UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended DECEMBER 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _______________________
Commission file number: 1-11754
PICCADILLY CAFETERIAS, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 72-0604977
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3232 SHERWOOD FOREST BLVD., BATON ROUGE, LOUISIANA 70816
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (225)293-9440
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of Common Stock, without par value, as of
February 4, 2000, was 10,528,368.
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
PICCADILLY CAFETERIAS, INC.
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
BALANCES AT DECEMBER 31 June 30
1999 1999
ASSETS
CURRENT ASSETS
Accounts and notes receivable $ 1,365 $ 1,970
Inventories 12,808 12,595
Recoverable income taxes 810 5,578
Deferred income taxes 11,356 11,216
Other current assets 861 888
--------- ---------
TOTAL CURRENT ASSETS 27,200 32,247
PROPERTY, PLANT AND EQUIPMENT 308,684 310,285
Less allowances for depreciation and unit closings 137,064 134,035
--------- ---------
NET PROPERTY, PLANT AND EQUIPMENT 171,620 176,250
GOODWILL, net of $713,000 and $532,000 accumulated
amortization at 12,799 12,982
December 31, 1999 and at June 30, 1999
OTHER ASSETS 10,629 11,460
--------- ---------
TOTAL ASSETS $ 222,248 $ 232,939
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 14,712 $ 18,612
Accrued interest 408 275
Accrued salaries, benefits and related taxes 22,943 22,824
Accrued rent 5,297 5,183
Other accrued expenses 4,598 6,267
--------- ---------
TOTAL CURRENT LIABILITIES 47,958 53,161
LONG-TERM DEBT 73,000 74,226
DEFERRED INCOME TAXES 4,192 3,992
RESERVE FOR UNIT CLOSINGS 11,132 12,693
ACCRUED EMPLOYEE BENEFITS, less current portion 9,230 9,465
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 10,528,368 shares at December 31, 1999 and
at June 30, 1999 19,141 19,141
Additional paid-in capital 18,735 18,735
Retained earnings 39,136 41,804
--------- ---------
77,012 79,680
Less treasury stock at cost: 25,000 Common Shares at
December 31, 1999 and at June 30, 1999 276 278
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 76,736 79,402
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 222,248 $ 232,939
========= =========
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
PICCADILLY CAFETERIAS, INC.
(AMOUNTS IN THOUSANDS - EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31 DECEMBER 31
1999 1998 1999 1998
Net sales $116,368 $130,376 $230,494 $259,311
Cost and expenses:
Cost of sales 68,428 78,644 137,193 155,647
Other operating expense 40,354 42,732 82,942 85,331
General and administrative expense 3,927 4,391 7,929 8,970
Interest expense 1,639 1,586 3,059 3,265
Other expense (income) (387) (192) (523) (191)
-------- -------- -------- --------
113,961 127,161 230,600 253,022
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES 2,407 3,215 (106) 6,289
Provision for income taxes 932 1,239 31 2,425
-------- -------- -------- --------
NET INCOME (LOSS) $ 1,475 $ 1,976 $ (137) $ 3,864
======== ======== ======== ========
Weighted average number of shares
outstanding 10,503 10,503 10,503 10,504
======== ======== ======== ========
Net income (loss) per share - basic and
diluted $ .14 $ .19 $ (.01) $ .37
======== ======== ======== ========
Cash dividends per share $ .12 $ .12 $ .24 $ .24
======== ======== ======== ========
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
PICCADILLY CAFETERIAS, INC.
(AMOUNTS IN THOUSANDS)
SIX MONTHS ENDED DECEMBER 31 1999 1998
OPERATING ACTIVITIES
Net income (loss) $ (137) $ 3,864
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation and amortization 8,334 9,079
Costs associated with closed units (1,390) (244)
Provision for deferred income taxes 60 600
Loss on sale of assets 102 175
Pension expense, net of contributions 577 (1,767)
Change in operating assets and liabilities 109 (3,471)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,655 8,236
INVESTING ACTIVITIES
Acquisition of business --- (6,802)
Purchases of property, plant and equipment (5,798) (5,622)
Proceeds from sales of property, plant and equipment 1,888 16
-------- --------
CASH USED IN INVESTING ACTIVITIES (3,910) (12,408)
FINANCING ACTIVITIES
Proceeds from (payments on) long-term debt - net (1,226) 6,921
Treasury stock transactions - net 2 (228)
Dividends paid (2,521) (2,521)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (3,745) 4,172
-------- --------
Increase (decrease) in cash and cash equivalents --- ---
Cash and cash equivalents at beginning of period --- ---
-------- --------
Cash and cash equivalents at end of period $ --- $ ---
======== ========
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
PICCADILLY CAFETERIAS, INC.
