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1
UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended October 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
Commission file number 0-12343
VICORP Restaurants, Inc.
(Exact name of registrant as specified in its charter)
COLORADO 84-0511072
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 West 48th Avenue Denver, Colorado, 80216
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 296-2121
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Common Stock
$.05 par value per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filer pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]
The aggregate market value of 8,052,111 shares of the registrant's common
stock held by non-affiliates on January 17, 1995 was approximately
$ 144,938,000.
At January 17, 1995, there were 9,515,093 shares of the Company's Common
Stock $.05 par value outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The Notice of Annual Meeting of Shareholders and Proxy Statement pertaining
to the 1995 Annual Meeting of Shareholders ("the Proxy Statement") are
incorporated herein by reference into Parts I and III.
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PART I
ITEM 1. BUSINESS.
VICORP Restaurants, Inc., the registrant, together with its subsidiary, is
referred to herein as "VICORP" or the "Company". The Company was
incorporated in 1959 and is headquartered in Denver, Colorado.
VICORP operates family style restaurants under the names "Village Inn" and
"Bakers Square" and franchises restaurants under the Village Inn name. The
Company is also evaluating a third concept, "Angel's Diner and Bakery". At
October 30, 1994, VICORP operated 307 restaurants in 14 states, of which
112 were Village Inns, 189 were Bakers Squares and six were Angel's. On that
date, there were 107 franchised Village Inn restaurants in 19 states. The
Company has a pie manufacturing and food distribution division supporting its
restaurants, which operates under the name VICOM. VICOM has six facilities
located in those areas where the Company has major concentrations of its
restaurants.
During fiscal 1994, six new company-operated restaurants were opened, 10
locations were closed and two locations that previously had been operated
by the Company were franchised. Also during fiscal 1994, three new
franchise restaurants were opened and two existing franchise restaurants
were closed.
Company Operations
In the fourth quarter of 1994, the Company adopted a plan to close and/or
dispose of 50 of its restaurants over the next year, of which 18 are
Village Inn restaurants and 32 are Bakers Square restaurants. This
decision was predicated upon a reevaluation of the Company's business and
competitive position in order to identify strategies to re-establish growth
and improve profitability and return on investment. The locations
identified for disposal were restaurants that had both declining sales and
operating cash flows and are in trade areas that are no longer considered
appropriate for the Company's existing concepts. The Company recorded a
$23.0 million pretax charge in the fourth quarter primarily to reduce the
assets of the targeted disposal locations to estimated net realizable value
and to accrue for expected carrying costs of closed units and sublease
losses.
All of the Company's restaurant concepts serve breakfast, lunch and dinner
with a guest check average between $4 and $7. Village Inn is primarily
known for its breakfast foods while Bakers Square emphasizes lunch and
dinner and features fresh baked pies as signature items, for internal
consumption or for carryout.
The Angel's restaurants exhibit a diner motif and feature cakes as
signature items. The Company has converted eight of its restaurants to
the Angel's concept, including two which opened in early fiscal 1995. The
appeal of the Angel's concept stems from the potential to significantly
increase sales at marginal locations through increased ambiance, larger
food portions and a high level of service, albeit at a higher relative cost
structure and conversion costs approximating $500,000 per location. The
Company does not plan to further expand the concept unless the existing
Angel's can provide attractive returns.
Store management typically consists of a general manager and two
associate/assistant managers. This management team has primary
responsibility for the efficient and profitable operation of their
restaurant and are provided incentives to do so. Additionally, the Company
employs area directors who each oversee approximately nine restaurants and
work closely with the restaurant general managers in helping them meet the
Company's objectives. Each area director in turn reports to a vice-
president of operations who is responsible for a specific region of the
country within each concept.
The Company believes the principal measure of success for its restaurants
is the ability to provide each customer with a satisfying experience.
Hiring and retaining the right people, making certain that employees are
adequately trained to do their jobs, clearly communicating the specific
results expected from each employee and providing relevant feedback of
performance are central factors in ensuring customer satisfaction.
Training programs are designed to meet these objectives and focus on
outcome-based training, emphasizing the acquisition of basic skills and
behavior that result in desired performance for specific positions.
3
Cost effective procurement and distribution of quality products is also
critical to providing a satisfying customer experience. The Company makes
centralized purchasing decisions for basic menu ingredients to gain favorable
prices and ensure uniform quality specifications. It does not anticipate any
difficulty in obtaining food products of adequate quantity or quality at
acceptable prices.
The Company utilizes advertising where market penetration allows.
Expenditures for advertising were 3.7% of company-operated restaurant sales
in fiscal 1994. During 1994, Village Inn introduced an extended line of
breakfast skillets, new burgers and new dinner entrees, each supported with
advertising. Bakers Square advertising in 1994 included support of holiday
pie sales and select menu items and introduction and testing of a
repositioning to a broadened bakery focus.
New point-of-sale computer systems, designed specifically for VICORP's
concepts, were installed in all of the Company's restaurants by the end of
fiscal 1994. Also, a new reporting system was completed to provide daily
restaurant performance information to each restaurant, as well as field and
corporate management. Plans for 1995 include enhancing the existing
performance reporting system and developing other systems to free up store
management time spent on manual transcription tasks, providing on-line
profit and loss reports and developing marketing support systems to
facilitate menu analysis and promotional effectiveness.
In November 1994, the Company settled a lawsuit against its directors and
officers liability insurance carriers. See Item 3 of Part I, Legal
Proceedings.
Franchise Operations
The Village Inn restaurants franchised under the Company's current franchise
program generally operate for an initial term of 20 years and require payments
to the Company of an initial franchise fee of $30,000, a continuing royalty fee
of four percent of the franchisee's revenues and a marketing fee of four-tenths
of one percent of such revenues. In addition, franchisees are required to spend
an amount equal to 1.6 percent of gross sales on local advertising and
promotional activities. In support of its franchising activities, the Company
employs field consultants who visit the franchise restaurants regularly to
ensure that the franchisees maintain compliance with certain standards of
operations and make recommendations for improvements. A Franchise Advisory
Board, consisting of seven franchisees who are elected by their peers every two
years, meets regularly with Company personnel to discuss facets of operations
that affect the Company's franchise community.
The net number of Village Inn franchise restaurants in operation over the
last five years has not changed significantly. However, as franchising
provides a profitable revenue stream and at the same time leverages the
strength of the Village Inn brand into new markets, the Company continues
to pursue franchising opportunities with qualified applicants. Four to six
new franchise units are expected to open in fiscal 1995.
Management and Administrative Changes
In fiscal 1994, the Company made significant management changes. In August
1994, J. Michael Jenkins, an industry veteran with over 25 years of
experience in the restaurant business, joined the Company as President, Co-
Chief Executive Officer and a member of the Board of Directors. Also, the
Company completed an organizational restructuring, whereby its Bakers
Square administrative office in Matteson, Illinois was closed. The
functions performed at that office were transferred and combined where
possible with similar functions performed at its Denver, Colorado
headquarters. In addition, the Company eliminated 27 other administrative
positions that were deemed redundant or non-essential to ongoing
operations. These actions are intended to streamline coordination of
programs and processes, make support functions more responsive to the
restaurants' management, and should reduce administrative costs in the
future.
4
Trademarks and Service Marks
The Company has acquired the right to use the marks which it considers
important to its business through various federal and state registrations.
VICORP has no reason to believe that there are any conflicting rights that
might materially impair the use of the Company's marks.
Working Capital Items
The Company is not required to maintain significant levels of working
capital because its revenues are primarily derived from cash sales while
restaurant inventories are purchased on credit and rapidly converted to
cash.
Competition
The restaurant industry is highly competitive and is often affected by
changes in taste and eating habits of the public, by local and national
economic conditions affecting spending habits, and by population and
traffic patterns. The Company competes directly or indirectly with all
types of restaurants, from national and regional chains to local
establishments. Some of its competitors are corporations much larger than
the Company, having at their disposal greater capital resources and greater
ability to withstand adverse business trends.
Research and Development
No material amount was spent on Company sponsored research and development
activities during the last fiscal year. Additionally, no material amounts
were spent by the Company on customer sponsored research activities
relating to the development of new products, services or techniques or the
improvement of existing products, services or techniques.
Regulation
The Company is subject to various federal, state and local laws affecting
its business. Restaurants generally are required to comply with a variety
of regulatory provisions relating to zoning of restaurant sites,
sanitation, health and safety. With respect to the restaurants operated by
the Company which serve alcoholic beverages, VICORP is governed by the laws
regulating the sale of liquor, wine and beer.
The Company is subject to a substantial number of state laws regulating
franchise operations and sales. Those laws impose registration and
disclosure requirements on franchisors in the offer and sale of franchises
and, in certain cases, also apply substantive standards to the relationship
between franchisor and franchisee. The Company also must adhere to the
Federal Trade Commission regulations governing disclosure requirements in
the sale of franchises.
