Item 1. Business
General Development of Business
Piccadilly Cafeterias, Inc. was incorporated under the laws of Louisiana in 1965 and is the successor to various predecessor corporations and partnerships which operated "Piccadilly" cafeterias beginning with the acquisition of the first unit in 1944. Except where the context otherwise indicates, the terms "Company", "Piccadilly", and "Registrant" as used herein refer to Piccadilly Cafeterias, Inc., its predecessors and its subsidiaries.
At June 30, 1994, the Company operated 130 cafeterias in 16 states. Of these, 63 were in suburban malls, 22 were in suburban strip centers, and 45 were free-standing suburban locations. Approximately 10 new cafeterias are expected to be opened during the year ending June 30, 1995. The following table sets forth certain information regarding development of the Company's cafeteria chain during the five years ended June 30, 1994:
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During 1988, the Company acquired substantially all of the assets of the Ralph & Kacoo's seafood restaurant chain, headquartered in Baton Rouge, Louisiana, including six restaurants, a warehouse and seafood distribution facility, a catering facility, and a seafood processing facility. The Company holds a federally registered tradename, "Ralph & Kacoo's," and a federally registered trademark on its Ralph & Kacoo's catfish logo.
At June 30, 1994 the Company operated seven "Ralph and Kacoo's" seafood restaurants in Louisiana, Mississippi and Texas. One Ralph & Kacoo's seafood restaurant is expected to be opened in the year ending June 30, 1995. The following table sets forth certain information regarding development of the Company's restaurant chain during the five years ended June 30, 1994:
Although the Company's operations are in the southern, southwestern, and western regions of the United States, the Company does not consider its growth to be limited to such areas. During the year ended June 30, 1994, the Company opened its first cafeterias in Kansas City, Kansas and St. Louis, Missouri. During the year ending June 30, 1995, the Company expects to open its first cafeterias in Louisville, Kentucky and Chicago, Illinois. Piccadilly evaluates numerous potential expansion locations each year, focusing on demographic data such as population densities, population profiles, income levels, traffic counts, as well as the extent of competition. The number of new cafeterias and restaurants that the Company can open depends upon its ability to secure appropriate locations, generate necessary financial Resources, and develop personnel for expansion.
Financial Information about Industry Segments _______________________________________________
Under the provisions of Statement 14 of the Financial Accounting Standards Board, the Company has determined that, during all periods included herein, its business constituted a single reportable industry segment -- "cafeteria and restaurant operations."
Cafeteria and Restaurant Operations ____________________________________
The Company's cafeterias seat from 250 to 450 customers each. Each unit offers a wide variety of food, at reasonable prices, and with the convenience of cafeteria service, to a diverse luncheon and dinner clientele. Cafeteria personnel cook and prepare from scratch substantially all food served. All items are prepared from standardized recipes. Menus are varied at the discretion of unit management in response to local and seasonal food preferences.
Like most industry participants, the Company purchases foodstuffs (other than some basic staples) through local or regional suppliers in small quantities in order to better ensure freshness. As a result, inventory is kept relatively low; average per-cafeteria-inventory at June 30, 1994 was $15,000. Food is typically purchased on 30-day credit terms and sold for cash within such 30- day period, thereby favorably affecting cash flow.
Ralph & Kacoo's restaurants seat from 250 to 600 customers each. These restaurants are full-service menu facilities. All of the food served is cooked and prepared by the restaurant staff from standardized recipes. Substantially all of the food, supplies, and other materials required for the preparation of meals are supplied by the Company-owned commissary.
The commissary, located in Baton Rouge, Louisiana, contains approximately 26,500 square feet of restaurant food and supplies storage. Seafood accounts for approximately 50% of inventory at the commissary. In order to provide consistent quality, selection, and price throughout the year, the commissary purchases in-season seafood in quantities sufficient to supply the restaurants during periods when such products would otherwise not be available at reasonable prices in the marketplace. On the average, seafood inventory turns approximately once every four months. Inventory maintained at the commissary at June 30, 1994, was approximately $2,692,000 while the average restaurant inventory level at year-end was approximately $44,000. The commissary is not dependent upon a single supplier nor a small group of suppliers.