December 31, 1999
NOTE 1: BASIS OF PRESENTATIONS
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Comparative results of operations by periods may be affected by the
timing of the opening of new units. Quarterly results are additionally
affected by seasonal fluctuations in customer volume. Customer volume at
established units is generally higher in the second quarter ended December
31 and lower in the third quarter ending March 31 reflecting seasonal
retail activity.
NOTE 2: LONG-TERM DEBT
The Company has a credit facility with a syndicated group of banks
maturing on June 22, 2001. As reported in the Company's Report on Form 8-K
dated November 18, 1999, the Company and its lenders amended the credit
facility to revise certain financial covenants effective September 30,
1999, such that the Company was in compliance with all covenants as of
September 30, 1999. The Company is in compliance with all covenants as of
December 31, 1999.
The financial covenants, as amended, are designed to correlate with
the Company's projected performance over the remaining term of the credit
facility. Negative variance from projected performance with respect to
sales, operating performance, or other unforeseen matters may cause the
Company to be in non-compliance with those covenants. Failure to meet
these covenants could result in the Company being placed in default of the
amended credit facility.
As amended, the credit facility provides for: (i) an increase in the
effective interest rate from LIBOR plus 175 basis points to LIBOR plus 300
basis points, and an increase to the fees payable with respect to letters
of credit, with the amount of the interest rate and letter of credit fees
subject to adjustment at the end of each fiscal quarter based on the
Company's ratio of total debt to EBITDA; (ii) mandatory step downs in the
total amount of credit available under the facility from $100,000,000 to
$95,000,000 as of the effective date of the amendment, from $95,000,000 to
$90,000,000 on or before March 31, 2000 and from $90,000,000 to $80,000,000
on or before March 31, 2001, together with additional mandatory commitment
reductions in an amount equal to the net proceeds in excess of $5 million
in the aggregate from sales of certain assets; (iii) financial covenants
with respect to the ratio of total debt to EBITDA and the fixed charge
coverage ratio; (iv) a restriction on the Company's ability to make capital
expenditures; (v) the replacement of the funded debt to total capital
financial covenant with a financial covenant requiring a minimum adjusted
tangible net worth; (vi) a further restriction commencing with the third
fiscal quarter ending March 31, 2000 on the ability of the Company to pay
dividends to an amount that does not exceed the amount of net income for
the prior fiscal quarter; (vii) a prohibition on acquisitions; (viii) the
requirement that by (a) December 15, 1999, the credit facility will be
secured by substantially all owned real properties and related equipment
and fixtures of the Company and (b) March 15, 2000, the credit facility
will be further secured by substantially all the assets of the Company; and
(ix) the payment of an amendment fee to each bank that signs the amendment.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE MORRISON ACQUISITION
In May 1998, the Company acquired 89% of the common stock of Morrison
Restaurants, Inc. (Morrison) for $5.00 per share. The merger was completed
on July 31, 1998 when the Company purchased the remaining outstanding
Morrison share for $5.00 per share (the Morrison Acquisition). Management
believes that, in some instances, separate discussion of the results of
operations of the Morrison units is necessary for an understanding of the
Company's results of operations on the whole. The discussion that follows
refers to the units acquired in the Morrison Acquisition as "Morrison
units". Likewise, all other units are referred to as "Piccadilly units".
The Company began converting Morrison units to Piccadilly-style units
(the Morrison Conversions) in fiscal 1999. As of September 30, 1999 the
Company had completed 112 Morrison Conversions. Expenses associated with
the Morrison Conversions averaged approximately $40,000 per unit for
training-team labor, new uniforms, repairs, and supplies. Additional costs
of approximately $25,000 per unit, primarily for signage, were capitalized.