Various federal and state labor laws govern the Company's relationship with
its employees, including such matters as minimum wage requirements,
overtime, and other working conditions. Environmental requirements have
not had a material effect on the operations of the Company or those of its
franchisees.
Employees
At October 30, 1994, the Company employed approximately 14,400 persons.
5
Executive Officers of the Company
The following sets forth certain data concerning the executive officers of
the Company, all of whom are appointed on an annual basis. There is no
family relationship between any of the executive officers.
Name Age Position
------ ----- -----------
Charles R. Frederickson 58 Chairman of the Board and Co-Chief Executive Officer
J. Michael Jenkins 48 Director, President and Co-Chief Executive Officer
James F. Caruso 40 President/Bakers Square
Robert E. Kaltenbach 49 President/Village Inn
Dennis L. Kuper 47 Executive Vice President/Finance
Charles R. Frederickson has been a director of the Company since 1968, and
Chairman of the Board since November 1986.
J. Michael Jenkins was appointed President in August 1994. From February
1992 until his appointment with the Company, he served as Chief Executive
Officer and Chairman of the Board for El Chico Restaurants, Inc. Mr.
Jenkins served as President and Chief Executive Officer of Metromedia
Steakhouses, Inc. from May 1989 to February 1992.
James F. Caruso was appointed President/Bakers Square in December 1994. Prior
to that time, he served as Executive Vice President in charge of Bakers Square
operations, after serving in the same capacity for the Village Inn division
since September 1990 when he joined the Company. For the two years preceding
his employment with the Company, Mr. Caruso was obtaining his Masters in
Economics degree from the University of Missouri where he also served as a
graduate teaching assistant.
Robert E. Kaltenbach was appointed President/Village Inn in December 1994
after serving as Vice President/Franchise Operations since July 1988.
Dennis L. Kuper was appointed Executive Vice President/Finance in November
1986.
6
ITEM 2. PROPERTIES.
The following table provides information as of October 30, 1994, concerning
the land and buildings at restaurant locations owned, leased, under
development or held for sale by the Company.
Village Bakers
Inn Square Angel's Other Total
-------- -------- -------- ------- ------
Company-operated restaurants:
Properties owned in fee 7 55 3 -- 65
Buildings owned on leased land 3 9 -- -- 12
Leased locations 86 95 3 -- 184
-------- -------- -------- ------ ------
96 159 6 -- 261
======== ======== ======== ====== ======
Properties leased to others:
Properties owned in fee 3 -- -- 4 7
Buildings owned on leased land -- -- -- 1 1
Leased locations 29 -- -- 18 47
-------- -------- -------- ------ ------
32 -- -- 23 55
======== ======== ======== ====== ======
Leased properties under
development -- -- 2 -- 2
======== ======== ======== ====== ======
Properties held for sale:
Properties owned in fee 1 1 -- 4 6
Buildings owned on leased land -- 1 -- -- 1
Leased locations 15 28 -- 12 55
-------- -------- -------- ------ ------
16 30 -- 16 62
======== ======== ======== ====== ======
The Company considers its existing operating restaurant properties and
equipment to be in good condition.
The restaurants operated by the Company are located primarily in Arizona,
California, Florida, the Rocky Mountain region, and the upper Midwest.
The Company intends to lease, sublease or sell the 16 properties which are
currently idle. Additionally, over the next fiscal year, the Company plans
to dispose of another 46 properties which were operating at October 30, 1994.
For additional information concerning the Company's leases see Note 5 of
Notes to Consolidated Financial Statements which is included in Item 8 of
Part II.
The Company owns its home office complex in Denver, consisting of
approximately 5.25 acres of land, a 90,000 square foot office building and
a 5,000 square foot restaurant building.
VICORP also owns the land and buildings comprising its bakery facilities in
Oak Forest, Illinois and Denver, Colorado. It leases the land and buildings
which comprise its bakery facilities in Santa Fe Springs, California, Orlando,
Florida, Phoenix, Arizona, Mounds View, Minnesota, and distribution facility in
Oak Forest, Illinois.
7
ITEM 3. LEGAL PROCEEDINGS.
On November 30, 1994, VICORP Restaurants, Inc. v. Federal Insurance Company
& Cigna Insurance Company, United States District Court for the District of
Colorado, Civil Case No. 92-C-751 was dismissed with prejudice as a result
of a settlement entered into between the parties. Pursuant to the terms of
the confidential settlement agreement, the Defendant insurance companies
paid VICORP an amount in excess of the net receivable previously recorded
for this claim and a gain of approximately $1.9 million was recognized as
of October 30, 1994.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to the Company's security holders during
the 12 week period ended October 30, 1994.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
The Company's common stock is traded in the over-the-counter market and is
quoted on the National Association of Securities Dealers (NASDAQ) National
Market System under the symbol "VRES". As of January 17, 1995, the
Company had 590 shareholders of record. The following table sets forth
for the periods indicated the high and low closing sales quotations per share
of common stock as reported by NASDAQ:
Fiscal Quarter
First Second Third Fourth
-----------------------------------
1994
High $ 21 1/2 $ 21 $ 15 1/2 $ 17 1/4
Low 17 3/4 15 1/4 14 14 3/8
1993
High $ 26 1/4 $ 27 $ 27 1/2 $ 20 3/4
Low 20 1/4 23 18 1/2 16 1/4
The range of high and low closing sales quotations contained in the
foregoing table reflects inter-dealer prices, without retail mark-up, mark-
down or commissions, and may not represent actual transactions.
The Company has not paid cash dividends on its common stock since 1986.
Future common stock dividend payments will be dependent upon operating
results, loan agreement restrictions and other financial and business
considerations.
8
ITEM 6. SELECTED FINANCIAL DATA.
(dollars in thousands, except per share data) 1994 1993 1992 1991 1990
----------------------------------------------------------
RESULTS OF OPERATIONS
System-wide sales including franchise sales $ 529,982 $ 542,986 $ 527,817 $ 524,231 $ 489,444
Restaurant sales 409,297 425,139 414,324 417,808 389,105
Total revenues 412,644 428,505 417,518 421,232 392,523
Income (loss) before extraordinary item (6,638) 16,524 15,522 7,182 10,821
Net income (loss) (6,638) 16,524 14,940 6,375 10,821
----------------------------------------------------------
OPERATING ANALYSIS
Restaurant operating profit analysis as a
percentage of restaurant sales
Costs and expenses
Food 30.1% 29.8% 30.9% 32.7% 33.7%
Labor 30.2% 28.5% 27.8% 27.8% 28.0%
Other operating 28.2% 27.5% 27.2% 26.4% 25.2%
Operating profit 11.4% 14.2% 14.1% 13.1% 13.1%
General and administrative expense
as a percentage of revenues 8.7% 7.8% 7.5% 7.0% 7.1%
Interest expense as a percentage of revenues .9% .9% 1.3% 1.9% 2.4%
Income before income taxes and extraordinary
and unusual items as a percentage of revenues 2.5% 6.3% 6.1% 4.9% 4.6%
Effective income tax rate 37.5% 36.2% 39.5% 40.4% 39.7%
----------------------------------------------------------
BALANCE SHEET DATA
Total assets $ 249,023 $ 254,031 $ 241,958 $ 234,251 $ 237,430
Long-term debt and capitalized lease obligations 42,554 40,008 43,736 53,259 63,877
Preferred stock liquidation preference -- -- -- -- 11,062
Common shareholders' equity 134,866 148,318 135,445 119,932 100,138
Preferred stock and debt to total capitalization 24.0% 21.2% 24.4% 30.8% 42.8%
----------------------------------------------------------
CASH FLOW DATA
Net income (loss) $ (6,638) $ 16,524 $ 14,940 $ 6,375 $ 10,821
Depreciation and amortization 26,133 23,381 20,242 17,758 15,511
Deferred income tax provision (5,414) 5,932 8,145 2,911 5,814
Write-offs, extraordinary item, and other 24,113 4,397 2,645 12,405 3,010
----------------------------------------------------------
Subtotal 38,194 50,234 45,972 39,449 35,156
Change in current assets and liabilities (4,100) 636 8,196 (1,570) 646
----------------------------------------------------------
Cash provided by operations 34,094 50,870 54,168 37,879 35,802
As a percentage of revenues 8.3% 11.9% 13.0% 9.0% 9.1%
Investment in property and equipment 28,733 42,426 41,509 36,339 27,610
----------------------------------------------------------
PER COMMON SHARE
Earnings (loss) before extraordinary item $ (.69) $ 1.60 $ 1.48 $ .70 $ 1.00
Earnings (loss) (.69) 1.60 1.42 .62 1.00
Book value 14.18 14.96 13.58 11.99 10.72
Market price at year-end 16 3/4 20 3/4 22 1/4 21 1/8 14
Weighted average common and dilutive
common equivalent shares (000's omitted) 9,656 10,301 10,519 10,304 9,765
----------------------------------------------------------
NUMBER OF RESTAURANTS AT YEAR-END
Bakers Square 189 187 181 179 167
Company-operated Village Inn 112 126 122 122 124
Franchised Village Inn 107 104 105 106 104
Angel's 6 -- -- -- --
----------------------------------------------------
Total 414 417 408 407 395
----------------------------------------------------------
9
. An asset disposal and restructuring charge of $23,000,000 and income of
$1,918,000 from settlement of litigation were included in results of
operations for 1994.
