsidiaries in any Fiscal Year, without giving
effect to this proviso, exceeds the aggregate amount actually
incurred during such Fiscal Year, the lesser of one hundred
percent of the amount of such excess or $10,000,000 may be carried
forward to the next Fiscal Year and (ii) in the Fiscal Years (but
no later than the 1997 Fiscal Year) in which the Borrower is
required to acquire restaurant properties from Marriott or
Thompson
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<PAGE>
Hospitality, Inc., either directly or pursuant to the Borrower's
obligations under the Restaurant Sale and Purchase Agreement dated
May 20, 1992, by and among the Borrower, Marriott Family
Restaurants, Inc., Marriott Corporation and Thompson Hospitality,
Inc., Consolidated Capital Expenditures in respect of such Fiscal
Year shall be increased by an amount not to exceed $5,000,000 in
the aggregate for all such Fiscal Years, and provided, further,
that there shall be excluded from Consolidated Capital
Expenditures undeveloped real estate designated as Mortgage
Financing Collateral prior to such time that restaurants
constructed on such real estate are open and operating."
SECTION 2.5.8 Clause (b) of Section 7.2.8 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"(b) (i) Guaranties existing on May 9, 1993 and disclosed
in Item 7.2.8 ("Existing Guaranties") of the Disclosure Schedule
and (ii) guaranties replacing such guaranties so long as such
replacement guaranty does not increase the amount of obligations
guarantied thereby and the other terms and conditions of such
replacement guaranty are no more onerous to the Borrower than
those of the guaranty so replaced;"
SECTION 2.5.9 Section 7.2.11 of the Existing Credit Agreement
is hereby amended by (a) adding the words "(other than Divestitures)" after
the words "assets or properties" appearing in the second line of clause (e)
of such Section and (b) deleting clause (h) of such Section in its entirety
and replacing such clause with the following:
"(h) so long as no Default has occurred and is continuing
or would occur after giving effect thereto, the Borrower (i) may
sell the Pargo's, Fifth Quarter and Mike Rose Foods Concepts so
long as the consideration for any such sale shall be (x) at least
80% cash (unless the Required Lenders otherwise agree) and (y) is
within a range of fair values (as reasonably determined by the
Board of Directors of the Borrower) to Persons other than
Affiliates and (ii) may dispose of the Lee's Famous Recipe Concept
for (A) a cash consideration (as reasonably determined by the
Board of Directors of the Borrower), (B) a lease to the purchaser
of such Concept of up to 10 Lee's Famous Recipe restaurants in
connection therewith and (C) a promissory note of such purchaser
in a principal amount of $4,000,000; provided that (I) the cash
Net Proceeds of such Divestitures (other than proceeds of the
leases referred to above) shall be used to contemporaneously repay
Loans pursuant to Section 3.1.2(e) and any promissory notes
constituting Divestiture
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<PAGE>
proceeds (including the note described in clause (C) above) shall
be pledged to the Collateral Agent for the benefit of the Lenders,
(II) the terms and conditions of any non-cash proceeds of such
Divestitures shall be in form and substance satisfactory to the
Agent and (III) upon the consummation of each such Divestiture
there shall remain Collateral having an aggregate value of at
least $500,000,000;"
SECTION 2.5.10 Clauses (j) and (k) of Section 7.2.11 of the
Existing Credit Agreement are hereby amended in their entirety to read as
follows:
"(j) the subleasing by the Borrower of real properties
owned by Realco having an aggregate net book value not in excess
of $10,000,000 at any time, provided such subleases are
subordinate to the Security Interests of the Collateral Documents;
(k) the disposition by the Borrower of up to forty
restaurants (which may constitute Collateral or be owned by
Realco) consisting of up to twenty "Shoney's" Concept restaurants
and up to twenty "Captain D's" Concept restaurants which
restaurants the Borrower has determined are no longer necessary or
useful for the continuing business of the Borrower; and"
SECTION 2.5.11 Section 7.2.11 of the Existing Credit Agreement is
hereby amended by adding a new clause (l) thereto to read as follows:
"(l) the leasing or subleasing by the Borrower or the leasing by
Realco of up to ten (10) Lee's Famous Recipe Concept restaurants
to RTM Inc. (or to a sublessee or lessee designated by RTM Inc.)
in connection with the Divestiture of the Lee's Famous Recipe
Concept."
