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SYRACUSE, N.Y.--(BUSINESS WIRE)--Sept. 13, 2001-- The Penn Traffic Company (Nasdaq: PNFT - news) today announced
that EBITDA for the second quarter of Fiscal 2002 (the 13-week period ended August 4, 2001) was $29.5 million, an increase of 16.4 percent over the prior year's adjusted $25.4 million level. The prior year's EBITDA has been adjusted to exclude $2.8 million of income associated with the Company's prior lease of 10 stores in New England to another supermarket chain which expired in August 2000 (the ``New England Lease'').
Adjusted net income was $5.3 million or $.26 per share in the second quarter of Fiscal 2002 compared to $2.6 million or $.13 per share in the prior year. Net income has been adjusted to exclude amortization of excess reorganization value in both years, and an unusual item and New England Lease income in Fiscal 2001. In accordance with the implementation of a new accounting standard, Penn Traffic does not expect to record the noncash charge, amortization of excess reorganization value, after Fiscal 2002.
Revenues for the second quarter of Fiscal 2002 increased approximately 2.8 percent to $644.3 million from $626.9 million in the prior year (adjusted to exclude New England Lease income). Same store sales for the second quarter increased 0.7 percent from the comparable prior year period.
``We are very pleased with our strong performance in the second quarter,'' said Joseph V. Fisher, Penn Traffic's President and Chief Executive Officer. ``We believe the improvement in our sales and profitability is a direct result of numerous marketing, merchandising
and cost reduction initiatives we have implemented over the past two years. We expect the Company to continue benefiting from these programs in future periods.
``Our continued progress in building sales and profitability results primarily from the efforts of our management and associates to pursue our business plan and improve our operations,'' said Mr. Fisher. ``There is no doubt that as an organization, we have made significant strides in how we run our company and serve the needs of our customers.
``I am particularly proud of the progress our management and associates continue to make in managing our cost structure,'' said Mr. Fisher. ``During the quarter, we decreased shrink expense, distribution costs and store labor costs. We used the savings from these and other cost reductions to improve profitability and increase the promotions that drive sales.
``Aided by technology we are implementing, we intend to keep improving in these areas,'' said Mr. Fisher. He cited two examples of technology being introduced that will help the company drive costs down further and manage Penn Traffic's business better: A nnew logistics system to schedule and route trucks more efficiently
New software to improve the efficiency of pharmacy operations.
Mr. Fisher also said that the 10 New England stores Penn Traffic resumed operating in August 2000 began contributing to the Company's EBITDA in the second quarter, which is earlier than the Company had expected.
``We are continuing to make investments to enhance the store facilities in our core markets,'' said Martin A. Fox, Penn Traffic's Executive Vice President and Chief
Financial Officer. Penn Traffic reported that since the beginning of the second quarter, it has completed 16 store remodels, including five in Columbus, Ohio; four in
Johnstown, Pennsylvania; and one each in Cooperstown, Penn Yan, Potsdam and Skaneateles, New York; Towanda and Wellsboro, Pennsylvania; and Circleville, Ohio.
``Since the completion of our financial restructuring approximately two years ago, we have now remodeled, enlarged or replaced 72 supermarkets, representing 37% of
our total square footage,'' said Mr. Fox. ``During this time, we have invested approximately $110 million to upgrade our store base and make improvements in our
distribution, manufacturing and technology infrastructure.''
Mr. Fox reported that before the end of the current fiscal year, Penn Traffic plans to upgrade another eight supermarkets, representing 5% of the Company's total
square footage, and begin work on three or four new or replacement stores set to open in 2002. In total, Penn Traffic plans to invest approximately $55 million in capital improvements during Fiscal 2002 (the 52-week period ending February 2, 2002).
Mr. Fisher also announced that Penn Traffic will roll out its loyalty card, ``The Wild Card,'' in its 150 P&C, Quality and Bi-Lo stores on September 16. The company will
now have the Wild Card in all of the supermarkets it operates.
``The Wild Card has been very successful in our 70 Big Bear stores in Ohio and West Virginia, and we anticipate that our customers in upstate New York, Pennsylvania, Vermont and New Hampshire will be equally enthusiastic about it,'' said Mr. Fisher. ``The Wild Card helps to increase both sales and customer loyalty by enabling us to focus our promotions on our best customers.''
Since Penn Traffic introduced the Wild Card to its 70 Big Bear stores, more than one million customers have signed up for the card. Penn Traffic estimates that it will
expend approximately $3 million to complete the rollout of the Wild Card, with all of these costs to be incurred before the end of the current fiscal year, primarily in the
Penn Traffic also indicated that in the third quarter and the second half of Fiscal 2002, it expects to achieve positive same store sales and growth in adjusted EBITDA
over the prior year's $21.7 million and $51.2 million levels, respectively. EBITDA adjustments include loyalty card start-up costs in both Fiscal 2001 and 2002 and costs
associated with the commencement of operation of the New England stores in Fiscal 2001.
``As a result of our solid operating performance and our balance sheet management programs, we ended the second quarter with only $307.4 million of total debt,'' said
Mr. Fox. ``We anticipate that after funding planned capital improvements and the rollout of the loyalty card this year, the Company's total debt level will be approximately equal to the $325 million balance it had at the beginning of Fiscal 2002.''