ITEM 2. PROPERTIES
All but 35 of the cafeterias, express units, and restaurants operated by the Company at June 30, 1998, were operated on premises held under long-term leases with differing provisions and expiration dates. The 35 cafeterias and restaurants not operated on premises held under long-term leases are owned. Leases provide for monthly rentals, typically computed on the basis of a fixed amount plus a percentage of sales. Most leases contain provisions permitting the Company to renew for one or more specified terms. These leases are scheduled to expire, exclusive of renewal provisions, as follows:
Reference is made to Note 5 of the Notes to Consolidated Financial Statements for certain additional information regarding the Company's leases.
The Company's maintenance program provides for remodels of existing properties generally on ten year cycles. All equipment is maintained and modernized as necessary to maintain appearance and utility. The list below provides a general geographic review of the locations of the Company's operations at June 30, 1998:
The Company utilizes generally standardized building configurations for its new cafeterias and restaurants in terms of seating, food display, preparation areas, and other factors and attempts to build out floor space to maximize efficient use of available space.
The Company continues to pursue strategies to increase the capacity and utilization of its cafeterias. The Company is converting its "order pick-up" counters to Piccadilly Express hot counters where the physical facilities are conducive to doing so. The new counters allow customers to view and select their choices rather than simply ordering to go items from a menu. This delivery system increases the number of take-out orders that can be filled at peak order times.
Piccadilly's corporate headquarters occupy approximately two-thirds of a Company-owned 45,000 square foot office building completed in 1974 and located on a Company-owned tract comprising approximately five acres in Baton Rouge, Louisiana. The remainder of the building is leased to commercial tenants.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to and does not have any property that is the subject of any legal proceedings pending or, to the knowledge of management, threatened, other than ordinary routine litigation incidental to its business and proceedings which are material or as to which management believes the Company does not have adequate insurance.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 4(a). EXECUTIVE OFFICERS OF THE REGISTRANT
Executive officers are elected annually by the Board of Directors and hold office until a successor is duly elected. The names and positions of executive officers of the Registrant, together with a brief description of the business experience of each such person during the past five years, is set forth below.
W. Scott Bozzell, Vice President and Controller, age 35, has held such positions since July 1996. From May 1992 to July 1996 he was Vice President and Assistant Controller. Prior to that he was Assistant Controller.
Frederick E. Fuchs Jr., Executive Vice President and Director of Real Estate, age 51, has held such positions since June 1986.
Jere W. Goldsmith Jr., Executive Vice President and Director of Training, age 52, has held such positions since July 1995. Mr. Goldsmith previously served in this capacity from May 1987 to February 1992. From February 1992 to July 1995 he was Executive Vice President and Region Manager.
J. Fred Johnson, age 47, Executive Vice President, Treasurer, and Chief Financial Officer, has held such positions since November 1995. From August 1985 through October 1995 he was with Graphic Industries, Inc., a printing company, in various capacities, including Chief Financial Officer and Treasurer.
Ronald A. LaBorde, age 42, President and Chief Executive Officer, has held such positions since June 1995. From January 1992 to May 1995 he was Executive Vice President, Treasurer and Chief Financial Officer. Prior to that he was Executive Vice President, Secretary, and Controller.
D. Thomas Landry, Executive Vice President and Director of Maintenance, Construction and Design, age 46, has held such positions since May 1992. From July 1990 to May 1992 he was Vice President and Director of Maintenance.
Robert P. Listen, Executive Vice President and Director of Technical Services, age 50, has held such positions since December 1992. From July 1987 to November 1992 he was Executive Vice President and District Manager.
Mark L. Mestayer, Executive Vice President, Secretary, and Director of Finance, age 40, has held such positions since July 1996. From May 1992 to July 1996, he was Executive Vice President, Secretary and Controller. From January 1992 to May 1992, he was Vice President and Controller. Prior to that, he was Vice President and Controller, Ralph & Kacoo's.
Joseph S. Polito, Executive Vice President and General Manager, age 56, has held such positions since July 1995. From October 1992 to July 1995, he was Executive Vice President and Director of Training. From 1987 to October 1992 he was Executive Vice President and District Manager.
Patrick R. Prudhomme, Executive Vice President and Region Manager, age 46, has held such positions since February 1992. From January 1989 to February 1992 he was Vice President and District Manager, Ralph & Kacoo's.
C. Warriner Siddle, Executive Vice President and Director of Development, age 47, has held such positions since July 1995. From February 1992 to July 1995 he was Executive Vice President and Region Manager. From October 1984 to February 1992 he was Executive Vice President and District Manager.
Donovan B. Touchet, Executive Vice President and Director of Data Processing, age 49, has held such positions since June 1988.