Ten Morrison units have not been converted. Three of these units will
continue to operate as Morrison cafeterias. The remaining seven units are
in varying stages of lease renewal negotiations and the timing for
converting these units to Piccadilly-style units is uncertain. The table
below shows the number of Morrison Conversions by quarter:
Morrison Units Converted in
the Quarter ended
---------------------------
September 30, 1998 12
December 31, 1998 16
March 31, 1999 32
June 30, 1999 39
September 30, 1999 13
---------------------------
Total 112
===========================
FISCAL 2000 SECOND QUARTER COMPARED TO FISCAL 1999 SECOND QUARTER
Net sales for the second quarter of fiscal 1999 include $6,064,000
from the Ralph & Kacoo's restaurants. The Ralph & Kacoo's restaurants
were sold on March 30, 1999. The following table reconciles total
cafeteria sales to same-store cafeteria sales (units that were open for
three full months in both periods) for the second quarters of fiscal years
2000 and 1999:
Three months ended December 31 (SALES IN THOUSANDS)
1999 1998
------------------- ----------------- Sales
SALES UNITS SALES UNITS Change
------------------- -----------------------------
Total cafeteria sales $116,368 244 $124,312 266 -6.4%
Less new units (A) (1,999) (5) --- ---
Less closed units (B) (55) (1) (3,242) (28)
-------- ------- -------- ------
Net same-store cafeteria sales $114,314 238 $121,070 238 -5.6%
======== ======= ======== ======
(A) CAFETERIAS OPENED SINCE SEPTEMBER 30, 1998.
(B) CAFETERIAS CLOSED SINCE SEPTEMBER 30, 1998.
The net decrease in same-store sales of 5.6% reflects a decline in
same-store customer traffic of 8.9% combined with a check average increase
of 2.2%. The check average increase results from various price increases
implemented at certain units since December 31, 1998.
Same-store units include units open all three months of the second
quarter of fiscal 1999 and 2000. Piccadilly same-store sales for the
second quarter were down 1.5%. Morrison same-store sales for the second
quarter were down 11.4%. Management believes that it will continue to
report lower same-store sales as compared to the prior fiscal year for the
remainder of the fiscal year ending June 30, 2000.
Piccadilly customer traffic began trending downward in 1997. The
Company attributes these declines to general patterns of customer traffic
declines being generally experienced in the family-dining sector of the
restaurant industry.
On the whole, the Morrison Conversions have adversely affected
customer traffic in those units. While several Morrison units increased
customer traffic immediately after converting to Piccadilly-style units,
most units suffered customer count declines, and in some markets, these
declines were significant. The largest declines for Morrison Conversions
are in Florida, comprising approximately 34% of the Morrison units and
approximately 57% of the same-store sales decline in the comparative
quarters. The Company attributes these declines to adverse reactions to
the Morrison Conversions by a segment of loyal Morrison customers.
To address declines in customer traffic, the Company tested a sales-
building initiative targeting the Tampa, Florida area during the second
quarter. The Tampa area encompasses 14 cafeterias, 9 of which are Morrison
units. Management believes that this program has had a positive effect on
customer traffic which increased 17% above the Company's projections for
the second quarter. The Company is in various stages of developing other
sales-building initiatives. These initiatives are intended to address
customer perceptions of value and convenience. The Company anticipates
testing several of these initiatives during its third quarter ending March
31, 2000.
During the second quarters of fiscal 2000 and 1999, consolidated
net operating income (net sales less cost of sales and other operating
expenses) as a percent of net sales was 6.5% and 6.9%, respectively.
Excluding the operations of Ralph & Kacoo's restaurants in the second
quarter of fiscal 1999, net operating income as a percent of net sales was
6.6%. The following table illustrates net operating income, cost of sales,
other operating expenses, and general and administrative expense as a
percent of net sales for the comparative periods. The table and the
discussion that follows explain results of operations net of the Ralph &
Kacoo's operations in last year's results.
