-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, TvSdXzhTUBHmk9S0uZelzZR+OjNkVlSGnqNKfZfL5C64EnQhlO12/rShcoop/KMe 6YUA+wNyyFzTqubr8iEL/w== 0000912057-94-003426.txt : 19941018 0000912057-94-003426.hdr.sgml : 19941018 ACCESSION NUMBER: 0000912057-94-003426 CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19941017 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENN TRAFFIC CO CENTRAL INDEX KEY: 0000077155 STANDARD INDUSTRIAL CLASSIFICATION: 5411 IRS NUMBER: 250716800 STATE OF INCORPORATION: PA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 424B2 SEC ACT: 1933 Act SEC FILE NUMBER: 033-51213 FILM NUMBER: 94552940 BUSINESS ADDRESS: STREET 1: 319 WASHINGTON STREET CITY: JOHNSTOWN STATE: PA ZIP: 15901 BUSINESS PHONE: 8145369900 MAIL ADDRESS: STREET 1: 1200 STATE FAIR BLVD CITY: SYRACUSE STATE: NY ZIP: 13221-4737 424B2 1 424B2 INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME A FINAL PROSPECTUS SUPPLEMENT IS DELIVERED. THIS PRELIMINARY PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED OCTOBER 13, 1994 PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED DECEMBER 8, 1993 $100,000,000 THE PENN TRAFFIC COMPANY ______% SENIOR NOTES DUE __________, 2004 ----------- Interest on the Senior Notes is payable on ______ and ______ of each year, commencing ______, 1995. The Senior Notes are redeemable at the option of the Company, in whole or in part, at any time on or after ______, 1999 at the redemption prices set forth herein, plus accrued interest to the date of redemption. The Company is required to offer to repurchase the Senior Notes at 101% of their principal amount, plus accrued interest to the date of repurchase, in the event of certain mergers or in the event of a Change of Control of the Company. The Senior Notes will be issued in fully registered form in denominations of $1,000 and any integral multiple thereof.The Senior Notes will be represented by one or more global securities ("Global Securities") registered in the name of The Depository Trust Company ("DTC") or its nominee. Interests in the Global Securities will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its participants. Except as described under "Description of Debt Securities--Global Securities" in the accompanying Prospectus, Senior Notes in definitive form will not be issued. Settlement for the Senior Notes will be made in immediately available funds. The Senior Notes will trade in DTC's Same-Day Funds Settlement System until maturity, and secondary market trading activity for the Senior Notes will therefor settle in immediately available funds. All payments of principal and interest will be made by the Company in immediately available funds. See "Description of Senior Notes--Same-Day Settlement and Payment". The Senior Notes are unsecured general obligations of the Company and will rank PARI PASSU with other unsecured general obligations of the Company. As of October 12, 1994, these obligations consisted of approximately $107 million principal amount of 11 1/2% Senior Notes due 2001, $125 million principal amount of 10 1/4% Senior Notes due 2002, $200 million principal amount of 8 5/8% Senior Notes due 2003, $100 million principal amount of 10 3/8% Senior Notes due 2004, and other general unsecured obligations of the Company. The Senior Notes will be effectively subordinated to secured indebtedness of the Company with respect to the assets securing such secured indebtedness. The Company's Revolving Credit Facility provides for borrowings of up to $200 million, subject to increase to $225 million before February 1995 if certain conditions are met and subject to a borrowing base limitation. The Revolving Credit Facility is secured by the Company's accounts receivable, inventory and related assets. The proceeds of the offering of the Senior Notes will be used to fund the acquisition of supermarkets from American Stores Company and for general corporate purposes. See "Use of Proceeds." SEE "CERTAIN FACTORS" IN THE ACCOMPANYING PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SENIOR NOTES. ---------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ----------------
INITIAL PUBLIC OFFERING UNDERWRITING PROCEEDS TO PRICE(1) DISCOUNT(2) COMPANY(1)(3) ---------------- ------------- --------------- Per Senior Note............. % % % Total....................... $ $ $ - -------------------------- (1) Plus accrued interest, if any, from ______, 1994. (2) The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (3) Before deducting estimated expenses of $ payable by the Company.