. Fiscal 1993 consisted of 53 weeks while the remainder of the fiscal
years presented consisted of 52 weeks. A restructuring charge of $1,300,000
was included in results of operations for 1993.
. Pretax extraordinary debt extinguishment costs of $963,000 were
included in results of operations for 1992.
. A receivable write-off of $8,683,000 and pretax extraordinary debt
extinguishment costs of $1,354,000 were included in results of operations
for 1991.
. The Company has not paid dividends on its common stock during the last
five years.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following analysis should be read in conjunction with the Selected Financial
Data (Item 6 of Part II) and the Consolidated Financial Statements (Item 8 of
Part II).
RESULTS OF OPERATIONS
The following table sets forth selected operating statistics for the
Company's two primary operating concepts and consolidated information for
the last three fiscal years. All average sales are presented on a 52 week
basis.
1994 1993 1992
Village Inn
Restaurant sales $145,410,000 $150,660,000 $140,886,000
Average sales per restaurant 1,192,000 1,182,000 1,174,000
Store operating profit 12.3% 13.9% 13.6%
Restaurants at year-end 112 126 122
Bakers Square
Restaurant sales $260,110,000 $274,479,000 $273,438,000
Average sales per restaurant 1,364,000 1,475,000 1,528,000
Store operating profit 11.1% 14.4% 14.4%
Restaurants at year-end 189 187 181
Consolidated
Restaurant sales $409,297,000 $425,139,000 $414,324,000
Food cost 30.1% 29.8% 30.9%
Labor cost 30.2% 28.5% 27.8%
Other operating cost 28.2% 27.5% 27.2%
Store operating profit 11.4% 14.2% 14.1%
Restaurant sales decreased 3.7% in 1994 compared to 1993, despite the
addition of six new restaurants in 1994 and full year inclusion of eleven
restaurants opened in 1993. Contributing to the sales decrease was an
extra week of operations in 1993 under the Company's 52/53 week accounting
year convention. However, the principal reason for the decline was a
decrease in comparable restaurant sales of 5.7% resulting primarily from
lower customer counts. The customer count decreases were most predominant
in the Company's Bakers Square concept where customer counts decreased for
the third consecutive year. These declines were the result of various
operational, demographic and competitive issues and led to substantial
organizational changes during 1994. The disruptive effects of these
changes further exacerbated the sales declines in 1994, but are expected to
produce improving trends in future years. Menu price changes had no
appreciable effect on sales volumes in 1994.
The sales increase of 2.6% in 1993 over 1992 resulted largely from the net
addition of eleven restaurants during the year, price increases
approximating 2% and the inclusion of the additional week in fiscal year
1993. Comparable sales, however, decreased 3.5% due to lower customer
counts primarily in the Bakers Square concept.
10
Restaurant operating profit decreased in 1994 compared to 1993, both in
total and as a percentage of sales. The inability to correspondingly
decrease the fixed portion of labor costs and other fixed costs in
relationship to declines in comparable restaurant sales was principally
responsible for this decline. Partially offsetting this decline were
incremental profits from operating new units, reduced insurance expense and
lower marketing costs for Bakers Square.
Restaurant operating profit modestly increased in 1993 compared to 1992.
The improvement resulted largely from decreased food and advertising costs
and additional operating income from new restaurants. These improvements
were partially offset by the effect of lower comparable sales in
relationship to fixed costs.
General and administrative expense increased in 1994 compared with 1993 due
primarily to a $1,000,000 sign-up bonus for the Company's new president,
litigation costs and lower capitalization of overhead as a result of a
slowdown in construction activity. General and administrative expense in
1993 increased over 1992 due largely to additional field administration and
training costs associated with new store openings.
Other income/expense in 1994 included $1,918,000 of income related to
settlement of litigation against certain of the Company's insurance
carriers.
Interest expense was essentially unchanged in 1994 after declining in 1993.
The decrease in 1993 versus 1992 was due largely to the conversion and
redemption of the Company's 13 1/2% convertible subordinated debentures
which resulted in the extraordinary debt extinguishment charge in 1992.
In the fourth quarter of 1994, the Company recorded a $23,000,000 charge
related primarily to adopting a plan to dispose of 50 underperforming
restaurants over the next fiscal year. The charge reduced the carrying
amounts of the assets associated with the disposal properties to estimated
net realizable value. Also, included were accruals for expected carrying costs
following closure and sublease losses. Included in the charge was
$2,287,000 to write-down carrying values on four properties with projected
cash flows inadequate to recover the remaining investments, and $1,291,000
of restructuring costs consisting primarily of severance associated with
the elimination of 27 positions late in 1994. Twelve of the targeted
restaurants were closed late in fiscal 1994 or early fiscal 1995. The remaining
restaurants will remain open until either disposed or economics dictate
closure. The Company does not anticipate that disposition proceeds or
costs for these properties will materially affect the Company's liquidity.
In the fourth quarter of 1993, the Company recorded a $1,300,000 charge
related to the decision to close its Matteson, Illinois regional office and
relocate or combine most of the functions performed there with similar
functions at its Denver, Colorado headquarters. The charge consisted
primarily of severance and moving expenses. The reorganization was
completed during 1994.
The Company's reported tax rate is not indicative of actual tax payments
because of net operating loss (NOL) carryforwards available to offset
taxable income. The effective income tax rates used for financial
reporting were 37.5% in 1994, 36.2% in 1993 and 39.5% in 1992. The 1994
rate was also affected by the FICA tipped income tax credit that took
effect January 1, 1994. The lower effective tax rate for 1993 was due to
the increase in the top federal rate from 34% to 35% enacted in August of
1993, which increased the Company's net deferred tax asset $1,200,000 and
reduced income tax expense accordingly.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of funds is cash provided by operations.
Cash flow from operations decreased in 1994 due primarily to lower
operating income. Cash flow from operations decreased in 1993 primarily
as a result of the timing and payment of certain components of working
capital.
11
The Company's working capital is generally in a deficit position because, like
most restaurant businesses, substantially all sales are for cash, while credit
is received from trade suppliers. Furthermore, the Company has not maintained
large excess cash balances, but rather has utilized available cash for capital
spending, repayment of borrowings or the repurchase of its common stock.
The Company supplements cash provided by operations with bank borrowings
and occasional lease financing. At October 30, 1994, the Company had
$28,250,000 of outstanding borrowings under its bank credit facility, with
approximately $39,700,000 available for additional direct advances.
In 1992, the Company, retired through conversion and redemption, all
$18,400,000 of its 13 1/2% convertible subordinated debentures then
outstanding. The redemption was funded primarily with bank borrowings.
Over the last three years, 891,500 shares of the Company's common stock
was repurchased under authorizations approved by the Board of Directors.
At October 30, 1994, authorization to repurchase an additional 508,500
common shares was available. Future purchases with respect to this
authorization may be made from time to time in the open market or through
privately negotiated transactions and will be dependent upon various
business and financial considerations.
Capital expenditures in 1994 totaled approximately $28,700,000 and
consisted of $2,400,000 for new restaurants, $15,200,000 for remodeling and
refurbishing existing restaurants, $3,700,000 for converting restaurants to
the Angel's concept, and $7,400,000 for other support related projects,
including an addition to the corporate office. Capital expenditures of
$17,000,000 are expected for 1995. No new restaurants are planned during
1995 as the Company will focus on improving existing operations before
resuming growth. Cash flow from operations and funds available under the
Company's bank credit facility are expected to be adequate for planned
capital projects and any repurchases of common stock authorized by the Board.
MANAGEMENT OUTLOOK
Improvements in future operating performance will be dependent upon the
Company's ability to reverse comparable sales trends, especially given the
significant operating leverage associated with negative incremental sales
at existing restaurants. The Company believes that management changes
initiated in 1994, a refocusing on its core business strengths, the disposal
of underperforming restaurants, and a significant reduction in general and
administrative costs resulting from the restructuring of administrative
functions, will lead to improvements in sales and operating trends.
Although national health-care reform legislation, including employer
mandated contributions, was not enacted during 1994, the Company continues
to monitor legislative efforts regarding health-care reform. The significance
of health-care reform to the restaurant industry with its large part-time
employee work force is substantial. Uncertainties related to food commodity
costs, labor availability in certain regions, other government initiatives, the
economy and the weather pose additional risks to the Company's business.
Historically, the Company has mitigated the effects of inflation through
cost controls and periodic price increases. Management believes it will be
able to minimize the effects of future inflation through similar measures,
although such price increases will be subject to competitive constraints.
