99 Cents Only Stores Reports First Quarter 2004 Earnings Per Share of $0.13 after a Provision for Estimated Litigation Settlement of $0.05 Per Share.Business Editors CITY OF COMMERCE, Calif.--(BUSINESS WIRE)--April 20, 2004 99 Cents Only Stores(R) (NYSE NYSE See: New York Stock Exchange :NDN NDN Indian NDN Naples Daily News (Daily news paper in Naples Florida) NDN Non Delivery Notification NDN National Data Network NDN Necdin NDN New Democratic Network NDN Next Door Neighbor NDN Nevada Donor Network ) reported first quarter net income per share of $0.13 on net income of $9.3 million compared to earnings per share in the first quarter of 2003 of $0.20 on net income of $14.6 million. Earnings per share for the quarter were impacted by $0.05 resulting from a reserve established for the settlement of the previously disclosed California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). class action wage and hour case, as described in Item 3 and Footnote Text that appears at the bottom of a page that adds explanation. It is often used to give credit to the source of information. When accumulated and printed at the end of a document, they are called "endnotes." 9 Commitments and Contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. to the Financial Statements in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed March 15, 2004. Earnings were also impacted $0.02 from results of the Company's Texas operation. President Eric ERIC Educational Research Information Clearinghouse ERIC Educational Resources Information Center ERIC ERISA Industry Committee ERIC Epidemiologic Research and Information Center (Durham, NC) Schiffer Schiffer is a German surname meaning "ship steerer". It may refer to:
The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; store sales have not improved sufficiently to absorb absorb To offset sell orders or a new security offering with buy orders. operating and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. . Results were also negatively affected by two store grand openings on the last day of the quarter. "We are new to Houston and our challenge has been to introduce our unique concept to this marketplace. Thus far, we have fallen short of our plan. However, we have identified specific sales and marketing strategies that we believe will have a beneficial impact on our Houston operation. The sales run rate for the initial Dallas Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. store opened this January January: see month. is comparable to the non-Texas new store average. "We are focused on and committed to making Texas a highly profitable region of stores. By June June: see month. , we plan to implement a new sales strategy in Texas, which we believe will help to increase sales and profits. This new merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. policy will allow us to better highlight the great values in our stores and to competitively offer more non-standard as well as standard sizes of commodity items. Of course, nothing will be sold for over 99 cents. "Additionally, to help improve sales, we recently revised our weekly Houston newspaper ad and initiated several direct mail advertising flyers for all stores outside of Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, , including Texas. We also recently rolled out to all of our stores two exciting new merchandising sections. "During 2004, we plan to grow our square footage by 25% by opening 48 new 99 Cents Only Stores, with approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 12 in Houston and 13 in Dallas, 17 in California, 5 in Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). and 1 in Nevada Nevada (nəvăd`ə, –vä–), far western state of the United States. It is bordered by Utah (E), Arizona (SE), California (SW, W), and Oregon and Idaho (N). . The Company opened 10 stores in the first quarter. One of these new stores, located in Northern California Northern California, sometimes referred to as NorCal, is the northern portion of the U.S. state of California. The region contains the San Francisco Bay Area, the state capital, Sacramento; as well as the substantial natural beauty of the redwood forests, the northern , achieved record sales for its first week of business. The Company plans to open 13 stores in the second quarter, 15 in the third quarter and 10 in the fourth quarter." Total net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight during the first quarter increased $33.6 million or 17.1% to $230.1 million. Retail sales increased $34.1 million or 18.5% to $218.8 million. Sales of grocery products and household items accounted for the majority of the growth. Same stores sales in the first quarter increased .2%. First quarter 2004 total gross margin was 39.8%, compared to 40.4% in 2003. Retail gross margin for the first quarter was 40.9%, versus 41.7% in 2003. This change primarily results from category mix shifts, with continued focus on grocery. Retail gross margin percent was negatively impacted by .4% due to the increase in the grocery sales mix sales mix See product mix. . Also volume variances on health and beauty care and on import items, including house-wares, had a .4% adverse impact on gross margin. