EX-99 2 ex99-1form8k_021507.txt EXHIBIT 99.1 EXHIBIT 99.1 ------------ -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- The Penn Traffic Company Shareholder Conference Call February 15, 2007 -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 1 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- INTRODUCTIONS ------------- o Chairman of the Board - Bob Kelly o President/CEO - Bob Panasuk o EVP/COO - Greg Young o Interim CFO - Ben Jones o VP, General Counsel - Dan Mahoney -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 2 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- AGENDA I. Introductions II. Progress to Date III. Update on Initiatives IV. Company Overview V. Financial Results VI. Q&A -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 3 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- 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 48-week period ended December 30, 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 (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. o 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. -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 4 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- 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; 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; -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 5 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS, continued 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 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. -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 6 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- MANAGEMENT'S PROGRESS o Management / Culture - Management Team changes - Accountability culture - Leadership Conference - Model Store process - Training & Development Plan - P&L education process o Allocation changes- ownership - Business process development/refinement - Union Engagement o Operational Structure Change - Store Operations - 1 SVP - Regions (4) - Zones (24) - Banners - One Company -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 7 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- MANAGEMENT'S PROGRESS o Real Estate, Construction, Maintenance Structure change - Consolidation of leadership - Business process change - CapEx standards o External Audit - Eisner LLC progress underway - resources o Internal Audit - Establishment of key metrics o Communication o Fiscal Year 08 Budget completion -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 8 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- MANAGEMENT'S PROGRESS o Facility Rationalization - Store closings - 7 (5 Grocery, 2 Rx) o Sales transfer - "Tool Box" o Wholesale opportunities - Office consolidation - Jamestown outsourcing/warehouse closing o Three year IT plan detailed o Business segment profitability analysis complete o Working Capital - Cash Management - Inventory management - Forecasting o Human Resource strategy in development -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 9 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- INITIATIVES UPDATE SALES & MARGIN o Pricing - Promotional & Regular - Demand Tec rollout is on track - Trade Point deployment is in start up phase - Private Label positioning improved - two tier o Sales impediments removed - Private Label plan in place - Under performing categories targeted for improvement - Sales contests scheduled - Marketing plan formalized- segmentation complete - Aggressive store reset program in motion - On going input from MAC - "Prime Time" program in process - Pharmacy Business Plan -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 10 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- INITIATIVES UPDATE SALES & MARGIN, continued o Competitive Response Plan - "Tool Box" is now in place - offense/defense - Operational improvements visible - Store merchandising improvements o Model Store program o Signature items o Conventional & Fresh o Co-Branding - Primary focus on Dunkin' Donuts - Friendly's opportunity - In Store Bank discussions -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 11 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- INITIATIVES UPDATE EXPENSE MANAGEMENT o Labor management - Forecasting improvements - Scheduling standards updated o Shrink management - Perishable shrink improvements - Center store progress - Sales building vs shrink control o Other Expense - Significant expense improvement - most areas - Administrative staff reductions - Analysis benchmarking complete for expense lines - E-Auction process in place for NFR and also COG savings - Reclamation changes in roll-out phase -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 12 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- INITIATIVES UPDATE CAPITAL EXPENDITURE PLAN o Five Major remodels o Nine Minor remodels o Sixteen Mini remodels o Store Equipment o POS - common platform o Finance, Merchandising software o EM&R budget - Funded by cash flow. - Forecasted and measured based on rigorous analysis. -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 13 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- COMPANY OVERVIEW o The Penn Traffic Company currently operates or supplies approximately 230 stores in New York, Pennsylvania, Vermont and New Hampshire. o Since October 2006, the Company has: - Closed 5 retail stores - Closed 2 stand-alone pharmacies and 4 in-store pharmacies - Announced the closure of a distribution center located in Jamestown, NY* ---------------------------------------------- Retail stores, as of 9/23/2006 12/30/2006 2/15/2007 ---------------------------------------------- P&C 53 50 50 Quality 22 22 21 BiLo 19 19 18 Fresh 17 18 17 ---------------------------------------------- Total 111 109 106 ---------------------------------------------- Pharmacies 39 35 33 Warehouses 5 5 4* -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 14 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- THE PENN TRAFFIC COMPANY UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS ($ in thousands, except per share data) --------------- 48-WEEKS ENDED 12/30/06 --------------- REVENUES $ 1,193,804 COSTS AND OPERATING EXPENSES Cost of Sales, including buying & occupancy costs 892,863 Selling and Administrative Expenses 297,535 Unusual Items (1) --------------- OPERATING INCOME 3,407 Reorganization Item 861 Interest Expense 9,687 --------------- LOSS BEFORE INCOME TAXES (7,141) Benefit from Income Taxes (2,514) --------------- NET LOSS BEFORE DISCONTINUED (4,627) Discontinued