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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended August 6, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period to
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Commission file number 0-4377
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SHONEY'S, INC.
(Exact name of registrant as specified in its charter)
Tennessee 62-0799798
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1727 Elm Hill Pike, Nashville, TN 37210
(Address of principal executive (Zip Code)
offices)
Registrants telephone number, including area code (615)391-5201
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
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As of September 7, 1995, there were 41,497,288 shares of
Shoney's, Inc. $1 par value common stock outstanding.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
SHONEY'S, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheet
(Unaudited)
August 6, October 30,
1995 1994
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ASSETS
Current assets:
Cash and cash equivalents $ 5,654,028 $ 4,229,784
Notes and accounts receivable, less allowance for doubtful
accounts of $1,745,000 in 1995 and $1,276,000 in 1994 12,656,392 16,936,307
Inventories 35,950,248 37,787,689
Deferred income taxes and other current assets 28,954,133 27,896,933
Net current assets of discontinued operations 8,499,896 7,814,401
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Total current assets 91,714,697 94,665,114
Property, plant and equipment, at cost 722,896,454 697,131,862
Less accumulated depreciation and amortization (301,144,930) (278,529,473)
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Net property, plant and equipment 421,751,524 418,602,389
Other assets:
Net non-current assets of discontinued operations 30,228,114 31,916,261
Deferred charges and other intangible assets 7,690,827 6,650,229
Other assets 5,972,617 5,738,592
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Total other assets 43,891,558 44,305,082
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$ 557,357,779 $ 557,572,585
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LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 30,756,043 $ 41,789,157
Federal and state income taxes 6,026,643 3,764,329
Other accrued liabilities 70,284,230 60,805,868
Reserve for litigation settlement 23,514,889 23,803,836
Debt and capital lease obligations due within one year 23,438,767 66,692,163
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Total current liabilities 154,020,572 196,855,353
Long-term senior debt and capital lease obligations 351,289,718 333,235,215
Zero coupon subordinated convertible debentures 86,129,883 80,790,563
Reserve for litigation settlement 44,415,434 61,673,834
Deferred credits:
Income taxes 19,075,405 15,477,405
Income and other liabilities 6,586,042 6,304,456
Shareholders' equity (deficit):
Common stock, $1 par value: authorized 100,000,000 shares;
issued 41,495,288 in 1995 and 41,185,290 in 1994 41,495,288 41,185,290
Additional paid-in capital 60,447,676 57,509,644
Retained earnings (deficit) (206,102,239) (235,459,175)
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Total shareholders' equity (deficit) (104,159,275) (136,764,241)
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$ 557,357,779 $ 557,572,585
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See notes to consolidated condensed financial statements.
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SHONEY'S, INC. AND SUBSIDIARIES
Consolidated Condensed Statement of Operations
(Unaudited)
Forty Weeks Ended
August 6, August 7,
1995 1994
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Revenues
Net sales $ 797,213,267 $ 797,778,697
Franchise fees 18,513,020 19,960,989
Other income 1,750,483 8,798,555
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817,476,770 826,538,241
Costs and expenses
Cost of sales 701,368,283 687,011,374
General and administrative expenses 47,219,607 42,933,240
Interest expense 31,007,162 33,038,369
Restructuring expenses 1,785,915
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Total costs and expenses 781,380,967 762,982,983
Income from continuing operations before income taxes, extraordinary
charge and cumulative effect of change in accounting principle 36,095,803 63,555,258
Provision for income taxes 13,716,000 23,833,000
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Income from continuing operations before extraordinary charge
and cumulative effect of change in accounting principle 22,379,803 39,722,258
Income from discontinued operations, net of income tax 6,977,133 8,600,071
Extraordinary charge on early extinguishment of debt,
net of income taxes of $623,000 (1,037,808)
Cumulative effect of change in accounting for income taxes 4,468,386
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Net income $ 29,356,936 $ 51,752,907
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Earnings per common share
Primary:
Income from continuing operations before extraordinary charge
and cumulative effect of change in accounting principle $ 0.54 $ 0.96
Income from discontinued operations 0.17 0.21
Extraordinary charge on early extinguishment of debt (0.03)
Cumulative effect of change in accounting for income taxes 0.11
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Net income $ 0.71 $ 1.25
==== ====
Fully diluted:
Income from continuing operations before extraordinary charge
and cumulative effect of change in accounting principle $ 0.54 $ 0.92
Income from discontinued operations 0.17 0.18
Extraordinary charge on early extinguishment of debt (0.02)
Cumulative effect of change in accounting for income taxes 0.10
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Net income $ 0.71 $ 1.18
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Weighted average shares outstanding
Primary 41,495,234 41,313,285
Fully diluted 41.495,234 46,536,916
Common shares outstanding 41,495,288 41,155,722
Dividends per share NONE NONE
See notes to consolidated condensed financial statements.
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SHONEY'S, INC. AND SUBSIDIARIES
Consolidated Condensed Statement of Operations
(Unaudited)
Twelve Weeks Ended
August 6, August 7,
1995 1994
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Revenues
Net sales $ 247,348,015 $ 250,695,166
Franchise fees 5,702,615 6,192,374
Other income 846,417 2,593,988
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253,897,047 259,481,528
Costs and expenses
Cost of sales 217,164,419 213,815,550
General and administrative expenses 14,070,280 12,164,172
Interest expense 9,406,788 9,482,727
Restructuring expenses 86,042
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Total costs and expenses 240,727,529 235,462,449
Income from continuing operations before income taxes
and extraordinary charge 13,169,518 24,019,079
Provision for income taxes 5,004,000 9,007,000
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Income from continuing operations before
extraordinary charge 8,165,518 15,012,079
Income from discontinued operations, net of income tax 2,034,226 2,241,531
Extraordinary charge on early extinguishment of debt,
net of income taxes of $623,000 (1,037,808)
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Net income $ 10,199,744 $ 16,215,802
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Earnings per common share
Primary:
Income from continuing operations before extraordinary charge $ 0.20 $ 0.36
Income from discontinued operations 0.05 0.05
Extraordinary charge on early extinguishment of debt (0.03)
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Net income $ 0.25 $ 0.39
==== ====
Fully diluted:
Income from continuing operations before extraordinary charge $ 0.20 $ 0.34
Income from discontinued operations 0.05 0.05
Extraordinary charge on early extinguishment of debt (0.02)
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Net income $ 0.25 $ 0.37
==== ====
Weighted average shares outstanding
Primary 41.613,498 41,303,046
Fully diluted 41,613,498 46,509,110
Common shares outstanding 41,495,288 41,155,722
Dividends per share NONE NONE
See notes to consolidated condensed financial statements.
