Piccadilly Announces Third Quarter Results.Business Editors BATON ROUGE Baton Rouge (băt`ən r  zh) [Fr.,=red stick], city (1990 pop. 219,531), state capital and seat of East Baton Rouge parish, SE La. , La.--(BUSINESS WIRE)--May 7, 2003Piccadilly Cafeterias Picadilly Cafeterias is a chain of cafeteria restaurants found primarily in the Southern United States. The company began with a single cafeteria in Baton Rouge, Louisiana in 1944, founded by T.H. Hamilton. Today, the chain operates 130 locations in 15 states. , Inc. (AMEX AMEX See: American Stock Exchange :PIC (1) (Programmable Interrupt Controller) An Intel 8259A chip that controls interrupts. Starting with the 286-based AT, there are two PICs in a PC, providing a total of 15 usable IRQs. ) today announced its operating results for the third quarter and three quarters ended April 1, 2003. The Company incurred a net loss for the quarter ended April 1, 2003, of $(2.4) million, or $(0.23) per share, compared with net income of $3.1 million, or $0.30 per share, for the quarter ended March 31, 2002. For the three quarters ended April 1, 2003, the Company incurred a net loss of $(9.1) million, or $(0.84) per share, compared with net income of $3.5 million, or $0.33 per share, for the three quarters ended March 31, 2002. The Company's net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the quarter ended April 1, 2003, were $82.4 million compared with $89.7 million for the quarter ended March 31, 2002, a net decline of $7.3 million, or 8.1%. Net sales from the third quarter of last year include $2.0 million for cafeterias that are now closed. This year's third quarter was one day longer than the third quarter of last year, increasing comparable net sales by $0.8 million. Same-store sales Same-store sales is a business term which refers to the revenue generated by one of a retail chain's specific outlets during a certain period of time (often a fiscal quarter or a particular shopping season), compared to an identical period in the past, usually in the previous year. for the third quarter were down $6.1 million, or 7.0%, from last year's third quarter. For the four-week periods ended January 28, 2003, and February 25, 2003, and the five-week period ended April 1, 2003, same-store sales were down 7.5%, 8.0%, and 6.8%, respectively. The Company's net sales for the three quarters ended April 1, 2003, were $255.5 million compared with $276.6 million for the three quarters ended March 31, 2002, a decline of $21.1 million, or 7.6%. Net sales from the first three quarters of last year include $6.6 million for cafeterias that are now closed. This year's first three-quarter period was one day shorter than the same three-quarter period of last year, lowering comparable net sales by $1.3 million. Same-store sales for the three-quarter period ended March 31, 2003, were down 4.9% compared with the same period last year. The Company believes that a sluggish economy Sluggish Economy A state in the economy in which the growth is slow, flat or declining. The term can refer to the economy as a whole or a component of the economy, such as weak housing starts. and international events had a negative impact on the mid-scale dining segment in which the Company operates, thereby reducing the dining frequency of the Company's guest base. The impact was more noticeable in cafeterias located in regional shopping malls. These cafeterias comprise approximately one-half of all of the Company's cafeterias. Same-store sales for mall cafeterias were down 9.7% for the third quarter while the Company's non-mall cafeterias were down 5.4%. Several items had an impact on the comparability of operating results year over year: Asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges. During the quarter ended April 1, 2003, the Company recorded asset impairment charges of $0.9 million related to one cafeteria cafeteria: see restaurant. with recent sales trends that indicate that future cash flows will not be sufficient to recover its net carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. . During the quarter ended December 31, 2002, the Company recorded asset impairment charges of $5.8 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 48 cafeterias with low sales volumes that were operating at the end of the quarter, including 40 cafeterias located in regional shopping malls. In total, these cafeterias generated, before allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of corporate overhead, net losses of $(2.4) million and $(1.0) on net sales of $36.2 million and $39.7 million for the first three quarters of fiscal 2003 and 2002, respectively. During the third quarter of fiscal 2002, the Company recorded $0.2 million of asset impairment charges. Loss on early retirement of debt. Net income (losses) from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the three quarters ended April 1, 2003 and March 31, 2002, also include losses from the early retirement of debt of $1.3 million and $1.9 