---------------- The Senior Notes are offered severally by the Underwriters, as specified herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. It is expected that the Senior Notes will be ready for delivery through the facilities of DTC in New York, New York on or about ______, 1994 against payment therefor in immediately available funds. GOLDMAN, SACHS & CO. BT SECURITIES CORPORATION MORGAN STANLEY & CO. INCORPORATED ------------- The date of this Prospectus Supplement is ______, 1994. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SENIOR NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-2 SUMMARY THIS PROSPECTUS SUPPLEMENT SHOULD BE READ IN CONJUNCTION WITH THE ACCOMPANYING PROSPECTUS DATED DECEMBER 8, 1993 RELATING TO THE ISSUANCE OF UP TO $400 MILLION AGGREGATE PRINCIPAL AMOUNT OF DEBT SECURITIES. CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED HEREIN HAVE THE MEANINGS SET FORTH IN THE PROSPECTUS. THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND FINANCIAL DATA APPEARING ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS, INCLUDING INFORMATION INCORPORATED THEREIN BY REFERENCE. SEE "CERTAIN FACTORS" IN THE PROSPECTUS FOR A DISCUSSION OF CERTAIN OF THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE SENIOR NOTES. THE COMPANY The Penn Traffic Company ("Penn Traffic" or the "Company") is one of the leading food retailers in the eastern United States. As of October 12, 1994, the Company operated 236 supermarkets in Pennsylvania, upstate New York, Ohio and northern West Virginia under the names "Riverside Markets" (13 stores), "Bi-Lo Foods" (23 stores), "Insalaco's" (15 stores), "Quality Markets" (44 stores), "P&C Foods" (64 stores) and "Big Bear" and "Big Bear Plus" (77 stores). On September 30, 1994, Penn Traffic announced that it had reached an agreement with American Stores Company to acquire supermarkets operated under the Acme trade name located in north central and northeastern Pennsylvania and south central New York (the "Acquisition"). See "Recent Developments." Penn Traffic also operates a wholesale food distribution business which, as of October 12, 1994, served 130 licensed franchisees and 117 independent operators and a discount general merchandise business with 15 stores. Total consolidated revenues of Penn Traffic for the 52-week period ended July 30, 1994 aggregated approximately $3.3 billion. In addition, Penn Traffic holds an indirect ownership interest representing on a fully diluted basis approximately 17.8% of the common stock of Grand Union Holdings Corporation ("Grand Union Holdings"), the indirect parent corporation of the Grand Union Company ("Grand Union"). As of October 12, 1994, approximately 75% of Penn Traffic's supermarket sales are in smaller communities where Penn Traffic believes it virtually always holds the number one or number two market position. The balance of Penn Traffic's sales is in Columbus, Ohio and Buffalo and Syracuse, New York. Penn Traffic believes it has the leading market share in each of these communities except Buffalo, New York. Penn Traffic's retail and wholesale operations stretch from Ohio to upstate New York. The Company operates in communities with diverse economies based on manufacturing, natural resources, retailing, health care services, education and government services. As of October 12, 1994, no supermarket company competed against stores representing more than 20% of the Company's total revenues, with the exception of The Kroger Co., which competed against Big Bear stores representing approximately 30% of the Company's total revenues. The Company has achieved continued improvement in operating performance over the past several years. The Company attributes these improvements in operating performance primarily to: (1) a successful merchandising strategy which allows management to adapt its in-store presentations and advertising programs to local community preferences; (2) significant investments in store and distribution facilities permitting the Company to add higher margin products and services while increasing operating efficiencies; (3) improved merchandising and buying programs; and (4) strong cost controls assisted by efficiencies gained from investments in technology and sharing of corporate resources. S-3 The Company pursues an aggressive capital program that seeks to match store size and format to local demographics and competitive conditions. During the five fiscal years ended January 29, 1994, the Company has opened or remodeled 73% of its retail supermarket square footage. These larger, more modern facilities strengthen the Company's competitive position and enable it to offer its customers a broader variety of specialty departments, including pharmacies, bakeries, delicatessens, floral, greeting cards and other general merchandise. During the period from January 29, 1994 to January 31, 1999, the Company expects to spend approximately $700 million (excluding the Acquisition) on capital expenditures (including capital leases), equivalent to approximately 3.5% to 4.0% of planned retail sales over this period. These expenditures are expected to be made within or contiguous to the Company's current marketing areas, primarily to support the Company's retail supermarket business. The Company believes that it will be able to fund its capital plan through internally generated funds, borrowings under its revolving credit facility and capital leases. As of October 12, 1994, approximately 100 senior managers of the business were direct shareholders in Penn Traffic. THE OFFERING Securities Offered........... $100,000,000 principal amount of ______% Senior Notes due ______, 2004 (the "Senior Notes"). Interest Payment Dates....... ______ and ______, commencing ______, 1995. Interest Rate................ ______% per annum. Redemption................... The Senior Notes are redeemable at the option of the Company, in whole or in part, on or after ______, 1999, at the redemption prices set forth herein, plus accrued interest to the redemption date. See "Description of Senior Notes--General--Redemption." The Senior Notes are not entitled to the benefit of any sinking fund. Ranking...................... The Senior Notes will be unsecured general obligations of Penn Traffic and will rank PARI PASSU with other unsecured general obligations of the Company. As of October 12, 1994 these obligations consisted of approximately $107 million principal amount of 11 1/2% Senior Notes due 2001, $125 million principal amount of 10 1/4% Senior Notes due 2002, $200 million principal amount of 8 5/8% Senior Notes due 2003, $100 million principal amount of 10 3/8% Senior Notes due 2004 and other unsecured and unsubordinated obligations of Penn Traffic. The Senior Notes will be effectively subordinated to secured indebtedness of Penn Traffic with respect to the assets securing such secured indebtedness. The Company's revolving credit facility (as amended, the "Revolving Credit Facility") with National Westminster Bank USA, as Agent for a group of lending institutions, provides for borrowings of up to $200 million, subject to increase to $225 million before February 1995 if certain conditions are met and subject to a borrowing base limitation. The Revolving Credit Facility is secured by the Company's accounts receivable, inventory and related assets.
