1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------------- FORM 10-K/A -------------------- Amendment Number 1 For the fiscal year ended: December 31, 1995 Commission file number: 1-13044 COOKER RESTAURANT CORPORATION (Exact name of registrant as specified in its charter) OHIO 69-1292102 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 5500 Village Boulevard, West Palm Beach, Florida 33407 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (407) 615-6000 Securities registered pursuant to Section 12(b) of the Act: Title of Class Name of each exchange on which registered Common Shares, without par value The New York Stock Exchange Rights to Purchase Class A Junior Participating Preferred Trades with the Common Shares Shares, without par value Securities registered pursuant to Section 12(g) of the Act: Title of Class 6 3/4% Convertible Subordinated Debentures Due 2002 This Amendment Number 1 is being filed by the Registrant in order to refile the Statement of Cash Flows for the Fiscal Years Ended December 31, 1995, January 1, 1995 and January 2, 1994, which correct errors in two line items for the fiscal year ended January 1, 1995; "Increase in Accrued Liabilities" which was $356,000 in original, but which should have been $475,000 and "Increase in Income Taxes Payable" which was $544,000 in original, but which should have been $625,000. No other amounts are being changed on such Statement in any other financial statement or note thereto which are filed herewith in complete form. The error is the result of a clerical mistake in compiling the change in Accrued Liabilities and Income Taxes Payable. 2 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (A) DOCUMENTS FILED AS PART OF THIS FORM 10-K. (1) Financial Statements: Independent Accountants' Report dated January 29, 1996 Balance Sheet as of December 31, 1995 and January 1, 1995 Statement of Income for the Fiscal Years Ended December 31, 1995, January 1, 1995 and January 2, 1994 Statement of Changes in Shareholders' Equity for the Fiscal Years Ended December 31, 1995, January 1, 1995 and January 2, 1994 Statement of Cash Flows for the Fiscal Years Ended December 31, 1995, January 1, 1995 and January 2, 1994 Notes to Financial Statements for the Fiscal Years Ended December 31, 1995, January 1, 1995 and January 2, 1994 (2) FINANCIAL STATEMENT SCHEDULES: Not applicable. (3) The following exhibits are filed as part of this Form 10-K. (3) ARTICLES OF INCORPORATION AND BY-LAWS. 3.1. Amended and Restated Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 28.2 of Registrant's quarterly report on Form 10-Q for the quarterly period ended March 29, 1992; Commission File Number 0-16806). 3.2. Amended and Restated Code of Regulations of the Registrant (incorporated by reference to Exhibit 4.5 of the Registrant's quarterly report on Form 10-Q for the fiscal quarter ended April 1, 1990; Commission File No. 0-16806). (4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS. 4.1. See Articles FOURTH, FIFTH and SIXTH of the Amended and Restated Articles of Incorporation of the Registrant (see 3.1 above). 4.2. See Articles One, Four, Seven and Eight of the Amended and Restated Code of Regulations of the Registrant (see 3.2 above). 4.3. Rights Agreement dated as of February 1, 1990 between the Registrant and National City Bank (incorporated by reference to Exhibit 1 of the Registrant's Form 8-A filed with the Commission on February 9, 1990; Commission File No. 0-16806). 3 4.4. Amendment to Rights Agreement dated as of November 1, 1992 between the Registrant and National City Bank (incorporated by reference to Exhibit 4.4 of Registrant's annual report on Form 10-K for the fiscal year ended January 3, 1993 (the "1992 Form 10-K"); Commission File No. 0-16806). 4.5. Letter dated October 29, 1992 from the Registrant to First Union National Bank of North Carolina (incorporated by reference to Exhibit 4.5 to the 1992 Form 10-K). 4.6. Letter dated October 29, 1992 from National City Bank to the Registrant (incorporated by reference to Exhibit 4.6 to the 1992 Form 10-K). 4.7. See Section 7.4 of the Amended and Restated Loan Agreement dated December 22, 1995 between Registrant and First Union National Bank of Tennessee. (see 10.4 below). 4.8. Indenture dated as of October 28, 1992 between Registrant and First Union National Bank of North Carolina, as Trustee (incorporated by reference to Exhibit 2.5 of Registrant's Form 8-A filed with the Commission on November 10, 1992; Commission File Number 0-16806). (10) MATERIAL CONTRACTS (* Management contract or compensatory plan or arrangement.) 10.1. Purchase and Sale Agreement dated October 20, 1995 between GMRI, Inc. and Registrant (incorporated by reference to Exhibit 99.1 of the Registrant's Current Report on Form 8-K dated January 4, 1996 (the "1996 8-K"); Commission File No. 1-13044). 10.2. First Amendment to Purchase and Sale Agreement dated October __, 1995 between GMRI, Inc. and Registrant (incorporated by reference to Exhibit 99.2 of the 1996 8-K; Commission File No. 1-13044). 10.3. Joinder of Escrow Agreement dated October 25, 1995 among Lawyers Title Insurance Corporation, GMRI, Inc. and Registrant (incorporated by reference to Exhibit 99.3 of the 1996 8-K; Commission File No. 1-13044). 