12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Index to Consolidated Financial Statements
Page 13 Management's report on financial statements
Page 13 Report of independent public accountants
Page 14 Consolidated balance sheets at October 30, 1994 and October 31, 1993
Page 15 Consolidated statements of operations for each of the
three years in the period ended October 30, 1994
Page 16 Consolidated statements of cash flows for each of the
three years in the period ended October 30, 1994
Pages 17-30 Notes to consolidated financial statements
Page 30 Quarterly financial data (unaudited)
13
MANAGEMENT'S REPORT ON FINANCIAL STATEMENTS
TO OUR SHAREHOLDERS:
The preparation and integrity of the financial statements of VICORP Restaurants,
Inc. are the responsibility of its management. This responsibility includes the
selection of accounting procedures and practices which conform with generally
accepted accounting principles considered appropriate in the circumstances.
Informed judgments and estimates which the Company believes to be reasonable are
required in the determination of certain data used in the accounting and
reporting process.
The Company maintains a system of internal accounting controls designed to
provide reasonable assurance that transactions are executed in accordance
with management's authorization and properly recorded in all material
respects. Adequate communication of Company policies to its employees,
segregation of responsibilities for the authorization and execution of
transactions, and proper accountability for the Company's assets are
essential elements of the system.
Each year the Board of Directors appoints an Audit Committee comprised of
directors who are not employees of the Company. The principal
responsibilities of this Committee are to recommend an independent auditor
for the Company and to periodically meet with representatives of the
independent auditors and with management to obtain reasonable assurances
that the auditors are properly discharging their responsibilities and that
the Company's financial reporting to stockholders and others is adequate
and appropriate.
Arthur Andersen LLP has conducted an independent examination in order to
render their opinion on the Company's financial statements.
/s/ Charles R. Frederickson /s/ J. Michael Jenkins /s/ Dennis L. Kuper
Charles R. Frederickson J. Michael Jenkins Dennis L. Kuper
Chairman of the Board and President and Co-Chief Executive Vice President
Co-Chief Executive Officer Executive Officer Finance and Chief Financial
Officer
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF VICORP RESTAURANTS, INC.:
We have audited the accompanying consolidated balance sheets of VICORP
Restaurants, Inc. (a Colorado corporation) and subsidiary as of October 30,
1994 and October 31, 1993, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three years
in the period ended October 30, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of VICORP Restaurants,
Inc. and subsidiary as of October 30, 1994 and October 31, 1993, and the
results of their operations and their cash flows for the three years in the
period ended October 30, 1994, in conformity with generally accepted
accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Denver, Colorado,
December 6, 1994.
14
VICORP RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
October 30, October 31,
(in thousands) 1994 1993
---------- ----------
ASSETS
Cash (Note 1) $ 6,123 $ 5,288
Receivables (Notes 1 and 3) 9,801 4,326
Inventories (Note 1) 10,585 11,825
Deferred income taxes (Notes 1 and 9) 6,000 8,059
Prepaid expenses and other (Note 1) 2,592 2,158
---------- ---------
Total current assets 35,101 31,656
---------- ---------
Property and equipment, net (Notes 1 and 4) 165,802 177,720
Deferred income taxes (Notes 1 and 9) 33,550 26,077
Long-term receivables (Notes 1 and 3) 3,998 7,150
Other assets (Note 1) 10,572 11,428
---------- ---------
Total assets $249,023 $254,031
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of long-term
debt and capitalized lease
obligations (Notes 1, 5 and 6) $ 1,796 $ 1,738
Accounts payable, trade 19,246 20,669
Accrued compensation 5,965 6,229
Accrued taxes 9,979 9,212
Accrued insurance (Note 10) 6,537 6,830
Other accrued expenses 6,930 5,566
--------- ---------
Total current liabilities 50,453 50,244
--------- ---------
Long-term debt (Notes 1 and 6) 28,573 23,643
Capitalized lease obligations (Note 5) 13,981 16,365
Non-current accrued insurance (Note 10) 7,750 8,433
Other non-current liabilities and credits 13,400 7,028
Commitments and contingencies (Notes 5,
6 and 10)
Shareholders' equity (Note 7)
Series A Junior Participating Preferred Stock,
$.10 par value, 200,000 shares authorized,
no shares issued -- --
Common stock, $.05 par value, 20,000,000
shares authorized, 9,509,426 and 9,911,563
shares issued 476 496
Paid-in capital 91,544 98,338
Retained earnings 42,846 49,484
--------- --------
Total shareholders' equity 134,866 148,318
--------- --------
Total liabilities and shareholders' equity $249,023 $254,031
========= ========
The accompanying notes are an integral part of the financial statements.
15
VICORP RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended
--------------------------------------------
October 30, October 31, October 25,
(in thousands, except per share data) 1994 1993 1992
---------- ---------- ----------
Revenues
Restaurant operations $409,297 $425,139 $414,324
Franchise operations (Note 1) 3,347 3,366 3,194
---------- ---------- ----------
412,644 428,505 417,518
---------- ---------- ----------
Costs and expenses
Restaurant operations
Food 123,280 126,647 128,095
Labor 123,718 121,273 115,010
Other operating 115,591 116,795 112,609
General and administrative 35,752 32,991 31,388
Interest 3,867 3,878 5,321
Other (income) expense, net (Note 3) (1,944) (289) (562)
Asset disposal, restructuring and
related costs (Note 2) 23,000 1,300 --
--------- --------- ----------
423,264 402,595 391,861
--------- --------- ----------
Income (loss) before income taxes and
extraordinary item (10,620) 25,910 25,657
Provision for income taxes (Note 9) (3,982) 9,386 10,135
--------- --------- ----------
Income (loss) before extraordinary item (6,638) 16,524 15,522
Extraordinary loss on early extinguishment
of debt (less applicable income taxes
of $381,000) (Note 6) -- -- (582)
--------- --------- ----------
Net income (loss) $ (6,638) $ 16,524 $ 14,940
========= ========= ==========
Earnings (loss) per common and dilutive
common equivalent share (Note 1)
Before extraordinary item $ (.69) $ 1.60 $ 1.48
Extraordinary item -- -- (.06)
--------- --------- ---------
Net income (loss) $ (.69) $ 1.60 $ 1.42
========= ========= =========
The accompanying notes are an integral part of the financial statements.
16
VICORP RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended
--------------------------------------------
October 30, October 31, October 25,
(in thousands) 1994 1993 1992
---------- ---------- ----------
OPERATIONS
Net income (loss) $ (6,638) $16,524 $14,940
Reconciliation to cash provided by operations
Depreciation and amortization 26,133 23,381 20,242
Deferred income tax provision (5,414) 5,932 8,145
Asset disposal, restructuring
and related costs 24,788 2,787 1,900
Extraordinary debt extinguishment costs -- -- 963
Other, net (675) 1,610 (218)
---------- ---------- ----------
38,194 50,234 45,972
Change in assets and liabilities
Trade receivables (1,855) (164) 1,149
Inventories 1,240 (1,404) 3,008
Accounts payable, trade (1,423) 2,739 1,760
Other current assets and liabilities (1,379) (1,099) 1,983
Non-current accrued insurance (683) 564 296
---------- ---------- ----------
Cash provided by operations 34,094 50,870 54,168
---------- ---------- ----------
INVESTING ACTIVITIES
Purchase of property and equipment (28,733) (42,426) (41,509)
Purchase of other assets (1,568) (580) (1,011)
Disposition of property (16) 255 387
Additions to non-trade receivables (1,088) -- (3,999)
Collection of non-trade receivables 1,617 694 1,181
---------- ---------- ----------
Cash used for investing activities (29,788) (42,057) (44,951)
---------- ---------- ----------
FINANCING ACTIVITIES
Proceeds from issuance of debt 17,750 6,750 37,700
Payments of debt and capital lease
obligations including premiums (14,471) (10,060) (43,900)
Purchase of common stock (7,282) (5,449) (3,508)
Other, net 532 394 323
---------- ---------- ----------
Cash used for financing activities (3,471) (8,365) (9,385)
---------- ---------- ----------
Increase (decrease) in cash 835 448 (168)
Cash at beginning of year 5,288 4,840 5,008
---------- ---------- ----------
Cash at end of year (Note 1) $ 6,123 $ 5,288 $ 4,840
========== ========== ==========
SUPPLEMENTAL INFORMATION
Cash paid during the year for
Interest (net of amount capitalized) $ 3,792 $ 3,828 $ 5,887
Income taxes 1,217 2,228 1,249
The accompanying notes are an integral part of the financial statements.
17
VICORP RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The consolidated financial statements include the accounts of VICORP and
its wholly-owned subsidiary. All significant intercompany transactions and
accounts have been eliminated.
Reclassifications
Certain accounts have been reclassified in prior year's consolidated
financial statements to be consistent with the 1994 presentation.
Fiscal year
The Company utilizes a 52/53 week fiscal year, which ends on the last
Sunday in October. Fiscal year 1993 was 53 weeks and fiscal years 1994 and
1992 were each 52 weeks.
Inventories
Inventories, which generally consist of food products, are valued at the
lower of first-in, first-out cost or market value.