Each cafeteria and restaurant is operated as a separate unit under the control of a manager and associate manager who have responsibility for virtually all aspects of the unit's business including purchasing, food preparation, and employee matters. Twelve district managers, under the supervision of three region managers, the president, and the chief executive officer, oversee and regularly inspect cafeteria operations. Three district managers, under the supervision of a region manager and the chief executive officer, oversee restaurant operations. The Company employed approximately 7,300 persons at June 30, 1994, of whom all but 77 general office employees worked at Piccadilly's 137 cafeteria and restaurant locations and its commissary.
The food service industry is highly competitive. Competitive factors include food quality and variety, price, customer service, location, the number and proximity of competitors, decor, and public reputation. The Company considers its principal competitors to be other cafeterias, casual dining concepts, and fast-food operations. Like other food service operations, the Company must remain attuned to changes in both consumer preferences for food and habits in patronizing eating establishments.
Customer volume at established cafeterias and sales volume at established restaurants are generally higher in the Company's second fiscal quarter and lower in the third quarter. These patterns reflect the general seasonal fluctuations of the retail industry.
Cost of sales is affected by statutory minimum wage rates. The Company's operations are subject to federal, state, and local laws and regulations relating to environmental protection, including regulation of discharges into the air and water, and relating to safety and labor, including the Federal Occupational Safety and Health Act and wage and hour laws. Additionally, the Company's operations are regulated pursuant to state and local sanitation and public health laws. Operating units utilize electricity and natural gas, which are subject to various federal and state regulations concerning the allocation of energy. The Company's operating costs have been and will continue to be affected by increases in the cost of energy.
Item 2.
Item 2. Properties
All but 18 of the cafeterias and restaurants operated by the Company at June 30, 1994, were held under long-term leases with differing provisions and expiration dates. The 18 cafeterias and restaurants not held under long-term leases are owned. Leases provide for monthly rentals, typically computed on the basis of a fixed amount plus a percentage of sales. Most leases contain provisions permitting the Company to renew for one or more specified terms. These leases are scheduled to expire, exclusive of renewal provisions, as follows:
________________________________________ Five-year periods Units Units ending June 30 Operating Closed _______________________________________
1998 46 1 2003 27 1 2008 31 11 2013 14 3 2018 1 - _______________________________________ Total 119 16 ======================================= _________________________
Reference is made to Note D of the Notes to Consolidated Financial Statements for certain additional information regarding the Company's leases.
All cafeterias and restaurants have been constructed or remodeled since 1984 and all cafeteria equipment is maintained and modernized as necessary to maintain appearance and utility. For a discussion of the Company's current remodeling program see Management's Discussion and Analysis of Financial Condition and Results of Operations on pages 10 and 11 of the Annual Shareholders Report for the year ended June 30, 1994. The list below provides a general geographic review of the locations of the Company's cafeterias and restaurants at June 30, 1994:
__________________________________________ State Cafeterias Restaurants __________________________________________
Alabama 6 Arizona 4 California 1 Florida 22 Georgia 18 Kansas 1 Louisiana 26 5 Mississippi 3 1 Missouri 2 North Carolina 5 Oklahoma 5 South Carolina 2 Tennessee 11 Texas 17 1 Virginia 7
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The Company utilizes generally standardized building configurations for its new cafeterias and restaurants in terms of seating, food display, preparation areas, and other factors and attempts to build out floor space to maximize efficient use of available space.
The Company continues to pursue strategies to increase the capacity and utilization of its cafeterias. Although most of the Company's cafeterias are single-line, 33 of the Company's cafeterias are double-line which provide increased capacity at peak hours. The Company does not currently intend to convert any of its single-line cafeterias to double-line.