S-4 Principal Covenants.......... The Indenture relating to the Senior Notes (the "Senior Indenture") restricts, among other things, the ability of Penn Traffic and its Subsidiaries (i) to incur additional indebtedness, (ii) to enter into sale and leaseback transactions, (iii) to pledge or dispose of assets and (iv) to engage in transactions with affiliates. The Senior Indenture also restricts the ability of Penn Traffic (i) to make distributions on and repurchases of its common stock, (ii) to have restrictions on the ability of Subsidiaries to make dividend or other payments to Penn Traffic and (iii) to merge or consolidate with or transfer all or substantially all of its assets to another entity. The Senior Indenture also restricts the ability of Subsidiaries of Penn Traffic to issue preferred stock. The restrictions referred to in this paragraph will not apply to any subsidiary designated as an Unrestricted Subsidiary. See "Description of Debt Securities--Certain Restrictive Covenants" in the accompanying Prospectus. Repurchase Obligation........ Penn Traffic will offer to repurchase all outstanding Senior Notes at 101% of their principal amount plus accrued interest to the date of repurchase promptly after the occurrence of a Change of Control (as defined in the Senior Indenture) of Penn Traffic or in the event of a merger where, immediately after giving effect to the merger, the surviving corporation does not meet the interest coverage ratio set forth in the Senior Indenture. See "Description of Debt Securities-- Mergers and Consolidations; Change of Control" in the accompanying Prospectus. Use of Proceeds.............. The Company will apply the net proceeds from the sale of the Senior Notes to fund the Acquisition and for general corporate purposes. See "Use of Proceeds."
S-5 USE OF PROCEEDS The Company currently intends to use the net proceeds of the offering (the "Offering") of the Senior Notes offered hereby to fund the Acquisition and for general corporate purposes. Pending completion of the Acquisition, which is expected to occur by the end of the calendar year, the net proceeds of the Offering will be used to repay indebtedness outstanding under the Revolving Credit Facility and invested in short-term securities. The Revolving Credit Facility was recently amended to provide for interest at a rate per annum, at the Company's option, equal to (x) LIBOR (as defined) plus 2.25%, LIBOR plus 2.0% or LIBOR plus 1.75%, depending on the interest coverage ratio attained by the Company, or (y) the Base Rate (as defined) plus 1%, the Base Rate plus .75% or the Base Rate plus .50%, depending on the interest coverage ratio attained by the Company. The Company's interest coverage ratio is currently high enough for it to obtain the lowest rates described above. For the 26 weeks ended July 30, 1994, the Company paid a weighted average rate of interest on borrowings under the Revolving Credit Facility of approximately 7.0%. The Revolving Credit Facility will mature on April 30, 2000. The Acquisition is subject to customary conditions. Although the Company expects all of such conditions will be satisfied, there can be no assurance that the Acquisition will be completed. In the event that the Acquisition is not consummated, the Company will use the net proceeds of the Offering to repay outstanding indebtedness and for general corporate purposes. RECENT DEVELOPMENTS On September 30, 1994, the Company entered into an agreement with certain subsidiaries of American Stores Company to acquire 45 supermarkets currently operating under the Acme trade name in north central and northeastern Pennsylvania and south central New York. The purchase price for the stores is approximately $75 million plus the cost of inventory (estimated to be approximately $19 million). The 45 stores had aggregate revenues of approximately $358 million for the year ended January 29, 1994. After an initial transition period, the integration of a majority of these stores into the Company is expected to add approximately 700,000 to 800,000 retail square feet to Penn Traffic's existing operations and to generate annual revenues of approximately $260 million. During the next 24 to 30 months, Penn Traffic plans to renovate or enlarge most of the acquired stores at a total cost of approximately $50 million. The Company expects the Acquisition, which is subject to various customary conditions, to close by calendar year end. In August 1994, the Company entered into an amendment (the "Amendment") to its $200 million Revolving Credit Facility. This amendment provides for an increase in the total facility to $225 million if Penn Traffic so requests prior to February 1995 and lending commitments are obtained for the additional $25 million. Penn Traffic currently plans to arrange for an increase in the Revolving Credit Facility to $225 million, although there can be no assurance that the Company will do so or be able to do so. The Amendment also reduced the interest rate on LIBOR-based borrowings from LIBOR (as defined) plus 2.50% or LIBOR plus 2.25%, depending on the interest coverage ratio attained by the Company, to LIBOR plus 2.25%, LIBOR plus 2.0% or LIBOR plus 1.75%, depending on the interest coverage ratio attained by the Company, and reduced the rate on prime-based borrowings from the Base Rate (as defined) plus 1.00% or the Base Rate plus 0.75%, depending on the interest coverage ratio attained by the Company, to the Base Rate plus 1.00%, the Base Rate plus 0.75% or the Base Rate plus 0.50%, depending on the interest coverage ratio attained by the Company. The Company's interest coverage ratio is currently high enough for it to obtain the lowest LIBOR-based and prime-based rates described above. See "Terms of Financing Agreements" in the accompanying Prospectus. S-6 CAPITALIZATION The following table sets forth the capitalization of Penn Traffic and its subsidiaries as of July 30, 1994 and as adjusted to give effect to the sale of the Senior Notes pursuant to the Offering. The table should be read in conjunction with the Consolidated Financial Statements of Penn Traffic and the related Notes thereto, which are set forth in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K which are incorporated by reference in the Prospectus.
