-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UE7WUZur9C1igAl30tm8UC6PNi9xJ76HrjBq5uJ8r9hQxFTbkv9RZWP0wkqbWlhw 34Jol5/5Eq1mU6Bm+dwLiQ== 0000950142-06-001899.txt : 20061019 0000950142-06-001899.hdr.sgml : 20061019 20061019091618 ACCESSION NUMBER: 0000950142-06-001899 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061019 ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061019 DATE AS OF CHANGE: 20061019 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENN TRAFFIC CO CENTRAL INDEX KEY: 0000077155 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 250716800 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-08858 FILM NUMBER: 061152127 BUSINESS ADDRESS: STREET 1: 1200 STATE FAIR BLVD CITY: SRYACUSE STATE: NY ZIP: 13221-4737 BUSINESS PHONE: 8145369900 MAIL ADDRESS: STREET 1: 1200 STATE FAIR BLVD CITY: SYRACUSE STATE: NY ZIP: 13221-4737 8-K 1 form8k_101906.txt CURRENT REPORT ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): October 19, 2006 THE PENN TRAFFIC COMPANY - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) DELAWARE - -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 001-9930 25-0716800 - -------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 1200 STATE FAIR BOULEVARD SYRACUSE, NEW YORK 13221-4737 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (315) 453-7284 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) N/A - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (SEE General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 7.01 REGULATION FD DISCLOSURE On October 19, 2006, at approximately 10:00 a.m., Eastern time, the Company hosted a conference call, and made available presentation materials (the "Presentation Materials") to be used by participants in connection with the conference call. The Presentation Materials are attached to this Current Report as Exhibit 99.1 and incorporated into this Item 7.01 by reference. The information contained in this Item 7.01, including the information set forth in the Presentation Materials filed as Exhibit 99.1 to, and incorporated in, this Current Report on Form 8-K, is being "furnished" and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section. The information in Exhibit 99.1 furnished pursuant to this Item 7.01 shall not be incorporated by reference into any registration statement or other documents pursuant to the Securities Act of 1933, as amended, or into any filing or other document pursuant to the Exchange Act except as otherwise expressly stated in any such filing. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (d) Exhibits. EXHIBIT NUMBER DESCRIPTION ------ ----------- 99.1 Presentation Materials for the Company's conference call on October 19, 2006.* * As described in Item 7.01 above of this Current Report on Form 8-K, this exhibit is "furnished" and not "filed" with this Current Report. 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE PENN TRAFFIC COMPANY By: /s/ Randy P. Martin ---------------------------- Name: Randy P. Martin Title: Senior Vice President Dated: October 19, 2006 3 EXHIBIT INDEX ------------- EXHIBIT DESCRIPTION - ------- ----------- 99.1 Presentation Materials for the Company's conference call on October 19, 2006.* * As described in Item 7.01 above of this Current Report on Form 8-K, this exhibit is "furnished" and not "filed" with this Current Report. EX-99 2 ex99-1form8k_101906.txt EXHIBIT 99.1 EXHIBIT 99.1 ------------ - ------------------------------------------------------------------------------- [GRAPHIC OMITTED] T H E P E N N T R A F F I C C O M P A N Y - ------------------------------------------------------------------------------- 1 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- THE PENN TRAFFIC COMPANY Good Morning, thank you for joining us. I am Bob Kelly, Chairman of the Board. Introduce: - Greg Young - Co-Chief Operating Officer - Bob Panasuk - Co-Chief Operating Officer - Randy Martin - Sr. VP Finance Please note we will have a question and answer session at the end of the presentation. - ------------------------------------------------------------------------------- 2 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- CAUTIONARY NOTE REGARDING FINANCIAL INFORMATION o The unaudited financial information included in this presentation has been derived from the Company's unaudited historical financial statements for the 39-week period ended January 28, 2006 and the 34-week period ended September 23, 2006. o The Company cautions that: (1) such financial information has not been included in any periodic report filed with the US Securities and Exchange Commission; (2) such financial information has not been audited and does not include footnotes or other supplemental disclosure that would otherwise be included in audited financial statements; (3) such financial information has not necessarily been prepared on a basis consistent with previously disclosed financial information; and - ------------------------------------------------------------------------------- 3 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- CAUTIONARY NOTE REGARDING FINANCIAL INFORMATION (4) no independent