Three months ended December 31 (excludes results of 1999 1998 Change
operations relating to the Ralph & Kacoo's seafood
restaurants)
- -------------------------------------------------------------------------------------------
Cost of sales 58.8% 60.4% -1.6%
Other operating expenses 34.7% 33.1% 1.6%
Net operating income 6.5% 6.6% -0.1%
General & administrative expense 3.3% 3.2% 0.1%
Cost of sales as a percent of net sales declined 160 basis points.
That decline is a combination of a 120 basis point decline in food cost and
a 40 basis point decline in labor cost. Food cost as a percent of net
sales improved primarily as a result of the July 1999 price increase.
Movement in labor cost, as a percent of net sales, is the net result
of a number of factors. Factors that improved performance include:
1) Prices increased July 1999.
2) The tip-wage program lowers wages-per-hour. The tip-wage program
was implemented in the fourth quarter of fiscal year 1999.
3) Until the second quarter of this fiscal year, labor efficiency at
Morrison units did not reflect Piccadilly standards.
4) No Morrison units were converted in the second quarter of this
fiscal year while 16 Morrison units were converted in last year's
second quarter. Labor cost is generally higher for three to four
months following the conversion of a Morrison unit to a Piccadilly-
style unit.
Factors that negatively impacted performance include:
1) Lower year-over-year unit sales to absorb fixed costs.
2) Opening team labor cost associated with a new unit opened in the
second quarter of fiscal 2000 compared to no new unit openings in
the second quarter of last fiscal year.
Other operating expense decreased $734,000. As a percent of net
sales, other operating expense increased 160 basis points. The net
movement in other operating expenses is the result of several factors.
First, other operating expense in the second quarter of last fiscal year
includes costs relating to 16 Morrison Conversions. There were no Morrison
Conversions in the second quarter of this fiscal year. Secondly, as a
percent of sales, the fixed portion of certain operating costs, such as
rent, repairs and maintenance, utilities, and depreciation, increase when
average unit sales decrease.
General and administrative expense (net of Ralph & Kacoo's related
expenses in the prior fiscal year) as a percent of net sales increased 10
basis points but decreased in absolute dollars by $225,000.
Interest expense increased $53,000 as a result of higher rates the
effect of which was partially offset by lower debt levels in the second
quarter compared to the same quarter last year. See Note 2 to the
Condensed Consolidated Financial Statements regarding the Company's amended
credit facility and its impact on interest expense.
SIX MONTHS ENDED DECEMBER 31, 1999 COMPARED TO SIX MONTHS ENDED DECEMBER
31, 1998
Net sales for the first six months of fiscal 1999 include
$12,037,000 from the Ralph & Kacoo's restaurants. The Ralph & Kacoo's
restaurants were sold on March 30, 1999. The following table reconciles
total cafeteria sales to same-store cafeteria sales (units that were open
for six full months in both periods) for the six months ended December 31,
1999 and 1998.
Six months ended December 31 (SALES IN THOUSANDS)
1999 1998
------------------- ----------------- Sales
SALES UNITS SALES UNITS Change
------------------- -----------------------------
Total cafeteria sales $230,494 264 $247,274 272 -6.8%
Less new units (A) (4,154) (5) --- ---
Less closed units (B) (1,736) (15) (9,078) (28)
-------- ------- -------- -------
Net same-store cafeteria sales $224,604 244 $238,196 244 -5.7%
======== ======= ======== =======
(A) CAFETERIAS OPENED SINCE JUNE 30, 1998.
(B) CAFETERIAS CLOSED SINCE JUNE 30, 1998.
The net decrease in same-store sales of 5.7% reflects a decline in
same-store customer traffic of 8.6% combined with a check average increase
of 2.5%. The check average increase results from various price increases
implemented at certain units since December 31, 1998. See the above
discussion, "Fiscal 2000 Second Quarter Compared to Fiscal 1999 Second
Quarter", for related information on same-store sales declines.
During the six months ended December 31, 2000 and 1999, consolidated
net operating income (net sales less cost of sales and other operating
expenses) as a percent of net sales was 4.5% and 7.1%, respectively.
Excluding the operations of the Ralph & Kacoo's restaurants in the first
half of fiscal 1999, net operating income as a percent of net sales was
6.8%. The following table illustrates net operating income, cost of sales,
other operating expenses, and general and administrative expense as a
percent of net sales for the comparative periods. The table and the
discussion that follows explain results of operations net of the Ralph &
Kacoo's operations in last year's results.