10.4. Amended and Restated Loan Agreement dated December 22, 1995 between Registrant and First Union National Bank of Tennessee. X 10.5. Form of Contingent Employment Agreement and schedule of executed Agreements. * X 10.6. The Registrant's 1988 Employee Stock Option Plan, as amended and restated (incorporated by reference to Exhibit 10.12 of the Registrant's annual report on Form 10-K for the fiscal year ended December 29, 1991 (the "1991 Form 10-K"), Commission File No. 0-16806).* 10.7. The Registrant's 1992 Employee Stock Option Plan (incorporated by reference to Exhibit 10.14 to the 1991 Form 10-K).* 10.8. The Registrant's 1988 Directors Stock Option Plan, as amended and restated (incorporated by reference to Exhibit 10.15 of the Registrant's Annual Report on Form 10-K for the fiscal year ended January 2, 1994 (the "1993 Form 10-K"), Commission File No. 0-16806).* 10.9. The Registrant's 1992 Directors Stock Option Plan, as amended and restated (incorporated by reference to Exhibit 10.16 of the 1993 Form 10-K).* 10.10. The Registrant's 1996 Officers' Stock Option Plan. * X [FN] - -------------- X Previously Filed 4 10.11. Guaranty and Suretyship Agreement dated March 22, 1994 between the Registrant and First Union National Bank of Tennessee (incorporated by reference to Exhibit 10.17 of the 1993 Form 10-K). 10.12. Reaffirmation and Amendment to Guaranty and Suretyship Agreement between Registrant and NationsBank of Tennessee, N.A. dated July 24, 1995 (incorporated by reference to Exhibit 10.5 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended July 2, 1995; Commission File No. 1-13044). 10.13. Separation Agreement and General Release dated October 26, 1994 between Registrant and William Z. Esch (incorporated by reference to Exhibit 10.16 of the Registrant's Annual Report on Form 10-K for the fiscal year ended January 1, 1995; Commission File No. 1-13044).* (23) CONSENTS OF EXPERTS AND COUNSEL. 23.1 Consent of Price Waterhouse LLP. (24) POWERS OF ATTORNEY. 24.1. Powers of Attorney. X 24.2. Certified resolution of the Registrant's Board of Directors authorizing officers and directors signing on behalf of the Registrant to sign pursuant to a power of attorney. X (27) FINANCIAL DATA SCHEDULE. 27.1. Financial Data Schedule. X (B) REPORTS ON FORM 8-K. No current report on Form 8-K was filed by the Registrant during the fourth quarter of fiscal 1995. [FN] - ------------- X Previously Filed 5 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment Number 1 to this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: April 18, 1996 COOKER RESTAURANT CORPORATION (the "Registrant") By: /s/ G. Arthur Seelbinder -------------------------------- G. Arthur Seelbinder Chairman of the Board, Chief Executive Officer and Director (principal executive officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this Amendment Number 1 to this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on April 18, 1996. SIGNATURE TITLE /s/ G. Arthur Seelbinder Chairman of the Board, Chief Executive - --------------------------------------- G. Arthur Seelbinder Officer and Director (principal executive officer) /s/ Phillip L. Pritchard * President, Chief Operating - --------------------------------------- Phillip L. Pritchard Officer and Director /s/ Glenn W. Cockburn * Senior Vice President - Operations - --------------------------------------- Glenn W. Cockburn and Director /s/ David C. Sevig * Vice President - Chief Financial Officer - --------------------------------------- David C. Sevig (principal financial and accounting officer) /s/ Joseph E. Madigan * Director - --------------------------------------- Joseph E. Madigan /s/ Robin V. Holderman * Director - --------------------------------------- Robin V. Holderman /s/ David T. Kollat * Director - --------------------------------------- David T. Kollat /s/ David L. Hobson * Director - --------------------------------------- David L. Hobson /s/ Henry R. Hillenmeyer * Director - --------------------------------------- Henry R. Hillenmeyer /s/ Margaret T. Monaco * Director - --------------------------------------- Margaret T. Monaco * By: /s/ G. Arthur Seelbinder - --------------------------------------- G. Arthur Seelbinder Attorney-in-Fact 6 COOKER RESTAURANT CORPORATION INDEX TO FINANCIAL STATEMENTS Page Report of Independent Accountants.................................................................. F-1 Balance Sheet at December 31, 1995 and January 1, 1995............................................. F-2 Statement of Income for the fiscal years ended December 31, 1995, January 1, 1995 and January 2, 1994.................................................................................... F-4 Statement of Changes in Shareholders' Equity for the fiscal years ended December 31, 1995, January 1, 1995 and January 2, 1994................................................................ F-5 Statement of Cash Flows for the fiscal years ended December 31, 1995, January 1, 1995 and January 2, 1994.................................................................................... F-6 Notes to Financial Statements...................................................................... F-7 F-1 7 REPORT OF INDEPENDENT ACCOUNTANTS January 29, 1996 To the Board of Directors and Shareholders of Cooker Restaurant Corporation In our opinion, the accompanying balance sheet and the related statements of income, of changes in shareholders' equity and of cash flows present fairly, in all material respects, the financial position of Cooker Restaurant Corporation (the Company) at December 31, 1995 and January 1, 1995, and the results of its operations and its cash flows for each of the three fiscal years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Price Waterhouse LLP Columbus, Ohio F-2 8 COOKER RESTAURANT CORPORATION BALANCE SHEET DECEMBER 31, 1995 AND JANUARY 1, 1995 DECEMBER 31, JANUARY 1, 1995 1995 ASSETS (in thousands) CURRENT ASSETS: Cash and cash equivalents $ 1,299 $ 2,087 Inventory 914 830 Preoperational costs 302 678 Prepaid expenses and other current assets 511 739 -------- -------- TOTAL CURRENT ASSETS 3,026 4,334 PROPERTY AND EQUIPMENT 78,127 64,481 OTHER ASSETS 2,028 2,037 -------- -------- $ 83,181 $ 70,852 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 2,421 $ 2,604 Accrued liabilities 5,543 4,433 Income taxes payable 783 633 Deferred income taxes 79 79 -------- -------- TOTAL CURRENT LIABILITIES 8,826 7,749 LONG-TERM DEBT 35,976 28,600 DEFERRED INCOME TAXES 433 595 -------- -------- TOTAL LIABILITIES 45,235 36,944 -------- -------- SHAREHOLDERS' EQUITY: Common shares - without par value; authorized, 26,082 26,003 30,000,000 shares; issued 7,663,000 and 7,651,000 shares at December 31, 1995 and January 1, 1995, respectively Retained earnings 18,013 13,939 Treasury stock, at cost, 513,000 and 500,000 shares (6,149) (6,034) at December 31, 1995 and January 1, 1995, respectively COMMITMENTS (Note 13) -------- -------- 37,946 33,908 -------- -------- $ 83,181 $ 70,852 ======== ======== The accompanying notes are an integral part of the financial statements. F-3 9 COOKER RESTAURANT CORPORATION STATEMENT OF INCOME FISCAL YEARS ENDED DECEMBER 31, 1995, JANUARY 1, 1995 AND JANUARY 2, 1994 DECEMBER 31, JANUARY 1, JANUARY 2, 1995 1995 1994 (in thousands, except per share data) SALES $ 91,678 $ 84,169 $ 66,688 -------- -------- -------- COST OF SALES: Food and beverages 26,218 24,193 18,780 Labor 31,977 31,389 23,384 Restaurant operating expenses 15,065 13,549 10,540 Restaurant depreciation and amortization 3,957 5,030 4,063 -------- -------- -------- 77,217 74,161 56,767 -------- -------- -------- Restaurant operating income 14,461 10,008 9,921 -------- -------- -------- OTHER EXPENSES (INCOME): General and administrative 5,785 4,532 3,710 Interest expense 1,848 1,787 1,105 Gain on sale of property (305) -- -- Interest and other income (30) (72) (409) -------- -------- -------- 7,298 6,247 4,406 -------- -------- -------- INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM 7,163 3,761 5,515 PROVISION FOR INCOME TAXES BEFORE EXTRAORDINARY ITEM 2,731 1,280 2,021 -------- -------- -------- INCOME BEFORE EXTRAORDINARY ITEM 4,432 2,481 3,494 EXTRAORDINARY GAIN, NET OF INCOME TAXES -- 484 -- -------- -------- -------- NET INCOME $ 4,432 $ 2,965 $ 3,494 ======== ======== ======== EARNINGS PER COMMON SHARE: Before extraordinary item $ .60 $ .34 $ .45 Extraordinary item -- .07 -- -------- -------- -------- TOTAL $ .60 $ .41 $ .45 ======== ======== ======== WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND COMMON EQUIVALENT SHARES OUTSTANDING 7,387 7,254 7,846 ======== ======== ======== The accompanying notes are an integral part of the financial statements. F-4 10 COOKER RESTAURANT CORPORATION STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FISCAL YEARS ENDED DECEMBER 31, 1995, JANUARY 1, 1995 AND JANUARY 2, 1994 Common Shares Treasury Stock ----------------------- Retained ----------------------- Shares Amounts Earnings Shares Amounts Total -------- -------- -------- -------- -------- -------- (in thousands) Balance, January 3, 1993 7,591 $ 25,393 $ 8,226 -- $ -- $ 33,619 Purchase of treasury stock -- -- -- 105 (1,347) (1,347) Issuance of common shares under stock option plans 55 338 -- -- -- 338 Tax benefits of stock -- 244 -- -- -- 244 options exercised Dividends paid $.05 per -- -- (380) -- -- (380) share Net income -- -- 3,494 -- -- 3,494 -------- -------- -------- -------- -------- -------- Balance, January 2, 1994 7,646 25,975 11,340 105 (1,347) 35,968 Purchase of treasury stock -- -- -- 395 (4,687) (4,687) Issuance of common shares under stock option plans 5 22 -- -- -- 22 Tax benefits of stock -- 6 -- -- -- 6 options exercised Dividends paid $.05 per -- -- (366) -- -- (366) share Net income -- -- 2,965 -- -- 2,965 -------- -------- -------- -------- -------- -------- Balance, January 1, 1995 7,651 26,003 13,939 500 (6,034) 33,908 Addition to treasury stock -- -- -- 13 (115) (115) Issuance of common shares under stock option plans 12 52 -- -- -- 52 Tax benefits of stock -- 27 -- -- -- 27 options exercised Dividends paid $.05 per -- -- (358) -- -- (358) share Net income -- -- 4,432 -- -- 4,432 -------- -------- -------- -------- -------- -------- Balance, December 31, 1995 7,663 $ 26,082 $ 18,013 513 $ (6,149) $ 37,946 ======== ======== ======== ======== ======== ======== The accompanying notes are an integral part of the financial statements. F-5 11 COOKER RESTAURANT CORPORATION STATEMENT OF CASH FLOWS FISCAL YEARS ENDED DECEMBER 31, 1995, JANUARY 1, 1995 AND JANUARY 2, 1994 DECEMBER 31, JANUARY 1, JANUARY 2, 1995 1995 1994 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,432 $ 2,965 $ 3,494 Adjustments to reconcile net income to net cash providing by operating activities: Depreciation and amortization 4,375 5,464 4,482 Gain on sale of property (305) -- -- Gain on repurchase of debentures, net of income taxes (23) (484) -- (Increase) in inventory (84) (192) (207) (Increase) in preoperational costs (444) (1,348) (2,441) Decrease (increase) in prepaid expenses and other current assets 237 (327) (756) (Increase) decrease in other assets (276) (131) 130 Increase in accounts payable 460 683 (336) Increase in accrued liabilities 1,110 475 985 Increase in income taxes payable 175 625 752 Decrease (increase) in deferred income taxes (162) (159) 100 -------- -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 9,495 7,571 6,203 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (17,200) (11,318) (23,627) Proceeds from sales of property and equipment 459 206 108 Proceeds from sales of short-term investments -- 749 18,628 Advances to related party -- -- (375) Payments from related party -- -- 375 -------- -------- -------- NET CASH USED IN INVESTING ACTIVITIES (16,741) (10,363) (4,891) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings 8,811 9,300 -- Repurchase of debentures (1,180) (1,200) -- Redemption of debentures (893) (975) -- Exercise of stock options 78 22 337 Purchases of treasury stock -- (6,034) -- Dividends paid (358) (366) (379) -------- -------- -------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 6,458 747 (42) -------- -------- -------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (788) (2,045) 1,270 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,087 4,132 2,862 -------- -------- -------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,299 $ 2,087 $ 4,132 ======== ======== ======== The accompanying notes are an integral part of the financial statements. F-6 12 OOKER RESTAURANT CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995, JANUARY 1, 1995 AND JANUARY 2, 1994 1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cooker Restaurant Corporation (the Company) owns and operates 37 restaurants in Tennessee, Ohio, Indiana, Kentucky, Michigan, Florida, Georgia, North Carolina, Virginia, and Maryland which have been developed under the Cooker concept. Fiscal year. The Company's fiscal year ends on the Sunday closest to December 31 of each year. Fiscal years 1995, 1994 and 1993 consisted of 52 weeks. Cash and cash equivalents. Cash and cash equivalents consist of cash on hand and in banks and credit card receivables. Credit card receivables are considered cash equivalents because of their short collection period. The carrying amount of credit card receivables approximates fair value. Inventories. Inventories consist primarily of food and beverages and are stated at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method. Preoperational costs. Preoperational costs consist primarily of costs for employee training and relocation and supplies incurred in connection with the opening of each restaurant. These costs are accumulated to the date the restaurant is opened and are amortized on the straight-line method over one year commencing from that date. Prior to fiscal 1993, preoperational costs were amortized on the straight-line method over three years. This change in estimate decreased fiscal 1993 net income by $611,000 or $.08 per share. Accumulated amortization of preoperational costs was $136,000 and $711,000 at December 31, 1995 and January 1, 1995, respectively. Property and equipment. Property and equipment, including capital improvements, are recorded at cost. Depreciation is computed by the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of the useful life of the improvements or the remaining lease term. Maintenance and repairs are charged directly to expense as incurred. When property and equipment are sold or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and the resulting gains or losses are reported in operations. Interest is capitalized primarily in connection with the construction of new restaurants. Capitalized interest is amortized over the asset's estimated useful life. Interest costs of $291,000, $291,000 and $429,000 were capitalized in fiscal 1995, 1994 and 1993, respectively. Deferred financing costs. Deferred financing costs are being amortized over the term of the related debt. Prepaid lease. Prepaid lease represents prepayment of a long-term land lease and is being amortized over the lease term. Financial instruments. The carrying amounts of financial instruments, including cash and cash equivalents, accounts payable and other current liabilities approximate their estimated fair values. The