auditor has audited or reviewed any of the Company's financial statements since the end of its 2002 fiscal year, and therefore any adjustments that would have been reflected in the financial information included herein as a result of (x) the audits of the Company's financials for its prior four fiscal years may not have been made and (y) "fresh start" accounting adjustments reflecting the adjustments required as a result of the Company's emergence from bankruptcy proceedings under chapter 11 of the US Bankruptcy Code on April 13, 2005 may not have been made. As a result, such financial information may not accurately reflect what will ultimately be included in the Company's financial statements that will be filed with the US Securities and Exchange Commission for the periods set forth above and should not be relied upon. In addition, information with respect to any interim period is not necessarily indicative of results to be expected for the full fiscal year. - ------------------------------------------------------------------------------- 4 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements made or incorporated by reference in this presentation may constitute forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, as amended, reflecting management's current analysis and expectations, based on what management believes to be reasonable assumptions. These forward-looking statements include statements relating to our anticipated financial performance and business prospects. Statements preceded by, followed by or that include words such as "believe," "anticipate," "estimate," "expect," "could," and other similar expressions are to be considered such forward-looking statements. Forward-looking statements may involve known and unknown risks, uncertainties and other factors, which may cause the actual results to differ materially from those projected, stated or implied, depending on such factors as: the ability of the Company to improve its operating performance and effectuate its business plan; the ability of the Company to operate pursuant to the terms of its credit facilities and to comply with the terms of its lending agreements or to amend or modify the terms of such agreements as may be needed from time to time; - ------------------------------------------------------------------------------- 5 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS the ability of the Company to generate cash; the ability of the Company to attract and maintain adequate capital; the ability of the Company to refinance; increases in prevailing interest rates; the ability of the Company to obtain trade credit, and shipments and terms with vendors and service providers for current orders; the ability of the Company to maintain contracts that are critical to its operations; potential adverse developments with respect to the Company's liquidity or results of operations; general economic and business conditions; competition, including increased capital investment and promotional activity by the Company's competitors; availability, location and terms of sites for store development; the successful implementation of the Company's capital expenditure program; labor relations; labor and employee benefit costs including increases in health care and pension costs and the level of contributions to the Company sponsored pension plans; the ability of the Company to pursue strategic alternatives; economic and competitive uncertainties; changes in strategies; adverse changes in economic and political climates around the world, including terrorist activities and international hostilities; and - ------------------------------------------------------------------------------- 6 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS the outcome of pending, or the commencement of any new, legal proceedings against, or governmental investigations of, the Company, including the previously announced SEC and U.S. Attorney's Office investigations. The Company cautions that the foregoing list of important factors is not exhaustive. Accordingly, there can be no assurance that the Company will meet future results, performance or achievements expressed or implied by such forward-looking statements. The Company does not necessarily intend to update these factors. - ------------------------------------------------------------------------------- 7 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- COMPANY UPDATE o The Penn Traffic Company operates or supplies 233 stores in New York, Pennsylvania, Vermont and New Hampshire, which generates total revenues of approximately $1.3 billion (unaudited) for the 52-week period ended January 28, 2006 (Fiscal 2006). o The Company has three separate business units. - Corporate Retail Stores o 111 retail stores and 2 stand alone pharmacies.
o The breakdown is: CONVENTIONAL FRESH MARKETS ------------ ------------- - 61 P&C (63% of Sales) 52 9 - 29 Quality (22% of Sales) 22 7 - 21 BiLo (15% of Sales) 19 2