Piccadilly's general offices occupy approximately two-thirds of a Company- owned 45,000 square foot office building completed in 1974 and located on a Company-owned tract comprising approximately five acres in Baton Rouge, Louisiana. The remainder of the building is leased to commercial tenants.
Item 3.
Item 3. Legal Proceedings
The Company is not a party to and does not have any property that is the subject of any legal proceedings pending or, to the knowledge of management, threatened, other than ordinary routine litigation incidental to its business and proceedings which are not material or as to which management believes the Company has adequate insurance.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of the Registrant
On September 27, 1994 James W. Bennett resigned as Chairman of the Board and Chief Executive Officer of the Company. Dr. Paul W. Murrill has been named Chairman of the Board. A committee of the Board, chaired by Dr. Murrill, will begin a search for a new Chief Executive Officer. In the interim, the Board has appointed a Management Committee to assume the responsibilities of the office of the chief executive officer. The members of the Management Committee are Malcolm T. Stein, who is chairman of the committee, Ronald A. LaBorde and James E. Durham.
Executive officers are elected annually by the Board of Directors and hold office until a successor is duly elected. The names and positions of executive officers of the Registrant, together with a brief description of the business experience of each such person during the past five years, is set forth below.
W. Scott Bozzell, Vice President and Assistant Controller, age 31, has held that position since May 1992. He joined the Company in December 1988 as Assistant Controller.
James E. Durham Jr., age 60, became Region Manager in 1981 and was elected Senior Executive Vice President in August 1988. Mr. Durham is a member of the Management Committee.
Frederick E. Fuchs Jr., Executive Vice President and Director of Real Estate, age 47, has held that position since June 1986.
Jere W. Goldsmith Jr., Executive Vice President and Region Manager, age 48, has held that position since February 1992. From May 1987 to February 1992 he was Executive Vice President and Director of Training.
Ronald A. LaBorde, age 38, Treasurer, Chief Financial Officer, and Executive Vice President, has held such positions since January 1992. Prior to that he was Executive Vice President, Secretary, and Controller. Mr. LaBorde is a member of the Management Committee.
D. Thomas Landry, Executive Vice President and Director of Maintenance, Construction, Design, and Equipment Manufacturing, age 42, has held that position since May 1992. From July 1990 to May 1992 he was Vice President and Director of Maintenance. Before joining the Company in January 1989, Mr. Landry was a senior project manager with a mechanical contractor.
Robert P. Listen, Executive Vice President and Director of Technical Services, age 46, has held that position since December 1992. From July 1987 to November 1992 he was Executive Vice President and a district manager
Mark L. Mestayer, Executive Vice President, Secretary, and Controller, age 36, has held such positions since May 1992. From January 1992 to May 1992, he was Vice President and Controller. Prior to that, he was Vice President and Controller, Ralph & Kacoo's, since joining the Company in December 1988.
Joseph S. Polito, Executive Vice President and Director of Training, age 52, has held that position since November 1992. From 1987 to October 1992, he was Executive Vice President and a district manager.
Patrick R. Prudhomme, Executive Vice President and Region Manager, age 44, has held that position since February 1992. From January 1989 to February 1992 he was Vice President and a district manager, Ralph & Kacoo's. Prior to that he was Vice President and a unit manager.
C. Warriner Siddle, Executive Vice President and Region Manager, age 43, has held that position since February 1992. From October 1984 to February 1992 he was Executive Vice President and a district manager.
Malcolm T. Stein Jr., President and Chief Operating Officer, age 61, has held such positions since May 1993. From February 1992 to May 1993 he was Senior Executive Vice President and Chief Operating Officer. From December 1988 to February 1992 he was the General Manager of the Ralph & Kacoo's restaurant division. Mr. Stein had been a Region Manager of cafeteria operations since 1979. Mr. Stein is a member of the Management Committee.
Donovan B. Touchet, Executive Vice President and Director of Data Processing, age 45, has held that position since June 1988.