carrying amount of borrowings under the Amended and Restated Loan Agreement (see Note 5) approximates fair value at December 31, 1995. The fair value of the convertible subordinated debentures is determined using discounted future cash flows based on similar types of borrowing arrangements. At December 31, 1995, the carrying amount and fair value of the convertible subordinated debentures are $17,870,000 and $15,569,000, respectively. Income taxes. Income taxes are accounted for under the liability method in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. F-7 13 OOKER RESTAURANT CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995, JANUARY 1, 1995 AND JANUARY 2, 1994 Earnings per share. Earnings per share is calculated using the weighted average number of common shares outstanding including common share equivalents, which consist of stock options. The convertible subordinated debentures have not been included as common share equivalents due to their antidilutive effect. Use of estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications. Certain fiscal 1994 and 1993 amounts have been reclassified to conform with fiscal 1995 presentations. 2. PROPERTY AND EQUIPMENT Property and equipment consist of the following: December 31, January 1, 1995 1995 ------------- ---------- (in thousands) Land $ 19,595 $ 17,512 Buildings and leasehold improvements 43,097 39,135 Furniture, fixtures and equipment 16,836 15,961 Construction in progress 11,013 858 Land held for sale 882 1,089 -------- -------- 91,423 74,555 Less accumulated depreciation and amortization (13,296) (10,074) -------- -------- $ 78,127 $ 64,481 ======== ======== F-8 14 OOKER RESTAURANT CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995, JANUARY 1, 1995 AND JANUARY 2, 1994 3. OTHER ASSETS Other assets consist of the following: December 31 January 1, 1995 1995 ----------- ---------- (in thousands) Deferred financing costs, net of accumulated amortization of $573,000 and $465,000 $ 764 $ 753 Prepaid lease, net of accumulated amortization of $46,000 and $33,000 643 617 Advances to Employee Stock Ownership Plan 270 298 Liquor licenses, net of accumulated amortization of $90,000 and $73,000 209 224 Other 142 145 ------ ------ $2,028 $2,037 ====== ====== 4. ACCRUED LIABILITIES Accrued liabilities consist of the following: December 31 January 1, 1995 1995 ----------- ---------- (in thousands) Salaries and wages $3,221 $2,274 Gift certificates payable 608 567 Sales tax payable 466 442 Property taxes 298 485 Other 950 665 ------ ------ $5,543 $4,433 ====== ====== F-9 15 OOKER RESTAURANT CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995, JANUARY 1, 1995 AND JANUARY 2, 1994 5. LONG-TERM DEBT Long-term debt consists of the following: December 31, January 1, 1995 1995 ------------ ---------- (in thousands) Convertible subordinated debentures $17,870 $19,300 Revolving line of credit 18,106 9,300 ------- ------- $35,976 $28,600 ======= ======= The convertible subordinated debentures (the "Debentures") mature October 1, 2002. The Debentures bear interest at 6.75% which is payable quarterly on the first day of each January, April, July and October. The Debentures are convertible at any time before maturity, unless previously redeemed, into common shares of the Company at a conversion price of $21.5625 per share, subject to adjustment for stock splits. The Debentures are subordinated to all existing and future Senior Indebtedness of the Company as defined in the indenture relating to the Debentures. At the holder's option, the Company is obligated to redeem debentures tendered during the period from August 1 through October 1 of each year, commencing August 1, 1994, at 100% of their principal amount plus accrued interest, subject to an annual aggregate maximum (excluding the redemption option on the death of the holder) of $1,150,000. During fiscal years 1995 and 1994, the Company redeemed the annual aggregate maximum amount required by the holder's option. The Company is also required to redeem debentures at 100% of their principal plus accrued interest in the event of death of a debenture holder up to a maximum of $25,000 per year per deceased debenture holder. During fiscal years 1995 and 1994, the Company redeemed debentures subject to this provision of $30,000 and $50,000, respectively. The Debentures are redeemable at any time on or after October 1, 1994 at the option of the Company, in whole or in part, at declining premiums. In addition, upon the occurrence of certain changes of control of the Company, the Company is obligated to purchase Debentures at the holder's option at par plus accrued interest. In December 1994, the Company recorded an extraordinary gain of $734,000 ($484,000 after taxes) in connection with the repurchase of debentures in the principal amount of $2,500,000. In December 1995, the Company repurchased debentures in the principal amount of $250,000 resulting in a gain of $23,000. These transactions were financed through funds available under the revolving line of credit. On December 22, 1995, the Company entered into a Revolving/Term Loan under an Amended and Restated Loan Agreement (the