million, respectively. During fiscal 2003, the Company repaid $8.7 million of its long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. pursuant to excess cash flow offers required by its debt agreements. During fiscal 2002, the Company repaid $9.4 million of its long-term debt with the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from a sale-leaseback transaction, repaid $3.7 million of its long-term debt using available cash, and refinanced its working capital credit facility. Losses from the early retirement of debt include the prorata portion of unamortized financing costs and prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. premiums. Team member benefits. The Company made changes to its team member benefit plans during fiscal 2002, significantly reducing the Company's costs for these plans. Additionally, the Company utilized the remaining assets of an over-funded benefit trust fund to reduce its ongoing expenditures for team member benefits. In total, team member benefit expense was $3.8 million lower for the three quarters ended April 1, 2003, compared with last year. Most of the benefit plan changes were effective January 1, 2002. Discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Sixteen cafeterias were closed during the three quarters ended April 1, 2003 and are accounted for as discontinued operations. Net loss from discontinued operations for the quarters ended April 1, 2003 and March 31, 2002, was $(0.4) million and $(0.1) million, respectively. Net loss from discontinued operations for the three quarters ended April 1, 2003 and March 31, 2002, was $(0.4) million and $(0.5) million, respectively. Results of discontinued operations for the second quarter of fiscal 2003 include a gain of $0.8 million from the sale of a closed cafeteria. The Company expects to close 17 cafeterias during the fourth quarter ending July 1, 2003 of which 11 had closed as of May 7, 2003, and expects to record a closing charge in the fourth quarter for closing costs Closing Costs The numerous expenses (over and above the price of the property) that buyers and sellers normally incur to complete a real estate transaction. Costs incurred include loan origination fee, discount points, appraisal fee, title search, title insurance, survey, taxes, of approximately $4.6 million. For the quarters ended April 1, 2003 and March 31, 2002, these cafeterias generated net losses of $(0.6) million and $(0.5) million, respectively, on net sales of $4.2 million and $4.9 million, respectively. For the three quarters ended April 1, 2003 and March 31, 2002, these cafeterias generated net losses of $(2.1) million and $(1.3) million, respectively, on net sales of $13.4 million and $15.1 million, respectively. Income tax benefit. During the quarter ended April 1, 2003, the Company applied to the Internal Revenue Service for certain tax accounting method changes. As a result of these changes, the Company also filed a refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies claim to carry back the tax net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. generated in its 2002 tax year to prior years, which were previously outside the permitted carry back period until the enactment of the Job Creation and Work Assistance Act of 2002. At December 31, 2002, the Company estimated that the amount of the refund would be approximately $2.0 million. As a result of finalizing the return in the quarter ended April 1, 2003, the actual refund claim was $2.5 million. Likewise, in fiscal 2002 the Company filed a $2.0 million refund claim with the Internal Revenue Service to carry back net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. recognized in its 2001 tax year to its 1996 tax year. Because a full valuation allowance had previously been established for the Company's net deferred tax assets, including net operating losses, these refunds resulted in adjustments to the valuation allowance and tax benefits of approximately $2.5 million for fiscal 2003, $2.0 million of which was recognized in the quarter ended December 31, 2002, and $0.5 million of which was recognized in the quarter ended April 1, 2003, and $2.0 for fiscal 2002. Marketing. The Company remains focused on improving cafeteria guest traffic. To that end, the Company launched two new marketing initiatives during its third quarter ended April 1, 2003. On Tuesday, Piccadilly guests may enjoy "Chef's Carving carving, n the shaping and forming with instruments. Day," which includes hand-carved turkey, ham, corned beef or roast beef with three side items of salads and desserts, priced at $5.99. On Thursday, "Kid's Day", kids can enjoy new kid-friendly menu items like popcorn chicken, popcorn shrimp, potato smiles and pudding pudding. Early writers on cookery class puddings and dumplings together. The earliest puddings were boiled in a bag or cloth. Later they were placed in a buttered bowl, covered with a cloth, and steamed. The baked or chilled puddings evolved even later. with gummy gummy an old