o They range from 7,700 to 72,000 Sq. Ft. o Our average store is 36,000 Sq. Ft. o For Fiscal 2006 revenues were approximately $1.038 billion (unaudited) or 80% of total revenues. - ------------------------------------------------------------------------------- 8 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- COMPANY UPDATE - Wholesale / Franchise o Currently supplying 122 independently operated supermarkets o 74 Franchise Stores o 48 Independent Wholesale Accounts o For Fiscal 2006 revenues were approximately $216 million (unaudited) or 17% of total revenues. - Bakery o We manufacture and distribute fresh and frozen bakery products to our corporate stores, wholesale and franchise stores, as well as other third party accounts. o For Fiscal 2006 revenues were approximately $29 million (unaudited) or 3% of total revenues. - ------------------------------------------------------------------------------- 9 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- COMPETITION o Penn Traffic's main competitors are: - Wal-Mart in all markets - Wegman's and Price Chopper in Syracuse - Wegman's in Buffalo and Erie - Giant Eagle & Weis in Pennsylvania - Shaw's and Hannaford in New England o We currently compete against 33 Wal-Mart supercenters affecting 56 corporate stores. 11 Wal-Mart supercenters have opened since we emerged from bankruptcy in April of 2005. o In addition, major competitors have also opened 17 stores since we emerged. o 1 additional store is expected to open during the balance of the year affecting 2 of our corporate stores. - ------------------------------------------------------------------------------- 10 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- COMPETITION o 7 Wal-Mart supercenters are expected to open during next calendar year affecting an additional 16 of our corporate stores. o We've opened 4 stores since we've emerged from bankruptcy and completed 25 remodels. o We closed 2 stores. - ------------------------------------------------------------------------------- 11 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- KEY POINTS OF INTEREST SINCE BANKRUPTCY o Penn Traffic has signed 17 of our 18 union contracts. Wages increased by approximately 3% and health and welfare rose an additional 10-15%. o The Company encountered a two week strike at our general merchandise and HBC warehouse in Jamestown NY. o The Chief Marketing Officer and VP of Non Perishables were terminated in February of 2006. o Our margins have been negatively impacted by a decision to abandon Demand-Tec, our price optimization solution and process at the beginning of calendar 2006. We've seen a decline in margins since that decision. o We have re-engaged Demand-Tec and its rollout is currently in process. We expect to begin to see some impact in the 4th quarter of Fiscal 2007 with full impact by April of Fiscal 2008. - ------------------------------------------------------------------------------- 12 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- KEY POINTS OF INTEREST SINCE BANKRUPTCY o The governmental investigation relating to the Company's promotional allowance practices and policies has cost the Company approximately $6.2 million. In addition another $3.5 million was paid to the Company's prior auditors. While we have completed our internal investigation, we have no indication when the SEC or the US Attorney General will conclude their investigations. o The Company is finalizing its review of allowance accounting with Alix Partners. Once this review is complete we plan to restate our financial statements for prior years. We do not currently expect that this will have a material impact on our financial statements. o Deloitte & Touche resigned as the Company auditors. o The Company has retained Eisner LLP to audit our financial statements. We plan to start with our balance sheet as of April 13, 2005 (the emergence date) and audit all the subsequent annual p&l's and balance sheets. o We plan to have a shareholders meeting after the audited financial statements are complete. o Greg and Bob will talk about our marketing and operating strategy after Randy reviews our unaudited financial statements. - ------------------------------------------------------------------------------- 13 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- T H E P E N N T R A F F I C C O M P A N Y UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS (In thousands of dollars, except per share data) 39-Weeks Ended January 28, 2006 ------------- REVENUES (1) $ 969,324 COSTS AND OPERATING EXPENSES: Cost of sales (including buying and occupancy costs) 719,380 Selling and administrative expenses (2) 244,023 Unusual item (3) 2,767 ------------- OPERATING INCOME 3,154 Interest expense 8,272 ------------- LOSS BEFORE INCOME TAXES (5,118) Benefit for income taxes (4) (3,085) ------------- NET LOSS $ (2,033) ============= NET (LOSS) PER SHARE (5) $ (0.25) ADJUSTED NET INCOME (6) $ 2,844 ADJUSTED NET INCOME PER SHARE (6) $ 0.35 --------------------------------------------------------------------------- SUPPLEMENTAL DATA (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) EBITDA (7) $ 25,673 Cash interest expense 7,205 - ------------------------------------------------------------------------------- 14 