SECTION 2.5.12 Section 7.2.15 of the Existing Credit Agreement is
hereby amended in its entirety to read as follows:
"SECTION 7.2.15. Inconsistent Agreements. The Borrower
will not, and will not permit any of its Subsidiaries to, enter
into any agreement containing any provision which would be
violated or breached by any Loan or by the performance by the
Borrower of its obligations hereunder or under any Note, any other
Loan Document or any Realco Document."
SECTION 2.5.13 Clause (a) of Section 7.2.20 of the Existing
Credit Agreement is hereby amended in its entirety to read as follows:
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<PAGE>
"(a) any provision of any Mortgage Financing Transaction
Document in any manner which adversely affects the Agent, the
Collateral Agent or the Lenders (it being understood that
amendments in form and substance satisfactory to the Agent to
Mortgage Financing Transaction Documents which would permit the
substitution of Mortgage Financing Collateral described in clause
(b)(ii) of the definition of Mortgage Financing Collateral for
existing Mortgage Financing Collateral subject to a Mortgage
Financing Transaction having an equal value shall not be deemed
adverse to the Agent, the Collateral Agent or the Lenders;
provided, that, any such valuation shall, in the case of existing
Mortgage Financing Collateral, be based on the value of such
Mortgage Financing Collateral at the time such property became
Mortgage Financing Collateral and, in the case of Mortgage
Financing Collateral described in clause (b)(ii) of the definition
of Mortgage Financing Collateral, be based on the valuation of
such Mortgage Financing Collateral as of April 15, 1995 as set
forth in the Marshall and Stevens report thereon dated May 19,
1995),".
SECTION 2.5.14 Section 7.2.23 of the Existing Credit Agreement is
hereby amended in its entirety to read as follows:
"SECTION 7.2.23. Purchase of Franchisees. The Borrower
will not, and will not permit its Subsidiaries to, make any
Franchisee Acquisitions except Franchisee Acquisitions the
consideration for which is common stock and/or other
consideration, (i) such common stock not having a value in excess
of $10,000,000 in the aggregate (with such common stock being
valued at its market value at the time of the relevant
acquisition) and (ii) such other consideration having an aggregate
value for all such Franchisee Acquisitions not in excess of
$30,000,000 in any one Fiscal Year and not more than $60,000,000
in the aggregate (with any consideration other than cash valued at
the fair market value thereof); provided, however, that (x) both
before and after giving effect to any such Franchisee
Acquisitions, no Default shall have occurred or be continuing and
(y) if applicable, the Borrower and/or such Subsidiary shall have
complied with clause (iii) of the proviso to Section 7.2.5 (but
such compliance shall not be in derogation of the Borrower's
rights under clause (a) of Section 7.2.11 with respect to such
Subsidiary)."
SECTION 2.5.15 Section 7.2.24 of the Existing Credit Agreement is
hereby deleted in its entirety.
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SECTION 2.6 Modification of Article X (Miscellaneous). Article X
of the Existing Credit Agreement is hereby modified as follows:
SECTION 2.6.1 Clause (b)(iii) of Section 10.14 of the Existing
Credit Agreement is hereby amended by inserting a new clause (iii) to read
as set forth below and renumbering the existing clause (iii) to clause (iv)
and renumbering existing clause (iv) to clause (v):
"(iii) constituting property subject to a Mortgage or Subsidiary
Mortgage or held by Realco to the extent that the value
(determined as of the last available Marshall & Stevens appraisal
for such property) of the remaining Collateral and assets of
Realco (after giving effect to such release) is equal to or
greater than $500,000,000; provided, however, that the aggregate
value of all such assets so released shall not exceed
$15,000,000;"
ARTICLE III
CONDITIONS TO EFFECTIVENESS
SECTION 3.1 Modification Effective Date. This Modification
Agreement No. 7 shall become effective as of the date first above written,
when all of the conditions set forth in Sections 3.1.1 through 3.1.17 shall
have been satisfied (the "Modification Effective Date").
SECTION 3.1.1 Resolutions, etc. The Agent shall have
received from the Borrower, a certificate, dated the Modification Effective
Date, of its Secretary or any Assistant Secretary as to:
(a) resolutions of its Board of Directors
then in full force and effect authorizing the execution,
delivery, and performance of this Modification Agreement
No. 7 and each other Loan Document to be executed by it;
and
(b) the incumbency and signatures of the
officers of the Borrower authorized to act with respect to
this Modification Agreement No. 7 and each other Loan
Document to be executed by it (upon which certificate the
Agent and each Lender may conclusively rely until the
Agent shall have received a further certificate of the
Secretary of the Borrower canceling or amending such prior
certificate, which further certificate shall be reasonably
satisfactory to the Agent).
