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.
At June 30, 1995, the Company operated 132 cafeterias in 17 states. Of these, 60 were in suburban malls, 22 were in suburban strip centers, and 50 were free-standing suburban locations. One new cafeteria is expected to be opened during the year ending June 30, 1996. The following table sets forth certain information regarding development of the Company's cafeteria chain during the five years ended June 30, 1995:
_______________________________________________________________________________ Year Ended June 30 1995 1994 1993 1992 1991 _______________________________________________________________________________ Net sales per unit (in thousands)(A) $1,990 $1,916 $1,868 $1,880 $1,903
Units opened 5 3 1 3 2
Units closed 3 4 11 5 0
Units open at year-end 132 130 131 141 143
Total customer volume (in thousands) 48,274 48,098 50,564 54,298 56,441 __________________
(A) Excludes cafeterias opened or closed during period. ___________________________________
At June 30, 1995 the Company operated eight "Ralph and Kacoo's" seafood restaurants in Louisiana, Alabama, Mississippi, and Texas. No additional Ralph & Kacoo's seafood restaurants are expected to be opened in the year ending June 30, 1996. The following table sets forth certain information regarding the Company's "Ralph and Kacoo's" seafood restaurant chain during the five years ended June 30, 1995:
_______________________________________________________________________________ Year Ended June 30 1995 1994 1993 1992 1991 _______________________________________________________________________________ Net sales per unit (in thousands)(A) $3,394 $3,343 $3,362 $3,151 $3,995
Units opened 1 0 0 1 3
Units closed 0 0 2 1 0
Units open at year-end 8 7 7 9 9 _________________
(A) Excludes restaurants opened or closed during period. ___________________________________
Although the Company's operations are primarily 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, 1995, the Company opened its first cafeterias in Louisville, Kentucky and Chicago, Illinois. Although, as disclosed above, the Company has no immediate plans for additional expansion in 1996, Piccadilly continues to evaluate numerous potential expansion locations, focusing on demographic data such as population densities, population profiles, income levels, traffic counts, as well as the extent of competition.
Cafeteria and Restaurant Operations
The Company's cafeterias seat from 250 to 450 customers each. Each cafeteria 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 in small quantities from local and regional suppliers in order to better assure freshness. As a result, inventory is kept relatively low; average per-cafeteria-inventory at June 30, 1995 was $16,100. Foodstuffs are 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, 1995, was approximately $2,656,000 while the average "Ralph and Kacoo's" restaurant inventory level at year-end was approximately $48,000. 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. Thirteen district managers, under the supervision of one general manager, and the chief executive officer oversee and regularly inspect cafeteria operations. Two district managers, under the supervision of a region manager and the chief executive officer, oversee restaurant operations. The Company employed approximately 7,600 persons at June 30, 1995, of whom all but 69 corporate headquarters employees worked at Piccadilly's 140 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 venues, and fast-food operations. Like other food service operations, the Company is 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 24 of the cafeterias and restaurants operated by the Company at June 30, 1995, were operated on premises held under long- term leases with differing provisions and expiration dates. The 24 cafeterias and restaurants not operated on premises 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 __________________________________________ 2000 37 2
2005 37 2
2010 34 11
2015 8 2 =========================================== Total 116 17 ___________________________________________
Reference is made to Note C 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 four and five of the Annual Shareholders Report for the year ended June 30, 1995. The list below provides a general geographic review of the locations of the Company's cafeterias and restaurants at June 30, 1995:
________________________________________ State Cafeterias Restaurants ________________________________________ Alabama 6 1
Arizona 4
California 1
Florida 22
Georgia 18
Illinois 1
Kansas 1
Kentucky 1
Louisiana 26 5
Mississippi 3 1
Missouri 3
North Carolina 5
Oklahoma 4
South Carolina 2
Tennessee 11
Texas 17 1
Virginia 7 __________________________
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 corporate headquarters 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.
Item 4(a). Executive Officers of the Registrant
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 32, has held such positions since May 1992. He joined the Company in December 1988 as Assistant Controller.
Frederick E. Fuchs Jr., Executive Vice President and Director of Real Estate, age 48, has held such positions since June 1986.