Prepaid expenses
Prepaid expenses consist primarily of supplies and restaurant preopening
costs. Preopening costs are amortized over a one-year period, commencing
with the first full four week accounting period of operation. Unamortized
preopening costs totaled $386,000 and $209,000 at the end of 1994 and 1993,
respectively.
Depreciation and amortization
Depreciation and amortization of property and equipment are provided using
principally the straight-line method at rates based upon estimated useful
lives of the assets, ranging from 20 to 40 years for buildings and 3 to 15
years for equipment and improvements. Amortization of leasehold rights and
excess of cost over net assets acquired in purchase transactions is
provided using the straight-line method, primarily over the remaining lives
of location leases or assets acquired, generally 5 to 25 years.
Franchise revenues
Initial franchise fees are deferred when received and recognized as income
when the franchisee has commenced operations and the Company has performed
all material services and conditions related to the sale of the franchise.
Continuing service fees, which are a percentage of the gross sales of
franchised operations, are accrued as income when earned except for
situations in which collectibility is in doubt. In those situations,
continuing service fees and rental income are recognized when received, and
gains on property sales are recorded using the cost recovery method.
Net franchise revenues consisted of the following (in thousands):
1994 1993 1992
------ ------ ------
Continuing service fees $3,968 $3,607 $3,502
Initial and renewal fees 166 125 28
Property rental income 319 630 585
Interest income on franchisee notes 263 299 379
Equipment sales income 64 115 85
Administrative expense (1,433) (1,410) (1,385)
------ ------ ------
Franchise revenues $3,347 $3,366 $3,194
====== ====== ======
18
Fair value of financial instruments
The Company has notes receivable carried on its balance sheets at values
approximating estimated fair market value. Because these instruments are
not publicly traded, the Company estimates the value based on the
respective facts and circumstances of each instrument. The fair value of
the Company's long-term debt approximates carrying value because of its
variable, market-based interest rate feature.
Income taxes
Based on enacted tax laws, deferred income tax assets and liabilities are
recognized for the expected future income tax consequences of temporary
differences between the financial reporting and tax bases of assets,
liabilities and carryforwards. Deferred tax assets are reduced, if deemed
necessary, by a valuation allowance for the amount of any tax benefits
which, more likely than not based on current circumstances, are not
expected to be realized.
Earnings per common and common equivalent share
Earnings per common and common equivalent share is based upon earnings
attributable to common shareholders and the weighted average number of
common and dilutive common equivalent shares for stock options outstanding
during the year. Common equivalent shares for fiscal 1994 were anti-
dilutive due to the net loss recorded in that year. The weighted average
number of common and common equivalent shares used for the 1994, 1993 and
1992 calculations were as follows:
1994 1993 1992
---------- ---------- ----------
Weighted average common shares outstanding 9,656,094 10,007,907 10,086,439
Common equivalent shares outstanding -- 292,793 432,612
---------- ---------- ----------
9,656,094 10,300,700 10,519,051
========== ========== ==========
Statements of cash flows
The Company considers all highly liquid investments and debt instruments
with original maturities of three months or less to be cash equivalents.
19
NOTE 2. ASSET DISPOSAL, RESTRUCTURING AND RELATED COSTS
In 1994, a $23,000,000 charge was recorded to reduce the value of certain
assets, accrue carrying costs of closed restaurants, and provide for
severance costs associated with dispositions and the restructuring of
administrative functions. The principal portion of that charge related to
a plan to dispose of 50 restaurants that have both declining sales and
profits, and are in trade areas that are no longer considered appropriate
for the Company's operating concepts.
Four of the 50 disposal restaurants were closed in October 1994 and eight
were closed in the first part of fiscal 1995. The remaining restaurants
will be operated until a satisfactory sale or sublease can be negotiated or
until unit economics dictate closure. Most of the identified locations are
expected to be disposed of in 1995 through sale or sublease. If subleased, it
is anticipated many of these agreements will have lower sublease rental rates
than the Company's obligation under the prime lease. The charge includes an
estimated accrual for such differences until the end of the primary lease
term.
In addition to the planned dispositions, four restaurant properties with
projected cash flows insufficient to recover remaining investments were
written down.
The disposition plan also includes a portion of the Company's manufacturing
and distribution operations which are no longer economical to operate.
The disposal properties had net assets totaling $15,140,000 immediately
prior to the write-down.
In total, the charge for disposal, restructuring and related costs
consisted of the following (in thousands):
Reduction of disposal property and equipment to estimated net
realizable value $ 9,622
Reduction of other disposal assets to estimated net realizable value 1,053
Accrual of estimated carrying costs on closures 3,855
Accrual of estimated sublease losses 4,892
-------
Total related to asset disposal 19,422
Asset impairment 2,287
Organizational restructuring costs (primarily severance) 1,291
-------
Total charge $23,000
=======
Operating results for the 50 locations for the past three fiscal years were
as follows (in thousands):
1994 1993 1992
------- ------- -------
Sales $37,709 $41,354 $44,334
Store operating profit (loss) (1,040) 171 1,256
The restructuring of administrative functions occurred late in 1994 and
involved the elimination of 27 positions that were redundant or non-
essential to ongoing operations.
In the fourth quarter of 1993, the Company recorded a $1,300,000
restructuring charge for the closure of its Matteson, Illinois
administrative office and consolidation of functions at its Denver,
Colorado headquarters. The charge consisted primarily of severance and
moving expenses. The consolidation was completed in October 1994.
Approximately 70 employees resigned or were terminated as a result of the
office closure.
20
NOTE 3. RECEIVABLES
Receivables consisted of the following:
October 30, October 31,
(in thousands) 1994 1993
---------- ----------
Trade receivables $ 3,751 $ 3,477
Notes receivable 7,755 7,175
Insurance receivable 6,500 6,500
Discounts (1,170) (1,019)
Allowance for doubtful accounts (3,037) (4,657)
---------- ----------
Receivables, net 13,799 11,476
Current portion 9,801 4,326
---------- ----------
Long-term portion $ 3,998 $ 7,150
========== ==========
In November 1994, the Company settled a lawsuit against certain of its
insurance carriers. The litigation arose in April 1992 when the Company
claimed the defendants breached their contract of insurance by withholding
payments to fund a $6,500,000 court approved settlement arising from prior
litigation against the Company. The Company recorded income of $1,918,000
in the fourth quarter of 1994, representing the excess recovery over the
net carrying value of the receivable.
The Company's receivables, excluding the insurance receivable, arose
primarily from contracts and property transactions with its franchisees and
other sublessees. The ability of these parties to honor their obligations
is largely dependent on cash flows generated from their restaurant
operations. The trade receivables are generally unsecured but the related
contracts are cancelable if the debtor fails to perform. Under Company
policy, the notes receivable are generally secured with security agreements
on the property that gave rise to the transaction.
21
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
October 30, October 31,
(in thousands) 1994 1993
---------- ----------
Property and equipment used in operations
Land $ 22,692 $ 18,552
Buildings and improvements 128,791 120,581
Equipment 116,520 108,984
Construction in progress 8,671 14,690
Restaurant property leased to others 3,811 6,492
Accumulated depreciation (110,771) (98,456)
---------- ----------
169,714 170,843
---------- ----------
Capitalized lease buildings 13,868 16,750
Accumulated amortization (6,406) (7,258)
---------- ----------
7,462 9,492
---------- ----------
Allowance for loss on disposal (11,374) (2,615)
---------- ----------
Property and equipment, net $165,802 $177,720
========== ==========
Depreciation and amortization expense charged to operations for property
and equipment was $25,509,000 in 1994, $22,763,000 in 1993 and $19,616,000
in 1992.
In 1994, the Company increased the allowance for loss on disposal for the
disposition of certain properties as more fully discussed in Note 2.
22
NOTE 5. LEASES
The Company is the prime lessee under various land and building leases for
restaurants operated by it and certain of its franchisees. Additionally,
the Company leases administrative office space and certain bakery and
distribution facilities in market areas where the Company has a
concentration of restaurants. The leases have initial terms generally
ranging from 15 to 35 years and in certain instances, provide for renewal
options ranging from 5 to 20 years. Some of the leases contain purchase
options at the end of the lease terms. Many of the leases contain
escalation clauses, either predetermined or based upon inflation. Most of
the leases require additional (contingent) rental payments by the Company
if sales volumes at the related restaurants exceed specified levels. Most
of the agreements require payment of taxes, insurance and maintenance
costs. The Company is also obligated under various equipment and other
leases having initial terms ranging from 3 to 7 years. The implicit
interest rates range from 7.2% to 15.6% for capitalized building leases.
The Company as prime lessee has entered into sublease agreements with
franchisees and others on certain locations that are not operated by the
Company. These leases generally have terms similar to the prime lease with
the sublessee assuming the Company's obligations to pay taxes, insurance
and maintenance costs.