Six months ended December 31 1999 1998 Change
(excludes results of operations relating to the Ralph &
Kacoo's seafood restaurants)
- ------------------------------------------------------------------------------------------
Cost of sales 59.5% 60.0% -0.5%
Other operating expenses 36.0% 33.2% 2.8%
Net operating income 4.5% 6.8% -2.3%
General & administrative expense 3.4% 3.3% 0.1%
Cost of sales as a percent of net sales decreased 50 basis points.
That decline is a combination of a 70 basis point decline in food cost and
a 20 basis point increase in labor cost. Food cost as a percent of net
sales improved primarily as a result of the July 1999 price increase.
Movement in labor cost, as a percent of net sales, is the net result
of a number of factors. Factors that improved results include:
1) Prices increased July 1999.
2) The tip-wage program lowers wages-per-hour. The tip-wage program
was implemented in the fourth quarter of fiscal year 1999.
3) Until the second quarter of this fiscal year, labor efficiency at
Morrison units did not reflect Piccadilly standards.
4) 13 Morrison units converted in the first half of this fiscal year
while 28 Morrison units converted in first half of last year.
Labor cost is generally higher for three to four months following
the conversion of a Morrison unit to a Piccadilly-style unit.
Factors that negatively impacted results include:
1) Lower year-over-year unit sales to absorb fixed costs.
2) Opening team labor cost associated with five new units opened in
the first half of fiscal 2000 compared to no new unit openings in
the first half of last fiscal year.
3) During the second quarter of last fiscal year, the management
staffing at Morrison units was increased to levels comparable to
Piccadilly units. Management staffing at Morrison units had been
on the decline for several years prior to the Morrison Acquisition
due to attrition.
Other operating expense decreased $960,000. As a percent of net
sales, other operating expense increased 280 basis points. The net
movement in other operating expenses is the result of several factors.
First, other operating expense in the first half of last fiscal year
includes costs relating to 28 Morrison Conversions. There were 13 Morrison
Conversions in the first half of this fiscal year. Secondly, as a percent
of sales, the fixed portion of certain operating costs, such as rent,
repairs and maintenance, utilities, and depreciation, increase when average
unit sales decrease. Additionally, the Company incurred opening costs for
five new cafeterias in the first half of fiscal 2000. No cafeterias opened
in the first half of fiscal 1999.
General and administrative expense (net of Ralph & Kacoo's related
expenses in the prior fiscal year) as a percent of net sales increased 10
basis points but decreased in absolute dollars by $555,000.
Interest expense decreased $206,000 as a result of lower debt levels
in the first half of this fiscal year compared to last fiscal year. See
Note 2 to the Condensed Consolidated Financial Statements regarding the
Company's amended credit facility and its impact on interest expense.
TRENDS AND UNCERTAINTIES
Unless the Company experiences additional and unexpected erosion in
net sales, it believes that it will remain in compliance with the terms of
its amended credit facility. However, it is possible that continuing
erosion of customer traffic at individual units could result in the closing
of such units and additional non-cash charges under SFAS 121, including
impairment of goodwill, and if any such charges were material, could cause
the Company to fail to be in compliance with one or more provisions of the
credit facility. At the present time no adjustments for impairment for
Morrison-related goodwill are necessary.
The U.S. Congress is considering proposals to increase the federal
minimum wage. An increase in the federal minimum wage would have an
adverse effect on the Company's operating costs. Historically, the Company
has absorbed minimum wage increases through price increases. The Company
operates in a highly competitive industry and may be unable to transfer all
or a portion of such higher operating costs to its customers.
LIQUIDITY AND CAPITAL RESOURCES
As discussed in Note 2 to the Condensed Consolidated Financial
Statements, the Company has a $95 million credit facility with a
syndicated group of banks maturing on June 22, 2001. On November 18, 1999
the Company and its lenders amended the credit facility.
