2008-07-29 05:00:00
Mothers Work Reports Third Quarter Fiscal 2008 Earnings
Company Also Announces $7 Million Stock Repurchase Program
PHILADELPHIA, July 29 /EMWNews/ -- Mothers Work, Inc.
(Nasdaq: MWRK), the world's leading maternity apparel retailer, today
announced operating results for the third quarter of fiscal 2008 ended June
30, 2008, and announced that its Board of Directors approved a program to
repurchase up to $7 million of the Company's outstanding common stock.
Net income for the third quarter of fiscal 2008 was $4.1 million, or
$0.68 per common share (diluted), compared to net income for the third
quarter of fiscal 2007 of $1.0 million, or $0.17 per common share
(diluted). The Company's earnings per share were in line with the Company's
updated diluted earnings per share guidance, provided in its July 10, 2008
press release, of between $0.66 and $0.70 per share. During June 2008, the
Company prepaid $8 million principal amount of its senior secured Term Loan
due March, 2013, which resulted in an after-tax charge of $0.01 per share
in the third quarter of fiscal 2008. During April 2007, the Company
redeemed the remaining $90 million principal amount of its outstanding
11-1/4% Senior Notes, which resulted in an after-tax charge of $0.73 per
share in the third quarter of fiscal 2007. Net income before the debt
repurchase charge for the third quarter of fiscal 2008 was $4.2 million, or
$0.69 per common share (diluted), compared to the net income before the
debt repurchase charge for the third quarter of fiscal 2007 of $5.5
million, or $0.90 per common share (diluted).
Net income for the first nine months of fiscal 2008 was $3.4 million,
or $0.56 per common share (diluted), compared to net income for the first
nine months of fiscal 2007 of $5.0 million, or $0.81 per common share
(diluted). Net income before debt repurchase charges for the first nine
months of fiscal 2008 was $3.5 million, or $0.57 per common share
(diluted), compared to net income before debt repurchase charges for the
first nine months of fiscal 2007 of $10.7 million, or $1.74 per common
share (diluted). The debt repurchase charge for the first nine months of
fiscal 2008, of $0.01 per share after tax, resulted from the Company's
prepayment of $5 million of its outstanding Term Loan in March 2008 and the
prepayment of $8 million of its outstanding Term Loan in June 2008. The
debt repurchase charge for the first nine months of fiscal 2007, of $0.94
per share after tax, resulted from the Company's redemption of $25 million
of its Senior Notes in December 2006 and the redemption of the remaining
$90 million of its Senior Notes in April 2007.
Net sales for the third quarter of fiscal 2008 decreased 0.7% to $152.2
million from $153.2 million for the third quarter of fiscal 2007. The
decrease in sales versus last year resulted primarily from a decrease in
sales from our leased department and licensed relationships, largely due to
a decrease in Sears leased department sales, as well as reduced sales
volume from the ongoing closure of certain underperforming stores,
substantially offset by an increase in comparable store sales and increased
internet sales. Comparable store sales increased 2.4% during the third
quarter of fiscal 2008 (based on 989 locations) versus a comparable store
sales decrease of 8.2% during the third quarter of fiscal 2007 (based on
1,393 locations). For the quarter ended June 30, 2008, the Company opened
seven stores, including three Destination Maternity(R) Superstores, and
closed 12 stores, including seven store closings related to multi-brand
store openings. As of the end of June 2008, the Company operates 761
stores, 294 leased department locations and 1,055 total retail locations,
compared to 787 stores, 812 leased department locations and 1,599 total
retail locations operated at the end of June 2007. The decrease in leased
department locations at the end of June 2008 versus the end of June 2007
reflects the closure of the remaining leased departments within Sears
stores during the month of June 2008, as compared to the 516 Sears leased
departments operated by the Company at the end of June 2007. Adjusted
EBITDA was $14.1 million for the third quarter of fiscal 2008, a 12.6%
decrease from the $16.1 million of Adjusted EBITDA for the third quarter of
fiscal 2007. Adjusted EBITDA is defined in the financial tables at the end
of this press release.