AS OF JULY 30, 1994 ----------------------------- ACTUAL PRO FORMA (1) ------------- -------------- (DOLLARS IN THOUSANDS) Current Maturities of Long-Term Debt and Capital Leases............................ $ 13,430 $ 13,430 ------------- -------------- ------------- -------------- Revolving Credit Facility.......................................................... $ 22,600 $ 22,600 Other Secured Indebtedness......................................................... 29,605 29,605 Obligations under Capital Leases................................................... 129,616 129,616 11 1/2% Senior Notes due October 2001.............................................. 107,240 107,240 10 1/4% Senior Notes due February 2002............................................. 125,000 125,000 8 5/8% Senior Notes due December 2003.............................................. 200,000 200,000 _____% Senior Notes due ______ 2004................................................ -- 100,000 10 3/8% Senior Notes due October 2004.............................................. 100,000 100,000 9 5/8% Senior Subordinated Notes due April 2005.................................... 400,000 400,000 ------------- -------------- Total Long-Term Debt and Capital Leases.......................................... $ 1,114,061 $ 1,214,061 Shareholders' Equity............................................................... 15,476 15,476 ------------- -------------- Total Capitalization............................................................. $ 1,129,537 $ 1,229,537 ------------- -------------- ------------- -------------- - ------------------------ (1) Assumes the sale by the Company of $100 million in principal amount of Senior Notes.
S-7 SELECTED CONSOLIDATED FINANCIAL DATA Set forth below are selected historical consolidated financial data of Penn Traffic for the twenty-six weeks ended July 30, 1994 and July 31, 1993, and for the five fiscal years ended January 29, 1994, and selected pro forma consolidated financial data for the twenty-six weeks ended July 30, 1994 and July 31, 1993, and for the fiscal year ended January 29, 1994. Due to the acquisition of Big Bear, the equity investment in Grand Union and the divestiture of the New England Division of P&C (see footnotes (1) and (2) below), comparisons of the consolidated historical financial results among years are not necessarily meaningful. Furthermore, the historical consolidated financial data for the fiscal years ended January 30, 1993 and February 1, 1992 have been restated for the retroactive adoption of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). The selected historical consolidated financial data for the five fiscal years ended January 29, 1994 are derived from the Consolidated Financial Statements of Penn Traffic which have been audited by Price Waterhouse, independent accountants. The selected historical consolidated financial data for the twenty-six weeks ended July 30, 1994 and July 31, 1993 are derived from consolidated financial statements, which financial statements, in the opinion of management, reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of such data. The unaudited selected pro forma consolidated financial data represents the historical data for the periods indicated adjusted for items set forth in Note 10 below. The pro forma adjustments described in Note 10 are based upon estimates and assumptions that management believes are reasonable. The selected consolidated financial data should be read in conjunction with the Consolidated Financial Statements of Penn Traffic and related Notes thereto, which are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended January 29, 1994, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K which are incorporated by reference in the Prospectus.