Following is a summary as of October 30, 1994, of future minimum lease
payments under capital and operating leases having an initial or remaining
non-cancelable term of one year or more:
Lease and
Capital Operating sublease
(in thousands) leases leases rentals
------- --------- ---------
1995 $ 3,554 $ 16,283 $ (2,420)
1996 3,405 15,387 (2,332)
1997 3,181 14,065 (2,250)
1998 2,935 13,240 (2,062)
1999 2,748 12,731 (1,746)
Later years 8,744 64,566 (7,076)
------- -------- ---------
Total minimum lease payments 24,567 $136,272 $ (17,886)
======== =========
Less amount representing interest 8,859
-------
Present value of minimum lease
payments 15,708
Current maturities of capitalized
lease obligations 1,727
-------
Capitalized lease obligations $13,981
=======
23
Net rental expense consisted of the following:
(in thousands) 1994 1993 1992
-------- -------- --------
Restaurant land and buildings
Minimum rentals $15,243 $15,154 $15,013
Contingent rentals 2,922 3,522 3,859
Equipment 3,293 3,362 3,763
-------- ------- --------
Rental expense 21,458 22,038 22,635
Less lease and sublease rental income 3,152 3,829 4,095
-------- ------- --------
Net rental expense $18,306 $18,209 $18,540
======== ======= ========
NOTE 6. DEBT
Long-term debt consisted of the following:
October 30, October 31,
(in thousands) 1994 1993
---------- ----------
Advances under bank credit agreement $28,250 $23,250
Other long-term debt 392 458
---------- ----------
28,642 23,708
Current maturities 69 65
---------- ----------
Long-term debt $28,573 $23,643
========== ==========
The Company's bank credit agreement provides up to $75,000,000 for direct
advances and letters of credit with a sublimit of $25,000,000 on letters of
credit. Advances bear interest at the lenders' prime rate or, if elected,
at LIBOR (London Interbank Offering Rate) plus 1 1/8%. The Company is required
to pay a commitment fee of 3/8% per annum on the unused commitment plus a
quarterly agents' fee of $12,500 and 1 1/8% per annum on issued letters of
credit. The agreement expires on June 30, 1996, when it becomes a term facility
payable in equal quarterly installments through June 30, 1998. The largest
outstanding balance under the facility during 1994 was $31,750,000. The average
balance outstanding was $24,460,000 and the average annual interest rate was
5.1%. As of October 30, 1994, the Company had placed letters of credit totaling
$7,061,000 in connection with its insurance programs.
The agreement contains various restrictive covenants which include, among
others, maintenance of certain financial ratios, maintenance of a minimum
balance of tangible net worth and limitations on annual capital expenditures,
indebtedness, dividends, dispositions and acquisitions.
In February 1992, the Company called for redemption all of its then outstanding
13 1/2% convertible subordinated debentures at a price of 102.7% of the
principal amount. In connection with that call, $4,079,000 of the debentures
were converted into 161,827 common shares and $14,315,000 were redeemed for cash
which was funded primarily by the Company's bank credit facility. The Company
recorded a pretax extraordinary debt extinguishment charge of $963,000,
consisting of the $387,000 premium and the write-off of unamortized issuance
costs associated with the redeemed debentures.
At October 30, 1994, principal amounts of long-term debt due during each of the
five succeeding fiscal years were $69,000 in 1995, $3,605,000 in 1996,
$14,203,000 in 1997, $10,677,000 in 1998 and $88,000 in 1999.
The Company incurred $3,956,000, $4,179,000 and $5,543,000 of interest charges
in 1994, 1993 and 1992, respectively. Of these amounts, $89,000, $301,000 and
$222,000 were capitalized in each respective year.
24
NOTE 7. SHAREHOLDERS' EQUITY
The Company's authorized preferred stock consists of 5,000,000 $.10 par
value shares to be issued in series. The rights of each series are to be
determined by the Company's Board of Directors.
The Company has outstanding one right for each outstanding common share of
the Company. When exercisable, each right will entitle its holder to buy
1/100th of a share of the Company's Series A Junior Participating Preferred
Stock at an exercise price of $40. If, among other things, the Company is
acquired in a merger or other business combination transaction, including
one in which the Company is the surviving corporation, each right will
entitle its holder to purchase, at the then current exercise price of the
right, that number of shares of common stock of the surviving company which
at the time of such transaction would have a market value of twice the
exercise price of the right. The rights are exercisable only if, without
the Company's prior consent, a party acquires, or obtains the right to
acquire, 25% or more of the Company's outstanding voting securities or
announces a tender offer which would result in such ownership. At the
Company's option, the rights are redeemable at two cents per right at any
time before a 25% position has been acquired and under limited
circumstances thereafter. The rights expire May 26, 1997.
In August 1992, June 1993, and June 1994, the Company's Board of Directors
authorized the purchase of up to 400,000, 500,000 and 500,000 shares of its
common stock, respectively. Pursuant to these authorizations, the Company
purchased 891,500 shares of common stock over the last three years. At
October 30, 1994, authorization to purchase an additional 508,500 common
shares was available.
Under Colorado law enacted in July 1994, repurchased shares of capital
stock are considered authorized and unissued shares and have the same
status as shares which have never been issued.
Under the most restrictive covenants of the Company's bank credit
agreement, approximately $8,300,000 of consolidated retained earnings were
unrestricted at October 30, 1994, as to the declaration of cash dividends
and the acquisition of the Company's common stock.
25
The following table summarizes shareholders' equity activity:
Common stock Total
---------------- Paid-in Retained shareholders'
(in thousands, except share data) Shares Amount capital earnings equity
--------------------------------------------------------
Balances at October 27, 1991 10,003,330 $ 500 $ 101,412 $ 18,020 $ 119,932
Net income -- -- -- 14,940 14,940
Common stock options exercised
including income tax benefit 11,252 -- 166 -- 166
Purchase of common shares (200,194) (10) (3,498) -- (3,508)
Conversion of subordinated
debentures into common shares 161,827 8 3,907 -- 3,915
--------------------------------------------------------
Balances at October 25, 1992 9,976,215 498 101,987 32,960 135,445
Net income -- -- -- 16,524 16,524
Common stock options exercised
including income tax benefit 244,685 13 3,163 -- 3,176
Purchase of common shares (309,337) (15) (6,812) -- (6,827)
--------------------------------------------------------
Balances at October 31, 1993 9,911,563 496 98,338 49,484 148,318
Net loss -- -- -- (6,638) (6,638)
Common stock options exercised
including income tax benefit 39,513 2 466 -- 468
Purchase of common shares (441,650) (22) (7,260) -- (7,282)
--------------------------------------------------------
Balances at October 30, 1994 9,509,426 $ 476 $ 91,544 $ 42,846 $ 134,866
========================================================
26
NOTE 8. STOCK OPTION AND PROFIT-SHARING PLANS
The Company has stock option plans which generally provide for the granting of
options to all employees and non-employee directors of the Company at exercise
prices not less than the market value of the common stock on the date of the
grant. The options generally vest over three years and expire ten years after
the date of grant or three months after employment termination, whichever occurs
first.
In August 1994, the Company entered into a stock option agreement with J.
Michael Jenkins, a Director, Co-Chief Executive Officer and President of the
Company. Under the agreement, Mr. Jenkins was granted an option to purchase
300,000 shares of the Company's stock. The optioned shares are divided into
50,000 share increments with exercise prices ranging from $15.00 to $30.17. The
options are scheduled to vest on October 1, 1999 and are exercisable until
October 1, 2004, unless accelerated under certain conditions.
The following table summarizes stock option activity:
Shares Option price
-------- --------------
Outstanding at October 27, 1991
(650,116 shares exercisable) 772,951 $ 5.63 - 25.50
Granted 67,500 16.25 - 24.50
Exercised (11,252) 5.63 - 15.50
Canceled -- --
- - --------------------------------------------------------------------
Outstanding at October 25, 1992
(758,365 shares exercisable) 829,199 5.63 - 25.50
Granted 58,000 22.75 - 26.00
Exercised (244,685) 5.63 - 15.75
Canceled (7,000) 24.50
- - --------------------------------------------------------------------
Outstanding at October 31, 1993
(554,516 shares exercisable) 635,514 5.63 - 26.00
Granted 338,809 14.25 - 30.17
Exercised (39,513) 5.63 - 14.75
Canceled (87,500) 5.63 - 23.50
- - --------------------------------------------------------------------
Outstanding at October 30, 1994
(508,336 shares exercisable) 847,310 $ 5.63 - 30.17
====================================================================
The Company has an employees' profit-sharing plan, established under Section
401(k) of the Internal Revenue Code of 1986, which provides for annual
contributions by the Company to be determined by the Board of Directors. The
Company's annual contribution, if the Company is profitable (as defined in the
plan), must be equal to at least 2% and may not exceed 15% of the aggregate
compensation of the participants while participating. Any full-time employee
21 years of age or older who has completed one year of service with the Company
is eligible to participate. Assets of the profit-sharing plan can be invested
in the Company's common stock, or among several other alternatives. The
Company's expenses related to contributions to the plan in 1994, 1993, and 1992
were $829,000, $861,000 and $825,000, respectively.