Net sales for the first nine months of fiscal 2008 decreased 2.6% to
$434.1 million from $445.6 million for the same nine months of the
preceding year. The decrease in sales versus last year resulted primarily
from a decrease in sales from our leased department and licensed
relationships, largely due to a decrease in Sears leased department sales,
as well as reduced sales volume from the ongoing closure of certain
underperforming stores and a decrease in comparable store sales, partially
offset by increased internet sales. Comparable store sales decreased 0.6%
during the first nine months of fiscal 2008 (based on 842 locations) versus
a comparable store sales decrease of 4.1% during the first nine months of
fiscal 2007 (based on 1,365 locations). During the nine months ended June
30, 2008, the Company opened 24 stores, including five multi-brand stores,
and closed 44 stores, with 16 of these store closings related to
multi-brand store openings. During the nine months ended June 30, 2008, the
Company also closed the 501 leased department locations within Sears(R)
stores, pursuant to mutual agreement with Sears. As we have previously
disclosed, our relationship with Sears ended in June, 2008, resulting in
the closure of our leased departments within Sears stores. Adjusted EBITDA
was $27.1 million for the first nine months of fiscal 2008, a 31.7%
decrease from the $39.6 million of Adjusted EBITDA for the first nine
months of fiscal 2007.
Since March 19, 2008, the Company has prepaid $13 million of its
outstanding Term Loan, including $8 million prepaid on June 19, 2008. At
June 30, 2008, the Company's indebtedness under the Term Loan Agreement was
$75.9 million, there were no outstanding borrowings under the credit
facility and the Company had approximately $49 million of availability
under the credit facility.
On July 29, 2008 the Company announced that its Board of Directors
approved a program to repurchase up to $7 million of the Company's
outstanding common stock. Under the program, the Company may repurchase
shares from time to time through solicited or unsolicited transactions in
the open market or in negotiated or other transactions. The program will be
in effect until the end of July 2010.
Rebecca Matthias, President and Chief Creative Officer of Mothers Work,
noted, "We are pleased with our strong sales performance for June and for
the third quarter, despite the continued weak overall economic and retail
environment, as we continue to anniversary weaker sales results from a year
ago and continue to refine our merchandise assortments and our in-store
merchandise presentation. Our sales for the third quarter of $152.2 million
were within our guidance range of $150.0 million to $153.5 million provided
in our April 23, 2008 press release, with our comparable store sales
increase of 2.4% for the quarter within our guidance range of an increase
of 1.0% to 3.5% for the quarter.
"As we announced in our July 1, 2008 strategic restructuring press
release, we are streamlining our merchandise brands and store nameplates
and have implemented cost reductions in order to simplify our business
model, reduce our overhead costs and improve and tighten our merchandise
assortments to drive the best possible results during this difficult
economic period and for the long term. We expect to realize approximately
$5 million of annualized expense savings from these actions, beginning in
the fourth quarter of fiscal 2008, and expect to incur pre-tax expense of
approximately $0.9 million from these actions, with approximately $0.7
million of this expense expected to be recorded in the fourth quarter of
fiscal 2008 and approximately $0.2 million expected to be recorded in the
first quarter of fiscal 2009. Pursuant to our strategic restructuring, we
will re-brand our Mimi Maternity(R) merchandise brand under our A Pea in
the Pod(R) brand beginning with the Spring 2009 collection, which will
debut beginning in November 2008. We also plan to streamline our store
nameplates by January 2009, by renaming our single-brand Mimi Maternity
stores as A Pea in the Pod, and by renaming our multi-brand Mimi Maternity
stores as Destination Maternity. We feel strongly that the strategic
restructuring and streamlining of our merchandise brands and store
nameplates will help improve our long-term profitability by simplifying our
brand structure, reducing our cost structure, and leveraging both our
renowned A Pea in the Pod luxury brand and our growing multi-brand
Destination Maternity store brand.
"As of June 30, 2008, we have 41 two-brand Mimi combo stores, 3 triplex
stores, and 18 Destination Maternity Superstores. The Mimi combo and
triplex stores will be renamed as Destination Maternity by January 2009, as
part of our restructuring. We believe there is a significant opportunity to
expand our multi-brand Destination Maternity store concepts, which we
believe will generate higher sales per store and improved store operating
profit margins by reducing store expense percentages through the efficiency
of operating one larger store rather than multiple smaller stores in a
single market. In addition, in certain cases, we believe our Destination
Maternity store concepts will increase overall sales in the geographical
markets they serve. Opening our Destination Maternity Superstores will
typically involve closing two or more smaller stores and may frequently
result in one-time store closing costs resulting primarily from early lease
terminations. We opened four Destination Maternity Superstores in fiscal
2008, and are targeting to open one additional Superstore in fiscal 2008.