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<PAGE>
SECTION 3.1.2 Compliance Certificate. The Agent shall have
received, with a counterpart for each Lender, a duly executed and completed
Compliance Certificate (based upon the Borrower's second Fiscal Quarter of
Fiscal Year 1995 financial statements), dated the Modification Effective
Date.
SECTION 3.1.3 Security Agreements; Insurance Compliance. The
Agent shall have received in connection with the Security Agreement and the
Subsidiary Security Agreements
(a) executed copies of proper Financing Statements
(Form UCC-1) or Financing Statement Amendment(Form UCC-3), naming
the Borrower or the relevant Subsidiary as the debtor, as
appropriate, and the Collateral Agent as the secured party, and
other similar Instruments or documents, with respect to collateral
described in Section 3.1.7 filed under the Uniform Commercial Code
in the States listed on the appropriate schedules to the
Collateral Documents;
(b) executed copies of proper Financing Statements
(Form UCC-3) to release all Security Interests and other rights of
any Person (other than the Collateral Agent) in the collateral
described in any Collateral Document previously granted by the
Borrower or the relevant Subsidiary, except for any Security
Interest which is permitted by clause (b) of Section 7.2.3 of the
Existing Credit Agreement;
(c) certified copies of Requests for Information or
Copies (Form UCC-11) (or similar search report certified by a
party acceptable to the Collateral Agent), dated a date within
sixty days of the Modification Effective Date for states other
than Tennessee and within (i) seven days of the Modification
Effective Date for Tennessee for filings that may be made with the
office of the Secretary of State of Tennessee and (ii) thirty days
of the Modification Effective Date for all other Tennessee filings
that may be made in offices other than the Secretary of State of
Tennessee, listing all effective financing statements which name
the Borrower or any relevant Subsidiary (under its present name
and any previous name) as debtor and which are filed in the
jurisdictions in which filings were made pursuant to clause (a),
together with copies of such financing statements (none of which
shall cover any collateral described in the Security Agreement or
the Subsidiary Security Agreements unless the Required Lenders
shall consent thereto in writing), and accompanied by judgment and
tax lien searches with respect to the Borrower and such
Subsidiaries; and
(d) evidence (including an insurance broker's
certificate or letter) reasonably satisfactory to the
-18-
<PAGE>
Collateral Agent of compliance with Section 4.5 of each of the
Security Agreement and the Subsidiary Security Agreements and with
Section 7.1.5 of the Existing Credit Agreement.
SECTION 3.1.4 Amendments to Security Agreements. The Agent shall
have received an amendment to each of the Borrower Security Agreement, the
Copyright Security Agreement and the Trademark Security Agreement, dated as
of the Modification Effective Date in the forms attached hereto as Exhibits
B, C and D duly executed and delivered, and in form satisfactory for filing
with the appropriate public office.
SECTION 3.1.5 Realco Documents. The Agent shall have received,
with copies for each Lender, each Realco Document relating to properties to
be transferred to Realco on the Modification Effective Date, and such
Realco Documents shall be satisfactory in form and substance to the Agent.
SECTION 3.1.6 Officer Solvency Certificate. The Agent shall have
received for its benefit and the benefit of each Lender, a favorable
certificate of an Authorized Officer of the Borrower, dated as of the
Modification Effective Date, substantially in the form of Exhibit F
attached to the Existing Credit Agreement.
SECTION 3.1.7 Valuations. The Agent shall have received for its
benefit and the benefit of the Lenders, addressed to the Agent and the
Lenders, in reasonable detail and otherwise in form and substance
satisfactory to the Agent and the Lenders, valuations conducted by Marshall
& Stevens, or other independent appraisers satisfactory to the Agent, of
all real estate of the Borrower and its Subsidiaries constituting
collateral being transferred to Realco in connection with the Modification
Effective Date, which on the Modification Effective Date substantiate
values in an amount at least equal to $51,000,000.
SECTION 3.1.8 [Intentionally Omitted].
SECTION 3.1.9 Consents, Approvals, etc. The Agent shall have
received copies of all consents, waivers, amendments and other approvals of
each Person necessary for the performance of the Realco Documents and the
other transactions contemplated hereby. Each such consent, waiver,
amendment and other approval shall be in full force and effect and in form
and substance satisfactory to the Agent.
