<PAGE> 1
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
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended July 13, 1997 Commission file number 0-7961
TPI ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-1899681
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 382460
GERMANTOWN, TENNESSEE 38138-2460
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (901) 752-3889
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, Par Value $.01 per Share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---- ----
The number of shares outstanding of the registrant's common stock is
20,664,512 as of August 21, 1997.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Companies for which information is furnished:
TPI Enterprises, Inc.(1)
Telecom Plus Shared Tenants Services, Inc.(2)
Maxcell Telecom Plus, Inc.(2)
TPI Restaurants, Inc.(3)
Insurex Agency, Inc.(3)(4)
Insurex Benefit Administrators, Inc.(3)(4)
TPI Entertainment, Inc.(3)
TPI West Palm, Inc.(3)
TPI Commissary, Inc.(3)(4)
TPI Transportation, Inc.(3)(4)
TPI Insurance Corporation (3)
(1) Dissolved under New Jersey law on December 31, 1996.
(2) Dissolved under Delaware law on August 19, 1997.
(3) Subsidiaries were sold to Shoney's Inc. in a transaction consummated on
September 9, 1996. See Note 2 to Notes to Consolidated Financial Statements.
(4) Wholly-owned subsidiaries of TPI Restaurants, Inc.
2
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS
TPI ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JULY 13, DECEMBER 29,
1997 1996
-------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS $ 829 $1,190
INVESTMENTS 5,198 5,078
------ ------
TOTAL ASSETS 6,027 6,268
LIABILITIES
RESERVE FOR ESTIMATED COSTS DURING THE PERIOD OF LIQUIDATION 861 1,053
ACCRUED EXPENSES 287 480
------ ------
TOTAL LIABILITIES 1,148 1,533
------ ------
NET ASSETS IN LIQUIDATION $4,879 $4,735
====== ======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE> 4
TPI ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
NET ASSETS IN LIQUIDATION, DECEMBER 29, 1996 $ 4,735
INVESTMENT EARNINGS 144
-------
NET ASSETS IN LIQUIDATION, JULY 13, 1997 $ 4,879
=======
</TABLE>
4
<PAGE> 5
TPI ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(GOING CONCERN BASIS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TWELVE TWENTY-EIGHT
WEEKS ENDED WEEKS ENDED
JULY 14, 1996 JULY 14, 1996
------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
RESTAURANT REVENUES $ 66,356 $ 151,290
COSTS AND EXPENSES:
FOOD, SUPPLIES, AND UNIFORMS 24,120 55,153
RESTAURANT LABOR AND BENEFITS 21,183 48,641
RESTAURANT DEPRECIATION AND AMORTIZATION 2,707 6,301
OTHER RESTAURANT OPERATING EXPENSES 12,620 29,029
GENERAL AND ADMINISTRATIVE EXPENSES 4,728 11,696
PROVISION FOR ASSET VALUATION (833) (17,000)
CLOSED UNIT RESERVE 4,657 4,657
RESTRUCTURING (136) (170)
OTHER 5,247 7,113
TOTAL COSTS AND EXPENSES 74,293 145,420
OPERATING INCOME (7,937) 5,870
OTHER INCOME AND EXPENSES:
INTEREST INCOME (202) (507)
INTEREST EXPENSE 2,454 5,951
TOTAL OTHER INCOME AND EXPENSES 2,252 5,444
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES (10,189) 426
PROVISION FOR INCOME TAXES -- --
-------- ---------
NET INCOME (LOSS) $(10,189) $ 426
======== =========
NET INCOME (LOSS) PER COMMON SHARE $ (0.49) $ 0.02
======== =========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES OUTSTANDING 20,649 20,635
======== =========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE> 6
TPI ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(GOING CONCERN BASIS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
TWENTY-EIGHT WEEKS ENDED
JULY 14, 1996
--------------
(DOLLARS IN THOUSANDS)
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 426
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 8,790
DEFERRED INCOME TAXES (184)
RESERVE FOR RESTRUCTURING (170)
PROVISION FOR ASSET VALUATION (17,000)
CLOSED UNIT RESERVE 4,657
CHANGES IN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE-TRADE 607
LITIGATION SETTLEMENT RECEIVABLE 30,000
INVENTORIES 3,690
OTHER CURRENT ASSETS 1,706
OTHER ASSETS (243)
ACCOUNTS PAYABLE-TRADE (2,219)
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (6,844)