We are the only national retailer that is solely focused on maternity, and
we are further differentiating ourselves as the ultimate maternity
destination with these large, well- assorted, "must visit" multi-brand
Destination Maternity store concepts.
"Over the past several years, we have increased the sales we generate
from our leased department and licensed relationships, and we are committed
to continuing this important part of our business and seeking ways to
profitably expand it over the long term. We are the exclusive maternity
apparel provider to Kohl's(R) through a licensed relationship, and have
leased department relationships with Macy's(R), Babies "R" Us(R),
Boscov's(R), and Gordmans(R). As we announced in September 2007, our
relationship with Sears ended in June 2008. While we are disappointed about
the end of our relationship with Sears, we feel the decision not to proceed
with a renewal was in the best interest of our stockholders since we were
unable to reach terms on a renewal which would be favorable for Mothers
Work and our stockholders. As we have previously stated, we are focused on
generating sales that also generate an adequate return on investment and
help us to increase shareholder value-we are not interested in generating
sales that do not help deliver shareholder value. We believe that we
continue to have the opportunity to profitably increase the sales we
generate from our leased department and licensed relationships over time.
We believe these growth opportunities include additional maternity apparel
department locations with our current partners as well as developing
relationships with new partners. Our continued commitment to this strategy
of expanding our leased department and licensed relationships is also
demonstrated by our new leased department relationships rolled out during
fiscal 2007 with Boscov's and Gordmans, two regional department store
chains.
"In addition, although we currently do not have any international sales
other than in Canada, we do believe there is a significant opportunity to
develop international sales beyond Canada, and we are actively analyzing
and evaluating some of these opportunities. We feel confident that the
strength of our brands and product offerings and our unmatched overall
expertise in maternity apparel will enable us to build significant
international sales volume over time. We anticipate that our initial
international strategy will include licensing or similar arrangements with
foreign partners.
"We believe our customers, particularly first-time parents, are
entering a new life stage that drives widespread changes in purchasing
needs and behavior, thus making our maternity customer a highly-valued
demographic for a range of consumer products and services companies. We
have been able to leverage the relationship we have with our customers to
earn incremental revenues, and we aim to expand these revenues over time
through a variety of marketing partnership programs utilizing our extensive
opt-in customer database and various in-store marketing initiatives, which
help introduce our customers to various baby and parent-related products
and services offered by leading third-party consumer products and services
companies.
"Also, we continue to expand futuretrust(R), our MasterCard(R)-based
college savings program that we market through our stores and our internet
sites. The futuretrust program enables members to help save for their
child's (or grandchild's or any other relative's or friend's) college
education when they link their futuretrust MasterCard to a tax-advantaged
529 College Savings account. Members earn rebates on all purchases with
their futuretrust MasterCard that are automatically contributed to their
529 College Savings account and can also earn additional college savings at
merchants in the futuretrust Preferred Merchant Network. We have entered
into relationships with select providers of 529 savings programs, tax
preparation services, home mortgages and real estate services for our
futuretrust members and, in the future, we anticipate further developing
our futuretrust program into a full service financial services and
information resource for our members known as the Futuretrust Family
Financial Center(TM). We anticipate that additional potential services
offered through the Futuretrust Family Financial Center may include online
banking, life insurance and other financial services needed by families
with children. We plan to offer such services through relationships with
high-quality third-party providers of these services.
"As for our outlook for the rest of fiscal 2008, we are optimistic
about seeing continued improvement in our sales trend as we anniversary
weaker sales results from a year ago, and continue to refine our
merchandise assortments and our in-store merchandise presentation. We have
seen a strong improvement in our sales trend in the third quarter compared
to our sales performance in the first six months of fiscal 2008, as we have
seen more seasonal temperatures compared to a year ago and we began to
anniversary much weaker sales results from a year ago. Based on our sales
results thus far in July, we expect our comparable store sales for the full
month of July to be in the range of up 2.0% to 3.5%.
"For the fourth quarter of fiscal 2008, we are projecting net sales in
the $130.5 million to $134.4 million range, based on an assumed comparable
store sales increase of 1.0% to 4.0% for the quarter. Based on this
targeted net sales, we are projecting fourth quarter earnings per common
share (diluted) of between a loss of $(0.30) and $(0.46) per share,
significantly better than last year's fourth quarter diluted loss of
$(0.92) per share. Before debt repurchase and restructuring charges, we are
projecting fourth quarter earnings per share (diluted) of between a loss of
$(0.23) and $(0.39) per share.