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SHONEY'S, INC. AND SUBSIDIARIES
Consolidated Condensed Statement of Cash Flows
(Unaudited)
Forty Weeks Ended
August 6, August 7,
1995 1994
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Operating activities
Net income $ 29,356,936 $ 51,752,907
Adjustments to reconcile net income
to net cash provided by operating
activities:
Income from discontinued
operations, net of tax (6,977,133) (8,600,071)
Depreciation and amortization 33,641,554 31,411,985
Amortization of deferred charges
and other non-cash charges 6,460,368 7,628,172
Realized and unrealized loss (gain)
on marketable securities and
sale of other assets 1,392,202 (3,177,926)
Cumulative effect of change
in accounting for income taxes (4,468,386)
Change in deferred income taxes 3,598,000 5,798,000
Changes in operating assets and
liabilities 11,605,146 10,761,425
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Net cash provided by continuing
operating activities 79,077,073 91,106,106
Net cash provided by discontinued
operating activities 9,364,007 12,425,288
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Net cash provided by operating activities 88,441,080 103,531,394
Investing activities
Cash required for property, plant and equipment (45,763,816) (64,406,273)
Cash required for assets held for sale (1,291,322) (4,065,722)
Proceeds from disposal of property, plant
and equipment 3,500,850 4,374,908
Cash (required for) provided by other assets (796,965) 162,824
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Net cash used by investing activities (44,351,253) (63,934,263)
Financing activities
Payments on long-term debt and
capital lease obligations (107,677,744) (213,298,590)
Proceeds from long-term debt 78,000,000 195,681,800
Net proceeds from (payments on)
short-term borrowings 4,918,000 (6,292,000)
Payments on litigation settlement (17,547,347) (19,026,648)
Cash required for debt issue costs (2,033,827) (1,707,101)
Proceeds from exercise of employee stock options 1,675,335 3,151,435
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Net cash used by financing activities (42,665,583) (41,491,104)
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Change in cash $ 1,424,244 $ (1,893,973)
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See notes to consolidated condensed financial statements.
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SHONEY'S, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
August 6, 1995
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to
Form 10-Q. As a result, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements.
The Company, in management's opinion, has included all adjustments
(consisting of normal recurring accruals) necessary for a fair
presentation of the results of operations. Certain reclassifications
have been made in the consolidated condensed financial statements to
conform to the 1995 presentation.
Operating results for the twelve and forty week periods ended August 6,
1995 are not necessarily indicative of the results that may be expected
for all or any balance of the fiscal year ending October 29, 1995.
NOTE 2 - DISCONTINUED OPERATIONS AND RESTRUCTURING
On January 16, 1995, the Company's Board of Directors announced a
reorganization designed to improve the performance and growth of the
Shoney's Restaurant concept. The reorganization included the
divestiture of certain non-core lines of business including Lee's Famous
Recipe, Pargo's and Fifth Quarter restaurants, as well as Mike Rose
Foods, Inc., a private label manufacturer of food products.
On July 28, 1995, the Company announced a change in its divestiture
plans which calls for the Company to retain its Fifth Quarter and
Pargo's restaurants. These two restaurant concepts will be combined
with BarbWire's Steakhouses to form a thirty-two unit casual dining
group with shared management and administrative support services to
achieve improved operating and supervisory efficiencies.
On July 10, 1995, the Company and RTM Restaurant Group announced they
had entered into a definitive asset purchase agreement whereby RTM will
purchase the assets of Lee's Famous Recipe. On August 3, 1995, the
Company and Levmark Capital Corporation announced they had entered into
a definitive purchase agreement for Levmark to acquire Mike Rose Foods,
Inc. The Company expects the Lee's Famous Recipe and Mike Rose Foods,
Inc. sales to be completed by the end of fiscal 1995. Both the Lee's
and Mike Rose Foods agreements are subject to usual and customary
conditions for such sales.
For the quarter ended August 6, 1995, the discontinued businesses
represented 6.7% of consolidated net property, plant and equipment, 7.9%
of consolidated revenues, and 14.4% of consolidated earnings before
interest and taxes. The Company expects that these discontinued lines
of business will be disposed of for amounts in excess of their carrying
values. Certain one-time charges associated with the reorganization
will be accrued as they are incurred. However, the Company expects the
net result of the divestitures and the restructuring will be a gain once
the sales are consummated.
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Severance pay of $1.5 million was included in restructuring expenses for
the forty weeks ended August 6, 1995. There were no comparable expenses
in the first three quarters of 1994.
For financial reporting purposes, the results of operations of the lines
of business to be divested have been treated as discontinued operations
in the accompanying financial statements and are presented net of any
related income tax expense. Prior year financial statements have been
reclassified to conform to this method of presentation. Pargo's and
Fifth Quarter restaurants were included in the results of discontinued
operations in the first and second quarters of 1995, but have been
reclassified to continuing operations following the Company's decision
to retain these businesses during the third quarter. Accordingly, the
results of continuing and discontinued operations for the third quarter
and for the forty weeks ended August 6, 1995 are not comparable to
previously reported operating results for the first and second quarter
of 1995.
NOTE 3 - CHANGES IN ACCOUNTING POLICIES
Effective November 1, 1993, the Company adopted FASB Statement No. 109
"Accounting for Income Taxes" through a cumulative effect adjustment
resulting in an increase to net income of approximately $4.5 million or
$.10 per share (fully diluted). Statement No. 109 changes the Company's
method of accounting for income taxes from the deferred method to the
liability method. The liability method requires the recognition of
deferred income tax liabilities and assets for the expected future tax
consequences of temporary differences between the tax bases and
financial reporting bases of assets and liabilities (see Note 5).
Effective November 1, 1993, the Company also adopted FASB Statement No.
115, "Accounting for Certain Investments in Debt and Equity Securities".
This Statement requires that debt and equity securities be carried at
fair value unless the Company has the positive intent and ability to
hold debt securities to maturity. Debt and equity securities must be
classified into one of three categories: 1) held-to maturity, 2)
available-for-sale or 3) trading securities. Each category has
different accounting treatment for the change in fair values. There was
no cumulative effect from the adoption of Statement No. 115, since at
the time of adoption, the Company held no investments in debt or equity
securities.
NOTE 4 - EARNINGS PER SHARE
Primary earnings per share have been computed using the weighted average
number of shares of common stock and common stock equivalents
outstanding during each period presented. Common stock equivalents
include all dilutive outstanding stock options. For the third quarter
and first three quarters of 1994, fully diluted earnings per share also
includes the assumed conversion of the zero coupon subordinated
convertible debentures. This calculation adjusts earnings for interest
that would not be paid if the debentures were converted. The primary
and fully diluted earnings per share for the third quarter and first
three quarters of 1995 were computed using the weighted average number
of shares of common stock and common stock equivalents outstanding
during the period. No consideration was given to the convertible
debentures for either the third quarter or the first three quarters of
1995 since they were not considered dilutive.
-7-
NOTE 5 - INCOME TAXES
Income taxes for the twelve and forty week periods ended August 6, 1995
and August 7, 1994 were provided based on the Company's estimate of its
effective tax rates (38.0% and 37.5%, respectively) for the entire
respective fiscal years. The Company's estimate of its effective tax
rate for the 1995 fiscal year increased from 1994 due primarily to the
expiration of the Targeted Jobs Tax Credit in December 1994. The
statutory federal income tax rate was 35% for both periods presented.