Agreement) with a bank for borrowings up to $33,000,000. Borrowings under the Agreement may be used for general working capital purposes and costs incurred in expansion of the restaurant business. The Agreement is secured by certain properties owned by the Company. Beginning January 1, 1998, borrowing availability will be reduced quarterly by a maximum of $1,650,000. Borrowings are due December 31, 1998. Interest, payable quarterly, is at the Company's option at LIBOR plus 1.25% up to LIBOR plus 2.00% or prime up to prime plus 0.50%, based on a financial ratio as defined in the Agreement. Interest on borrowings at December 31, 1995 ranged from 7.43% to 8.75%. F-10 16 OOKER RESTAURANT CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995, JANUARY 1, 1995 AND JANUARY 2, 1994 The Agreement contains certain restrictive covenants, including maintenance of a minimum tangible net worth and fixed charge coverage ratio and limitations on indebtedness, stock acquisitions, encumbrances and new restaurant expansion. In addition, provided that net income of the prior year exceeds $2,000,000, dividends can be declared but cannot exceed 15% of the prior year's net income. 6. SHAREHOLDERS' EQUITY The Company has authorized 5,000,000 shares of Class A participating preferred stock, none of which have been issued. In January 1990, the Board of Directors approved a Shareholder Rights Plan, as amended, which provides that, in the event that a third party purchases 20% or more of total outstanding stock of the company, a dividend distribution of one and one-half rights for each outstanding common share will be made. These rights expire ten years from date of issuance, if not earlier redeemed by the Company, and entitle the holder to purchase, under certain conditions, preferred shares or common shares of the Company. As of December 31, 1995, approximately 10,725,000 rights were outstanding. 7. INCOME TAXES The provision for income taxes for the following fiscal years then ended consists of: December 31, January 1, January 2, 1995 1995 1994 ------------ -------- --------- (in thousands) Current taxes: Federal $ 2,412 $ 1,037 $ 1,453 State and local 481 402 468 ------- ------- ------- 2,893 1,439 1,921 Deferred taxes (162) (159) 100 ------- ------- ------- Provision for income taxes before extraordinary item 2,731 1,280 2,021 Provision for income taxes on extraordinary item -- 249 -- ------- ------- ------- Provision for income taxes $ 2,731 $ 1,529 $ 2,021 ======= ======= ======= F-11 17 OOKER RESTAURANT CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995, JANUARY 1, 1995 AND JANUARY 2, 1994 A reconciliation of the differences between income taxes calculated at the Federal statutory tax rate and the provision for income taxes before extraordinary item is as follows: Fiscal year ended ------------------------------------------ December 31, January 1, January 2, 1995 1995 1994 ---- ---- ---- (in thousands) Income tax expense on income before extraordinary item based on the Federal statutory rate $ 2,435 $ 1,279 $ 1,875 State taxes, net of Federal tax benefit 317 265 258 Reserve for tax examination 205 -- -- FICA tip tax credit (376) (250) -- Tax-exempt income and other 150 (14) (112) ------- ------- ------- $ 2,731 $ 1,280 $ 2,021 ======= ======= ======= Deferred income taxes are recorded based upon the difference between the book and tax bases of assets and liabilities, primarily property and equipment, preoperational costs and accrued liabilities. Deferred tax assets at December 31, 1995 and January 1, 1995 were $373,000 and $137,000, respectively. Deferred tax liabilities at December 31, 1995 and January 1, 1995 were $885,000 and $811,000, respectively. 8. EMPLOYEE STOCK OWNERSHIP PLAN In 1989, the Company established an Employee Stock Ownership Plan (the "ESOP" or the "Plan"). All employees who have reached the age of 21 years are participants in the Plan. Participants vest in the Plan based upon a graduated schedule providing 20 percent after three years of service and each year thereafter, with full vesting after seven years. The amount and frequency of contributions to the Plan are at the discretion of the Company. Contributions of $73,000 were made to the ESOP during fiscal 1995. No contributions were made during fiscal 1994 and 1993. Dividends on shares held by the ESOP are used to reduce the Company's receivable from the ESOP prior to allocation to ESOP participant accounts. Shares forfeited due to participant withdrawals from the ESOP during fiscal 1995 will be reallocated to remaining participants as of the end of the plan year, as was done for shares forfeited due to participant withdrawals from the ESOP during fiscal 1994. As of December 31, 1995, and January 1, 1995, the ESOP owns 335,000 and 363,000, respectively, of the Company's common shares, all of which are allocated to eligible participants. 