Jere W. Goldsmith Jr., Executive Vice President and Director of Training, age 49, has held such positions since July 1995. Mr. Goldsmith previously served in this capacity from May 1987 to February 1992. From February 1992 to July 1995 he was Executive Vice President and Region Manager.
Ronald A. LaBorde, age 39, President and Chief Executive Officer, has held such positions since June 1995. From January 1992 to May 1995 he was Executive Vice President, Treasurer and Chief Financial Officer. Prior to that he was Executive Vice President, Secretary, and Controller.
D. Thomas Landry, Executive Vice President and Director of Maintenance, Construction and Design, age 43, has held such positions since May 1992. From July 1990 to May 1992 he was Vice President and Director of Maintenance.
Robert P. Listen, Executive Vice President and Director of Technical Services, age 47, has held such positions since December 1992. From July 1987 to November 1992 he was Executive Vice President and District Manager.
Mark L. Mestayer, Executive Vice President, Secretary, and Controller, age 37, 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.
Joseph S. Polito, Executive Vice President and General Manager, age 53, has held such positions since July 1995. From October 1992 to July 1995, he was Executive Vice President and Director of Training. From 1987 to October 1992 he was Executive Vice President and District Manager.
Patrick R. Prudhomme, Executive Vice President and Region Manager, age 45, has held such positions since February 1992. From January 1989 to February 1992 he was Vice President and District Manager, Ralph & Kacoo's.
C. Warriner Siddle, Executive Vice President and Director of Development, age 44, has held such positions since July 1995. From February 1992 to July 1995 he was Executive Vice President and Region Manager. From October 1984 to February 1992 he was Executive Vice President and District Manager.
Donovan B. Touchet, Executive Vice President and Director of Data Processing, age 46, has held such positions since June 1988.
Brian G. Von Gruben, Executive Vice President and Director of Administrative Services, age 47, has held such positions 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 page one of the Annual Shareholders Report for the year ended June 30, 1995, is incorporated herein by reference.
Item 6.
Item 6. Selected Financial Data
"Selected Financial Data", on page one of the Annual Shareholders Report for the year ended June 30, 1995, 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 four and five of the Annual Shareholders Report for the year ended June 30, 1995, 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 six through 14 of the Annual Shareholders Report for the year ended June 30, 1995, are incorporated herein by reference:
Consolidated balance sheets as of June 30, 1995 and 1994 Consolidated statements of income for the fiscal years ended June 30, 1995, 1994 and 1993 Consolidated statements of changes in shareholders' equity for the fiscal years ended June 30, 1995, 1994 and 1993 Consolidated statements of cash flows for the fiscal years ended June 30, 1995, 1994 and 1993 Notes to consolidated financial statements for the fiscal years ended June 30, 1995, 1994 and 1993
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 relating to its 1995 annual meeting and 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, 1995:
Annual Shareholders Description Report Page ___________ ___________ Consolidated balance sheets as of June 30, 1995 and 1994 6
Consolidated statements of income for the fiscal years ended June 30, 1995, 1994 and 1993 7
Consolidated statements of changes in shareholders' equity for the fiscal years ended June 30, 1995, 1994 and 1993 7
Consolidated statements of cash flows for the fiscal years ended June 30, 1995, 1994 and 1993 8
Notes to consolidated financial statements for the fiscal years ended June 30, 1995, 1994 and 1993 9 - 13
Report of independent auditors 14
(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 VIII--Valuation and qualifying accounts 10
(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.
EXHIBITS
(3) (a) Articles of Incorporation of the Company , as amended on September 14, 1987 as amended on September 27, 1988 , and as amended on September 28, 1989 .
(b) By-laws of the Company, as amended through June 19, 1995.
(4) (a) Piccadilly Cafeterias, Inc. Stockholder Rights Agreement .
(b) Note Agreement, dated as of January 31, 1989, relating to $30 million principal amount of 10.15% Senior Notes due January 31, 1999 .
(10) (a) Piccadilly Cafeteria, Inc. Pension Plan, as amended, dated May 3, 1993 .
(b) Piccadilly Cafeterias, Inc. Employee Stock Purchase Plan , as amended on September 27, 1991 .