SECTION 3.1.10 Transfers to Realco. The Agent shall have
received a certificate, dated the Modification Effective Date, from an
Authorized Officer containing a true and complete listing of all properties
transferred to Realco on the Modification
-19-
<PAGE>
Effective Date and all properties listed in such Authorized Officer's
certificate shall be contributed to Realco on terms and conditions
satisfactory to the Agent.
SECTION 3.1.11 Shareholder Approval. The Agent shall have
received, with a counterpart for each Lender, from the Borrower in its
capacity as shareholder of each of its Subsidiaries, a certificate of an
Authorized Officer dated as of the Modification Effective Date consenting
to and approving the execution, delivery and performance of each of the
Loan Documents to which any of such Subsidiaries is a party as well as the
transactions contemplated thereby.
SECTION 3.1.12 Acknowledgement by Subsidiary Guarantors. The
Agent shall have received, with a counterpart for each Lender, from each
Subsidiary Guarantor, the Acknowledgement by Subsidiary Guarantors, dated
as of the Modification Effective Date, substantially in the form of Exhibit
A attached hereto.
SECTION 3.1.13 No Materially Adverse Effect. No events shall
have occurred which, individually or in the aggregate, comprise a
Materially Adverse Effect since October 30, 1994.
SECTION 3.1.14 Closing Fees and Expenses. The Agent shall have
received payment in full of all of the fees required to be paid on the
Modification Effective Date in accordance with the Agent's Fee Letter, as
amended, and shall have received payment in full of its out-of-pocket costs
and expenses (including counsel fees and disbursements) payable in
accordance with Section 10.3 of the Existing Credit Agreement for which
invoices have been submitted on or prior to such date.
SECTION 3.1.15 Opinions of Counsel. The Agent shall have
received opinions, dated as of the Modification Effective Date and
addressed to the Agent and all Lenders, from the following:
(a) Tuke Yopp & Sweeney, counsel to the Borrower,
substantially in the form of Exhibit E attached hereto, and as to
such other matters related to the transactions contemplated hereby
as the Agent may reasonably require; and
(b) Local counsel satisfactory to the Agent from each
state in which property to be transferred to Realco in connection
with the Modification Effective Date is located, each in form and
substance satisfactory to the Agent and its counsel and not
objected to by the Required Lenders, and as to such other matters
related to the transactions contemplated hereby as the Agent may
reasonably require.
-20-
<PAGE>
SECTION 3.1.16 Execution of Counterparts. The Agent shall have
received counterparts of this Modification Agreement No. 7 duly executed by
the Borrower, the Agent, and the Required Lenders.
SECTION 3.1.17 Compliance with Warranties; No Default etc. The
Agent shall have received from an Authorized Officer of the Borrower a
certificate, dated the date first above written, stating that
(a) the representations and warranties set forth in
Article VI of the Existing Credit Agreement (excluding, however,
those contained in Section 6.7 thereof) and the representations
and warranties set forth in each of the other Loan Documents, in
each case as modified in accordance herewith, are true and correct
in all material respects with the same effect as if then made
(unless stated to relate solely to an earlier date, in which case
such representations and warranties were true and correct as of
such earlier date);
(b) except as disclosed by the Borrower to the Agent
and the Lenders pursuant to Section 6.7 of the Existing Credit
Agreement:
(i) no labor controversy, litigation,
arbitration or governmental investigation or proceeding is
pending or, to the knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries which
might have a Materially Adverse Effect; and
(ii) no development has occurred in any labor
controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section
6.7 of the Existing Credit Agreement which might have a
Materially Adverse Effect; and
(c) no Default has occurred and is continuing, and
neither the Borrower nor any of its Subsidiaries is in material
violation of any law or government regulation or court order or
decree.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 Cross References. References in this Modification
Agreement No. 7 to any article or section are, unless otherwise specified,
to such article or section of this Modification Agreement No. 7.
-21-
<PAGE>
SECTION 4.2 Instrument Pursuant to Existing Credit Agreement;
Limited Waiver. This Modification Agreement No. 7 is a Loan Document
executed pursuant to the Existing Credit Agreement and shall (unless
otherwise expressly indicated therein) be construed, administered, and
applied in accordance with all of the terms and provisions of the Existing
Credit Agreement. Any term or provision of and any modification effected
by this Modification Agreement No. 7 may be modified in any manner by an
instrument in writing executed by the Borrower and the Required Lenders (or
the Agent on behalf of and with the consent of the Required Lenders).