"We are projecting net sales for fiscal 2008 in the $564.5 million to
$568.5 million range, representing a sales decrease of approximately down
2.2% to 2.9% versus fiscal 2007, based on an assumed comparable store sales
change of between down 0.3% and up 0.5% for the full fiscal year, as well
as decreased sales from our leased department and licensed relationships,
including the negative sales impact of the discontinuation of our Sears
relationship during the third quarter of fiscal 2008.
"Our projected sales for fiscal 2008 reflect our plan to open
approximately 28 to 29 new stores during the year, including approximately
6 to 7 new multi-brand stores, and our plan to close approximately 53 to 55
stores, with approximately 18 to 19 of these planned store closings related
to openings of new multi-brand stores, including our Destination Maternity
Superstores. Excluding the closure of all of the 501 Sears leased
department locations that we operated on September 30, 2007, we plan to
modestly increase the number of our leased department locations with our
existing leased department partners during fiscal 2008. In addition, we
distribute our Oh Baby by Motherhood(TM) collection through a licensed
arrangement at Kohl's stores throughout the United States and on Kohls.com.
Kohl's currently operates 957 stores in 47 states, compared to 834 stores
in 46 states a year ago.
"We project that our gross margin for fiscal 2008 will be approximately
50.3% of net sales, a decrease from our 51.6% gross margin in fiscal 2007,
due to increased markdowns to help manage our inventory level, product cost
inflation pressures, which are being felt throughout the apparel industry,
as well as from spreading product overhead costs over a smaller sales
volume. We continue to aggressively control our expenses, including the $5
million annualized reduction of our overhead costs expected to result from
our July 1, 2008 strategic restructuring. We expect our operating expenses
for fiscal 2008 to be several million dollars lower than fiscal 2007.
However, with our lower planned sales volume for fiscal 2008 versus fiscal
2007, we expect our operating expenses as a percentage of net sales for
fiscal 2008 to be flat to slightly higher versus fiscal 2007.
"Based on these assumptions, we are projecting operating income for
fiscal 2008 in the $8.3 million to $10.0 million range, compared to our
fiscal 2007 operating income of $18.7 million, and we are projecting
Adjusted EBITDA in the $28.9 million to $30.6 million range, compared to
our fiscal 2007 Adjusted EBITDA of $38.6 million. Also, based on these
assumptions, we are projecting diluted earnings per common share of between
$0.10 and $0.27 per share for fiscal 2008, compared to our $0.87 diluted
earnings per share before debt repurchase charges for fiscal 2007 and our
reported loss per share of $(0.07) per share for fiscal 2007. This earnings
guidance range is consistent with our previous guidance range for fiscal
2008 diluted earnings per share of between $0.05 and $0.36 per share
provided in our April 23, 2008 press release. Before debt repurchase and
restructuring charges, we are targeting diluted earnings per share of
between $0.18 and $0.35 per share for fiscal 2008. Of course, our ability
to achieve these targeted results will depend, among other factors, on the
overall retail, economic, political and competitive environment.
"We are planning our fiscal 2008 capital expenditures to be between $16
and $17 million. Our fiscal 2008 capital expenditures are primarily for new
store openings, expanding and relocating selected stores, store
remodelings, and some continued investment in our management information
systems and for continued distribution center automation. We expect our
inventory at fiscal 2008 year end to be less than fiscal 2007 year end,
despite generating significantly less sales than originally planned, as we
continue to tightly plan our inventory levels relative to sales and
recognize the impact of the sell-off of the inventory related to the Sears
business due to the non-renewal of the Sears relationship. Based on these
targets and plans, we expect to generate positive free cash flow during
fiscal 2008.