TWENTY-SIX WEEKS ENDED FISCAL YEAR ENDED --------------------------- ------------------------------------------------------------------------ FEBRUARY 2, JULY 30, JULY 31, JANUARY 29, JANUARY 30, FEBRUARY 1, 1991 (1) FEBRUARY 3, 1994 1993 1994 1993 1992 (53 WEEKS) 1990 (2) -------------- ---------- ----------- ----------- -------------- ------------ ------------ (DOLLARS IN THOUSANDS) OPERATING DATA: Revenues.................. $1,645,728 $1,543,036 $3,171,600 $2,832,949 $2,772,104 $2,803,781 $2,725,476 Cost of sales............. 1,274,388 1,202,651 2,464,853 2,230,493 2,195,773 2,253,619 2,202,754 Selling and administrative expenses................. 295,552 271,949 559,729 475,839 460,684 444,280 432,650 Unusual item (3).......... -- 6,400 6,400 -- -- -- -- -------------- ---------- ----------- ----------- -------------- ------------ ------------ Operating income.......... 75,788 62,036 140,618 126,617 115,647 105,882 90,072 Acquisition financing costs and expenses....... -- -- -- -- -- -- 12,345 Interest expense.......... 57,791 59,656 117,423 115,814 116,782 117,300 106,873 -------------- ---------- ----------- ----------- -------------- ------------ ------------ Income (loss) before income taxes, equity in net loss of affiliated company, extraordinary item and cumulative effect of change in accounting principle..... 17,997 2,380 23,195 10,803 (1,135) (11,418) (29,146) Provision (benefit) for income taxes (4)......... 8,873 1,327 15,019 6,812 4,217 2,427 (7,911) -------------- ---------- ----------- ----------- -------------- ------------ ------------ Income (loss) before equity in net loss of affiliated company, extraordinary item and cumulative effect of change in accounting principle................ 9,124 1,053 8,176 3,991 (5,352) (13,845) (21,235) Equity in net loss of Grand Union (5).......... -- -- -- -- -- (10,334) (7,916) -------------- ---------- ----------- ----------- -------------- ------------ ------------ Income (loss) before extraordinary item and cumulative effect of change in accounting principle................ 9,124 1,053 8,176 3,991 (5,352) (24,179) (29,151) Extraordinary item (net of tax benefit) (6)......... (2,967) (22,079) (25,843) (10,823) (3,718) -- -- -------------- ---------- ----------- ----------- -------------- ------------ ------------ Net income (loss) before cumulative effect of change in accounting principle................ 6,157 (21,026) (17,667) (6,832) (9,070) (24,179) (29,151) Cumulative effect of change in accounting principle................ (5,790)(7) -- -- -- (58,330)(8) -- -- -------------- ---------- ----------- ----------- -------------- ------------ ------------ Net income (loss)......... 367 (21,026) (17,667) (6,832) (67,400) (24,179) (29,151) Preferred dividends....... -- (159) (159) (968) (2,768) (3,286) (2,824) -------------- ---------- ----------- ----------- -------------- ------------ ------------ Net income (loss) applicable to common stock.................... $ 367 $ (21,185) $ (17,826) $ (7,800) $ (70,168) $ (27,465) $ (31,975) -------------- ---------- ----------- ----------- -------------- ------------ ------------ -------------- ---------- ----------- ----------- -------------- ------------ ------------ Ratio of earnings to fixed charges (9).............. 1.29x 1.04x 1.18x 1.07x -- -- -- OTHER DATA: Cash interest expense..... $ 55,809 $ 57,656 $ 113,270 $ 111,478 $ 112,228 $ 112,977 $ 103,147 Depreciation and amortization............. 43,245 40,237 82,869 72,787 68,581 61,307 53,431 LIFO adjustment........... 450 990 103 479 1,617 3,109 5,963 Capital expenditures including capital leases................... 43,223 69,000 182,700 148,650 82,061 74,750 77,044
S-8 BALANCE SHEET DATA (at July 30,1994): Total assets............ $1,600,806 Total debt and capital leases................. 1,127,491 Shareholders' equity.... 15,476
TWENTY-SIX WEEKS ENDED FISCAL YEAR ------------------------- ENDED JULY 30, JULY 31, JANUARY 29, 1994 1993 1994 ------------- ---------- ------------ PRO FORMA OPERATING DATA (10): Revenues.................. $1,783,232 $1,753,871 $3,534,710 Operating income (11)..... 80,887 69,258 153,891 Interest expense.......... 63,166 67,328 131,162 Income before income taxes, extraordinary item and cumulative effect of change in accounting principle (11)........... 17,721 1,930 22,729 Income before extraordinary item and cumulative effect of change in accounting principle (11)........... 8,958 783 8,024 OTHER PRO FORMA DATA (10): Cash interest expense..... $ 61,059 $ 62,905 $ 123,770 Depreciation and amortization............. 46,465 43,457 89,311 LIFO adjustment........... 450 990 103 PRO FORMA BALANCE SHEET DATA (at July 30, 1994) (10): Total assets.............. $1,708,806 Total debt and capital leases................... 1,227,491 Shareholders' equity...... 15,476 - ------------------------ (1) The divestiture of the P&C New England Division occurred on July 30, 1990 (Fiscal 1991). (2) Penn Traffic acquired Big Bear in April 1989 (Fiscal 1990). Penn Traffic owns an indirect ownership interest representing approximately 17.8% of the common stock of Grand Union Holdings, the indirect parent corporation of Grand Union, on a fully diluted basis. Penn Traffic's ownership interest in Grand Union Holdings was acquired in July 1989 (Fiscal 1990). (3) Represents costs related to a voluntary employee separation program at the Company's P&C Division and the realignment of certain operations. (4) For the fifty-two weeks ended January 29, 1994, includes a charge of $2.4 million as a result of the increase in the federal tax rate, as required by SFAS 109. (5) Penn Traffic is accounting for the Grand Union investment under the equity method. By February 2, 1991, Penn Traffic had recorded losses which reduced the carrying value of its investment to zero. (6) The extraordinary charges (net of income tax benefits) resulted from the early retirement of debt. (7) Represents cumulative effect of the Company's adoption of Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" ("SFAS 112"). (8) Represents cumulative effect of the Company's adoption of SFAS 109 retroactive to the beginning of the fiscal year ended February 1, 1992. Income tax provisions for the fiscal years ended February 2, 1991 and February 3, 1990 were computed in accordance with Accounting Principles Board Opinion No. 11.
