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SYRACUSE, N.Y. - The Penn Traffic Company on Wednesday announced that second-quarter earnings fell. The retailer also restated financial results for the previous three years following an accounting fraud.
For the fiscal 2003 second quarter ended Aug. 3, net income was $2.7 million or $0.13 per diluted share compared to adjusted net income of $4.6 million or $0.23 per diluted share in the prior year's second quarter.
Net income in the prior year was adjusted to exclude amortization of excess reorganization value and, excluding this adjustment, the company reported a net loss of $22.9 million, or $1.14 per diluted share, in the prior year's second quarter.
EBITDA for the second quarter was $25.0 million compared to $28.3 million in the prior year.
Same store sales decreased 1.0 percent from the comparable prior year period. Revenues for the second quarter were $598.0 million, a decrease of approximately 2.2 percent from $611.4 million in the prior year.
"While we are not pleased with our financial results for the second quarter, we also understand that our performance reflects the difficult economic conditions nationwide, the persistence of a long period of little or no food inflation and the increased penetration of the retail food industry by alternative channels of trade," said Joseph V. Fisher, Penn Traffic's president and CEO. "These dynamics have caused sluggish sales in the supermarket industry and a challenging competitive environment during a period of escalating wage and benefit costs."
"We will continue to invest in our markets to maintain our market share which we believe will position the company best for an economic recovery," said Fisher. "As we recognized our sales softening during the quarter, we responded aggressively by investing additional sums in promotions."
On Aug. 8, Penn Traffic said it would restate financial results after discovering that an employee of its Penny Curtiss bakery manufacturing subsidiary made false accounting entries that primarily involved the overstatement of inventory over a period of about three-and-one-quarter years.
Penn Traffic, which runs more than 200 regional supermarkets, including Big Bear and Bi-Lo Foods, said on Wednesday the total cumulative after-tax effect of the misstatements over the 3-1/4 year period ended May 4, 2002 was $7.3 million. In addition, the restatement reduced operating income for the 21-week period ended June 26, 1999 by $1.1 million.