9. STOCK OPTION PLANS The Company has employee stock option plans adopted in 1988 (1988 Plan) and 1992 (1992 Plan). Under these plans, employees and nonmanagement directors are granted stock options and stock appreciation rights as determined by a committee appointed by the Board of Directors (the Committee). Each option permits the holder to purchase one share of common stock of the Company at the stated exercise price up to ten years from the date of grant. The stated exercise price is the market value of the stock on the date of grant. Options vest at a rate of 25% per year. The Company has reserved 620,000 and 600,000 common shares for issuance to employees and 73,000 and 200,000 for issuance to nonmanagement directors under the 1988 Plan and 1992 Plan, respectively. F-12 18 OOKER RESTAURANT CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995, JANUARY 1, 1995 AND JANUARY 2, 1994 Changes in the number of shares under the stock option plans are summarized as follows: Options Price -------- ------------------- Balance at January 3 , 1993 536,000 $ 4.03 - $17.75 Granted 282,000 17.75 - 21.75 Canceled (1,000) 4.03 - 4.41 Exercised (55,000) 4.03 - 11.19 -------- ----- ------ Balance at January 2, 1994 762,000 4.03 - 21.75 Granted 772,000 6.63 - 12.88 Canceled (634,000) 4.03 - 21.75 Exercised (6,000) 4.03 - 4.41 -------- ----- ------ Balance at January 1, 1995 894,000 4.03 - 21.75 Granted 65,000 6.75 - 11.00 Canceled (17,000) 6.75 - 11.19 Exercised (11,000) 4.03 - 7.63 -------- ----- ------ Balance at December 31, 1995 931,000 $ 4.03 - $21.75 ======== ====== ====== At December 31, 1995, options were exercisable to purchase 417,000 common shares. During fiscal 1994, the Committee changed the exercise price of certain options through the authorization of the surrender and cancellation of 541,000 options and the reissuance of 398,000 options under the 1988 and 1992 Plans. The remaining 143,000 canceled options were made available for subsequent reissuance. 10. LEASES The Company leases buildings for certain of its restaurants under long-term operating leases which expire over the next twenty- five years. In addition to the minimum rental for these leases, the Company also pays, in certain instances, additional rent based on a percentage of sales, and its pro rata share of the lessor's direct operating expenditures. Several of the leases provide for option renewal periods and scheduled rent increases. Rental expense totaled $1,378,000, $1,637,000 and $1,394,000, including percentage rent of $262,000, $247,000 and $245,000 for the fiscal years ended December 31, 1995, January 1, 1995 and January 2, 1994, respectively. Minimum rental commitments for noncancelable leases as of December 31, 1995 are as follows: Fiscal Year Ending Amount ------------------ ------ (in thousands) 1996 $1,494 1997 1,498 1998 1,519 1999 1,545 2000 1,462 Thereafter 14,761 ------ $22,279 ======= F-13 19 OOKER RESTAURANT CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995, JANUARY 1, 1995 AND JANUARY 2, 1994 11. SUPPLEMENTAL CASH FLOW INFORMATION During 1995, the Company received $115,000 of its common stock from the ESOP for partial repayment of the advances to the ESOP. The common stock received was recorded as treasury stock. During fiscal 1993, the Company acquired treasury stock of $1,347,000 which was included in accounts payable at January 2, 1994 and was paid in fiscal 1994. Also, as described in Note 4, $643,000 related to the repurchase of Debentures was included in accounts payable at January 1, 1995 and was paid during 1995. Cash paid for interest for fiscal 1995, 1994 and 1993 was $1,489,000, $2,175,000 and $1,007,000, respectively. Cash paid for taxes for fiscal 1995, 1994 and 1993 was $2,581,000, $895,000 and $1,169,000, respectively. 12. RELATED PARTIES During October 1993, the Company advanced $375,000 to the Chairman of the Board of Directors (the Chairman). This advance bore interest at 7%. Principal and interest were repaid in December 1993 and March 1994, respectively. Effective March 9, 1994, the Board of Directors (the Board) authorized the Company to execute a Guaranty and Suretyship Agreement whereby the Company guaranteed $5,000,000 of personal indebtedness of the Chairman. This indebtedness is secured by a pledge of 570,000 common shares owned by the Chairman. The guaranty provides that the bank will sell the pledged shares and apply the proceeds thereof to the loan prior to calling on the Company for its guaranty. A fee of .25% per annum is charged on the amount of the guarantee. On June 27, 1995, the Board requested the Chairman to refinance his personal indebtedness with another bank. On December 27, 1995, the Board authorized the Company to reimburse the Chairman $42,000 for refinancing costs incurred in executing the request. The Company does not consider it necessary to provide for a potential loss related to the guarantee in the financial statements at this time. 13. SUBSEQUENT EVENT In January 1996, the Company borrowed an additional $7,050,000 on its revolving line of credit to finance the purchase of land and buildings for which commitments existed at December 31, 1995. F-14 20 OOKER RESTAURANT CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995, JANUARY 1, 1995 AND JANUARY 2, 1994 14. QUARTERLY FINANCIAL DATA (UNAUDITED) Quarterly financial data for fiscal year 1995 and 1994 are summarized as follows: First Second Third Fourth 1995 