(c) Piccadilly Cafeterias, Inc. 1988 Stock Option Plan , as amended on August 2, 1993.
(d) Agreement between Piccadilly Cafeterias, Inc. and James W. Bennett, effective September 28, 1994 .
(e) Form of Management Continuity Agreement, effective March 27, 1995, between Piccadilly Cafeterias, Inc. and each of Messrs. LaBorde, Bozzell, Fuchs, Goldsmith, Landry, Listen, Mestayer, Polito, Prudhomme, Siddle, Touchet, von Dameck and Von Gruben.
(f) Form of Director Indemnity Agreement, effective April 27, 1995, between Piccadilly Cafeterias, Inc. and each of Messrs. LaBorde, Durham, Murrill, Quick, Ross, Simmons, Smith and Stein and Ms. Hamilton.
(g) Agreement between Piccadilly Cafeterias, Inc. and Ronald A. LaBorde, effective June 26, 1995.
(h) Form of Agreement, effective August 1, 1995, between Piccadilly Cafeterias, Inc. and each of Malcolm T. Stein, Jr. and James E. Durham, Jr.
(13) The Registrant's Annual Report to Shareholders for the fiscal year ended June 30, 1995.
(21) List of Subsidiaries of the Registrant
(23) Consent of Independent Auditors
(27) Financial Data Schedule
Incorporated by reference from the Registrant's Registration Statement on Form S-1 (Registration No. 2-63249) filed with the Commission on December 19, 1978.
Incorporated by reference from the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1987.
Incorporated by reference from the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1988.
Incorporated by reference from the Registrant's Annual Report on Form 10-K, as amended, for the fiscal year ended June 30, 1989.
Incorporated by reference from the Company's Current Report on Form 8-K filed with the Commission on August 22, 1988.
Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 1988.
Incorporated by reference from the Company's Annual Report on Form 10-K, as amended, for the fiscal year ended June 30, 1993.
Incorporated by reference from the Registrant's Registration Statement on Form S-8 (Registration No. 33-17737) filed with the Commission on October 7, 1989.
Incorporated by reference from the Registrant's Annual Report on Form 10-K, as amended, for the fiscal year ended June 30, 1991.
Incorporated by reference from the Registrant's Registration Statement on Form S-8 (Registration No. 33-27793) filed with the Commission on March 29, 1989.
Incorporated by reference from the Registrant's Annual Report on Form 10-K, as amended, for the fiscal year ended June 30, 1994.
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 President & CEO
Date: 9/25/95 ______________________
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/ James E. Durham, Jr. 9/25/95 /s/ Dale E. Redman 9/25/95 __________________________ _______ ________________________ _______ James E. Durham, Jr., Date Dale E. Redman, Director Date
/s/ Norman D. Francis 9/25/95 /s/ William D. Ross, Jr. 9/25/95 ___________________________ _______ ________________________ _______ Norman D. Francis, Director Date William D. Ross, Jr., Date Director
/s/ Julia H. R. Hamilton 9/25/95 /s/ Edward M. Simmons, Sr. 9/25/95 ___________________________ _______ ________________________ _______ Julia H. R. Hamilton, Date Edward M. Simmons, Sr., Date Director Director
/s/ Ronald A. LaBorde 9/25/95 /s/ C. Ray Smith 9/25/95 ___________________________ _______ ________________________ _______ Ronald A. LaBorde, President, Date C. Ray Smith, Director Date Chief Executive Officer and Director (Principal Financial Officer)
/s/ Paul W. Murrill 9/25/95 /s/ Malcolm T. Stein, Jr. 9/25/95 ___________________________ _______ ________________________ _______ Paul W. Murrill, Chairman of Date Malcolm T. Stein, Jr., Date the Board Director
/s/ O.Q. Quick, Director 9/25/95 /s/ Mark L. Mestayer 9/25/95 ___________________________ _______ ________________________ _______ O.Q. Quick, Director Date Mark L. Mestayer, Secretary Date and Controller (Principal Accounting Officer)
(A) Deductions are for the write-off of certain property, plant and equipment relating to units closed and for the payment of other obligations (primarily rent) for those units closed and for those units for which a provision for unit closing was recorded during the year ended June 30, 1992 but were operating during the year ended June 30, 1993.