Effective November 1, 1993, the Company changed its method of accounting
for income taxes from the deferred method to the liability method as
required by FASB Statement No. 109, "Accounting for Income Taxes" (see
Note 3). As permitted under the new rules, prior years' financial
statements were not restated. The cumulative effect of adoption of the
Statement increased deferred tax assets and net income by $4.5 million
or $.10 per common share. This amount was reflected in the first quarter
of fiscal 1994 as the cumulative effect of a change in accounting for
income taxes.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's deferred tax assets
and liabilities as of October 30, 1994 were as follows:
Deferred tax assets:
Reserve for lawsuit settlement $ 31,420,209
Reserves for self insurance 9,449,874
Other - net 4,287,636
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Deferred tax assets - net 45,157,719
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Deferred tax liabilities:
Tax over book depreciation 19,244,064
Capital contribution 22,501,840
Other - net 1,067,275
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Deferred tax liability 42,813,179
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Net deferred tax asset $ 2,344,540
==========
No valuation allowance is considered necessary, as management believes
that the deferred tax assets will ultimately be realized. Management's
conclusion is based, in part, on future taxable income that will result
from the reversal of existing taxable temporary differences.
Additionally, management expects to have future taxable income from
operations, excluding the reversal of temporary differences.
NOTE 6 - SENIOR DEBT
In July 1993, the Company entered into a $125 million reducing revolving
credit facility with a syndicate of financial institutions. The facility
had a four year, three month term expiring October 22, 1997, with reductions
in the aggregate credit facility beginning in 1995. With the exception of
approximately $104 million of property available to collateralize future
financing activities of the Company, all material assets of the Company not
otherwise pledged (including all common shares of a wholly-owned real estate
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company which owns 183 of the Company's restaurant properties) have been
pledged as collateral for the facility. The interest rate for this
facility was at floating rates (the London Interbank Offered Rate
("LIBOR") plus 2%).
During the third quarter of fiscal 1994, the Company and the financial
institutions amended this credit facility to allow the Company to redeem
its 12% subordinated debentures issued in the Company's 1988
recapitalization. The credit facility was increased to a maximum of
$270 million, the interest rate remained at LIBOR plus 2% and the
maturity was extended to October 1999. The Company redeemed the $145.7
million of 12% subordinated debentures at par on July 2, 1994. At
August 6, 1995, the Company had borrowed $245 million under this
facility and the interest rate was 8.0%.
During the third quarter of fiscal 1995, the Company received a
modification of its lending agreements which permits the divestiture of
Mike Rose Foods, Inc. and Lee's Famous Recipe. The modification
requires that 35% of the net proceeds received from the divestiture of
these businesses be used to permanently reduce the credit facility. In
addition, approximately $51 million of properties that previously served
as collateral for the Company's Tranche C debt were substituted for
collateral to be released upon the sale of Mike Rose Foods, Inc. and
Lee's Famous Recipe. The lenders also agreed to release a negative
pledge they held on approximately $104 million of collateral previously
used to secure the Company's Tranche C debt to permit alternative uses
by the Company.
The Company's senior debt requires satisfaction of certain financial
ratios and tests; imposes limitations on capital expenditures; limits
the ability to incur additional debt, leasehold obligations and
contingent liabilities; prohibits dividends and distributions on common
stock; prohibits mergers, consolidations or similar transactions; and
includes other affirmative and negative covenants.
NOTE 7 - RESERVE FOR LITIGATION SETTLEMENT
On January 25, 1993, the Company received final court approval of a
settlement of a three and one-half year old class action race
discrimination lawsuit against the Company and its former senior
chairman. Under the terms of the settlement, the Company has agreed to
pay $105 million in claims. In addition, the Company agreed to pay
$25.5 million in plaintiffs' attorneys fees and an estimated $4 million
in applicable payroll taxes and administrative costs. Under the terms
of the consent decree, payments are made quarterly and substantially all
payments will be completed by March 1, 1998.
During 1994, the Company obtained an IRS private letter ruling which
clarified that certain portions of the settlement payments were not
subject to federal payroll taxes that had been previously accrued by the
Company. The reserve for litigation settlement was reduced by $1.7
million in the fourth quarter of fiscal 1994 to adjust for this change
in estimate for accrued payroll taxes due on the settlement.
NOTE 8 - LITIGATION
The Company is a defendant in a federal court suit filed on December 19,
1994 by one of its Captain D's franchisees who claims that the Company
imposes a "tying" arrangement by requiring franchisees to purchase food
products from the Company's commissary. The complaint seeks damages for
an alleged class of similarly situated plaintiffs in an amount not to exceed
$500 million and treble damages. The same plaintiff has also filed a state
court suit making essentially the same claims; however, in that suit,
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the plaintiff did not make a class action claim. On December 16, 1994
counsel for the plaintiff advised the Company that the federal court
case described above would be filed unless the Company settled the
pending state court case by purchasing the plaintiff's franchised
Captain D's restaurant for $1.65 million, plus assumption of certain
equipment leases. The Company rejected the demand and the federal court
lawsuit was filed. The federal complaint has been amended to add one
additional plaintiff, a former franchisee, and to add an additional
consumer protection act claim.
The Company also is a defendant in a federal court suit filed on
December 30, 1994 by two plaintiffs who are franchisees of six Shoney's
Restaurants. The complaint alleges that the Company imposes a "tying"
arrangement by requiring Shoney's Restaurant franchisees to purchase
their food products from the Company's commissary by not providing
product specifications in order to select alternative vendors. They
further allege that the Company has engaged in fraud, breach of
contract, and violations of the Tennessee Consumer Protection Act
regarding the establishment and operation of the Shoney's Restaurant
cooperative advertising program. One of the plaintiffs also
individually asserts a breach of contract claim regarding a franchise
territory transfer. The complaint does not specify the amount of
damages sought; however, the plaintiffs seek treble damages for both
their anti-trust claims and Tennessee Consumer Protection Act claims.
They also seek punitive damages on their fraud claim.
The plaintiffs in each of these federal court suits purport to act on
behalf of similarly situated classes of plaintiffs. In the first case
mentioned, the plaintiffs now have filed a motion to certify the case as
a class action. There has been no motion filed to certify the second
case as a class action. Neither of the cases has yet been certified as
a class action.
Management believes it has substantial defenses to the claims made in
each of these cases and intends to vigorously defend both cases. In the
opinion of management, the ultimate liability with respect to either
case will not materially affect the operating results or the financial
position of the Company.
The Company is a party to other legal proceedings incidental to its
business. In the opinion of management, the ultimate liability with
respect to these actions will not materially affect the operating
results or the financial position of the Company.
NOTE 9 - SALE OF SHONEY'S LODGING, INC. AND RELATED INVESTMENTS
Effective February 16, 1994, the Company sold its minority ownership
interests in four Shoney's Inns to ShoLodge, Inc. ("ShoLodge") in
exchange for 90,909 common shares of ShoLodge. The shares received were
recorded at their fair value on the date of the transaction of
approximately $2.4 million resulting in a gain of $1.7 million in the
quarter ended February 20, 1994. The ShoLodge common shares were
classified as trading securities under FASB Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" (see
Note 3). The change in fair value of the ShoLodge common shares
subsequent to the transaction is reflected in the results of operations.
The Company also owns certain warrants to acquire ShoLodge common stock
which were obtained in the 1992 sale of the Company's lodging division to
ShoLodge. In connection with the sale of the Company's minority motel
interests described in the preceding paragraph, the Company received future
registration rights with respect to the shares that may be acquired upon
exercise of the warrants. Under the provisions of FASB Statement No. 115,
certain of these warrants were classified as trading securities during the
first two quarters of both 1994 and 1995 and adjusted to their fair value.