Except as expressly amended hereby, all of the representations, warranties,
terms, covenants and conditions of the Existing Credit Agreement shall
remain unmodified and unwaived. The modifications set forth herein shall
be limited precisely as provided for herein to the provisions expressly
modified herein and shall not be deemed to be a waiver of, amendment of,
consent to or modification of any other term or provision of any other Loan
Document or of any transaction or further or future action on the part of
the Borrower which could require the consent of any of the Lenders under
the Existing Credit Agreement.
SECTION 4.3 Successors and Assigns. This Modification
Agreement No. 7 shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
SECTION 4.4 Counterparts. This Modification Agreement No. 7
may be executed by the parties hereto in several counterparts which shall
be executed by the Borrower, each of the Required Lenders and the Agent, as
the case may be, all of which shall be deemed to be an original and which
shall constitute together but one and the same agreement.
SECTION 4.5 Event of Default. It is understood and agreed that
any breach of any representation or warranty or covenant contained herein
shall constitute an Event of Default.
-22-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Modification Agreement No. 7 to be executed by the respective officers
hereunder duly authorized as of the day and year first above written.
SHONEY'S, INC.
By:
--------------------------
Title: Treasurer
CANADIAN IMPERIAL BANK OF
COMMERCE, acting through
its NEW YORK AGENCY, as
Agent
By:
-------------------------
Title: Authorized Signatory
CIBC INC., acting through
its Atlanta Office
By:
-------------------------
Title: Authorized Signatory
NATIONSBANK OF TENNESSEE, N.A.
By:
---------------------------
Title:
-----------------------
THE BANK OF NEW YORK
By:
---------------------------
Title:
-----------------------
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By:
---------------------------
Title:
-----------------------
-23-
<PAGE>
THE BANK OF NOVA SCOTIA
By:
---------------------------
Title:
-----------------------
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By:
---------------------------
Title:
-----------------------
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By:
---------------------------
Title:
-----------------------
THE FUJI BANK, LIMITED
By:
---------------------------
Title:
-----------------------
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By:
---------------------------
Title:
-----------------------
KREDIETBANK N.V.
By:
---------------------------
Title:
-----------------------
THE BANK OF TOKYO TRUST COMPANY
By:
---------------------------
Title:
-----------------------
-24-
<PAGE>
FIRST AMERICAN NATIONAL BANK
By:
---------------------------
Title:
-----------------------
ALLIED IRISH BANK
By:
---------------------------
Title:
-----------------------
MERCHANTILE BANK OF ST.
LOUIS, N.A.
By:
---------------------------
Title:
-----------------------
PNC BANK, KENTUCKY, INC.
By:
---------------------------
Title:
-----------------------
THE ROYAL BANK OF SCOTLAND
By:
---------------------------
Title:
-----------------------
GIROCREDIT BANK AG DER SPARKASSEN
GRAND CAYMAN ISLANDS BRANCH
By:
---------------------------
Title:
-----------------------
THE SUMITOMO BANK, LIMITED
By:
---------------------------
Title:
-----------------------
-25-
<PAGE>
<TABLE>
<CAPTION>
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE - EXHIBIT 11
Forty Weeks Ended
August 6, August 7,
1995 1994
------------ ------------
<S> <C> <C>
Earnings per Common Share - Primary
Average Shares outstanding 41,378,087 41,004,466
Net effect of dilutive stock options-based on the treasury
stock method using average market price 117,147 308,819
---------- ----------
Totals 41,495,234 41,313,285
========== ==========
Income from continuing operations before extraordinary charge
and cumulative effect of change in accounting principle $22,379,803 $ 39,722,258
Income from discontinued operations 6,977,133 8,600,071
Extraordinary charge on early extinguishment of debt (1,037,808)
Cumulative effect of change in accounting for income taxes 4,468,386
---------- ----------
Net income $29,356,936 $ 51,752,907
========== ==========
Per Share amount:
Income from continuing operations before extraordinary charge
and cumulative effect of change in accounting principle $ .54 $ .96
Income from discontinued operations .17 .21
Extraordinary charge on early extinguishment of debt (.03)
Cumulative effect of change in accounting for income taxes .11
---------- ----------