S-9 (9) For purposes of the computation, the ratio of earnings to fixed charges has been calculated by dividing (a) earnings before income taxes and fixed charges by (b) fixed charges plus the pre-tax equivalent of subsidiaries' preferred stock dividends. Fixed charges are equal to interest expense plus the estimated interest component of operating leases (assumed to be one-third). Earnings before income taxes and fixed charges were insufficient to cover fixed charges plus the pre-tax equivalent of subsidiaries' preferred stock dividends by $5.7 million, $16.9 million and $21.5 million for the periods ended February 1, 1992, February 2, 1991 and February 3, 1990, respectively. (10) The pro forma data give effect to the following events as though they had occurred at the beginning of the applicable period, in the case of Pro Forma Operating Data and Other Pro Forma Data, and at July 30, 1994, in the case of Pro Forma Balance Sheet Data: (a) the issuance of $100 million in principal amount of Senior Notes at an assumed interest rate of 10.5%; (b) the Acquisition of 45 supermarkets expected to be purchased from subsidiaries of American Stores Company for $75 million plus inventory; (c) the payment of expenses related to the foregoing; and (d) in the case of the Pro Forma Operating Data and Other Pro Forma Data for the year ended January 30, 1994 and the twenty-six weeks ended July 31, 1993, the acquisition of 12 supermarkets purchased from Insalaco Markets, Inc. in September 1993. The pro forma data are based on certain assumptions, some of which are detailed in Penn Traffic's Current Report on Form 8-K relating to the Acquisition which is incorporated herein by reference. Such assumptions may not prove to be accurate and the pro forma data are not necessarily indicative of actual financial position or results of operations which would have existed or been realized if the foregoing events had taken place at the dates indicated above or which may exist or be realized in the future. For each 1/8 of 1% change in assumed interest rate on the Senior Notes, pro forma interest expense and pro forma income before extraordinary item and cumulative effect of change in accounting principle would change by $125,000 and $75,000 per year (or $62,500 and $37,500 per twenty-six week period), respectively. (11) Amounts are stated after the deduction of unusual items of (a) $1.1 million ($0.7 million after taxes) relating to a voluntary employee separation program at the supermarkets to be acquired in the Acquisition for the twenty-six weeks ended July 30, 1994 and (b) $6.4 million ($3.8 million after taxes) relating to a voluntary employee separation program at the Company's P & C Division and the realignment of certain Company operations for the twenty-six weeks ended July 31, 1993 and for the fifty-two weeks ended January 29, 1994.