RESERVE FOR RESTRUCTURING (1,836)
INCOME TAXES CURRENTLY PAYABLE (128)
OTHER LIABILITIES (109)
--------
NET CASH PROVIDED BY OPERATING ACTIVITIES 21,143
CASH FLOWS FROM INVESTING ACTIVITIES:
ACQUISITION OF PROPERTY AND EQUIPMENT (2,012)
DISPOSITION OF PROPERTY AND EQUIPMENT 356
OTHER 63
NET CASH USED IN INVESTING ACTIVITIES (1,593)
CASH FLOWS FROM FINANCING ACTIVITIES:
NET BORROWINGS ON CREDIT FACILITIES 1,000
OTHER LONG-TERM DEBT PAYMENTS (992)
COMMON SHARES ISSUED 69
NET CASH PROVIDED BY FINANCING ACTIVITIES 77
--------
NET INCREASE IN CASH AND CASH EQUIVALENTS 19,627
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,744
--------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 28,371
========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
NON-CASH TRANSACTIONS:
CAPITALIZED LEASE OBLIGATIONS ENTERED INTO $ 299
CASH PAYMENTS (REFUNDS) DURING THE QUARTER FOR:
INTEREST 4,703
INCOME TAXES PAID 294
</TABLE>
6
<PAGE> 7
TPI ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - Pursuant to the terms of the Plan of Tax-Free
Reorganization under Section 368(a)(1)(c) of the Internal Revenue Code and
Agreement, dated March 15, 1996, as amended, by and among TPI Enterprises,
Inc. (the "Company"), Shoney's, Inc. ("Shoney's") and TPI Restaurants
Acquisition Corporation, a wholly-owned subsidiary of Shoney's (the
"Agreement"), the Company completed the sale of substantially all of the
Company's assets to Shoney's (the "Transaction") on September 9, 1996. In
connection with the Transaction, the Company's Board of Directors approved
a Plan of Complete Liquidation as required by the Agreement. Under the
Plan of Complete Liquidation, the Company is required to wind-down its
operations and distribute its assets after paying or making provision for
its liabilities. On October 1, 1996, the Company distributed 6,785,114
shares of Shoney's common stock, $1.00 par value ("Shoney's Common
Stock"), representing the total number of shares of Shoney's Common Stock
received pursuant to the Transaction, to its shareholders of record as of
September 24, 1996.
As a result of the Transaction, the Company adopted the liquidation basis
of accounting for all periods subsequent to September 9, 1996. Under the
liquidation basis of accounting, assets are stated at their estimated
realizable value and liabilities, including a provision for the estimated
costs of liquidation, are stated at their anticipated settlement amounts.
The valuations of assets and liabilities are based on management estimates
and assumptions as of the date of the financial statements; actual
realization of assets and settlement of liabilities could be higher or
lower than amounts indicated.
CONSOLIDATION - The consolidated statement of net assets in liquidation as
of July 13, 1997, the consolidated statement of changes in net assets in
liquidation for the period ended July 13, 1997 and the consolidated
statement of income and the consolidated statement of cash flows for the
period ended July 14, 1996 have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the consolidated
results of operations and the cash flows for the period ended July 14,
1996 have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These financial
statements should be read in conjunction with the audited financial
statements of the Company included in its Annual Report on Form 10-K for
the year ended December 29, 1996.
NET INCOME PER COMMON SHARE - As explained above in "Basis of
Presentation", effective September 9, 1996, the Company adopted the
liquidation basis of accounting, which reports an excess of assets over
liabilities. Accordingly, the presentation of per common share information
on a liquidation basis is not considered meaningful and has been omitted.
Income per common share data for the twelve and twenty-eight weeks ended
July 14, 1996 have been computed as that period is reported on the going
concern basis of accounting. As the Company's options, warrants, and
convertible debentures had an antidilutive effect during that period,
earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding during the period.