27
NOTE 9. INCOME TAXES
The total provisions for income taxes consisted of the following:
(in thousands) 1994 1993 1992
---------------------------
Current
Federal $ 414 $ 560 $ 560
States 929 1,311 983
---------------------------
1,343 1,871 1,543
Deferred
Federal (3,613) 6,416 7,780
States (1,801) (484) 365
---------------------------
(5,414) 5,932 8,145
---------------------------
$(4,071) $ 7,803 $ 9,688
===========================
Such provisions are reflected in the financial statements as follows:
(in thousands) 1994 1993 1992
---------------------------
Attributable to:
Income before extraordinary items $(3,982) $ 9,386 $10,135
Extraordinary items -- -- (381)
---------------------------
Net income tax expense (3,982) 9,386 9,754
Tax effect of deduction for
exercised stock options
credited to paid-in capital (89) (1,583) (66)
---------------------------
Total provisions for income taxes $(4,071) $ 7,803 $ 9,688
===========================
28
The components of income tax expense attributable to income before
extraordinary items were as follows:
(in thousands) 1994 1993 1992
---------------------------
Current
Taxes on income before carryforwards $ 6,177 $ 9,398 $ 9,574
Less benefit of loss carryforwards utilized (4,834) (7,527) (7,650)
---------------------------
1,343 1,871 1,924
Deferred
Tax effect of net change in temporary differences (9,659) (409) 495
Utilization of tax net operating loss carryforward 4,834 7,527 7,650
FICA tax credit (749) -- --
Expiration of tax credit carryforwards 2,160 -- --
Change in valuation allowance (2,000) 1,000 --
Tax effect of change in federal tax rate -- (2,186) --
---------------------------
(5,414) 5,932 8,145
Tax effect of deduction for exercised stock options
credited to paid-in capital 89 1,583 66
---------------------------
Income tax expense (benefit) attributable
to income before extraordinary items $(3,982) $ 9,386 $10,135
===========================
The provisions for income taxes differ from the amounts computed by applying the
federal income tax rate to income from continuing operations before income taxes
as follows:
(in thousands) 1994 % 1993 % 1992 %
-----------------------------------------------
Computed federal income taxes
using statutory rate $ (3,717) (35.0%) $9,024 34.8% $8,723 34.0%
FICA tax credit (749) (7.0) -- -- -- --
State income taxes net of federal
income tax benefit (567) (5.3) 1,341 5.2 1,206 4.7
Expiration of tax credit
carryforwards 2,160 20.3 -- -- -- --
Change in valuation allowance (2,000) (18.8) 1,000 3.8 -- --
Tax effect of change in federal
tax rate -- -- (2,186) (8.4) -- --
Other 891 8.4 207 0.8 206 0.8
-----------------------------------------------
$ (3,982) (37.5%) $9,386 36.2% $10,135 39.5%
===============================================
In August 1993, the Omnibus Budget Reconciliation Act of 1993 was enacted which
increased the top federal corporate tax rate from 34% to 35%. This increase was
retroactively applied to January 1, 1993, and was prorated for fiscal tax years
overlapping the effective date. The increase in rate had the effect of
increasing the deferred tax asset related to the Company's net operating loss
carryforwards. The Act also instituted a general business credit for FICA taxes
paid by employers on tips received by foodservice employees, effective January
1994.
29
The Company had taxable income for federal income tax purposes and book income
(loss) before income taxes as follows:
(in thousands) 1994 1993 1992
-----------------------------
Federal taxable income $14,589 $23,436 $20,085
Book income (loss) before income taxes (10,620) 25,910 24,694
Federal taxable income is generally less than book income before income
taxes due to state income taxes, differences in depreciation rates, and employee
stock option exercises. In 1994, such differences were more than offset by the
asset disposal charge of $23,000,000 a majority of which was not deductible for
tax purposes in that year.
The components of the net deferred tax asset were as follows:
(in thousands) 1994 1993
------------------
Deferred tax assets
Tax effect of net operating loss carryforwards $71,659 $76,172
Tax credit carryforwards 3,922 6,024
FICA tax credit 749 --
Alternative minimum tax credits 2,147 1,754
Accrued insurance claims not yet deductible 5,430 6,245
Leasing transactions 3,889 4,701
Property and equipment 3,359 --
Other 5,526 5,577
------------------
96,681 100,473
Valuation allowance (53,000) (55,000)
------------------
Deferred tax asset, net 43,681 45,473
------------------
Deferred tax liabilities
Property and equipment -- (6,905)
Other (4,131) (4,432)
------------------
Deferred tax liability (4,131) (11,337)
------------------
Net deferred tax asset 39,550 34,136
Current portion 6,000 8,059
------------------
Long-term portion $33,550 $26,077
==================
As of October 30, 1994, the Company had federal net operating loss carryforwards
totaling $190,674,000 which expire $72,600,000 in 1998, $112,880,000 in 1999 and
$5,194,000 in 2001. The Company also had investment tax credit carryforwards of
$3,506,000 expiring from 1997 through 2000. The Company has established a
valuation allowance due to the uncertainty that the full amount of those credits
and operating loss carryforwards will be applied against future taxable income.
This allowance was reduced by $2,000,000 in 1994 due to the expiration of
investment tax credits to which a portion of the allowance applied. Management
emphasized past performance rather than projections of taxable income when
determining the valuation allowance. Annual taxable income of approximately
$12,500,000 will be sufficient to realize the net deferred tax asset before
expiration of the net operating loss carryforwards. Future adjustments to the
valuation allowance deemed appropriate due to changed circumstances will be
recognized as a separate component of the provision for income taxes.
30
NOTE 10. COMMITMENTS AND CONTINGENCIES
The Company retains a significant portion of certain insurable risks primarily
in the medical, dental, workers' compensation, general liability and property
areas. Traditional insurance coverage is obtained for catastrophic losses.
Provisions for losses expected under these programs are recorded based upon the
Company's estimates of liabilities for claims incurred, including those not yet
reported. Such estimates utilize prior Company history and actuarial
assumptions followed in the insurance industry. The Company has provided
letters of credit totaling $7,061,000 in connection with certain of these
insurance programs.
The Company is involved in various lawsuits and claims arising from the conduct
of its business and has guaranteed certain indebtedness and leases of its
franchisees and others. Management believes the ultimate disposition of these
matters will not have a material adverse effect on the Company's consolidated
financial position or results of operations.
At October 30, 1994, the Company had contractual commitments for restaurant
construction of approximately $680,000.
NOTE 11. QUARTERLY FINANCIAL DATA (UNAUDITED)
The Company's quarterly results of operations are summarized as follows (in
thousands, except per share data):
Quarter ended
---------------------------------------------
February 20, May 15, August 7, October 30,
1994 (a) 1994 1994 1994
---------------------------------------------
Revenues $130,826 $97,045 $93,583 $91,190
Restaurant operating income 16,343 12,104 10,586 7,675
Net income (loss) 3,620 2,427 1,515 (14,200)(b)
Net income (loss) per common and
dilutive common equivalent share .36 .25 .16 (1.49)
=============================================
Quarter ended
---------------------------------------------
February 14, May 9, August 1, October 31,
1993 (a) 1993 1993 1993 (a)
---------------------------------------------
Revenues $130,479 $99,646 $96,931 $101,449
Restaurant operating income 19,714 14,884 12,764 13,062
Net income 5,427 4,626 3,244 3,227(c)
Net income per common and
dilutive common equivalent share .52 .45 .32 .32
=============================================
(a) The quarterly periods ended February 20, 1994, and February 14, 1993 were
comprised of sixteen weeks each, while the remainder of the Company's
quarterly periods were comprised of twelve weeks each, except for the fourth
quarter of 1993 which was thirteen weeks.
(b) Includes pre-tax asset disposal, restructuring and related cost charge of
$23,000,000 (see Note 2) and $1,918,000 income from settlement of litigation
(see Note 3).
(c) Includes pre-tax restructuring charge of $1,300,000 (see Note 2) and income
tax expense reduction due to a change in the federal rate (see Note 9).
31
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company will file a definitive proxy statement pursuant to Regulation 14A
for its 1995 Annual Meeting of Shareholders. Such statement will be filed not
later than 120 days after the close of the fiscal year covered by this Form
10-K. Except for certain information concerning executive officers of the
Company which is included in Part I of this Form 10-K, the information called
for by the above items will be included in such definitive proxy statement under
"Election of Directors", "Certain Transactions", "Compensation of Directors and
Executive Officers" and "Voting Securities and Principal Holders Thereof", which
is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(1) The following financial statement schedule for VICORP Restaurants, Inc., as
listed in the Index below, is included herein beginning on page 32.
Report of Independent Public Accountants on Financial Statement Schedule.
Schedule VIII - Valuation and Qualifying Accounts for the years ended October
30, 1994, October 31, 1993 and October 25, 1992.