The resulting gains
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of approximately $1.1 million and $.6 million in the first and second
quarters of 1994, respectively, and gains of approximately $.9 million
and $.2 million in the first and second quarters of 1995, respectively,
are reflected in the results of operations.
Once classified as a trading security, the warrants are carried at fair
value with increases and decreases in fair value reflected in the
results of operations. The fair value of the ShoLodge warrants and the
ShoLodge common stock held by the Company declined by approximately
$81,000 during the first quarter and by approximately $2.5 million
during the second quarter of 1995. In the third quarter of 1995, the
fair value of the ShoLodge warrants and the ShoLodge common stock held
by the Company increased by approximately $100,000. The fair value of
the ShoLodge common stock and the ShoLodge warrants classified as
trading securities was $3.4 million at August 6, 1995.
NOTE 10 - SUBSEQUENT EVENT
On September 5, 1995, the Company and TPI Enterprises, Inc. announced
the signing of a letter of intent to merge TPI Enterprises, Inc. with a
subsidiary of Shoney's, Inc. TPI Enterprises is the Company's largest
franchisee and operates 188 Shoney's and 69 Captain D's Seafood
restaurants. The letter of intent indicates that the Company will merge
with TPI through an exchange of .28 shares of its stock for each
outstanding share of TPI and one Shoney's warrant for each 3.125 shares
of TPI. The Shoney's warrant will be exercisable within five years and
will permit the holder to acquire one share of Shoney's common stock at
$21.50 per share. In addition, TPI shareholders will have the right to
receive contingent shares of Shoney's common stock that will permit TPI
shareholders to receive, on a pro rata basis, any net cash proceeds
resulting from the ultimate settlement of TPI's ongoing litigation,
through its Maxcell Telecom Plus, Inc. subsidiary, against McCaw
Cellular Communications, Inc. The contingent shares are limited to a
maximum of the aggregate shares issued pursuant to the .28 exchange
ratio for TPI's outstanding shares. In addition, Shoney's will assume
approximately $95 million of net debt from TPI.
The proposed transaction is subject to a number of conditions, including
the execution of a definitive merger agreement, approval by the
shareholders and lenders of both companies, and clearance by
governmental regulatory authorities.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis provides information
which management believes is relevant to an assessment and
understanding of the Company's consolidated results of operations and
financial condition. The discussion should be read in conjunction
with the consolidated condensed financial statements and notes
thereto. The third quarter and first three quarters of both fiscal
1995 and 1994 covered periods of twelve and forty weeks, respectively.
On January 16, 1995, the Company's Board of Directors announced
a reorganization designed to improve the performance and growth of the
Shoney's Restaurant concept. The reorganization included the planned
divestitures of certain non-core lines of business including Lee's
Famous Recipe, Pargo's and Fifth Quarter restaurants, as well as Mike
Rose Foods, Inc., a private label manufacturer of food products. On
July 28, 1995, the Company announced it had decided to retain its Pargo's
and Fifth Quarter restaurants and combine them with the Company's
BarbWire's Steakhouse restaurants to form a thirty-two unit casual dining
group. The Company plans to combine the corporate management and
administrative support functions for the three casual dining concepts to
achieve greater operational efficiencies. The Company signed definitive
agreements for the sales of Mike Rose Foods, Inc. and the Lee's Famous
Recipe division during the third quarter of 1995 and both sales are
expected to close before the end of the fiscal year.
For financial reporting purposes, the results of operations of the
lines of business to be divested have been treated as discontinued
operations in the accompanying financial statements and are presented net
of related income tax expense. Prior year financial statements have been
reclassified to conform to this method of presentation. During the first
and second quarters, Pargo's and Fifth Quarter operating results had been
included in discontinued operations. However, for the third quarter,
their results have been reclassified to continuing operations following
the July 1995 decision to retain these two restaurant concepts.
Accordingly, results of continuing and discontinued operations for the
first two quarters of fiscal 1995 are not comparable with the third quarter
and first three quarters of 1995.
For the third quarter of fiscal 1995, the discontinued lines of
business represented 6.7% of consolidated net property, plant and equipment,
7.9% of consolidated revenues and 14.4% of consolidated earnings before
interest and taxes if the Company had not adopted the discontinued
operations accounting treatment. The Company expects that these
discontinued lines of business will be disposed of for amounts in excess
of their carrying values. Certain one-time charges associated with the
reorganization will be accrued as they are incurred. However, the Company
expects the net result of the divestitures and the restructuring will be a
gain once the sales of these lines of business are consummated.
In connection with the reorganization, the Company has obtained
modifications to certain of its credit agreements that permit the Company
to utilize a significant portion of the divestiture proceeds to fund the
planned improvements and growth of the Shoney's Restaurant concept. The
modifications require the Company to apply 35% of the net divestiture
proceeds to permanently reduce the commitment available under the $270
million revolving credit facility.
Following the reorganization announcement, the Company has focused on
development and implementation of the performance improvement plan for the
Shoney's Restaurant concept. The performance improvement plan is directed
at all aspects of restaurant operations and restaurant support functions
including distribution, purchasing, restaurant development and general
corporate services. The
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Shoney's Restaurants experienced declines in comparable store sales which
resulted in lower operating margins in both the third quarter and first
three quarters of fiscal 1995 when compared to the same periods of fiscal
1994. The Company anticipates Shoney's Restaurants operating margins will
be less than the prior year for the remainder of fiscal 1995, or until the
benefits of the performance improvement plan begin to have a positive effect
on overall comparable store sales and operating margins.
Revenues from continuing operations for the third quarter of fiscal
1995 decreased 2.2% ($5.6 million) to $253.9 million as compared to the
third quarter of fiscal 1994. For the first three quarters of fiscal 1995,
revenues from continuing operations decreased 1.1% ($9.1 million) to $817.5
million as compared to the same period of fiscal 1994. An analysis of the
decrease in revenues is shown below.
12 Weeks Ended 40 Weeks Ended
August 6, 1995 August 6, 1995
$ Millions $ Millions
----------------- ----------------
Restaurant revenue $ 3.5 $ 19.2
Commissary and other sales ( 6.8) ( 19.8)
Franchise fees ( .5) ( 1.5)
Other Income ( 1.8) ( 7.0)
------ ------
$( 5.6) $( 9.1)
====== ======
The Company's continuing operations opened 23 restaurants during
the first three quarters of fiscal 1995, including 17 Shoney's (with
eleven units purchased from franchisees), four Pargo's and two Barbwire's,
and closed three Shoney's units. Franchisees for the Company's continuing
operations opened 15 units during the first three quarters of fiscal 1995
and closed 53 units (including the eleven units purchased by the Company).
Sixteen of the franchise closures were in the Chicago-area where the
Shoney's Restaurant franchisee filed Chapter 11 bankruptcy. Comparable
store sales of Company-owned restaurants in the Company's continuing
operations decreased 3.3% for the third quarter, including a menu price
increase of .3%. For the first three quarters of fiscal 1995, comparable
store sales of Company-owned restaurants in the Company's continuing
operations declined 1.9%, including a menu price increase of .4%.