7
<PAGE> 8
INVESTMENT - The Company's $5,198,000 in investments at July 13, 1997
represent U.S. Treasury bills due August 28, 1997. At July 13, 1997, the
cost of the investments, which includes accrued interest, approximates net
realizable value.
2. SHONEY'S, INC. TRANSACTION
GENERAL - On September 9, 1996, the Company consummated the sale of
substantially all of its assets to Shoney's pursuant to the terms of the
Agreement.
At December 31, 1995, the Company recorded a provision of $17.0 million to
reduce the carrying value of the net assets to be exchanged to the
estimated fair value of the consideration to be received from Shoney's.
During the first quarter of 1996, the Shoney's Common Stock price
increased, resulting in an increase in the fair value of the consideration
to be received by the Company. As a result of the increase in the Shoney's
Common Stock price, the Company determined the valuation allowance was not
longer required and reversed the allowance during 1996.
CONSIDERATION - In exchange for substantially all of the assets of the
Company, including the shares of capital stock of TPI Restaurants, Inc.
("TPIR"), TPI Entertainment, Inc., and TPI Insurance Corporation, at the
closing of the Transaction (the "Closing"), the Company received from
Shoney's an aggregate of 6,785,114 shares of Shoney's Common Stock and was
permitted to retain an amount in cash, including sufficient cash to pay
the Company's remaining Specified Wind-up Expenses (as defined in the
Agreement). As noted under the caption "Initial Distribution" below, on
October 1, 1996, the 6,785,114 shares of Shoney's Common Stock were
distributed to the Company's shareholders of record as of September 24,
1996.
The Agreement entitled the Company to retain up to $7,500,000 in cash
("Retained Cash") and up to $7,350,000 to pay Specified Wind-up Expenses,
in each case subject to certain adjustments. Approximately $1,150,000 in
Retained Cash was exchanged for additional shares of Shoney's Common Stock
pursuant to the Agreement, thereby reducing the amount of Retained Cash to
approximately $6,350,000. Specified Wind-up Expenses are currently
estimated to be approximately $1,300,000 in excess of the $7,350,000
allotment, which represents a payment to Shoney's at the Closing in
settlement of certain liabilities or contingent liabilities which exceeded
the liabilities agreed to be retained by Shoney's in the Agreement. The
$1,300,000 payment included approximately $550,000 for Excess Repair and
Maintenance Expenses (as defined in the Agreement).
Current estimates indicate that Retained Cash will be approximately
$4,856,000, or $0.235 per share of the Company's Common Stock. This
assumes that no liabilities of the Company, other than those presently
known, arise prior to its liquidation. This amount also assumes that the
Company's actual liabilities are the same in amount as its budgeted
liabilities; such actual liabilities may be higher or lower. Of the
$4,856,000, a maximum of up to approximately $210,000 will be required to
be retained by the Company for the benefit of holders of the stock options
of the Company which were assumed by Shoney's in the Transaction
("Shoney's Options"), until such time as such options are exercised, are
terminated, or expire. Under the Company's Plan of Complete Liquidation,
if Shoney's Options are not exercised prior to the final liquidating
distribution record date, such cash, after providing for the expenses of
the distribution thereof, will be distributed to the Company's
shareholders. As of August 21, 1997, none of the Shoney's Options were
exercised. The final liquidating distribution record date will occur no
earlier than December 31, 1998.
8
<PAGE> 9
INITIAL DISTRIBUTION - On October 1, 1996, the Board of Directors of the
Company (the "Company's Board") made an initial distribution to its
shareholders of all of the shares of Shoney's Common Stock received by the
Company in the Transaction (the "Initial Distribution") to holders of
record of the Company's Common Stock on September 24, 1996.
RESIGNATION OF OFFICERS AND BOARD MEMBERS - Effective as of September 9,
1996, all of the officers of the Company resigned, except for Frederick W.
Burford, who was elected as the Company's President, Chief Financial
Officer and Secretary, and Paul J. Siu, who was elected as Assistant
Secretary. Effective as of October 10, 1996, all of the members of the
Company's Board resigned, except for Mr. Burford and Mr. Siu.