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
(2) The exhibits filed in response to Item 601 of Regulation S-K are listed in
the Exhibit Index on Page 35.
For the purpose of complying with the amendments to the rules governing Form S-8
(effective July 13, 1990) under the Securities Act of 1933, the undersigned
registrant hereby undertakes as follows, which undertaking shall be incorporated
by reference into registrant's currently effective Registration Statements on
Form S-8:
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to any statute, charter provisions, bylaws, contract, or
other arrangements, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer, or controlling person of the registrant in the successful defense of
any action, suit or proceedings) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
32
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited, in accordance with generally accepted auditing standards, the
consolidated financial statements of VICORP Restaurants, Inc. and subsidiary
included in this Form 10-K and have issued our report thereon dated December 6,
1994. Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index above
is the responsibility of the Company's management and is presented for purposes
of complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. The schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Denver, Colorado,
December 6, 1994.
33
VICORP Restaurants, Inc.
Schedule VIII - VALUATION AND QUALIFYING ACCOUNTS
For the Three Years Ended October 30, 1994
(in thousands)
Column A Column B Column C Column D Column E
- - ----------- ---------- ----------------------- --------- ----------
Additions
-----------------------
Balance at Charged to Charged Balance
beginning costs and to other at end
Description of period expenses accounts Deductions of period
- - ----------- --------- ----------- --------- ----------- ---------
Year ended October 30, 1994:
Allowance for doubtful accounts $ 4,657 $ 185 $ 295 (4) $ 2,100 (1) $ 3,037
Discounts 1,019 (115) 266 (2) -- 1,170
Allowance for loss on disposal 2,615 10,675 -- 863 (1) 12,427
Accumulated amortization 5,549 813 -- 147 (3) 6,215
--------- ---------- ------ -------- ---------
$ 13,840 $ 11,558 $ 561 $ 3,110 $ 22,849
========= ========== ====== ======== =========
Year ended October 31, 1993:
Allowance for doubtful accounts $ 5,018 $ 410 $ 248 (4) $ 1,019 (1) $ 4,657
Discounts 93 (20) 946 (2) -- 1,019
Allowance for loss on disposal 2,733 -- -- 118 (1) 2,615
Accumulated amortization 4,820 900 -- 171 (3) 5,549
--------- ---------- ------ -------- ---------
$ 12,664 $ 1,290 $1,194 $ 1,308 $ 13,840
========= ========== ====== ======== =========
Year ended October 25, 1992:
Allowance for doubtful accounts $ 1,839 $ 2,746 $ 504 (4) $ 71 (1) $ 5,018
Discounts 403 (15) -- 295 (5) 93
Allowance for loss on disposal 2,514 375 -- 156 (1) 2,733
Accumulated amortization 5,030 904 -- 1,114 (3) 4,820
--------- ---------- ------ -------- ---------
$ 9,786 $ 4,010 $ 504 $ 1,636 $ 12,664
========= ========== ====== ======== =========
(1) Charges to the accounts for purposes for which the reserves were created.
Deductions to the allowance for doubtful accounts in 1994 includes
$1,918,000 reversal of previously established allowance due to settlement of
litigation in excess of the net receivable previously recognized for the
claim.
(2) Establishment of discounts on receivables.
(3) Asset dispositions and write-offs of fully amortized assets.
(4) Establishment of reserves by charges directly to income.
(5) Recognition of deferred gains.
34
Year-end balances are reflected in the Consolidated Balance Sheets as follows:
October 30, October 31,
1994 1993
----------- -----------
Deducted from current receivables $ 1,480 $ 561
Deducted from property and equipment 11,374 2,615
Deducted from long-term receivables 2,727 5,115
Deducted from other assets 7,268 5,549
----------- -----------
$ 22,849 $ 13,840
=========== ===========
35
EXHIBIT INDEX
The following documents are filed as a part of this report. Those exhibits
previously filed and incorporated herein by reference are identified below by an
asterisk (*). For each such exhibit there is shown below the filing and exhibit
number of the document in the previous filing. The registration statements were
filed by the Company unless otherwise indicated. Exhibits which are not
required for this report are omitted.
Exhibit Description of Document
- - ------- -------------------------
3 - *(i) Articles of Incorporation, as Amended - Form 10-K for the year
ended October 29, 1989.
- *(ii) Bylaws - Form 10-K for the year ended October 29, 1989.
4 - *(i) Specimen Stock Certificate - Form 10-K for the year ended
October 30, 1988.
- *(ii) Certificate of Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock of VICORP Restaurants, Inc.
- Current Report of VICORP Restaurants, Inc. on Form 8-K dated May 26,
1987.
- *(iii) Rights Agreement dated as of May 12, 1987 between VICORP
Restaurants, Inc. and Bank of America National Trust & Savings
Association as Rights Agent - Current Report of VICORP Restaurants,
Inc. on Form 8-K dated May 26, 1987.
10 - Material Contracts
*(i) Franchise Operating Agreement - Registration Statement 2-83326,
Exhibit 10(b).
*(ii) Amended & Restated Credit Agreement dated April 19, 1991 between
VICORP Restaurants, Inc. and Citibank, N.A. ("Amended & Restated
Credit Agreement"). - Form 10-K for the year ended October 27, 1991,
Exhibit 10(viii).
*(iii) Equipment Lease Agreement dated as of August 15, 1991 between
Citicorp Leasing, Inc. and VICORP Restaurants, Inc. - Form 10-K for
the year ended October 27, 1991, Exhibit 10(ix).
*(iv) Assignment and Acceptance dated October 10, 1991 between Citibank
N.A. and NCNB Texas National Bank - Form 10-K for the year ended
October 27, 1991, Exhibit 10(x).
*(v) Amendment No. 2 dated February 10, 1992 to Amended & Restated
Credit Agreement - Form 10-K for the year ended October 25, 1992,
Exhibit 10(xi).
(vi) Executive Compensation Plans and Arrangements
*(a) 1982 Incentive Stock Option Plan - Registration Statement
2-78250, Exhibit 10(c).
*(b) Amendment to 1982 Incentive Stock Option Plan - Form 10-Q for
the quarter ended May 10, 1987, Exhibit 10(i).
*(c) Amendment to 1982 Incentive Stock Option Plan - Form 10-Q for
the quarter ended August 2, 1987, Exhibit 10.
*(d) Amendment to 1982 Incentive Stock Option Plan - Form 10-Q for
the quarter ended May 8, 1988, Exhibit 10.
*(e) Amendment to 1982 Incentive Stock Option Plan, Form 10-K for
the year ended October 25, 1992, Exhibit 10(ix).
*(f) 1983 Non-Qualified Stock Option Plan - Registration Statement
2-83326, Exhibit 10(c).
*(g) Amendment to 1983 Non-Qualified Stock Option Plan - Form 10-Q
for the quarter ended May 10, 1987, Exhibit 10(ii).
*(h) Amendment to 1983 Non-Qualified Stock Option Plan - Form 10-K
for the year ended October 25, 1992, Exhibit 10(x).
*(i) VICORP Restaurants, Inc. Outstanding Stock Purchase Plan
(1989) - Registration Statement 33-32608, Exhibit 4(h).
*(j) Deferred Compensation Plan of VICORP Restaurants, Inc. as
amended - Form 10-K for the year ended October 31, 1993, Exhibit
10(vi)(1).
*(k) Form Severance Agreement (Executive Officers excluding
Frederickson and Jenkins) - Form 10-K for the year ended October
31, 1993, Exhibit 10(vi).
*(l) Severance Agreement Charles R. Frederickson - Form 10-K for
the year ended October 31, 1993, Exhibit 10(vi).
(m) Employment Severance and Release Agreement - Robert S. Benson.
(n) Employment Agreement of J. Michael Jenkins dated August 26,
1994.
(o) Stock Option Agreement for J. Michael Jenkins dated August 26,
1994.
23 - Consents of Accountants
24 - Power of Attorney
27 - Financial Data Schedule
36
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized, on the 23rd day of January,
1995.
VICORP RESTAURANTS, INC. (Registrant)
By /s/ Charles R. Frederickson
Charles R. Frederickson, Chairman of the Board
and Co-Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on January 23, 1995 on behalf of the
registrant and in the capacities indicated.
Signature Title
--------- -----
/s/ Charles R. Frederickson Chairman of the Board and Co-Chief Executive
(Charles R. Frederickson) Officer
/s/ J. Michael Jenkins Director, President and Co-Chief Executive
(J. Michael Jenkins) Officer
/s/ Dennis L. Kuper Executive Vice President/Finance
(Dennis L. Kuper) (Principal Financial and Accounting Officer)
/s/ Charles R. Frederickson
(Charles R. Frederickson)*
* Charles R. Frederickson, as attorney-in-fact for Carole Lewis Anderson, Bruce
B. Brundage, John C. Hoyt, Robert T. Marto, Dudley C. Mecum, Dennis B.
Robertson, and Arthur Zankel, constituting a majority of the Board of Directors
of the registrant.