Commissary sales decreased 14.9% ($6.6 million) and 12.4%
($18.2 million), respectively, during the third quarter and first
three quarters of 1995 as compared to the corresponding periods of
1994. When compared to restaurant sales, these sales have a higher
percentage of food costs and a lower percentage of operating expenses.
There is no restaurant labor associated with these commissary sales.
Franchise fees relating to the Company's continuing operations also
declined $.5 million (7.9%) and $1.5 million (7.2%) in the third
quarter and first three quarters of 1995 when compared to the prior
year. The decreases in both commissary sales and franchise fees are
primarily the result of a net decrease in the number of franchised
restaurants and a decline in comparable store sales at franchised
Shoney's Restaurants which more than offset comparable store sales
gains at franchised Captain D's units.
Other income decreased $7.0 million in the first three quarters
of 1995 when compared with the first three quarters of 1994 as the
result of several specific items. During the first quarter of 1994,
the Company received $.9 million from the settlement of certain class
action securities litigation against RJR Nabisco, Inc. and others. In
addition, during the first quarter of fiscal 1994, the Company sold its
minority ownership interests in four Shoney's Inns to ShoLodge, Inc.
("ShoLodge") and the resulting gain
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of $1.7 million was included in other income. In conjunction with this
sale, the Company also received future registration rights for shares of
ShoLodge stock that may be acquired by the Company upon the exercise of
certain warrants that it owns. Under the provisions of FASB Statement No.
115, certain of these warrants were classified as trading securities and
adjusted to fair value resulting in gains of $1.1 million and $ .1
million for the first and second quarters of fiscal 1994, respectively,
which were included in other income (see Note 9--Sale of Shoney's Lodging,
Inc. and Related Investments). During 1995, the value of the ShoLodge
shares and warrants increased $.8 million during the first quarter,
declined $2.3 million in the second quarter and increased by $ .1 million
in the third quarter, resulting in a decrease in other income in 1995
relating to valuation of ShoLodge shares and warrants of approximately
$2.6 million as compared to the first three periods of 1994. The third
quarter of 1994 also included approximately $1.6 million of other income
from gains on certain real estate transactions.
Cost of sales for continuing operations for the third quarter of
fiscal 1995 increased $3.3 million over the same quarter in fiscal 1994
and, as a percentage of revenues, were 85.5% in 1995 as compared to 82.4%
in the third quarter of 1994. Cost of sales for continuing operations
for the first three quarters of 1995 increased $14.4 million over the
same period in 1994 and, as a percentage of revenues, were 85.8% in 1995 as
compared to 83.1% for the same period of 1994. Food and supplies decreased
as a percentage of revenues principally due to the decline in commissary
sales. Restaurant food costs, as a percentage of revenues, were
principally unchanged for both the third quarter and first three quarters
of 1995 compared to the same periods of 1994. Restaurant labor increased
as a percentage of revenues in the third quarter and for the first three
quarters because of higher labor cost at the restaurant level and the
decline in commissary sales (which have no restaurant labor in cost of
sales). The higher restaurant labor cost is due to increases in payroll
costs stemming from competitive labor markets as well as higher levels of
staffing to implement the Shoney's Restaurant improvement plan. During
the third quarter and for the first three quarters of fiscal 1995,
operating expenses increased as a percentage of revenues when compared to
the same periods of 1994. The increased costs were primarily due to higher
depreciation expense and property taxes as well as various costs related
to the implementation of the Shoney's improvement plan in fiscal 1995.
In addition, during the second quarter of 1994, the settlement of a
lawsuit against a former insurance carrier for the Company reduced
insurance expense by $1.5 million and there was no comparable item in 1995.
General and administrative expenses increased as a percentage of
revenues from 4.7% in the third quarter of 1994 to 5.5% in the third
quarter of 1995. General and administrative expenses as a percentage of
revenues for the first three quarters of 1995 were 5.8%, as compared to
5.2% in the first three quarters of 1994. For the first three quarters
of fiscal 1995, this increase was primarily due to expenses for
consulting services related to assisting management with the development
of the Shoney's Restaurant performance improvement program (for which
there was no comparable item in the same period of the prior year) and
compensation expenses related to the performance improvement plan.
Restructuring charges of $1.8 million in the first three quarters
of 1995 were principally related to severance pay incurred as part of the
Company's overall restructuring plan. Other restructuring charges will
be accrued as they are incurred or when they can be reasonably estimated.
Interest expense for the third quarter of 1995, as compared to
the same period last year, declined approximately $.1 million. This
decline was the net effect of higher effective interest rates ($.1
million) offset by a reduction in interest expense from a decline in
the average debt outstanding ($.2 million). For the first three
quarters of 1995, interest expense declined approximately $2.0 million
principally due to lower interest rates ($.9 million) and a decline in
the average outstanding debt ($1.0 million).
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The effective income tax rates for the third quarter and first
three quarters of 1995 and 1994 were 38% and 37.5%, respectively. The
increase in the effective tax rate for fiscal 1995 is primarily due to
the expiration of the Targeted Jobs Tax Credit in December 1994. Effective
November 1, 1993, the Company changed its method of accounting for income
taxes from the deferred method to the liability method required by FASB
Statement No. 109, "Accounting for Income Taxes" (see Note 3-- Changes
in Accounting Policies). As permitted under the new rules, prior years'
financial statements were not restated. The cumulative effect of adoption
of the Statement in the first quarter of 1994 was to increase deferred
tax assets and net income by $4.5 million or $.10 per common share.
Revenues of the discontinued operations for the first three
quarters of 1995 declined 3.2% principally due to a 6.5% decline in
comparable store sales in the Lee's Famous Recipe division. Net income
from discontinued operations for the first three quarters of 1995 declined
19% principally due to lower operating margins for Lee's Famous Recipe
and Mike Rose Foods, Inc.
Cash provided from continuing operations decreased $12.0 million to
$79.1 million for the first three quarters of 1995 compared to $91.1
million for the first three quarters of 1994. This decrease was due
primarily to a reduction in net income, after adjustments for differences
in non-cash gains and losses. Cash used by investing activities in 1995
was $19.5 million less than 1994 as cash expenditures for property, plant
and equipment were reduced beginning in the second quarter of 1995 as the
Company focused greater attention on implementation of the Shoney's
Restaurant improvement plan. The fiscal 1995 remodels have been
significantly less costly than remodels in fiscal 1994 and new unit
construction for 1995 has been curtailed to focus on the performance
improvement program. Cash provided by discontinued operations was $3.1
million lower in the first three quarters of 1995 ($9.3 million as
compared to $12.4 million in 1994) due primarily to a reduction in net
income and an increase in working capital for the discontinued operations.
Significant financing activities during fiscal 1995 included
completion of a $28 million mortgage financing during the first quarter,
the payment of the final installment of $60 million on the senior fixed
rate debt in the second quarter, a $4.9 million net increase in short-term
borrowings under the Company's unsecured lines of credit, and payments of
$17.5 million under the terms of the Company's litigation settlement (see
Note 7--Reserve for Litigation Settlement). During the first three
quarters of fiscal 1995, the Company had net borrowings of $5.0 million on
the Company's $270 million Reducing Revolving Credit Facility ("Revolver")
and had outstanding borrowings of $245.0 million under the Revolver as of
August 6, 1995.