Brian G. Von Gruben, Executive Vice President and Director of Administration, age 46, has held that position since May 1987.
PART II
Item 5.
Item 5. Market for the Registrant's Common Stock and Related Security Holder Matters
Information regarding Common Stock market prices and dividends, on the inside front cover of the Annual Shareholders Report for the year ended June 30, 1994, is incorporated herein by reference.
Item 6.
Item 6. Selected Financial Data
"Selected Financial Data", on the inside front cover of the Annual Shareholders Report for the year ended June 30, 1994, is incorporated herein by reference.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of Operations, on pages 10 and 11 of the Annual Shareholders Report for the year ended June 30, 1994, is incorporated herein by reference.
Item 8.
Item 8. Financial Statements and Supplementary Data
The following consolidated financial statements and supplementary data, included on pages 12 through 20 of the Annual Shareholders Report for the year ended June 30, 1994, are incorporated herein by reference.
Consolidated balance sheets--June 30, 1994 and 1993 Consolidated statements of income--years ended June 30, 1994, 1993 and 1992 Consolidated statements of changes in shareholders' equity--years ended June 30, 1994, 1993 and 1992 Consolidated statements of cash flows--years ended June 30, 1994, 1993 and Notes to consolidated financial statements--June 30, 1994, 1993 and 1992
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
In accordance with General Instruction G (3) to Form 10-K, Items 10, 11, 12, and 13 have been omitted since the Company will file with the Commission a definitive proxy statement complying with Regulation 14A involving the
election of directors not later than 120 days after the close of its fiscal year. The Company incorporates by reference the information in response to such items set forth in its definitive proxy statement.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1) Financial Statements--The following are incorporated herein by reference in this Annual Report on Form 10-K from the indicated pages of the Registrant's Annual Shareholders Report for the year ended June 30, 1994:
Annual Shareholders Description Report Page ____________________ ___________________
Consolidated balance sheets--June 30, 1994 and 1993 12 Consolidated statements of income--years ended June 30, 1994, 1993 and 1992 13 Consolidated statements of changes in shareholders' equity--years ended June 30, 1994, 1993 and 1992 13 Consolidated statements of cash flows--years ended June 30, 1994, 1993 and 1992 14 Notes to consolidated financial statements-- June 30, 1994, 1993 and 1992 15 - 19 Report of independent auditors 20
(2) Schedules--The following consolidated schedules and information are included in this annual report on Form 10-K on the pages indicated. All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
Annual Report on Form 10-K Description Page __________________________ _________________
Schedule V--Property, plant and equipment 10 Schedule VI--Accumulated depreciation, depletion and amortization of property, plant and equipment 11 Schedule VIII--Valuation and qualifying accounts 12 Schedule IX--Short-term borrowings 13 Schedule X--Supplementary income statement information 14
(3) Listing of Exhibits -- See sub-section (c) below.
(b) No reports on Form 8-K were filed during the last quarter of the year covered by this report.
(c) Exhibits:
(3) (a) Articles of Incorporation, incorporated by reference to Exhibit 3.1 to Registrant's Form S-1, Registration No. 2-63249 filed December 19,1978 (the "Form S-1"); amendment to Articles of Incorporation, incorporated by reference to Exhibit 3 to Registrant's Form 10-K, File No. 0-9037, filed September 14, 1987; amendment to Articles of Incorporation, incorporated by reference to Exhibit 3 to Registrant's Form 10-K, File No. 0-9037, filed September 27, 1988; and amendment to Articles of Incorporation incorporated by reference to Exhibit 3(a) to Registrant's Form 10-K, as amended, File No. 0-9037, filed September 28, 1989.
(b) Bylaws of the Company incorporated by reference to Exhibit 3(a) to Registrant's Form 10-K, as amended, File No. 0-9037, filed September 14, 1993.