"We are very pleased with the reduction of our debt and ongoing
interest expense over the past two years. During fiscal 2007, we reduced
the Company's debt balance by approximately $25 million and completed the
redemption of the remaining $90 million principal amount of our Senior
Notes through a new, lower interest Term Loan financing. We have prepaid
$13 million of our Term Loan since March 2008 and we have repaid nearly $50
million of total debt in the last 24 months. We have $75.9 million of
outstanding Term Loan principal at June 30, 2008. Although we have had and
expect to have modest credit line borrowings from our $65 million credit
facility at times during fiscal 2008, reflecting seasonal and other timing
variations in cash flow as well as our use of funds for the $13 million
Term Loan prepayments, we did not have any outstanding credit line
borrowings at the end of the third quarter of fiscal 2008 and expect to
have none at the end of fiscal 2008. We had approximately $49 million of
availability under our credit facility at June 30, 2008. Our average level
of borrowings under our credit facility was $5.3 million during the first
nine months of fiscal 2008.
"We are also pleased to announce that our Board has authorized a share
repurchase program of up to $7 million. Over the past two years, we have
been very focused on deleveraging our balance sheet through debt
prepayment. However, we also believe that, at current market prices, our
shares represent an attractive investment opportunity, and we believe that
an investment in our own stock is a very appropriate one. While our
priority remains continued deleveraging through additional potential
prepayments of our Term Loan, this authorized share repurchase program
gives us excellent flexibility, indicates our continued commitment to
increase shareholder value, and reflects our continued confidence in our
generation of free cash flow despite a challenging overall economic
environment.
"As we look forward to fiscal 2009, we recognize it is very difficult
to project sales in this relatively volatile economic and retail
environment. Nonetheless, based on reasonable sales assumptions, we expect
to generate significantly higher earnings in fiscal 2009 than in fiscal
2008, while generating strong free cash flow. If our comparable store sales
change for fiscal 2009 were in the range of down 1% to up 1%, we project
that our fiscal 2009 net sales would be approximately $556 to $566 million
and our reported fiscal 2009 diluted earnings per share would be between
$0.60 and $1.00, a significant increase from our projected earnings range
for fiscal 2008. Before debt repurchase and restructuring charges, diluted
earnings per share would be between $0.63 and $1.03 per share for fiscal
2009. Based on this assumed comparable store sales range, operating income
for fiscal 2009 would be in the $11.8 to $15.8 million range, and Adjusted
EBITDA (representing operating income before certain non-cash charges)
would be in the $30.6 to $34.6 million range. Of course, our ability to
achieve these targeted results will depend, among other factors, on the
overall retail, economic, political and competitive environment.
"In fiscal 2009, we plan to open approximately 15 to 25 new stores,
including 5 to 10 new multi-brand Destination Maternity stores (both
Destination Maternity Superstores and smaller Destination Maternity combo
stores), and we plan to close approximately 45 to 55 stores, with
approximately 10 to 15 of these planned store closings related to openings
of new multi-brand Destination Maternity stores. We are planning our fiscal
2009 capital expenditures to be between $13 million and $15 million,
primarily for new store openings, expanding and relocating selected stores,
store remodelings, and continued investment in our management information
systems and for continued distribution center automation. After deducting
projected tenant construction allowance payments to us from store
landlords, we expect our net cash outlay for capital projects to be between
$10 million and $11 million. With respect to inventory, we are planning to
decrease overall inventory levels from our projected inventory at the end
of fiscal 2008. Based on these targets and plans, we expect to generate
strong free cash flow during fiscal 2009, which would enable us, first and
foremost, to continue to deleverage through additional potential debt
prepayments, while also enabling us to make potential stock repurchases."
As announced previously, the Company will hold a conference call today
at 9:00 a.m. Eastern Time, regarding the Company's third quarter fiscal
2008 earnings, future financial guidance, and certain business initiatives.
You can participate in this conference call by calling (210) 234-0026.
Please call ten minutes prior to 9:00 a.m. Eastern Time. The passcode for
the conference call is "Mothers Work." In the event that you are unable to
participate in the call, a replay will be available through Tuesday, August
12, 2008 by calling (800) 839-1334.
Mothers Work is the world's largest designer and retailer of maternity
apparel, using its custom TrendTrack(TM) merchandise analysis and planning
system as well as its quick response replenishment process to "give the
customer what she wants, when she wants it." As of June 30, 2008, Mothers
Work operates 1,055 maternity locations, including 761 stores,
predominantly under the tradenames Motherhood Maternity(R), A Pea in the
Pod(R), Mimi Maternity(R), and Destination Maternity(R), and sells on the
web through its DestinationMaternity.com and brand-specific websites. In
addition, Mothers Work distributes its Oh Baby by Motherhood(TM) collection
through a licensed arrangement at Kohl's(R) stores throughout the United
States and on Kohls.com.