Quarter Quarter Quarter Quarter ---- ------- ------- ------- ------- (in thousands, except per share data) Sales $22,899 $22,694 $22,758 $23,327 Restaurant operating 3,556 3,547 3,615 3,743 income (a) Income before income taxes 1,806 1,723 1,733 1,901 Net income 1,005 1,102 1,109 1,216 Earnings per share $.14 $.15 $.15 $.16 First Second Third Fourth 1994 Quarter Quarter Quarter Quarter ---- ------- ------- ------- ------- (in thousands, except per share data) Sales $20,120 $20,830 $21,226 $21,993 Restaurant operating 2,473 2,159 2,452 2,924 income (a) Income before income taxes and extraordinary item 1,003 814 820 1,124 Extraordinary gain (net -- -- -- 484 of tax) Net income 652 554 549 1,210 Earnings per share from operations before extraordinary item $ .09 $ .08 $ .07 $ .10 Earnings per share from extraordinary gain -- -- -- $ .07 Net income per share $ .09 $ .08 $ .07 $ .17 (a) Sales less food and beverages, labor, restaurant operating expenses and depreciation and amortization. F-15 21 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- COOKER RESTAURANT CORPORATION ----------------------- FORM 10-K ANNUAL REPORT FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1995 ----------------------- EXHIBITS ----------------------- 22 EXHIBIT INDEX EXHIBIT NUMBER OF PAGES INCORPORATED BY NUMBER DESCRIPTION IN ORIGINAL DOCUMENT + REFERENCE 3.1. Amended and Restated Articles of Incorporation of the Registrant. 13 * 3.2. Amended and Restated Code of Regulations of the Registrant. 12 * 4.1. See Articles FOURTH, FIFTH and SIXTH of the Amended and Restated Articles of Incorporation of the Registrant (see 3.1 above). 13 * 4.2. See Articles One, Four, Seven and Eight of the Amended and Restated Code of Regulations of the Registrant (see 3.2 above). 12 * 4.3. Rights Agreement dated as of February 1, 1990 between the Registrant and National City Bank. 65 * 4.4. Amendment to Rights Agreement dated as of November 1, 1992 between the Registrant and National City Bank. 1 * 4.5. Letter dated October 29, 1992 from the Registrant to First Union National Bank of North Carolina. 1 * 4.6. Letter dated October 29, 1992 from National City Bank to the Registrant. 1 * 4.7. See Section 7.4 of the Amended and Restated Loan Agreement dated as of December 22, 1995 between the Registrant and First Union National Bank of Tennessee (see 10.4 below). 31 X 4.8. Indenture dated as of October 28, 1992 between Registrant and First Union National Bank of North Carolina, as Trustee. 61 * 10.1. Purchase and Sale Agreement dated October 20, 1995 between GMRI, Inc. and Registrant. 17 * 10.2. First Amendment to Purchase and Sale Agreement dated October __, 1995 between GMRI, Inc. and Registrant. 2 * 10.3. Joinder of Escrow Agreement dated October 25, 1995 among Lawyers Title Insurance Corporation, GMRI, Inc. and Registrant. 2 * 10.4. Amended and Restated Loan Agreement dated December 22, 1995 between Registrant and First Union National Bank of Tennessee. 31 X 10.5. Form of Contingent Employment Agreement and schedule of executed Agreements. 10 X 10.6. The Registrant's 1988 Employee Stock Option Plan, as amended and restated. 14 * 10.7. The Registrant's 1992 Employee Stock Option Plan. 13 * <FN> + The Registrant will furnish a copy of any exhibit to a beneficial owner of its securities or to any person from whom a proxy was solicited in connection with the Registrant's most recent Annual Meeting of Shareholders upon the payment of a fee of fifty cents ($.50) per page. X Previously filed. E-1 23 EXHIBIT NUMBER OF PAGES INCORPORATED BY NUMBER DESCRIPTION IN ORIGINAL DOCUMENT + REFERENCE 10.8. The Registrant's 1988 Directors Stock Option Plan, as amended and restated. 6 * 10.9. The Registrant's 1992 Directors Stock Option Plan, as amended and restated. 6 * 10.10. The Registrant's 1996 Officers' Stock Option Plan 10 X 10.11. Guaranty and Suretyship Agreement dated March 22, 1994 between the Registrant and First Union National Bank of Tennessee. 7 * 10.12. Reaffirmation and Amendment to Guaranty and Suretyship Agreement between Registrant and NationsBank of Tennessee, N.A. dated July 24, 1995. 2 * 10.13. Separation Agreement and General Release dated October 26, 1994 between Registrant and William Z. Esch 8 * 23.1. Consent of Price Waterhouse LLP. 1 24.1. Powers of Attorney. 10 X 24.2. Certified resolution of the Registrant's Board of Directors authorizing officers and directors signing on behalf of the Registrant to sign pursuant to a power of attorney. 1 X 27.1. Financial Data Schedules (submitted electronically for SEC information only). 1 <FN> + The Registrant will furnish a copy of any exhibit to a beneficial owner of its securities or to any person from whom a proxy was solicited in connection with the Registrant's most recent Annual Meeting of Shareholders upon the payment of a fee of fifty cents ($.50) per page. X Previously filed. E - 2 24 + The Registrant will furnish a copy of any exhibit to a beneficial owner of its securities or to any person from whom a proxy was solicited in connection with the Registrant's most recent Annual Meeting of Shareholders upon the payment of a fee of fifty cents ($.50) per page. E - 3