EXHIBIT 99.1
GRISTEDE'S FOODS, INC.
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Executive Offices 823 Eleventh Avenue
New York, NY 10019-3535
(Phone) 212-956-5803
(Fax) 212-247-4509
GRISTEDE'S FOODS, INC FOR IMMEDIATE RELEASE
("GRI" - AMERICAN STOCK EXCHANGE)
Gristede's announces delay in filing 2003 Annual Report
New York, NY. March 18, 2004: Gristede's Foods, Inc., expects to file its Form
10-K Annual Report for the fiscal year ended November 30, 2003 with the
Securities and Exchange Commission ("SEC") prior to March 31, 2004. The Company
had previously filed a Form 12b-25 with the SEC which had extended the filing
due date until March 16, 2004.
The delay in filing is owing to (i) the Company's efforts to finalize an
amendment to its bank credit facility to extend its maturity to March, 2005,
provided, among other conditions, that the Company's majority stockholder
arranges for a $3.2 million increase in debt subordinated to the banks. This
would increase such subordinated debt from $18.3 million to $21.5 million. The
majority stockholder has agreed to this; and (ii) to permit the Company's
independent auditors to complete their audit examination for the fiscal year
ended November 30, 2003.
The Company's agent bank has offered, subject to final credit approval, to
increase the Company's revolving line of credit from $17 million to $19.5
million and further extend its maturity to March, 2007, provided, among other
conditions, that the Company's majority stockholder arranges for a further $2
million increase in debt subordinated to the banks. This would increase such
aggregate subordinated debt to $23.5 million, and would represent a $9.3 million
increase in subordinated debt from that outstanding at prior fiscal year end
(total subordinated debt at fiscal year end 2002 was $14.2 million). The
Company's majority stockholder has agreed to this condition.
As previously disclosed in the Company's Form 12b-25 filed on March 2, 2004, the
Company's preliminary results for fiscal 2003 (prior to year end audit
adjustments) is a net loss of approximately $12 million on sales of
approximately $280 million, versus a net loss of $926,000 on sales of $251
million for fiscal 2002.
The primary reasons for the larger preliminary 2003 net loss are:
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(i) During fiscal 2003, the Company entered into an aggregate $3.25
million settlement of litigation with certain delivery workers,
payable over 3 years, without interest. Of this settlement
amount, $1.3 million has already been reimbursed to the Company
by an affiliate, and has been reflected as additional
paid-in-capital. Not reflected in the Company's preliminary
results for fiscal 2003, is the Company's attempted recovery of a
$400,000 security bond posted by one of the defendants in the
litigation. Any recoveries from the bond shall be solely for the
Company's benefit, and shall be used to prepay the Company's
remaining obligations under the settlement.
(ii) The Company was not successful in its attempts to acquire Kings
Super Markets. In connection therewith, the Company recorded
charges to operations totaling approximately $1.4 million.
(iii) During 2003, approximately $1.6 million owed the Company by a
supermarket affiliate, was paid in full by the affiliates' parent
pursuant to its prior guarantee. However, since the full payment
was not received from an unrelated third party, but from another
affiliate, under current accounting regulations it was required
to be recorded as a bad debt expense of the Company, offset by an
equal contribution to additional paid-in-capital.
(iv) During the period 4th quarter fiscal 2002 through 2nd quarter
fiscal 2003, the Company opened 7 new stores (and closed 2
stores). The new store expansion program significantly lowered
earnings and EBITDA for fiscal 2003 through a combination of
higher labor costs, promotional pricing reductions of gross
margins, and higher advertising, depreciation, interest and rent
expense. The Company uses the term "EBITDA" to mean net income
before income taxes, interest expense, depreciation,
amortization, and changes in deferred rent and other non-cash
charges. EBITDA is a term not defined under United States
generally accepted accounting principles, but is a widely
accepted financial indicator utilized to analyze and compare
companies on the basis of operating performance. The Company's
method of computation of EBITDA may or may not be comparable to
other similarly titled measures used by other companies. (See
reconciliation of EBITDA to net income in the table set forth
below).
New stores incur significantly higher promotional pricing
(than remodeled stores) in their initial start-up phase. The
negative EBITDA impact of the seven stores during fiscal 2003
was approximately $3,500,000. Additionally, the two stores
closed in fiscal 2003 had a negative EBITDA impact of
approximately $200,000. The Company's preliminary EBITDA for
fiscal 2003 (subject to year end audit adjustments) is
$8,621,000 versus EBITDA of $10,873,000 in fiscal 2002.
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Reconciliation of EBITDA to net income ($000):
Preliminary (subject to year end audit adjustments)
Fiscal 2003 Fiscal 2002
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Net income (loss) $(11,512) $ (926)
Interest expense 3,104 2,967
Income tax expense 0 40
Depreciation, amortization &
changes in deferred rent 10,725 8,792
Other non-cash charges:
affiliate bad debt expense 1,639 0
litigation settlement 3,250 0
write-off Kings acquisition costs 1,415 0
EBITDA 8,621 10,873
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Other Selected Financial Data ($000):
Preliminary (subject to year end audit adjustments)
Total sales $279,687 $250,733
Total subordinated debt 21,508 14,200
Finally, Gristede's is in the process of finalizing its insurance claim for
perished inventories and related losses suffered in the August 14, 2003
"Northeast blackout". The Company previously filed preliminary insurance claims
for approximately $6 million, and anticipates final settlement of its claim
within the next 90-120 days. The Company has already received $1 million towards
such claim.
For further information, please contact Mr. John Catsimatidis, Chairman & CEO,
Gristede's Foods, Inc., at 212-956-5803
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