The Company cautions that any forward-looking statements (as such term
is defined in the Private Securities Litigation Reform Act of 1995)
contained in this press release or made from time to time by management of
the Company, including those regarding expected net sales, comparable store
sales, free cash flow or other results of operations, liquidity and
financial condition, expense savings, potential debt prepayments, potential
stock repurchases, and various business initiatives, involve risks and
uncertainties, and are subject to change based on various important
factors. The following factors, among others, in some cases have affected
and in the future could affect the Company's financial performance and
actual results and could cause actual results to differ materially from
those expressed or implied in any such forward-looking statements: our
ability to successfully manage our various business initiatives, our
ability to successfully manage and retain our leased department and
licensed relationships and marketing partnerships, future sales trends in
our existing store base, unusual weather patterns, changes in consumer
preferences and spending patterns, demographics and other macroeconomic
factors that may impact the level of spending for maternity apparel,
overall economic conditions and other factors affecting consumer
confidence, the impact of competition and fluctuations in the price,
availability and quality of raw materials and contracted products,
availability of suitable store locations, continued availability of capital
and financing, ability to hire and develop senior management and sales
associates, ability to develop and source merchandise, ability to receive
production from foreign sources on a timely basis, potential stock
repurchases, potential debt prepayments, changes in market interest rates,
war or acts of terrorism, unusual weather patterns and other factors set
forth in the Company's periodic filings with the Securities and Exchange
Commission, or in materials incorporated therein by reference.
MOTHERS WORK, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Third Quarter Ended Nine Months Ended
-------------------- -------------------
6/30/08 6/30/07 6/30/08 6/30/07
-------- -------- -------- --------
Net sales $152,224 $153,227 $434,105 $445,568
Cost of goods sold 74,022 72,105 214,255 211,336
-------- -------- -------- --------
Gross profit 78,202 81,122 219,850 234,232
Selling, general and
administrative
expenses 69,557 70,055 208,474 208,668
-------- -------- -------- --------
Operating income 8,645 11,067 11,376 25,564
Interest expense, net 1,711 2,043 5,435 7,965
Loss on extinguishment of
debt 59 7,330 97 9,423
-------- -------- -------- --------
Income before income
taxes 6,875 1,694 5,844 8,176
Income tax provision 2,738 661 2,449 3,189
-------- -------- -------- --------
Net income $4,137 $1,033 $3,395 $4,987
======== ======== ======== ========
Net income per share -
basic $0.69 $0.18 $0.57 $0.86
======== ======== ======== ========
Average shares outstanding
- basic 5,956 5,838 5,915 5,789
======== ======== ======== ========
Net income per share -
diluted $0.68 $0.17 $0.56 $0.81
======== ======== ======== ========
Average shares outstanding
- diluted 6,049 6,140 6,039 6,168
======== ======== ======== ========
Supplemental information:
Net income, as reported $4,137 $1,033 $3,395 $4,987
Add: loss on
extinguishment of debt,
net of tax 36 4,471 59 5,748
-------- -------- -------- --------
Adjusted net income,
before loss on
extinguishment of
debt 4,173 5,504 3,454 10,735
Add: stock compensation
expense, net of tax 399 333 1,086 936
-------- -------- -------- --------
Adjusted net income,
before loss on
extinguishment of
debt and stock
compensation expense $4,572 $5,837 $4,540 $11,671
======== ======== ======== ========
Adjusted net income per
share - diluted, before
loss on extinguishment
of debt $0.69 $0.90 $0.57 $1.74
======== ======== ======== ========
Adjusted net income per
share - diluted, before
loss on extinguishment
of debt and stock
compensation expense $0.76 $0.95 $0.75 $1.89
======== ======== ======== ========
Selected Consolidated Balance Sheet Data
(in thousands)
(unaudited)
June 30, September 30, June 30,
2008 2007 2007
------- ----------- -------
Cash and cash equivalents $8,522 $10,130 $7,393
Inventories 95,209 100,485 97,998
Property, plant and
equipment, net 66,589 68,651 71,237
Line of credit borrowings - - -
Long-term debt 77,838 91,646 92,064
Stockholders' equity 93,255 88,523 94,097
Supplemental Financial Information
Reconciliation of Operating Income to Adjusted EBITDA(1)
and Operating Income Margin to Adjusted EBITDA Margin
(in thousands, except percentages)
(unaudited)
Third Quarter Ended Nine Months Ended
-------------------- --------------------
6/30/08 6/30/07 6/30/08 6/30/07
-------- -------- -------- --------
Operating income $8,645 $11,067 $11,376 $25,564
Add: depreciation &
amortization expense 3,922 4,056 11,879 11,868
Add: loss on impairment of
long-lived assets 393 559 1,339 949
Add: loss (gain) on disposal
of assets 457 (129) 695 (292)
Add: stock compensation
expense 654 544 1,780 1,534
-------- -------- -------- --------
Adjusted EBITDA(1) $14,071 $16,097 $27,069 $39,623
======== ======== ======== ========
Net sales $152,224 $153,227 $434,105 $445,568
======== ======== ======== ========
Operating income margin
(operating income as a
percentage of net sales) 5.7% 7.2% 2.6% 5.7%
Adjusted EBITDA margin
(Adjusted EBITDA as a
percentage of net sales) 9.2% 10.5% 6.2% 8.9%
(1) Adjusted EBITDA represents operating income before deduction for the
following non-cash charges: (i) depreciation & amortization expense;
(ii) loss on impairment of long-lived assets; (iii) (gain) loss on
disposal of assets; and (iv) stock compensation expense.