Operations (483) --------------- NET INCOME $ (4,144) =============== NET LOSS PER SHARE (0.50) ADJUSTED NET INCOME $ (1,077) ADJUSTED NET INCOME PER SHARE (0.13) -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 15 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- o As of December 30, 2006, the Company operated 109 supermarkets with 3,894,884 of total square feet. o Same store sales for the Company's stores for the 48-week period ended December 30, 2006 - 1.9%. o Selling and Administrative expense for the 48-week period ended December 30, 2006 included $4.2 million of costs incurred in connection with the governmental investigations related to the Company's promotional and allowance practices and $1.4 million of severance. o During the 48-week period ended December 30, 2006, the Company recorded a gain of approximately $1.2 million associated with the sale of certain of its pharmacies and a gain of approximately $1.7 million on the sale of its Big Bear warehouse. o Tax provisions for the 48-week period ended December 30, 2006 are not recorded at statutory rates due to differences between income calculations for financial reporting and tax reporting purposes. o Shares used in the calculation of earnings per share for the 48-week period ended December 30, 2006 were 8,279,800. This total excludes shares to be issued in connection with outstanding bankruptcy claims. -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 16 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- THE PENN TRAFFIC COMPANY UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS ($ in thousands, except per share data) --------------- --------------- 9-WEEKS 8-WEEKS ENDED 12/30/06 ENDED 12/24/06 --------------- --------------- REVENUES $ 224,955 $ 207,539 COSTS AND OPERATING EXPENSES Cost of Sales, including buying & occupancy costs 168,310 155,715 Selling and Administrative Expenses 54,525 51,742 Unusual Items - - --------------- --------------- OPERATING INCOME 2,119 82 Reorganization Item 92 263 Interest Expense 1,984 1,464 --------------- --------------- LOSS BEFORE INCOME TAXES 43 (1,646) Benefit from Income Taxes 39 40 --------------- --------------- NET LOSS BEFORE DISCONTINUED 4 (1,685) Discontinued (82) (201) --------------- --------------- NET INCOME $ 86 $ (1,484) =============== =============== NET LOSS PER SHARE 0.01 (0.18) ADJUSTED NET INCOME $ (373) ADJUSTED NET INCOME PER SHARE (0.05) -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 17 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- o As of December 30, 2006, the Company operated 109 supermarkets with 3,894,884 of total square feet. o Same store sales for the Company's stores for the 9-week period ended December 30, 2006 were -3.1%. o Selling and Administrative expense for the 9-week period ended December 30, 2006 included $0.1 million of costs incurred in connection with the governmental investigations related to the Company's promotional and allowance practices and $0.6 million of severance. o During the the 9-week period ended December 30, 2006, the Company recorded a gain of approximately $1.2 million associated with the sale of certain of its pharmacies. o Tax provisions for the 9-week period ended December 30, 2006 are not recorded at statutory rates due to differences between income calculations for financial reporting and tax reporting purposes. o Shares used in the calculation of EPS for the 9-week period ended December 30, 2006 were 8,279,800. This total excludes shares to be issued in connection with outstanding bankruptcy claims. -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 18 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- o RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME
------------------- -------------------- 48 WEEKS 9 WEEKS $ IN THOUSANDS ENDED 12/30/06 ENDED 12/30/06 =================== ==================== NET INCOME $ (4,144) $ 86 SEC Legal Costs 4,249 (60) Severance 1,436 611 Gain On Sale of Big Bear Warehouse (1,715) - Signing Bonus for New Mngmt 323 214 Gain on Sale of Rx Scripts (1,225) (1,225) ------------------- -------------------- ADJUSTED NET INCOME $ (1,077) $ (373) =================== ====================
o RECONCILIATION OF NET INCOME TO EBITDA
------------------- -------------------- 48 WEEKS 9 WEEKS $ IN THOUSANDS ENDED 12/30/06 ENDED 12/30/06 =================== ==================== NET INCOME $ (4,144) $ 86 Depreciation 23,498 4,741 LIFO 1,175 200 Professional Fees 872 92 Unusual Items (484) (82) Interest 9,686 1,984 Taxes (2,513) 39 ------------------- -------------------- EBITDA $ 28,090 $ 7,061 =================== ====================
-------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 19 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- THE PENN TRAFFIC COMPANY UNAUDITED CONSOLIDATED BALANCE SHEET ($ in millions, except per share data)
------------- ------------ AS OF AS OF 12/30/06 12/30/06 ------------- ------------ ASSETS LIABILITIES & STOCKHOLDERS' EQUITY CURRENT ASSETS CURRENT LIABILITIES ---------------------------------- --------------------------------------- Cash $ 38,636 Current Debt $ 309 Accounts Notes and Receivable 31,896 Current Portion of Capital Leases 3,453 Inventory 104,341 Accounts & Drafts Payable 44,995 Other Current Assets 8,357 Payroll & Other Accrued 34,199 ------------- Total Current Assets 183,230 Accrued Interest Expense 552 Payroll & Other Taxes Payable 3,717 ------------ NON-CURRENT ASSETS Total Current Liabilities 87,226 ---------------------------------- Capital Leases 9,988 Property, Plant & Equipment 127,604 NON-CURRENT LIABILITIES ------------------------------------- Goodwill, net 500 Long-Term Debt 52,443 Beneficial Leases, net 17,836 Long-Term Capital Leases 17,355 Reorganization Value, net 22,695 Deferred Income Taxes 26,866 Other Assets 2,631 Other Non-Current Liabilities 55,893 ------------- ------------ TOTAL LIABILITIES 239,783 TOTAL ASSETS $ 364,485 ============= Liabilities Subject to Compromise 2,834 TOTAL STOCKHOLDERS' EQUITY 121,868 ------------ TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 364,485 ============
-------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION 20 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- REBUILDING RIGHT NOW! -------------------------------------------------------------------------------- Q & A S E S S I O N -------------------------------------------------------------------------------- FY'08 ESTABLISHING A FIRM FOUNDATION --------------------------------------------------------------------------------