On February 7, 2000, the Board elected to suspend the Company's
regular quarterly dividend of $.12 per share. The suspension of the
dividend will save approximately $1.26 million per quarter. The Company's
net income of $0.14 per share for the quarter ended December 31, 1999
would have allowed the declaration of a dividend under the terms of its
amended credit facility. Nonetheless, the Board concluded that until
the Company had demonstrated a sustained operating performance that would
support a dividend that could be safely maintained, suspension of the
dividend was the more prudent course of action.
Management believes that its cash from operations, together with
remaining credit available under the amended facility, will be sufficient
to provide for the Company's operational needs for the foreseeable future.
At December 31, 1999, approximately $6,800,000 was available under this
facility.
YEAR 2000 IMPACT
As of December 31, 1999, the Company had completed its migration of
information technology from internally developed systems to commercially
available products. The total cost of addressing Year 2000 issues by
purchasing commercial software products was approximately $700,000, which
was capitalized. Subsequent to December 31, 1999, the Company experienced
no significant operational problems related to Year 2000 issues. No future
Year 2000 issues are anticipated.
FORWARD-LOOKING STATEMENTS
Forward-looking statements regarding management's present plans or
expectations for new unit openings, remodels, other capital expenditures,
the financing thereof, and disposition of impaired units involve risks and
uncertainties relative to return expectations and related allocation of
resources, and changing economic or competitive conditions, as well as the
negotiation of agreements with third parties, which could cause actual
results to differ from present plans or expectations, and such differences
could be material. Similarly, forward-looking statements regarding
management's present expectations for operating results involve risks and
uncertainties relative to these and other factors, such as advertising
effectiveness and the ability to achieve cost reductions, which also would
cause actual results to differ from present plans. Such differences could
be material. Management does not expect to update such forward-looking
statements continually as conditions change, and readers should consider
that such statements speak only as the date hereof.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to changes in short-term interest rates related
to its $95,000,000 credit arrangement. If the variable rates on the
Company's credit arrangement were to increase by 1% from the rate at
December 31, 1999 and the Company had borrowed the maximum amount available
under its senior credit facility ($79.8 million) for the remaining two
quarters of fiscal 2000, then, solely as a result of the increase in
interest rates, the Company's interest expense would increase, resulting in
a $21,000 decrease in net income, assuming an effective tax rate of 37%.
The fair value of the Company's credit arrangement is not affected by
changes in market interest rates. This discussion does not consider the
effects of the reduced level of overall economic activity that could exist
following such changes. Further, in the event of changes in such
magnitude, management would likely take actions to mitigate its exposure to
such changes. The Company has not used derivative instruments to engage in
speculative transactions or hedging activities.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
The Annual Meeting of the shareholders of Piccadilly (the "Meeting") was
held on November 1, 1999 and 8,319,928 shares were represented. The voting
tabulation follows:
The election of the following to the Board of Directors:
FOR WITHHELD
Robert P. Guyton 8,167,929 151,571
Christel C. Slaughter 8,168,324 151,176
The following director's terms of office continued after the Meeting.
Ralph P. Erben, Norman C. Francis, Ronald A. LaBorde, Paul W. Murrill, Dale
E. Redman and C. Ray Smith.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3. (a) Articles of Incorporation of the Company, restated
through March 12, 1999(1).
(b) By-laws of the Company, as restated through March 12,
1999(1).
27 Financial Data Schedule
(b) Reports on Form 8-K - On November 18, 1999, the Company filed a
report on Form 8-K in which the Company's reported under Item 5
that it had amended its $100 million senior credit facility
agreement with a syndicated group of banks.
**FOOTNOTES**
(1) Incorporated by reference from the Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1999.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
PICCADILLY CAFETERIAS, INC.
(Registrant)
BY: /S/RONALD A. LABORDE
Ronald A. LaBorde
President and Chief Executive Officer
02/08/00
/s/ Ronald A. LaBorde 02/08/00
Ronald A. LaBorde, President, Chief Executive Officer, and Date
Director
/s/ Mark L. Mestayer 02/07/00
Mark L. Mestayer, Executive Vice President and Chief Financial Date
Officer (Principal Financial Officer)
/s/ W. Scott Bozzell 02/07/00
W. Scott Bozzell, Executive Vice President and Controller Date
(Principal Accounting Officer)