PLAN OF DISSOLUTION - The Company's Board intends to dissolve the Company
in accordance with the provisions of the New Jersey Business Corporation
Act (the "NJBCA") by obtaining tax clearance and by causing a certificate
of dissolution to be filed in the office of the Secretary of State of the
State of New Jersey. The application for tax clearance was approved on
December 31, 1996, at which time a certificate of dissolution was filed.
On each of February 3, 10, and 17, 1997, the Company gave notice requiring
all then-known creditors of the Company to present their claims in writing
on or prior to August 26, 1997. In August 1997, the Company's Board
intends to review the assets and liabilities of the Company and consider
the effect of all then known or anticipated liabilities, including the
audit discussed in Note 3 below. After such review, the Company's Board
intends to declare a distribution consisting of all of the then remaining
cash other than cash in escrow, cash that the Company's Board deems
necessary to satisfy liabilities (if any) and expenses associated with the
audit discussed in Note 3 below or cash required to be retained for
holders of Shoney's Options. See Note 5 regarding subsequent event.
3. TAX MATTERS
On April 11, 1997, the Company received a notification from the Internal
Revenue Service (the "IRS") indicating that the IRS would be auditing the
Company's 1995 tax return. At the present time, the Company is not aware
of any amounts that would be owed as a result of this review. However, any
findings by the IRS which would result in additional monies owed by the
Company would affect the Company's estimate of the remaining cash
available for distribution. See Note 2. The Board considered the effect of
the anticipated liabilities (if any) and expenses associated with the
audit prior to declaring a distribution of the remaining cash available
for distribution. See Note 5 regarding subsequent events. There can be no
assurance that subsequent events will not cause the trustees of the
liquidating trust to delay any cash distribution pending the results of
the audit.
4. RESTAURANT CLOSINGS
During the second quarter of 1996, the Company closed ten of its Shoney's
restaurants and one of its Captain D's restaurants. These underperforming
restaurants were closed to reduce overhead and the impact of the projected
cash flows. In connection with these closings, the Company recorded a
provision of $4,657,000 to write-down the related assets of these
restaurants to $5,050,000 which was their estimated fair value at July 14,
1996 and to record liabilities associated with the closing of these
locations. These liabilities included the cost of future lease payments
and other expenses. The Company reclassified the $5,050,000 discussed
above from property, plant and equipment to assets held for sale on its
balance sheet at July 14, 1996. The reserve for closed stores and the
estimated fair value of the remaining assets of these stores includes
management's best estimates.
9
<PAGE> 10
5. SUBSEQUENT EVENT
STOCK TRANSFER BOOKS - The Company closed its stock transfer books and
other records, effective as of the close of business on August 21, 1997.
No further trading of shares of Common Stock of the Company will be
allowed from and after August 21, 1997 and all shares of the Company's
Common Stock then outstanding, as reflected on the Company's stock
transfer books, will represent only the right to receive a pro rata
portion of the assets distributed in liquidation. SHAREHOLDERS SHOULD
SURRENDER THEIR SHARES OF COMMON STOCK OF THE COMPANY TO THE COMPANY'S
STOCK TRANSFER AGENT, AMERICAN STOCK TRANSFER & TRUST COMPANY, 6201 15TH
AVENUE, BROOKLYN, NEW YORK, 11219, FOR CANCELLATION.
LIQUIDATING TRUST - On August 21, 1997, the Company distributed all of its
assets and liabilities to a liquidating trust. The trustees of the
liquidating trust are Frederick W. Burford and Paul James Siu. Mr. Burford
and Mr. Siu each own less than 1% of the outstanding shares of Common
Stock of the Company as of August 21, 1997 (in each case, excluding
options which are due to expire on September 8, 1997 and which are not
anticipated to be exercised prior to such time). Mr. Burford is acting as
administrative officer of the liquidating trust and as compensation
therefor is being paid $2,500 per fiscal quarter until the liquidation is
completed, which is anticipated to occur in January 1999.