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- (1) Same store sales for the Company's supermarkets decreased 1.6% during the 39-week period ended January 28, 2006 from the comparable prior year period. At January 28, 2006 the Company operated 110 supermarkets with 3,960,861 total square feet. (2) Selling and administrative expenses include $2.1 million of costs incurred in connection with the governmental investigation relating to the Company's promotional and allowance practice and policies. (3) During the 39-week period ended January 28, 2006 the Company recorded an unusual item (expense) of approximately $2.8 million, which includes approximately $0.3 million of professional fees related to settling claims from bankruptcy and approximately $2.5 million related to a noncash fixed asset impairment write-down under SFAS 144. (4) The tax provisions for the 39-week period ended January 28, 2006 are not recorded at statutory rates due to differences between income calculations for financial reporting and tax reporting purposes. (5) Shares used in the calculation Earnings Per Share for the 39-week period ended January 28, 2006 were 8,279,800. This amount excludes shares to be issued in connection with outstanding bankruptcy claims. - ------------------------------------------------------------------------------- 15 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- (6) Adjusted Net Income reconciliation. Adjusted Net Income $ 2.8 Unusual Item (see Note 3) (2.8) SEC Investigation Fees (2.1) ----------- Net Income $ (2.0) (7) EBITDA reconciliation. EBITDA $ 25.7 Depreciation (18.3) LIFO (1.4) Unusual Item (see Note 3) (2.8) Interest (8.3) Taxes 3.1 ----------- Net Income $ (2.0) (8) Total capital expenditures for the 39-week period ended January 28, 2006 was $19.3 million. - ------------------------------------------------------------------------------- 16 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- T H E P E N N T R A F F I C C O M P A N Y UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS (In thousands of dollars, except per share data) 34-Weeks Ended September 23, 2006 --------------- REVENUES (1) $ 849,012 COSTS AND OPERATING EXPENSES: Cost of sales (including buying and occupancy costs) 635,010 Selling and administrative expenses (2) 211,236 Unusual item (3) 425 --------------- OPERATING INCOME 2,341 Interest expense 7,843 --------------- LOSS BEFORE INCOME TAXES (5,502) Benefit for income taxes (4) (2,020) --------------- NET LOSS $ (3,482) =============== NET (LOSS) PER SHARE (5) $ (0.42) ADJUSTED NET INCOME (6) $ 1,079 ADJUSTED NET INCOME PER SHARE (6) $ 0.13 ------------------------------------------------------------------------ SUPPLEMENTAL DATA (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) EBITDA (7) $ 19,790 Cash interest expense 6,992 - ------------------------------------------------------------------------------- 17 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- (1) Same store sales for the Company's supermarlcets decreased 1.7% during the 34-week period ended September 23,2006 from the comparable prior year period. At September 23,2006 the Company operated 111 supermarkets with 4,013,779 total square feet (2) Selling and administrative expense include $4.1 million of costs incurred in connection with the governmental investigation relating to the Company's promotional and allowance practice and policies. (3) During the 34-week period ended September 23, 2006 the Company recorded an unusual item (expense) of $0.4 million, which includes approximately $0.7 million of professional fees related to settling claims from bankruptcy offset by approximately $0.3 million of SFAS 87 pension income related to discontinued operations in Ohio. (4) The tax provisions for the 34-week period ended September 23,2006 are not recorded at statutory rates due to differences between income calculations for financial reporting and tax reporting purposes. (5) Shares used in the calculation of Earnings Per Share for the 34-week period ended September 23, 2006 were 8,279,800. This amount excludes shares to be issued in connection with outstanding bankruptcy claims. - ------------------------------------------------------------------------------- 18 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- (6) Adjusted Net Income reconciliation. Adjusted Net Income $ 1.1 Unusual Item (see Note 3) (0.4) SEC Investigation Fees (4.1) ----------- Net Income $ (3.5) (7) EBITDA reconciliation. EBITDA $ 19.8 Depreciation (16.2) LIFO (0.8) Unusual Item (see Note 3) (0.4) Interest (7.8) Taxes 2.0 ----------- Net Income $ (3.5) (8) Total capital expenditures for the 34-week period ended September 23, 2006 was $20.4 million. (9) At September 23, 2006 the Company's total debt (including capital leases) was $59.1 million. Excess availability as defined under the Company Credit Agreement was approximately $42.8 million at September 23, 2006. - ------------------------------------------------------------------------------- 19 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- T H E P E N N T R A F F I C C O M P A N Y UNAUDITED CONSOLIDATED BALANCE SHEET (In