(4) (a) Piccadilly Cafeterias, Inc. Stockholders Rights Agreement, incorporated by reference to Exhibit 4 to the Form 8-K, File No. 0-9037, filed August 22, 1988.
(b) Note Agreement dated as of January 31, 1989, relating to $30,000,000 principal amount of 10.15% Senior Notes due January 31, 1999, incorporated by reference to Exhibit 4 of the Form 10-Q, File No. 0-9037, filed February 11, 1989.
(10)(a) Piccadilly Cafeterias, Inc., Pension Plan, as amended, dated May 3, 1993 incorporated by reference to Exhibit 10(a) to Registrant's Form 10-K, as amended, File No. 0-9037, filed September 14, 1993.
(b) Piccadilly Cafeteria, Inc. Employee Stock Purchase Plan, incorporated by reference to Exhibit A to Registrant's Form S-8, Registration No. 33-17737, filed October 7, 1989 and amendment to Employee Stock Purchase Plan, incorporated by reference to Exhibit 10(b) to Registrant's Form 10-K, as amended, File No. 0-9037, filed September 27, 1991.
(c) Piccadilly Cafeterias, Inc. 1988 Stock Option Plan, incorporated by reference to Exhibit 4.1 to Registrant's Form S-8, Registration No. 33-27793, filed March 29, 1989; and amendment to 1988 Stock Option Plan dated August 2, 1993 incorporated by reference to Exhibit 10(c) to Registrant's Form10-K, as amended, File No. 0-9037, filed September 14, 1993.
(13)(a) The inside front cover of the Registrant's Annual Shareholders Report for the year ended June 30,1994, containing "Selected Financial Data", is on page 16.
(b) The inside front cover of the Registrant's Annual Shareholders Report for the year ended June 30, 1994, containing "Stock Information", is on page 17 .
(c) Pages 10 and 11 of the Registrant's Annual Shareholders Report for the year ended June 30, 1994, containing Management's Discussion and Analysis of Financial Condition and Results of Operations, are on pages 18 through 20.
(d) Pages 12 through 19 of the Registrant's Annual Shareholders Report for the year ended June 30, 1994, containing the Consolidated Financial Statements and the Notes to the Consolidated Financial Statements, are on pages 21 through 29.
(e) Page 20 of the Registrant's Annual Shareholders Report for the year ended June 30, 1994, containing the Report of Independent Auditors, is on page 30.
(21) List of subsidiaries is on page 31.
(23) Consent of independent auditors is on page 32.
(27) Financial Data Schedules required in filings on EDGAR are on page 33.
(d) See response to Item 14(a)(2) of this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PICCADILLY CAFETERIAS, INC. _______________________________ (Registrant)
By: /s/Ronald A. LaBorde ____________________ Ronald A. LaBorde Executive Vice President
Date: September 27, 1994 ____________________
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ Paul W. Murrill 9/27/94 /s/ James E. Durham, Jr. 9/27/94 ________________________ ________ _________________________ _________ Dr. Paul W. Murrill, Date James E. Durham, Jr., Date Chairman and Director Senior Vice President and Director*
/s/ O.Q. Quick 9/27/94 /s/ Julia H. R. Hamilton 9/27/94 _______________________ _________ _________________________ ________ O.Q. Quick, Director Date Julia H. R. Hamilton, Date Director
/s/ Malcolm T. Stein, Jr. 9/27/94 /s/ Mark L. Mestayer 9/27/94 _________________________ _________ __________________________ ________ Malcolm T. Stein, Jr., Date Mark L. Mestayer, Executive Date President, Chief Operating Vice President, Secretary, Officer and Director* and Controller (Principal Accounting Officer)
/s/ Ronald A. LaBorde 9/27/94 _________________________ _________ Ronald A. LaBorde, Date Executive Vice President, Chief Financial Officer (Principal Financial Officer), and Director*
* Member of the Management Committee.