At August 6, 1995, the Company had cash and cash equivalents of
approximately $5.6 million and unsecured lines of credit totaling $30
million under which the Company had borrowings of $8.7 million outstanding.
Capital expenditures for fiscal 1995 are expected to be approximately $68
million including expenditures committed for restaurant properties included
in net assets of discontinued operations.
As part of the overall Shoney's Restaurant improvement plan the
Company has obtained various modifications to its credit agreements.
These modifications include amendments to various financial and other
loan covenants to reflect elements of the Company's strategic plan and
the planned divestiture of the two non-core businesses. Management
expects the implementation of the Shoney's Restaurants improvement plan
will result in a continuation of the trend of lower margins in the Shoney's
Restaurants until overall improvements in comparable store sales and
operating margins are achieved. Management
-15-
and its lenders have considered these trends in the modifications of
its debt covenants. The Company expects to meet its needs for debt
service, capital expenditures (excluding those for land and
buildings which are expected to be met through mortgage financing
arrangements), the payments required by the settlement of the class
action litigation and other general corporate purposes through cash
generated by the Company's operations and from the Company's Revolver
(see Note 6--Senior Debt).
-16-
PART II- OTHER INFORMATION.
ITEM 1. LEGAL PROCEEDINGS.
Item 3 of Amendment No. 1 to the Company's Annual Report on Form
10-K, filed with the Commission on February 27, 1995 is incorporated
herein by this reference. See also Note 8 to the Notes to Consolidated
Condensed Financial Statements at pages 9-10 of this Quarterly Report
on Form 10-Q.
ITEM 5. OTHER INFORMATION.
On September 4, 1995, the Company entered into a letter of intent
to merge a subsidiary of the Company with TPI Enterprises, Inc. ("TPI"),
the Company's largest franchisee.
For a further description of this event, reference is made to the
letter of intent entered into between the Company and TPI and to the
press release announcing the letter of intent, copies of which are
incorporated by reference as Exhibits 99.1 and 99.2, respectively to
this Quarterly Report on Form 10-Q. See also Note 10 to the Notes to
Consolidated Condensed Financial Statements at page 11 of this
Quarterly Report on Form 10-Q.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) In accordance with the provisions of Item 601 of
Regulation S-K, the following have been furnished as Exhibits to
this Quarterly Report on Form 10-Q:
3(i), 4.1 Charter of Shoney's, Inc., as amended, filed as
Exhibit 4.1 to Post Effective Amendment No. 3 to the
Company's Registration Statement on Form S-8 (File
No. 33-605) filed with the Commission on October 31,
1988, and incorporated herein by this reference.
3(ii), 4.2 Amended and Restated Bylaws of Shoney's, Inc.
4.3 Amended and Restated Rights Agreement, dated as
of May 25, 1994, between Shoney's, Inc. (the
"Company") and Harris Trust and Savings Bank, as Rights
Agent, filed as Exhibit 4 to the Company's Current
Report on Form 8-K filed with the Commission on June
9, 1994 and incorporated herein by this reference.
4.4 Amendment No. 1 dated as of April 18, 1995 to
Amended and Restated Rights Agreement, dated as of
May 25, 1994, between Shoney's, Inc. (the "Company")
and Harris Trust and Savings Bank, as Rights Agent,
filed as Exhibit 4 to the Company's Current Report on
Form 8-K filed with the Commission on May 4, 1995 and
incorporated herein by this reference.
4.5 Indenture dated as of April 1, 1989 between the
Company and Sovran Bank/Central South, as Trustee
relating to $201,250,000 in principal amount of liquid
yield option notes due 2004, filed as Exhibit 4.8 to
Amendment No. 1 to the Company's Registration
-17-
Statement on Form S-3 filed with the Commission on
April 3, 1989 (No. 33-27571), and incorporated herein
by this reference.
4.6 Revolving Credit Agreement dated as of July 13, 1988
between the Company and First American National Bank,
filed as Exhibit 4.1 and 19.1 to the Company's Current
Report on Form 8-K filed with the Commission on December
3, 1991, and incorporated herein by this reference.
4.7 Modification Agreement No. 1 dated as of March 5,
1991 to Revolving Credit Agreement, dated as of
July 13, 1988 between the Company and First American
National Bank, filed as Exhibit 4.2 and 19.2 to the
Company's Current Report on Form 8-K filed with the
Commission on December 3, 1991, and incorporated herein
by this reference.
4.8 Alternative Rate Agreement dated as of June 4, 1992
supplementing that certain Revolving Credit Agreement
dated as of July 13, 1988 between the Company and First
American National Bank, filed as Exhibit 4.36 and 10.29
to Post Effective Amendment No. 5 to the Company's
Registration Statement on Form S-8 (File No. 2-64257)
filed with the Commission on January 25, 1993, and
incorporated herein by this reference.
4.9 Note Issuance Agreement, dated as of October 1,
1989, among the Company, Sovran Bank, N.A., as
Note Agent and Placement Agent and Sovran Bank /
Central South, as Escrow Agent, filed as Exhibit
19.3 and 28.3 to the Company's Current Report on
Form 8-K filed with the Commission on December 3,
1991, and incorporated herein by this reference.
4.10 Reimbursement Agreement, dated as of October 1,
1989, together with the Standby Note relating
thereto, among the Company, Sovran Bank / Central
South, Long Term Credit Bank of Japan, Limited,
New York Branch, Kredeitbank, N.V., New York
Branch and Sovran Bank / Central South, as Agent,
filed as Exhibit 19.4 and 28.4 to the Company's
Current Report on Form 8-K filed with the
Commission on December 3, 1991, and incorporated
herein by this reference.
4.11 Modification Agreement No. 1 dated as of July 21,
1993 to Reimbursement Agreement, dated as of
October 1, 1989, together with the Standby Note
relating thereto, among the Company, Sovran Bank
/ Central South, Long Term Credit Bank of Japan,
Limited, New York Branch, Kredeitbank, N.V., New
York Branch and Sovran Bank / Central South, as
Agent, filed as Exhibit 4.4 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended August 1, 1993 filed with the Commission on
September 15, 1993, and incorporated herein by
this reference.
4.12 Modification Agreement No. 2 dated as of June 8, 1994
to Reimbursement Agreement, dated as of October 1, 1989
together with the Standby Note relating thereto, among
the Company, NationsBank of Tennessee, N.A. (formerly
Sovran Bank / Central South), Long Term Credit Bank of
Japan, Limited, New York Branch, Kredeitbank, N.V., New
York Branch and NationsBank of Tennessee, N.A., as Agent,
filed as Exhibit 4.30 to the Company's Annual Report on
Form 10-K for the fiscal year ended October 30, 1994
-18-
filed with the Commission on January 30, 1995, and
incorporated herein by this reference.
4.13 Note Issuance Agreement, dated as of October 1, 1990,
among the Company, Sovran Bank, N.A., as Note Agent and
Placement Agent and Sovran Bank / Central South, as
Escrow Agent, filed as Exhibit 19.5 and 28.5 to the
Company's Current Report on Form 8-K filed with the
Commission on December 3, 1991, and incorporated herein
by this reference.
4.14 Reimbursement Agreement, dated as of October 1, 1990,
together with the Standby Note relating thereto, between
the Company and Sovran Bank / Central South, filed as
Exhibit 19.6 and 28.6 to the Company's Current Report on
Form 8-K filed with the Commission on December 3, 1991,
and incorporated herein by this reference.