The agency agreement (the "Agency Agreement") governing the liquidating
trust provides for the formation of a liquidating trust to determine and
pay or otherwise satisfy or finally provide for all then remaining claims
of creditors and other liabilities of the Company, including costs and
expenses of the trustees and the amounts held back for the benefit of the
holders of Shoney's Options. The Agency Agreement provides that the
liquidating trust shall not engage in a trade or business and shall not
take any actions except for the purpose of winding up its affairs. The
trustees have been granted with the power, among other things, to collect
assets and to pay, satisfy, and discharge the debts and other liabilities
of the liquidating trust. Pursuant to the terms of the Agency Agreement,
the trustees will distribute at least annually any proceeds from the sale
of assets or income from investments, subject to retention of a reasonable
amount of proceeds or income to meet claims and contingent liabilities.
The Agency Agreement also provides for mechanisms for effecting the final
liquidation of the liquidating trust and the distribution of amounts, if
any, due to holders of Shoney's Options upon their exercise.
The term of the liquidating trust is until the earlier to occur of (i)
August 21, 2000 or (ii) the date of distribution of all property then held
by or for the account of the liquidating trust, but in no event earlier
than December 31, 1998.
INITIAL CASH DISTRIBUTION - On August 21, 1997, after reviewing the assets
and liabilities of the liquidating trust, the trustees have authorized an
initial distribution of approximately $4,856,000, or $.235 in cash per
share of Common Stock, which represented substantially all of the assets
of the liquidating trust, less a reserve for known or anticipated
liabilities, including a holdback of up to approximately $210,000, or
$.235 in cash per share of Common Stock issuable upon exercise of Shoney's
Options, for the benefit of holders of Shoney's Options. Subject to no
other claims arising from and after August 21, 1997 which would cause the
trustees to revisit the propriety of making a distribution to shareholders
at this time, the distribution will be payable on September 12, 1997 to
shareholders of record as of the close of business on August 21, 1997.
10
<PAGE> 11
After the initial cash distribution is made, the liquidating trust will
continue to hold assets as a reserve against certain claims, including by
the holders of Shoney's Options, the tax audit discussed in Note 3 and
other known or anticipated liabilities, through the termination of the
liquidating trust. It is currently anticipated that complete liquidation
of the liquidating trust will occur in January 1999. At that time, the
remaining assets, if any, in the liquidating trust not required to satisfy
obligations will be distributed to the holders of record of the Common
Stock of the Company as of the close of business on August 21, 1997. It is
currently anticipated that there will be no more than a nominal amount of
cash, if any, to distribute at that time.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
As a result of the sale of the majority of the Company's assets (Note 2) and the
Company's Board's approval to adopt a Plan of Complete Liquidation, the
financial statements have been prepared on a liquidation basis of accounting.
Accordingly, assets have been valued at their estimated net realizable value and
liabilities include estimated costs to carry out the Plan of Complete
Liquidation. The net adjustment required during the quarter to convert from a
going concern (historical basis) to a liquidation basis of accounting was a
decrease in net assets of $1.25 million. This amount represents the Company's
estimate of the costs to carry out the Plan of Complete Liquidation.
RESULTS OF OPERATIONS
Prior to the Transaction, the Company's results of operations for the twelve and
twenty-eight week periods from April 20, 1997 and December 29, 1996 are
presented in the accompanying financial statements. Since operations for the
current year only include the change in net assets in liquidation, the quarters
are not comparable. Therefore, a comparison of material changes in results of
operations is not applicable.
SIGNIFICANT OR UNUSUAL ITEMS
At December 31, 1995, the Company recorded a provision of $17.0 million to
reduce the carrying value of the net assets to be exchanged to the estimated
fair value of the consideration to be received from Shoney's. During the first
quarter of 1996, the Shoney's Common Stock price increased, resulting in an
increase in the fair value of the consideration to be received by the Company.
As a result of the increase in the Shoney's Common Stock price, the Company
determined the valuation allowance was no longer required and reversed the
allowance during the first quarter of 1996.
Other costs for the sixteen and twenty-eight weeks ended July 14, 1996 included
on the Consolidated Statements of Income included $3.4 and $4.7 million of costs
incurred in connection with the Transaction.