SCHEDULE IX - SHORT-TERM BORROWINGS
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
______________________________________________________________________________ COL. A COL. B ______________________________________________________________________________ Item Charged to Costs and Expenses ______________________________________________________________________________
Year Ended June 30 __________________________________________ 1994 1993 1992 ___________ _____________ ____________ Maintenance and repairs $3,678,687 $3,303,169 $3,142,108 Advertising 1,208,431 973,512 3,502,779
Depreciation and amortization of intangible assets, taxes other than payroll and income taxes, and royalties are not set forth inasmuch as such items do not exceed 1% of total sales as shown in the accompanying statements of income.
EXHIBIT INDEX
(3) (a) Articles of Incorporation, incorporated by reference to Exhibit 3.1 to Registrant's Form S-1, Registration No. 2-63249 filed December 19,1978 (the "Form S-1"); amendment to Articles of Incorporation, incorporated by reference to Exhibit 3 to Registrant's Form 10-K, File No. 0-9037, filed September 14, 1987; amendment to Articles of Incorporation, incorporated by reference to Exhibit 3 to Registrant's Form 10-K, File No. 0-9037, filed September 27, 1988; and amendment to Articles of Incorporation incorporated by reference to Exhibit 3(a) to Registrant's Form 10-K, as amended, File No. 0-9037, filed September 28, 1989.
(b) Bylaws of the Company incorporated by reference to Exhibit 3(a) to Registrant's Form 10-K, as amended, File No. 0-9037, filed September 14, 1993.
(4) (a) Piccadilly Cafeterias, Inc. Stockholders Rights Agreement,incorporated by reference to Exhibit 4 to the Form 8-K, File No. 0-9037, filed August 22, 1988.
(b) Note Agreement dated as of January 31, 1989, relating to $30,000,000 principal amount of 10.15% Senior Notes due January 31, 1999, incorporated by reference to Exhibit 4 of the Form 10-Q, File No. 0-9037, filed February 11, 1989.
(10)(a) Piccadilly Cafeterias, Inc., Pension Plan, as amended, dated May 3, 1993 incorporated by reference to Exhibit 10(a) to Registrant's Form 10-K, as amended, File No. 0-9037, filed September 14, 1993.
(b) Piccadilly Cafeteria, Inc. Employee Stock Purchase Plan, incorporated by reference to Exhibit A to Registrant's Form S-8, Registration No. 33-17737, filed October 7, 1989 and amendment to Employee Stock Purchase Plan, incorporated by reference to Exhibit 10(b) to Registrant's Form 10-K, as amended, File No. 0-9037, filed September 27, 1991.
(c) Piccadilly Cafeterias, Inc. 1988 Stock Option Plan, incorporated by reference to Exhibit 4.1 to Registrant's Form S-8, Registration No. 33-27793, filed March 29, 1989; and amendment to 1988 Stock Option Plan dated August 2, 1993 incorporated by reference to Exhibit 10(c) to Registrant's Form 10-K, as amended, File No. 0-9037, filed September 14, 1993.
(13)(a) The inside front cover of the Registrant's Annual Shareholders Report for the year ended June 30,1994, containing "Selected Financial Data", is on page 16.
(b) The inside front cover of the Registrant's Annual Shareholders Report for the year ended June 30, 1994, containing "Stock Information", is on page 17 .
(c) Pages 10 and 11 of the Registrant's Annual Shareholders Report for the year ended June 30, 1994, containing Management's Discussion and Analysis of Financial Condition and Results of Operations, are on pages 18 through 20.
(d) Pages 12 through 19 of the Registrant's Annual Shareholders Report for the year ended June 30, 1994, containing the Consolidated Financial Statements and the Notes to the Consolidated Financial Statements, are on pages 21 through 29.
(e) Page 20 of the Registrant's Annual Shareholders Report for the year ended June 30, 1994, containing the Report of Independent Auditors, is on page 30.
(21) List of subsidiaries is on page 31.
(23) Consent of independent auditors is on page 32.
(27) Financial Data Schedules required in filings on EDGAR are on page 33.