4.15 Modification Agreement No. 1 dated as of July 21, 1993 to
Reimbursement Agreement, dated as of October 1, 1990,
together with the Standby Note relating thereto, between
the Company and Sovran Bank / Central South, filed as
Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q
for the quarter ended August 1, 1993 filed with the
Commission on September 15, 1993, and incorporated
herein by this reference.
4.16 Modification Agreement No. 2 dated as of April 1,
1994 to Reimbursement Agreement, dated as of October 1,
1990, together with the Standby Note relating thereto,
between the Company and NationsBank of Tennessee, N.A.
(formerly Sovran Bank / Central South), filed as Exhibit
4.34 to the Company's Annual Report on Form 10-K for the
fiscal year ended October 30, 1994 filed with the Commission
on January 30, 1995, and incorporated herein by this
reference.
4.17 Amended and Restated Note Issuance Agreement, dated as of
November 1, 1993, among the Company, NationsBank of
Virginia, N.A., as Note Agent and Placement Agent and
NationsBank of Tennessee, as Escrow Agent, filed as
Exhibit 4.36 to the Company's Annual Report on Form 10-K
for the fiscal year ended October 31, 1993 filed with the
Commission on January 31, 1994, and incorporated
herein by this reference.
4.18 Reimbursement Agreement, dated as of October 1, 1991,
together with the Standby Note relating thereto, between
the Company and National Bank of Canada, New York Branch,
filed as Exhibit 28.10 to the Company's Current Report on
Form 8-K filed with the Commission on December 3, 1991, and
incorporated herein by this reference.
4.19 Assignment, Assumption and Modification Agreement
dated as of November 4, 1993 relating to
Reimbursement Agreement, dated as of October 1,
1991, among the Company, NationsBank of Georgia,
N.A. and National Bank of Canada, New York Branch,
filed as Exhibit 4.38 to the Company's Annual
Report on Form 10-K for the fiscal year ended October
31, 1993 filed with the Commission on January 31, 1994,
and incorporated herein by this reference.
4.20 Loan Agreement dated as of September 24, 1992 between
the Company and CIBC, Inc., filed as Exhibit 4.43 and
10.36 to Post Effective Amendment No. 5 to the Company's
-19-
Registration Statement on Form S-8 (File No. 2-64257)
filed with the Commission on January 25, 1993, and
incorporated herein by this reference.
4.21 Modification Agreement No. 1 dated as of October 25,
1992 to Loan Agreement dated as of September 24, 1992
between the Company and CIBC, Inc., filed as Exhibit
4.44 and 10.37 to Post Effective Amendment No. 5 to
the Company's Registration Statement on Form S-8
(File No. 2-64257) filed with the Commission on January
25, 1993, and incorporated herein by this reference.
4.22 Modification Agreement No. 2 dated as of July 21, 1993
to Loan Agreement dated as of September 24, 1992 between
the Company and CIBC, Inc., filed as Exhibit 4.6 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended August 1, 1993 filed with the Commission on September
15, 1993, and incorporated herein by this reference.
4.23 Loan Agreement dated as of April 21, 1993 between the
Company and NationsBank of Tennessee, N.A., filed as
Exhibit 4 to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 9, 1993 filed with the
Commission on June 23, 1993, and incorporated herein by
this reference.
4.24 Modification Agreement No. 1 dated as of July 21,
1993 to Loan Agreement dated as of April 21, 1993
between the Company and NationsBank of Tennessee,
N.A., filed as Exhibit 4.7 to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 1,
1993 filed with the Commission on September 15, 1993,
and incorporated herein by this reference.
4.25 Loan Agreement dated as of December 1, 1994
between the Company and NationsBank of Tennessee,
N.A., filed as Exhibit 4.43 to the Company's Annual
Report on Form 10-K for the fiscal year ended October
30, 1994 filed with the Commission on January 30,
1995, and incorporated herein by this reference.
4.26 Reducing Revolving Credit Agreement, dated as of July 21,
1993, among the Company, various financial institutions now
or hereafter parties thereto and Canadian Imperial Bank of
Commerce, New York Agency, as agent, filed as Exhibit 4.1
to the Company's Quarterly Report on Form 10-Q for the
quarter ended August 1, 1993 filed with the Commission on
Sept. 15, 1993, and incorporated herein by this reference.
4.27 Modification Agreement No. 1 dated as of July 21,
1993 to Reducing Revolving Credit Agreement, dated
as of July 21, 1993, among the Company, various
financial institutions now or hereafter parties
thereto and Canadian Imperial Bank of Commerce,
New York Agency, as agent, filed as Exhibit 4.8 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended August 1, 1993 filed with the
Commission on September 15, 1993, and incorporated
herein by this reference.
4.28 Modification Agreement No. 2 dated as of December
21, 1993 to Reducing Revolving Credit Agreement,
dated as of July 21, 1993, among the Company,
various financial institutions now or hereafter
parties thereto and Canadian Imperial Bank of
Commerce, New York Agency. Filed as Exhibit 4.46
to the Company's Annual Report on Form
-20-
10-K for the fiscal year ended October 31, 1993, filed
with the Commission on January 31, 1994, and
incorporated herein by this reference.
4.29 Modification Agreement No. 3 dated as of May 3, 1994
to Reducing Revolving Credit Agreement, dated as of
July 21, 1993, among the Company, various financial
institutions now or hereafter parties thereto and
Canadian Imperial Bank of Commerce, New York Agency,
filed as Exhibit 99.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended May 15, 1994
filed with the Commission on June 29, 1994 and
incorporated herein by this reference.
4.30 Modification Agreement No. 4 dated as of October
27, 1994 to Reducing Revolving Credit Agreement, dated
as of July 21, 1993, among the Company, various
financial institutions now or hereafter parties thereto
and Canadian Imperial Bank of Commerce, New York Agency,
filed as Exhibit 4.48 to the Company's Annual Report on
Form 10-K for the fiscal year ended October 30, 1994 filed
with the Commission on January 30, 1995, and incorporated
herein by this reference.
4.31 Modification Agreement No. 5 dated as of January
18, 1995 to Reducing Revolving Credit Agreement, dated
as of July 21, 1993, among the Company, various financial
institutions now or hereafter parties thereto and Canadian
Imperial Bank of Commerce, New York Agency, filed as
Exhibit 4.49 to the Company's Annual Report on Form 10-K
for the fiscal year ended October 30, 1994 filed with
the Commission on January 30, 1995, and incorporated
herein by this reference.
4.32 Modification Agreement No. 6 dated as of April 1, 1995
to Reducing Revolving Credit Agreement, dated as of July
21, 1993, among the Company, various financial
institutions now or hereafter parties thereto and
Canadian Imperial Bank of Commerce, New York Agency,
filed as Exhibit 4.32 to the Company's Quarterly Report
on Form 10-Q for the quarter ended May 14, 1995 filed with
the Commission on June 28, 1995, and incorporated herein
by this reference.
4.33 Modification Agreement No. 7 dated as of July 28, 1995
to Reducing Revolving Credit Agreement, dated as of July
21, 1993, among the Company, various financial
institutions now or hereafter parties thereto and
Canadian Imperial Bank of Commerce, New York Agency.