millions of dollars) September 23, 2006 ------------- ASSETS CURRENT ASSETS: Cash and short-term investments $ 28.1 Accounts and notes receivable 33.8 Inventories 102.0 Prepaid expenses and other current assets 10.1 ------------- 174.0 ------------- NONCURRENT ASSETS: Property, plant and equipment, amortizable assets and goodwill 183.9 Other assets and deferred charge 3.3 ------------- $ 361.2 ============= - ------------------------------------------------------------------------------- 20 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- T H E P E N N T R A F F I C C O M P A N Y UNAUDITED CONSOLIDATED BALANCE SHEET (In millions of dollars) September 23, 2006 -------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 3.9 Post-petition payables 54.1 Accrued wages and other current liabilities 33.0 Accrued interest expense 0.7 Payroll taxes and other taxable payable 5.0 -------------- 96.7 -------------- NONCURRENT LIABILITIES: Long-term debt 37.0 Long-term capital leases 18.3 Deferred income tax 27.4 Minimum Pension Liabilities 33.5 Workers Compensation Liabilities 15.9 Other non current liabilities 9.9 STOCKHOLDERS' EQUITY 122.5 -------------- $ 361.2 ============== - ------------------------------------------------------------------------------- 21 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- BOB PANASUK GREG YOUNG C H I E F O P E R A T I N G O F F I C E R S THE PLAN (WHAT'S IMPORTANT) RIGHT NOW! BUCKLE UP - ------------------------------------------------------------------------------- 22 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- C U R R E N T TACTICAL INITIATIVES (The RIGHT NOW Stuff) - ------------------------------------------------------------------------------- 23 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- SALES & MARGIN RIGHT NOW! TACTICAL INITIATIVES o Management / Culture o Removing Sales Impediments o Pricing - Promotional and Regular o Mix - Category Targets i.e. Candy o Private Label Plan o Prime Time Sales Initiative o Counter Wal-Mart Initiative o Sales Contest Reward System (AOS Initiative) - ------------------------------------------------------------------------------- 24 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- SALES & MARGIN RIGHT NOW! TACTICAL INITIATIVES o Competitive Offense & Defense Plan o Marketing Excellence o Market Segmentation o Store Operational Excellence o Store Merchandising Technique o Signature Product Sales Initiative o Fresh Market Learning / Testing / Roll Out o Co-Branding Opportunities - ------------------------------------------------------------------------------- 25 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- EXPENSE MANAGEMENT RIGHT NOW! TACTICAL INITIATIVES o Manager Advisory Council (MAC) o Operational Expense Analysis / Benchmarks o Aggressive E - Auction & Bidding Processes o Center Store & Fresh Shrink Initiative o Supplies Initiative o Labor - Fringe / Work Rules Management o Store P&L - Process & Education o Administrative staffing review o Non Value and Redundant Activity - ------------------------------------------------------------------------------- 26 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- EXPENSE MANAGEMENT RIGHT NOW! TACTICAL INITIATIVES o Energy Management opportunity review - Store & Distribution Opportunities o Transportation scheduling review - Logistical Efficiencies o Reclamation process management o Service Provider Contract / Cost Review - i.e. Maintenance, Uniforms, Cleaning, etc) o Car / Travel Expense Policies review - ------------------------------------------------------------------------------- 27 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- STRATEGIC FRAMEWORK o Management / Culture Change - Servant Leadership and Accountability o Human Resource Strategy Development o Organizational Effectiveness o Wholesale / Franchise Strategic Plan o Business Segment Profitability Analysis o Fresh Market Positioning o IT - Capabilities Analysis / Long Term Plan o Supply & Logistic Effectiveness o Real Estate Portfolio Review / Rationalization o Cash Management o 3 Year Strategic Plan - ------------------------------------------------------------------------------- 28 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- CASH MANAGEMENT Cash Management Strategy o Inventory Management Phase I & II o Accounts Payable (A/P) - Best Practice o Scan Based Trading (SBT) - Testing o Capital Expense Process - ------------------------------------------------------------------------------- 29 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- IN CONCLUSION o Much work needs to be done, but much is underway already o Sense of urgency is climbing rapidly o Management consistency is important - "Flavor of the week" is out / Focus is in o Accountability is being established - ------------------------------------------------------------------------------- 30 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- QUESTIONS AND ANSWERS - ------------------------------------------------------------------------------- 31 YOUR KIND OF STORE. [LOGOS OMITTED] - ------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----