LIQUIDITY AND CAPITAL RESOURCES
The Company has no available short-term or long-term facilities. The Company
believes that its present cash and cash equivalents, short-term investments, and
earnings on such investments will allow it to implement its Plan of Complete
Liquidation. The Company made its initial distribution under its Plan of
Complete Liquidation on October 1, 1996 by distributing all of the Shoney's
Common Stock received in the Transaction to its shareholders of record at
September 24, 1996. As of July 13, 1997, the Company had approximately $4.9
million in assets in excess of its estimated liabilities. The Company does not
currently intend to make any cash distributions to its shareholders until such
time as the period for creditors of the Company to present written proof of
their claims, if any, shall have expired. At such time, the Company's Board
intends to review the assets and liabilities of the Company and consider the
effect of all then known or anticipated liabilities and, after paying or making
provision for all then known or anticipated liabilities, it intends to declare a
distribution consisting of all of the then remaining cash other than the cash
required to be retained for holders of Shoney's Options. See Note 5 regarding
subsequent event.
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
TPI Restaurants, Inc. v. Marlin Services, Inc., Marlin Electric, Inc., d/b/a
Marlin Services, and the Aetna Casualty and Surety Company and Marlin
Electric, Inc. v. TPI Restaurants, Inc. and Related Matters
On March 7, 1996, the Company filed a civil action in the Circuit Court of
Palm Beach County; captioned TPI Restaurants, Inc. v. Marlin Services, Inc.,
Marlin Electric, Inc., d/b/a Marlin Services, Inc. ("Marlin"), and The Aetna
Casualty and Surety Company. The Company contended, among other things, that
Marlin breached terms of a maintenance service agreement that Restaurant had
entered into with Marlin by failing to perform timely maintenance as required
by the agreement, overcharging for parts and materials, improperly billing
for labor, and improper charging for overhead. On March 7, 1996, Marlin filed
a separate action in the U.S. District Court of Virginia against TPIR
alleging among other things that TPIR breached its contract with Marlin by
failing to pay amounts owed under the contract. Marlin claimed damages in
excess of $2.2 million through March 1996.
On June 27, 1996, the Company entered into a settlement with Marlin. The
settlement provided for the payment to Marlin of an aggregate of $1,150,000
in cash in settlement of the civil action brought by Marlin against TPIR.
Under the terms of the settlement agreement, Marlin was obligated to use
settlement proceeds to fulfill its obligations with all subcontractors hired
by Marlin to perform work under Marlin's maintenance service agreement with
TPIR, and Marlin was entitled to the excess, if any, after all of the
subcontractors had been paid. No payment was to have been made to any
subcontractor unless the subcontractor fully released TPIR from any liability
and released all liens, if any, filed against TPIR. As part of the
settlement, mutual releases were exchanged among the parties and the two
civil actions were dismissed.
On March 12, 1997, the Company amended the settlement agreement with Marlin
pursuant to which the Company paid Marlin $95,000 of the remaining settlement
funds on March 3, 1997. The remainder of the settlement funds, in the amount
of approximately $70,000, will be held by the Company in an escrow account
until such time as the Company is satisfied that Marlin has complied with all
remaining obligations under the original settlement agreement. Marlin will
not be able to apply for these funds until February 1, 1998. The Company also
has the right to pay any subcontractors directly from this fund.
OTHER PROCEEDINGS
To the Company's knowledge, the Company and its subsidiaries are not party to
any other outstanding lawsuits.
13
<PAGE> 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
27- Financial Data Schedule (SEC Use Only)
(b) Reports on Form 8-K:
None
14
<PAGE> 15
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 hereunto duly authorized.
TPI ENTERPRISES, INC.
(Registrant)
Date: August 27, 1997 By: /s/ Federick W. Burford
- ---------------------- ------------------------------------------------
Frederick W. Burford
Trustee of the TPI Enterprises Liquidating Trust
15
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000096919
<NAME> TPI ENTERPRISES, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> APR-21-1997
<PERIOD-END> JUL-13-1997
<EXCHANGE-RATE> 1
<CASH> 829
<SECURITIES> 5,198
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,027
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,027
<CURRENT-LIABILITIES> 1,148
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0
0
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<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Represents net assets in liquidation as of July 13, 1997
</FN>
</TABLE>