Reconciliation of Net Income (Loss) Per Share - Diluted
to Adjusted Net Income (Loss) Per Share - Diluted,
Before Loss on Extinguishment of Debt, Restructuring Expense
and Stock Compensation Expense
(unaudited)
Projected for the Actual for the
Fourth Quarter Fourth Quarter
Ending Ended
9/30/08 9/30/07
---------------- --------------
Net loss per share - diluted $(0.46) to (0.30) $(0.92)
Add: per share effect of loss on
extinguishment of debt - -
Add: per share effect of restructuring
expense 0.07 -
---------------- --------------
Adjusted net loss per share - diluted,
before loss on extinguishment of debt
and restructuring expense (0.39) to (0.23) (0.92)
Add: per share effect of stock
compensation expense 0.07 0.06
---------------- --------------
Adjusted net loss per share - diluted,
before loss on extinguishment of debt,
restructuring expense and stock
compensation expense $(0.32) to (0.16) $(0.86)
================ ==============
Projected for the Actual for the
Year Ending Year Ended
9/30/08 9/30/07
---------------- --------------
Net income (loss) per share - diluted $0.10 to 0.27 $(0.07)
Add: per share effect of loss on
extinguishment of debt 0.01 0.94
Add: per share effect of restructuring
expense 0.07 -
---------------- --------------
Adjusted net loss per share - diluted,
before loss on extinguishment of debt
and restructuring expense 0.18 to 0.35 0.87
Add: per share effect of stock
compensation expense 0.24 0.21
---------------- --------------
Adjusted net income per share - diluted,
before loss on extinguishment of debt,
restructuring expense and stock
compensation expense $0.42 to 0.59 $1.08
================ ==============
Projected for the
Year Ending
9/30/09
----------------
Net income per share - diluted $0.60 to 1.00
Add: per share effect of loss on
extinguishment of debt 0.01
Add: per share effect of restructuring
expense 0.02
----------------
Adjusted net income per share - diluted,
before loss on extinguishment of debt
and restructuring expense 0.63 to 1.03
Add: per share effect of stock
compensation expense 0.22
----------------
Adjusted net income per share - diluted,
before loss on extinguishment of debt,
restructuring expense and stock
compensation expense $0.85 to 1.25
================
Reconciliation of Operating Income to Adjusted EBITDA
(in millions, unaudited)
Projected for the Actual for the
Year Ending Year Ended
9/30/08 9/30/07
---------------- --------------
Operating income $8.3 to 10.0 $18.7
Add: depreciation & amortization expense 16.1 16.4
Add: loss on impairment of long-lived
assets and (gain) loss on disposal
of assets 2.1 1.4
Add: stock compensation expense 2.4 2.1
---------------- --------------
Adjusted EBITDA $28.9 to 30.6 $38.6
================ ==============
Projected for the
Year Ending
9/30/09
----------------
Operating income $11.8 to 15.8
Add: depreciation & amortization expense 15.2
Add: loss on impairment of long-lived
assets and (gain) loss on disposal
of assets 1.3
Add: stock compensation expense 2.3
----------------
Adjusted EBITDA $30.6 to 34.6
================
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