The Pantry, Inc. Completes Acquisition of Golden Gallon Convenience Store Chain

SANFORD, N.C., October 17, 2003 - The Pantry, Inc. (NASDAQ: PTRY), a leading convenience store retailer, today announced that it has completed the acquisition of 138 convenience stores operating under the Golden Gallon name from Ahold, USA, Inc. Golden Gallon, with $387 million of revenue, operates 90 stores in Tennessee and 48 stores in northwest Georgia. This acquisition adds to The Pantry's existing regional presence and brings the chain to a combined total of 1,395 stores operating in 10 states in the Southeastern United States. The purchase price was approximately $187 million for the Golden Gallon assets, which consisted of 138 operating stores, of which 131 are fee-owned stores, a dairy plant, a fuel hauling operation, corporate headquarters buildings and 25 undeveloped sites. The Pantry structured the acquisition as two simultaneous transactions whereby the real estate was purchased and financed through a $94.5 million sale/leaseback transaction for 114 of the fee-owned stores, while the Golden Gallon operations and the balance of the real estate assets were acquired for approximately $92.5 million. The Pantry funded the second portion of the transaction with $80 million of debt through an add-on to the Company's existing first lien loans and available cash of the Company. Simultaneous with the closing, The Pantry sold the dairy plant to National Dairy Holdings, and the fuel hauling assets to Eagle Transport, both existing suppliers to The Pantry.

"The Golden Gallon acquisition is another critical step in The Pantry's strategy of developing the premier southeastern convenience store chain with excellent geographic density and outstanding store facilities and locations," commented Peter J. Sodini, President and Chief Executive Officer of The Pantry, Inc. "We are excited about this opportunity because Golden Gallon is a well established chain of stores in the greater Chattanooga, Tennessee market that is an excellent strategic fit for The Pantry with our existing 14 stores in the Nashville, Tennessee market and 56 stores in the Gainesville, Georgia market. Further, the Golden Gallon stores are attractive, high volume stores with a good mix of interstate and residential locations. The combined concentration of stores in the Tennessee and Georgia market provides us the opportunity to capitalize on synergies of the combined group."

For the trailing twelve month period ended June 2003, Golden Gallon had revenue of approximately $387 million. The average Golden Gallon store sold 1.3 million gasoline gallons and $940,000 of merchandise during this period, higher than industry averages. The Company expects the impact of the Golden Gallon acquisition and related financing to be significantly accretive, contributing approximately $0.40 to $0.45 to earnings per share for fiscal 2004. Further, the transaction is leverage neutral to the Company without incorporating any synergies.

Mr. Sodini further commented, "With valuable experience gained in prior acquisitions, as of the closing, we were well into the integration phase of this transaction. We immediately integrated all store operating systems on day one. Our training of the store and field operations personnel was completed prior to the closing and they have been added to our existing regional management structure. We are very excited to have the Golden Gallon associates join The Pantry. Additionally, the Golden Gallon stores were immediately added to our existing major supply agreements. Further, we believe there is an opportunity to expand the quick service restaurant business and will continue to evaluate these and other merchandising opportunities over the next year. We anticipate achieving a total of $8 - $10 million of synergies within 12-24 months with approximately $4 - $5 million of synergies realized in our 2004 fiscal year."

Regarding the financing of the acquisition, Mr. Sodini added, "We appreciate the strong support and confidence we received from our existing lenders, with Wachovia Securities being the arranger for the bank financing and Realty Income (NYSE "0") providing the sale leaseback financing."

Conference Call

The Company will host a conference call discussing the acquisition that will be broadcast live over the Internet on Monday, October 20, 2003 at 11:30 a.m. (EST). The broadcast will be accessible at www.thepantry.com or www.companyboardroom.com and an online archive of the broadcast will be available within one hour of the completion of the call and will be accessible until October 27, 2003. Additionally, the Company will discuss the detailed financial results of fiscal 2003 as well as its expectations for 2004 on its regularly scheduled conference call on November 13, 2003.

About The Pantry

Headquartered in Sanford, North Carolina, The Pantry, Inc. is the leading convenience store operator in the Southeastern United States and one of the largest independently operated convenience store chains in the country. As of October 16, 2003, the Company operated 1,257 stores in ten southeastern states. These stores offer a broad selection of merchandise, gasoline and ancillary services designed to appeal to the convenience needs of its customers. For more information visit the "Corporate" section of the Company's Web site at www.thepantry.com.

Safe Harbor Statement

The Company wishes to take advantage of the Safe Harbor provisions included in the Private Securities Litigation Reform Act of 1995 (the "Act"). Statements made by the Company in this press release relating to the acquisition of Golden Gallon that are generally preceded by words or phrases such as "targets", "outlooks", "expects", "anticipates", "forecasted", "plans" and similar words or phrases constitute "forward-looking statements" within the meaning of the Act. These forward-looking statements are based on the Company's current plans and expectations and involve a number of risks and uncertainties that could cause actual results and events to vary materially from the results and events anticipated or implied by such forward-looking statements. Any number of factors could affect actual results and events, including, without limitation; the actual operations and financial results of Golden Gallon after the acquisition; the ability of the Company to supply Golden Gallon locations under its gasoline supply agreements; the ability of the Company to integrate the Golden Gallon assets into the Company's operations; the ability of the Company to take advantage of synergies expected to occur in connection with consummation of the acquisition of the assets of Golden Gallon; fluctuations in domestic and global petroleum markets; changes in the competitive landscape of the convenience store industry; the effect of national and regional economic conditions on the convenience store industry or our vendors or customers; consumer demand for our product offerings; gasoline demand; capital markets and the Company's access to capital; increases in interest rates; the effect of regional weather conditions on customer traffic; the effect of store closings; financial difficulties of suppliers; environmental risks associated with storing and selling petroleum products; the effect or impact of any announced and prospective Company initiatives; the business environment generally; Governmental regulations; acts of war or terrorist activity; and other risks and uncertainties described from time to time in our filings with the Securities and Exchange Commission (the "SEC"). For a discussion of these and other risks and uncertainties, please refer to the Company's reports and filings with the SEC.

In addition, the forward-looking statements included in this press release are based on, and include, the Company's estimates and plans as of October 17, 2003. The Company anticipates that subsequent events and market developments will cause its estimates and plans to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so.

CONTACT: The Pantry, Inc. Dan Kelly, 919-774-6700

SOURCE: The Pantry, Inc.

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