Brian G. Von Gruben, Executive Vice President and Director of Administrative Services, age 50, has held such positions since May 1987.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
Information regarding Common Stock market prices and dividends, on the inside cover of the Annual Shareholders Report for the year ended June 30, 1998, is incorporated herein by reference.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
"Selected and Other Financial Data", on page 13 of the Annual Shareholders Report for the year ended June 30, 1998, is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations, on pages 14 through 16 of the Annual Shareholders Report for the year ended June 30, 1998, is incorporated herein by reference.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements and supplementary data, included on pages 17 through 27 of the Annual Shareholders Report for the year ended June 30, 1998, are incorporated herein by reference:
Consolidated balance sheets as of June 30, 1998 and 1997
Consolidated statements of income for the fiscal years ended June 30, 1998, 1997 and 1996
Consolidated statements of changes in shareholders' equity for the fiscal years ended June 30, 1998, 1997 and 1996
Consolidated statements of cash flows for the fiscal years ended June 30, 1998, 1997 and 1996
Notes to consolidated financial statements
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
In accordance with General Instruction G (3) to Form 10-K, Items 10, 11, 12, and 13 have been omitted since the Company has filed with the Commission a definitive proxy statement complying with Regulation 14A relating to its 1998 annual meeting and involving the election of directors not later than 120 days after the close of its fiscal year. The Company incorporates by reference the information in response to such items set forth in its definitive proxy statement.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements--The following are incorporated herein by reference in this Annual Report on Form 10-K from the indicated pages of the Registrant's Annual Shareholders Report for the year ended June 30, 1998:
(2) Schedules--The following consolidated schedules and information are included in this annual report on Form 10-K on the pages indicated. All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
(3) Listing of Exhibits - See sub-section (c) below.
(b) On June 5, 1998, the Company filed a report on Form 8-K related to its purchase of Morrison Restaurants, Inc. Financial statements and pro-forma financial information related to the acquired business were subsequently filed by amendment on Form 8-K/A on August 11, 1998.
(c) EXHIBITS
2. Plan and Agreement of Merger dated April 22, 1998, among Piccadilly, Purchaser and Morrison.(1)
3. (a) Articles of Incorporation of the Company(2), as amended on September 14, 1987(3) as amended on September 27, 1988(4), and as amended on September 28, 1989(5).
(b) By-laws of the Company, as amended through July 22, 1996(6).
10. (a) Piccadilly Cafeterias, Inc. 1993 Incentive Compensation Plan(7).
(b) Form of Management Continuity Agreement, effective March 27, 1995, unless otherwise indicated, between Piccadilly Cafeterias, Inc. and each of Messrs. LaBorde, Bozzell, Fuchs, Goldsmith, Johnson (November 16, 1995), Landry, Listen, Mestayer, Polito, Prudhomme, Siddle, Touchet, and Von Gruben(6).
(c) Form of Director Indemnity Agreement, effective April 27, 1995, unless otherwise indicated, between Piccadilly Cafeterias, Inc. and each of Messrs. LaBorde, Francis (September 25, 1995), Guyton (July 1, 1996), Murrill, Redman (September 25, 1995), Simmons and Smith(6).
(d) Agreement between Piccadilly Cafeterias, Inc. and Ronald A. LaBorde, effective June 26, 1995(6).
(e) Form of Agreement, effective August 1, 1995, between Piccadilly Cafeterias, Inc. and each of Malcolm T. Stein, Jr. and James E. Durham, Jr. (6).
(f) $125,000,000 Credit Agreement dated as of June 24, 1998 and First Amendment to Credit Agreement dated July 31, 1998 filed herewith on pages 11 through 129.
13. The Registrant's Annual Report to Shareholders for the fiscal year ended June 30, 1998.
21. List of Subsidiaries of the Registrant
23. Consent of Independent Auditors
27. Financial Data Schedule.
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(1) Incorporated by reference from Exhibit (c) (1) to the Company's Schedule 14D-1 dated April 29, 1998.
(2) Incorporated by reference from the Registrant's Registration Statement on Form S-1 (Registration No. 2-63249) filed with the Commission on December 19, 1978.
(3) Incorporated by reference from the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1987.
(4) Incorporated by reference from the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1988.
(5) Incorporated by reference from the Registrant's Annual Report on Form 10-K, as amended, for the fiscal year ended June 30, 1989.
(6) Incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996.
(7) Incorporated by reference from the Company's Annual Report on Form 10-K, as amended, for the fiscal year ended June 30, 1993.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Piccadilly Cafeterias, Inc. ----------------------------------------- (Registrant)
By: /s/ Ronald A. LaBorde ------------------------------------- Ronald A. LaBorde President and Chief Executive Officer
Date: September 24, 1998 -----------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(A) Deductions are for the write-off of certain property, plant and equipment relating to units closed and for the payment of other obligations (primarily rent) for those units closed and for those units for which a provision for unit closing was recorded during the years ended June 30, 1992, 1996 and 1998. During 1997, the Company reduced its accrued liability for rental and other occupancy costs associated with these properties by $600,000 as a result of a favorable change in management's estimate of future sublease income.
(B) Represents reserves for Morrison units which were recorded as part of the allocation of purchase price.
EXHIBIT INDEX
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(1) Incorporated by reference from Exhibit (c) (1) to the Company's Schedule 14D-1 dated April 29, 1998.
(2) Incorporated by reference from the Registrant's Registration Statement on Form S-1 (Registration No. 2-63249) filed with the Commission on December 19, 1978.
(3) Incorporated by reference from the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1987.
(4) Incorporated by reference from the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1988.
(5) Incorporated by reference from the Registrant's Annual Report on Form 10-K, as amended, for the fiscal year ended June 30, 1989.
(6) Incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996.
(7) Incorporated by reference from the Company's Annual Report on Form 10-K, as amended, for the fiscal year ended June 30, 1993.