Net income $ .71 $ 1.25
========== ==========
Earnings per Common Share - Fully Diluted:
Average shares outstanding 41,378,087 41,004,466
Net effect of dilutive stock options-based on the treasury
stock method using the average market price 117,147 316,861
Assumed conversion of 8.5% zero coupon convertible debentures (A) 5,215,589
---------- ----------
Totals 41,495,234 46,536,916
========== ==========
Income from continuing operations before extraordinary charge
and cumulative effect of change in accounting principle $22,379,803 $39,722,258
Add 8.5% zero coupon convertible debentures interest,
net of income tax (A) 3,077,918
---------- ----------
Total from continuing operations before extraordinary charge
and cumulative effect of change in accounting principle 22,379,803 42,800,176
Income from discontinued operations 6,977,133 8,600,071
Extraordinary charge on early extinguishment of debt (1,037,808)
Cumulative effect of change in accounting for income taxes 4,468,386
---------- ----------
Net income $29,356,936 $54,830,825
========== ==========
Per Share amount:
Income from continuing operations before extraordinary charge
and cumulative effect of change in accounting principle $ .54 $ .92
Income from discontinued operations .17 .18
Extraordinary charge on early extinguishment of debt (.02)
Cumulative effect of change in accounting for income taxes .10
---------- ----------
Net income $ .71 $ 1.18
========== ==========
(A) For the first three quarters and the third 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 since they were not considered dilutive.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE - EXHIBIT 11
Twelve Weeks Ended
August 6, August 7,
1995 1994
------------ ------------
<S> <C> <C>
Earnings per Common Share - Primary
Average Shares outstanding 41,466,378 41,146,151
Net effect of dilutive stock options-based on the treasury
stock method using average market price 147,120 156,895
---------- ----------
Totals 41,613,498 41,303,046
========== ==========
Income from continuing operations before extraordinary charge $ 8,165,518 $15,012,079
Income from discontinued operations 2,034,226 2,241,531
Extraordinary charge on early extinguishment of debt (1,037,808)
---------- ----------
Net income $10,199,744 $16,215,802
========== ==========
Per Share amount:
Income from continuing operations before extraordinary charge $ .20 $ .36
Income from discontinued operations .05 .05
Extraordinary charge on early extinguishment of debt (.03)
---------- ----------
Net income $ .25 $ .39
========== ==========
Earnings per Common Share - Fully Diluted:
Average shares outstanding 41,466,378 41,146,151
Net effect of dilutive stock options-based on the treasury
stock method using the average market price 147,120 157,327
Assumed conversion of 8.5% zero coupon convertible debentures (A) 5,205,632
---------- ----------
Totals 41,613,498 46,509,110
========== ==========
Income from continuing operations before extraordinary charge $ 8,165,518 $ 15,012,079
Add 8.5% zero coupon convertible debentures interest,
net of income tax (A) 941,409
---------- ----------
Total from continuing operations before extraordinary charge 8,165,518 15,953,488
Income from discontinued operations 2,034,226 2,241,531
---------- ----------
Net income $10,199,744 $ 18,195,019
========== ==========
Per Share amount:
Income from continuing operations before extraordinary charge $ .20 $ .34
Income from discontinued operations .05 .05
Extraordinary charge on early extinguishment of debt (.02)
---------- ----------
Net income $ .25 $ .37
========== ==========
(A) For the first three quarters and the third 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 since they were not considered dilutive.
</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 AUGUST 6,
1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-29-1995
<PERIOD-START> OCT-31-1994
<PERIOD-END> AUG-06-1995
<CASH> 5,654,028
<SECURITIES> 0
<RECEIVABLES> 14,401,380
<ALLOWANCES> 1,744,988
<INVENTORY> 35,950,248
<CURRENT-ASSETS> 91,714,697
<PP&E> 722,896,454
<DEPRECIATION> 301,144,930
<TOTAL-ASSETS> 557,357,779
<CURRENT-LIABILITIES> 154,020,572
<BONDS> 0
<COMMON> 41,495,288
0
0
<OTHER-SE> (145,654,563)
<TOTAL-LIABILITY-AND-EQUITY> 557,357,779
<SALES> 797,213,267
<TOTAL-REVENUES> 817,476,770
<CGS> 701,368,283
<TOTAL-COSTS> 781,380,967
<OTHER-EXPENSES> 49,005,522
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,007,162
<INCOME-PRETAX> 36,095,803
<INCOME-TAX> 13,716,000
<INCOME-CONTINUING> 22,379,803
<DISCONTINUED> 6,977,133
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,356,936
<EPS-PRIMARY> 0.71
<EPS-DILUTED> 0.71
</TABLE>