S-10 DESCRIPTION OF SENIOR NOTES THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE SENIOR NOTES OFFERED HEREBY (REFERRED TO IN THE ACCOMPANYING PROSPECTUS AS THE "DEBT SECURITIES" OR THE "SECURITIES") SUPPLEMENTS, AND TO THE EXTENT INCONSISTENT THEREWITH, REPLACES THE DESCRIPTION OF THE GENERAL TERMS AND PROVISIONS OF DEBT SECURITIES SET FORTH IN THE ACCOMPANYING PROSPECTUS, TO WHICH DESCRIPTION REFERENCE IS HEREBY MADE. CAPITALIZED TERMS NOT DEFINED HEREIN HAVE THE MEANINGS ASSIGNED TO SUCH TERMS IN THE ACCOMPANYING PROSPECTUS. The terms of the Senior Notes include those stated in the Senior Indenture. The Senior Notes are subject to all such terms and prospective purchasers are referred to the Senior Indenture for a statement thereof. The following statements relating to the Senior Notes and the Senior Indenture are summaries and do not purport to be complete. Such summaries may make use of certain terms defined in the Senior Indenture and are qualified in their entirety by express reference to such Senior Indenture. A copy of the Senior Indenture is on file with the Commission. As permitted by the Senior Indenture and as described herein, certain terms of the Senior Notes have been established pursuant to a Board Resolution adopted by the Board of Directors of the Company on September 13, 1994. GENERAL The Senior Notes will be issued under an indenture (the "Senior Indenture") dated as of December 15, 1993 (the "Senior Indenture") between the Company and United States Trust Company of New York, as trustee (the "Senior Trustee"). The Company's $200 million principal amount of 8 5/8% Senior Notes due 2003 were also issued pursuant to the Senior Indenture. The Senior Notes, which will be limited to $100 million aggregate principal amount, will constitute a series of Senior Debt Securities described in the accompanying Prospectus and will mature on ______, 2004. The Senior Notes will be unsecured general obligations of the Company and will be issued in denominations of $1,000 and integral multiples of $1,000. The Senior Notes will rank PARI PASSU with other unsecured general obligations of the Company. As of October 12, 1994 these obligations consisted of approximately $107 million principal amount of 11 1/2% Senior Notes due 2001, $125 million principal amount of 10 1/4% Senior Notes due 2002, $200 million principal amount of 8 5/8% Senior Notes due 2003, $100 million principal amount of 10 3/8% Senior Notes due 2004, and other general unsecured obligations of the Company. The Senior Notes will be effectively subordinated to secured indebtedness of the Company with respect to the assets securing such secured indebtedness. The Company's Revolving Credit Facility provides for borrowings of up to $200 million, subject to increase to $225 million before February 1995 if certain conditions are met and subject to a borrowing base limitation. The Revolving Credit Facility is secured by the Company's accounts receivable, inventory and related assets. The Company will pay interest on the Senior Notes on ______ and ______ of each year, commencing ______, 1995, to the persons who are registered holders at the close of business on the ______ or ______ immediately preceding the interest payment date. Initially, _______, a New York banking corporation, will act as Paying Agent and Registrar. GLOBAL SECURITIES. The Senior Notes will be issued in the form of one or more fully registered global securities ("Global Securities") which will be deposited with, or on behalf of, The Depository Trust Company ("DTC") and registered in the name of DTC or its nominee. Interests in the Global Securities will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its participants. Global Securities will not be transferrable or exchangeable for Senior Notes in definitive form except under the very limited circumstances described in the accompanying Prospectus under "Description of Debt Securities--Global Securities." S-11 SAME-DAY SETTLEMENT AND PAYMENT. Settlement for the Senior Notes will be made in immediately available funds. The Senior Notes will trade in DTC's Same-Day Funds Settlement System until maturity, and secondary market trading activity for the Senior Notes will therefor settle in immediately available funds. All payments of principal and interest on the Senior Notes will be made by the Company in immediately available funds. REDEMPTION. The Senior Notes will not be redeemable at the option of the Company prior to ______, 1999. On or after ______, 1999, the Senior Notes will be redeemable at the option of the Company, in whole at any time or in part, from time to time, on not less than 30 nor more than 60 days' prior notice, mailed by first-class mail to the Holders' last addresses as they appear upon the register, at the following prices (expressed in percentages of the principal amount), if redeemed during the twelve months beginning ______ of the years indicated below, in each case together with interest accrued to the redemption date:
YEAR PERCENTAGE - --------------------------------------------------------------------------------- ----------- 1999............................................................................. --% 2000............................................................................. -- 2001............................................................................. ------- 100.000% ------- ------- 2002 and thereafter..............................................................
If less than all the Senior Notes are to be redeemed, selection of Senior Notes for redemption will be made in the manner selected by the Senior Trustee or the Registrar for the Senior Notes. The Senior Notes will not have the benefit of any sinking fund obligations. COVENANTS. The restrictive covenants described under "Description of Debt Securities--Certain Restrictive Covenants--Common Indenture Covenants" and "--Senior Indenture Covenants" in the accompanying Prospectus are applicable to the Senior Notes. Pursuant to a Board Resolution adopted on September 13, 1994 establishing certain terms of the Senior Notes, for purposes of computing the amount of Restricted Payments permitted to be made pursuant to the limitation described in clause (iii) of the paragraph of the Prospectus captioned "Description of Debt Securities--Certain Restrictive Covenants--Common Indenture Covenants--Restricted Payments," the date from which Consolidated Net Income will be calculated will be July 31, 1994 and the determination of Consolidated Net Income for any period ending prior to May 1, 1995 shall exclude the deduction of an amount equal to the aggregate charges (net of applicable tax) incurred by the Company related to the repurchase or retirement of Indebtedness prior to its stated maturity. MERGERS AND CONSOLIDATIONS; CHANGE OF CONTROL. As described under "Description of Debt Securities--Mergers and Consolidations; Change of Control" in the accompanying Prospectus, Penn Traffic will offer to repurchase all outstanding Senior Notes, at 101% of their principal amount plus accrued interest to the date of repurchase, promptly after the occurrence of a Change of Control of Penn Traffic or in the event of a merger or consolidation where, immediately after giving effect to such merger or consolidation, the surviving corporation does not meet the interest coverage ratio set forth in the Senior Indenture. EVENTS OF DEFAULT. Events of Default with respect to the Senior Notes are set forth under "Description of Debt Securities--Events of Default" in the accompanying Prospectus. S-12 UNDERWRITING Subject to the terms and conditions set forth in the Underwriting Agreement and the Pricing Agreement, the Company has agreed to sell to each of the Underwriters named below, and each of the Underwriters has severally agreed to purchase from the Company, the principal amount of the Senior Notes set forth opposite its name below:
PRINCIPAL AMOUNT UNDERWRITERS OF SENIOR NOTES - --------------------------------------------------------------------------- ----------------- Goldman, Sachs & Co........................................................ $ -- BT Securities Corporation.................................................. -- Morgan Stanley & Co. Incorporated.......................................... -- ----------------- Total.................................................................... $ 100,000,000 ----------------- -----------------
Under the terms and conditions of the Underwriting Agreement and the Pricing Agreement, the Underwriters are committed to take and pay for all of the Senior Notes, if any are taken. The Underwriters propose to offer the Senior Notes in part directly to the public at the initial public offering price set forth on the cover page of this Prospectus Supplement and in part to certain securities dealers at such price less a concession of ___% of the principal amount of the Senior Notes. The Underwriters may allow, and such dealers may reallow, a concession not to exceed ___% of the principal amount of the Senior Notes to certain brokers and dealers. After the Senior Notes are released for sale to the public, the offering price and other selling terms may from time to time be varied by the Underwriters. The Senior Notes represent a new issue of securities with no established trading market. The Company has been advised by the Underwriters that the Underwriters intend to make a market in the Senior Notes but are not obligated to do so and may discontinue market making at any time without notice. No assurance can be given as to the liquidity of the trading market for the Senior Notes. The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. Miller Tabak Hirsch + Co. will receive a fee of $500,000 to be paid on the closing of the Acquisition for its services in connection with assisting the Company with the Acquisition and the Offering. See "Certain Transactions" in the accompanying Prospectus. Goldman, Sachs & Co., which is an Underwriter in this Offering, has performed various investment banking services for Penn Traffic, for which it received customary fees, and from time to time has participated in underwriting securities of Penn Traffic and Grand Union. Goldman, Sachs & Co. served as financial advisor to Grand Union Holdings in connection with the recapitalization of Grand Union Holdings and its subsidiaries in July 1992. BT Securities Corporation, which is an Underwriter in this Offering, has participated in underwriting securities of Penn Traffic and Grand Union. BT Securities Corporation has served as financial advisor to Grand Union Holdings in connection with the recapitalization of Grand Union Holdings and its subsidiaries in July 1992. Bankers Trust Company, an affiliate of BT Securities Corporation, maintains customary banking relationships with Grand Union Holdings and its subsidiaries, including acting as agent under Grand Union's bank credit agreement. Bankers Trust Company will be the Paying Agent and Registrar for the Senior Notes. VALIDITY OF THE SENIOR NOTES The validity of the Senior Notes will be passed upon for Penn Traffic by Donovan Leisure Newton & Irvine, New York, New York, and for the Underwriters by Sullivan & Cromwell, New York, New York. Such counsel will express no opinion as to federal or state laws relating to fraudulent transfers. See "Certain Factors--Fraudulent Conveyance" in the accompanying Prospectus. S-13 - ---------------------------------------------- ---------------------------------------------- - ---------------------------------------------- ---------------------------------------------- NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION. -------------- TABLE OF CONTENTS PROSPECTUS SUPPLEMENT
PAGE --------- Summary........................................... S-3 Use of Proceeds................................... S-6 Recent Developments............................... S-6 Capitalization.................................... S-7 Selected Consolidated Financial Data.............. S-8 Description of Senior Notes....................... S-11 Underwriting...................................... S-13 Validity of the Senior Notes...................... S-14 PROSPECTUS Available Information............................. 2 Incorporation of Certain Documents by Reference... 2 The Penn Traffic Company.......................... 3 Recent History.................................... 4 Certain Factors................................... 5 Ratio of Earnings to Fixed Charges................ 7 Use of Proceeds................................... 7 Description of Debt Securities.................... 8 Certain Transactions.............................. 35 Terms of Financing Agreements..................... 36 Plan of Distribution.............................. 38 Validity of the Debt Securities................... 38 Experts........................................... 39
$100,000,000 THE PENN TRAFFIC COMPANY ___% SENIOR NOTES DUE ______, 2004 ----------- PROSPECTUS SUPPLEMENT ----------- GOLDMAN, SACHS & CO. BT SECURITIES CORPORATION MORGAN STANLEY & CO. INCORPORATED - ---------------------------------------------- ---------------------------------------------- - ---------------------------------------------- ---------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----