10.1 License Agreement, dated as of October 28, 1991,
between Shoney's Investments, Inc. and Shoney's
Lodging, Inc., filed as Exhibit 28.7 to the
Company's Current Report on Form 8-K filed with
the Commission on December 3, 1991, and
incorporated herein by this reference.
10.2 Amendment No. 1 dated as of September 16, 1992 to
License Agreement, dated as of October 28, 1991,
between Shoney's Investments, Inc. and ShoLodge
Franchise Systems, Inc. (formerly Shoney's
Lodging, Inc.), filed as Exhibit 10.2 to the
Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1993 filed with the
Commission on January 31, 1994, and incorporated
herein by this reference.
-21-
10.3 Amendment No. 2 dated as of March 18, 1994 to License
Agreement, dated as of October 28, 1991, between Shoney's
Investments, Inc. and ShoLodge Franchise Systems, Inc.,
filed as Exhibit 10.3 to the Company's Quarterly Report
on Form 10-Q for the quarter ended May 14, 1995 filed
with the Commission on June 28, 1995, and incorporated
herein by this reference.
10.4 Amendment No. 3 dated as of March 13, 1995 to License
Agreement, dated as of October 28, 1991, between Shoney's
Investments, Inc. and ShoLodge Franchise Systems, Inc.,
filed as Exhibit 10.4 to the Company's Quarterly Report
on Form 10-Q for the quarter ended May 14, 1995 filed
with the Commission on June 28, 1995, and incorporated
herein by this reference.
10.5 Stock Purchase and Warrant Agreement, dated as of
October 28, 1991, between Shoney's Investments,
Inc. and Gulf Coast Development, Inc., filed as
Exhibit 28.8 to the Company's Current Report on
Form 8-K filed with the Commission on December 3,
1991, and incorporated herein by this reference.
10.6 Agreement dated as of September 8, 1992 between the
Company and R. L. Danner, filed as Exhibit 10.41 to Post
Effective Amendment No. 5 to the Company's Registration
Statement on Form S-8 (File No. 2-64257) filed with the
Commission on January 25, 1993, and incorporated
herein by this reference.
10.7 Consent Decree entered by the United States
District Court for the Northern District of
Florida on January 25, 1993 in Haynes, et. al v.
Shoney's, Inc., et. al, filed as Exhibit 28 to the
Company's Current Report on Form 8-K filed with
the Commission on February 3, 1993, and
incorporated herein by this reference.
10.8 Shoney's, Inc. 1981 Stock Option Plan, filed as
Exhibit 4.7 to Post Effective Amendment No. 3 to
the Company's Registration Statement on Form S-8
(File No. 2-84763) filed with the Commission on
January 25, 1993, and incorporated herein by this
reference.
10.9 Shoney's, Inc. Stock Option Plan, filed as Exhibit 4.7
to Post Effective Amendment No. 4 to the Company's
Registration Statement on Form S-8 (File No. 2-64257)
filed with the Commission on April 11, 1990, and
incorporated herein by this reference.
10.10 Shoney's, Inc. Employee Stock Purchase Plan, filed
as Exhibit 4.7 to Post Effective Amendment No. 4 to the
Company's Registration Statement on Form S-8 (File No. 33-
605) filed with the Commission on October 26, 1989, and
incorporated herein by this reference.
10.11 Shoney's, Inc. Employee Stock Bonus Plan, filed as
Exhibit 10.9 to the Company's Annual Report on
Form 10-K for the fiscal year ended October 31,
1993 filed with the Commission on January 31,
1994, and incorporated herein by this reference.
10.12 Shoney's, Inc. Directors' Stock Option Plan, filed
as Exhibit 4.38 to the Company's Registration
Statement on Form S-8 (File No. 33-45076) filed
with the Commission on January 14, 1992, and
incorporated herein by this reference.
-22-
10.13 Shoney's Ownership Plan 1977, filed as Exhibit
10.47 to Post Effective Amendment No. 5 to the
Company's Registration Statement on Form S-8 (File
No. 2-64257) filed with the Commission on January
25, 1993, and incorporated herein by this
reference.
10.14 Captain D's Ownership Plan 1976, filed as Exhibit
10.48 to Post Effective Amendment No. 5 to the
Company's Registration Statement on Form S-8 (File
No. 2-64257) filed with the Commission on January
25, 1993, and incorporated herein by this
reference.
10.15 Captain D's Ownership Plan 1978-1979, filed as
Exhibit 10.49 to Post Effective Amendment No. 5 to
the Company's Registration Statement on Form S-8
(File No. 2-64257) filed with the Commission on
January 25, 1993, and incorporated
herein by this reference.
10.16 Shoney's, Inc. Supplemental Executive Retirement
Plan, filed as Exhibit 10.14 to the Company's Annual
Report on Form 10-K for the fiscal year ended October
30, 1994 filed with the Commission on January 30,
1995, and incorporated herein by this reference.
10.17 Employment Agreement dated as of January 13, 1995
between the Company and Taylor H. Henry, filed
as Exhibit 10.15 to the Company's Annual Report on
Form 10-K for the fiscal year ended October 30, 1994
filed with the Commission on January 30, 1995, and
incorporated herein by this reference.
10.18 Employment Agreement dated as of January 17, 1995
between the Company and Charles E. Porter, filed
as Exhibit 10.16 to the Company's Annual Report on
Form 10-K for the fiscal year ended October 30, 1994
filed with the Commission on January 30, 1995, and
incorporated herein by this reference.
10.19 Employment Agreement dated as of January 17, 1995,
between the Company and W. Craig Barber, filed
as Exhibit 10.17 to Amendment No. 1 to the Company's
Annual Report on Form 10-K for the fiscal year ended
October 30, 1994 filed with the Commission on February
27, 1995, and incorporated herein by this reference.
10.20 Employment Agreement dated as of April 11, 1995,
between the Company and C. Stephen Lynn, filed as
Exhibit 4.32 to the Company's Quarterly Report on Form
10-Q for the quarter ended May 14, 1995 filed with the
Commission on June 28, 1995, and incorporated herein
by this reference.
11 Statement regarding computation of per share earnings.
27 Financial Data Schedule.
99.1 Letter of Intent between the Company and TPI
Enterprises, Inc. , filed as Exhibit 99.1 to the Current
Report on Form 8-K filed with the Commission by TPI
Enterprises, Inc. (File No. 0-07961) on September 7, 1995,
and incorporated herein by this reference.
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99.2 Press Release regarding letter of intent between the
Company and TPI Enterprises, Inc., filed as Exhibit 99.2
to the Current Report on Form 8-K filed with the
Commission by TPI Enterprises, Inc. (File No. 0-07961)
on September 7, 1995, and incorporated herein by this
reference.
(b) During the quarter ended August 6, 1995, the were no
Current Reports on Form 8-K filed by the Company
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized both on
behalf of the registrant and in his capacity as principal financial
officer of the registrant.
SHONEY'S, INC.
Date: September 18, 1995 By:/s/ W. Craig Barber
---------------------------
W. Craig Barber
Senior Executive Vice President
and Chief Financial Officer
(Principal Financial and
Chief Accounting Officer)
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