sheep that has lost all of its incisor teeth. worms Worms (vôrms), city (1994 pop. 79,155), Rhineland-Palatinate, SW Germany, on the Rhine River. It is an industrial city and a leading wine trade center. . The meal includes an entree, two sides, a choice of Jell-O, pudding or cupcake, and a drink for just $0.99. The Company will continue its "Delicious Desserts Wednesdays," where Piccadilly guests may enjoy one of Piccadilly's made-from-scratch desserts for only $0.79. These campaigns did not generate a sustained sales increase and the related broadcast media was cancelled in the latter part of the third quarter. Marketing expenses as a percent of net sales were 3.2% and 2.3% for the quarters ended April 1, 2003 and March 31, 2002, respectively. Marketing expenses as a percent of net sales were 3.0% and 1.9% for the three quarters ended April 1, 2003 and March 31, 2002, respectively. Management Change. The Company announced on May 5, 2003, that its Board of Directors had accepted the resignation of Ronald A. LaBorde as the Company's chief executive officer and as member of its Board of Directors. The Board of Directors also announced that it had entered into an agreement with PMCM PMCM partial mission-capable, maintenance (US DoD) PMCM Master Chief Patternmaker (Naval Rating) , LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ., an affiliate of Phoenix Management Services, Inc., of Chadd's Ford, Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York . Phoenix is an operationally-focused turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. management firm. Under the agreement, PMCM agreed to provide to the Company the services of Mr. Vincent Colistra, who will be in charge of the engagement and serve as the chief restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). adviser to the Company, and Mr. John G. "Jack" McGregor, who will serve as the interim chief executive officer of the Company. PMCM has been engaged to provide financial advisory, management and restructuring services to the Company. The Company expects that PMCM will perform these services for the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. Azam Malik Noun 1. malik - the leader of a town or community in some parts of Asia Minor and the Indian subcontinent; "maliks rule the hinterland of Afghanistan under the protection of warlords" , President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , commented, "Our current operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. is challenging. Not only has the mid-scale segment of the restaurant industry experienced negative traffic in recent periods, but the cafeteria/buffet segment in particular has also suffered from significant sales declines. We remain focused on stabilizing stabilizing, v to hold a limb motionless in order to ground its energy; a standard isometric resistance technique, it releases tension and lengthens muscle fibers. sales trends and are committed to improving the operating performance at existing sales levels through improvements in operating efficiencies." Piccadilly is a leader in the family-dining segment of the restaurant industry and operates 179 cafeterias in the Southeastern and Mid-Atlantic states Mid-At·lan·tic States See Middle Atlantic States. Noun 1. Mid-Atlantic states - a region of the eastern United States comprising New York and New Jersey and Pennsylvania and Delaware and Maryland U.S.A. . For more information about the Company visit the Company's website at www.piccadilly.com. The Company will provide an online Web simulcast of its third quarter of fiscal 2003 earnings conference call on May 8, 2003. The live broadcast of Piccadilly's conference call will begin at 3:00 p.m. Eastern Time. An online replay will be available approximately two hours following the conclusion of the live broadcast and will continue through June 8, 2003. A link to these events will be available at the Company's website: www.piccadilly.com. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding management's present plans or expectations may differ materially from actual results. These plans and expectations involve risks and uncertainties relative to certain factors including return expectations, allocation of resources allocation of resources Apportionment of productive assets among different uses. The issue of resource allocation arises as societies seek to balance limited resources (capital, labour, land) against the various and often unlimited wants of their members. , changing economic or competitive conditions, advertising effectiveness, the ability to achieve cost reductions, the ability to secure long-term financing Long-term financing Liabilities repayable in more than one year plus equity. , and the ability to offset inflationary in·fla·tion·ar·y adj. Of, associated with, or tending to cause inflation: inflationary prices; inflationary policies. Adj. 1. pressures through increases in selling prices, among others, any of which may result in material differences.
STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands - except per share data)
Quarter Ended Three Quarters Ended
April 1 March 31 April 1 March 31
2003 2002 2003 2002
(91 days) (90 days) (273 days) (274 days)
-------- -------- -------- --------
Net sales $ 82,389 $ 89,696 $255,543 $276,583
Cost and expenses:
Cost of sales 47,005 50,498 147,780 154,662
Other operating
expense 32,421 33,058 97,580 103,561
General and
administrative
expense 2,922 2,806 8,596 8,657
Other expense
(income) (40) (52) (691) (430)
Interest expense 1,739 1,895 5,425 6,018
Loss on early
retirement of
debt -- -- 1,326 1,906
Provision for
cafeteria
impairments 911 230 6,752 230
-------- -------- -------- --------
84,958 88,435 266,768 274,604
-------- -------- -------- --------
Income (loss) from
continuing
operations before
income taxes (2,569) 1,261 (11,225) 1,979
Provision for
income taxes
(benefit) (520) (2,026) (2,520) (2,026)
-------- -------- -------- --------
Income (loss)
from continuing
operations (2,049) 3,287 (8,705) 4,005
Discontinued
operations:
Loss from
operations (391) (143) (1,238) (547)
Gain on disposal
of cafeterias
closed -- -- 831 --
-------- -------- -------- --------
Net loss from
discontinued
operations (391) (143) (407) (547)
-------- -------- -------- --------
Net income (loss) $ (2,440) $ 3,144 $ (9,112) $ 3,458
======== ======== ======== ========
Weighted average
number of shares
outstanding - basic 10,900 10,510 10,885 10,508
======== ======== ======== ========
Weighted average
number of shares
outstanding -
assuming dilution 10,900 10,546 10,885 10,523
======== ======== ======== ========
Income (loss) per
share from
continuing
operations -
basic and
assuming dilution $ (.19) $ .31 $ (.80) $ .38
======== ======== ======== ========
Discontinued
operations per
share - basic and
assuming dilution $ (.04) $ (.01) (.04) $ (.05)
======== ======== ======== ========
Net income (loss)
per share - basic
and assuming
dilution $ (.23) $ .30 $ (.84) $ .33
======== ======== ======== ========
CONDENSED BALANCE SHEETS
(Unaudited)
(Amounts in thousands except share data)
Balances at April 1 July 2
2003 2002
-------- --------
ASSETS
Current assets
Cash and cash equivalents $ 1,958 $ 5,661
Accounts and other receivables 888 952
Income taxes recoverable 303 --
Inventories 10,584 11,286
Other current assets 1,924 1,541
-------- --------
Total current assets 15,657 19,440
Property, Plant and Equipment 213,107 243,416
Less allowances for depreciation 126,963 144,021
-------- --------
Net property, plant and equipment 86,144 99,395
Goodwill 3,305 3,705
Other assets 9,369 11,155
-------- --------
Total assets $114,475 $133,695
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long term debt, net
of $766,000 unamortized discount at
July 2, 2002 $ -- $ 9,112
Accounts payable 6,280 7,831
Accrued interest 2,051 984
Accrued salaries, benefits and related
taxes 12,674 12,973
Accrued rent 3,440 3,502
Other accrued expenses 4,415 4,592
-------- --------
Total current liabilities 28,860 38,994
Notes payable, net of $2,621,000 and
$2,927,000 unamortized discount at
April 1, 2003 and July 2, 2002,
respectively 36,596 34,695
Reserve for cafeteria closings 3,008 5,163
Other noncurrent liabilities, less
current portion 8,285 8,039
Minimum pension liability 22,538 22,538
Shareholders' equity
Preferred stock, no par value; authorized
50,000,000 shares; issued and
outstanding: none -- --
Common stock, no par value, stated value
$1.82 per share; authorized 100,000,000
shares; issued and outstanding:
10,910,221 shares at April 1, 2003
and 10,880,453 shares at July 2, 2002 19,782 19,782
Additional paid-in capital 18,506 18,506
Retained earnings (deficit) (562) 8,680
-------- --------
37,726 46,968
Less treasury stock at cost: 14,864
Common Shares at July 2, 2002 -- 164
Less accumulated other comprehensive loss 22,538 22,538
-------- --------
Total shareholders' equity 15,188 24,266
-------- --------
Total liabilities and shareholders' equity $114,475 $133,695
======== ========
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