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $13.7 million, or 5.9% of sales in the 2004 period versus $22.9 million in the 2003 period. Retail store expenses increased $9.7 million on the addition of 44 more stores over first quarter 2003. Distribution costs distribution costs distribute npl → Vertriebskosten pl increased $3.2 million. Distribution costs include $1.0 million for the Texas operation, a $0.9 million increase in delivery costs to the non-Texas stores outside of Southern California, $0.3 million of additional freight from the Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. DC to the Texas DC and a $1.0 million increase in labor in the Los Angeles distribution center. Other administrative costs increased $6.3 million, which includes a $6.0 million litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. reserve as mentioned above. As a percentage of net sales, operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased to 33.9% from 28.8% in 2003. Net income in the first quarter of 2004 decreased to $9.3 million on total sales of $230.1 million, compared to net income of $14.6 million on total sales of $196.4 million in 2003. Guidance for Q2, Q3 and Q4 2004 Total sales for the full year 2004, including wholesale sales, are projected in the range of $1.01 billion to $1.03 billion. Comparable store sales for the year are projected at 0% to 2%. The tax rate for 2004 as well as each quarter is estimated at 39.5%. Fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share count is projected at 74.0 million. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. for 2004 is reprojected to be in the range of $0.76 to $0.79 as a result of the above noted provision for estimated litigation settlement and for a revision to estimated annual sales for 2004. Total depreciation for 2004 is estimated in the range of $34 million to $36 million. Capital expenditures for 2004 are estimated to be in the range of $70 million to $80 million. Total sales for the second quarter, including wholesale, are projected in the range of $242.3 million to $247.3 million. Comparable store sales are projected at -1% to 1%. The company plans to open 13 stores in the second quarter. Total gross margin for the second quarter is projected in the range of 39.0% to 39.5%. Total SG&A expenses, including depreciation, are projected at 29.7% to 29.8%. Fully diluted share count is projected at 73.6 million and EPS for the second quarter is projected in the range of $0.19 to $0.20. Total sales for the third quarter, including wholesale, are projected in the range of $252.4 million to $257.5 million. Comparable store sales are projected at 1% to 2%. The company plans to open 15 stores in the third quarter. Total gross margin for the third quarter is projected in the range of 39.0% to 39.3%. Total SG&A expenses, including depreciation, are projected at 30.8% to 30.9%. Fully diluted share count is projected at 74.5 million and EPS for the third quarter is projected in the range of $0.17 to $0.18. Total sales for the fourth quarter, including wholesale, are projected in the range of $290.1 million to $295.0 million. Comparable store sales are projected at 1% to 3%. The company plans to open 10 stores in the fourth quarter. Total gross margin for the fourth quarter is projected in the range of 40.6% to 40.8%. Total SG&A expenses, including depreciation, are projected at 29.4% to 29.5%. Fully diluted share count is projected at 74.8 million and EPS for the fourth quarter is projected in the range of $0.27 to $0.28. The above estimated 2004 quarterly results do not reflect provision, if any, developing from any adverse outcome of other matters discussed in Footnote 9 Commitments and Contingencies to the Financial Statements in the Company's Form 10-K. A conference call to discuss this earnings release is scheduled for today, Tuesday Tuesday: see week. , April 20, 2004, at 8:00 AM Pacific Time. If you would like to participate in this conference call, please phone the Link conference call operator at 1-206-315-1857 about nine minutes before the call is scheduled to begin. A recorded version of the call will be made available four hours after completion of the call and will remain on-line for 7 days, until April 27, 2004. To access the recorded version, dial 1-913-383-5767, PASSCODE: 4071. 99 Cents Only Stores, the nation's oldest existing one-price retailer, operates 197 retail stores in California, Texas, Arizona and Nevada and a wholesale division called Bargain A reciprocal understanding, contract, or agreement of any sort usually pertaining to the loan, sale, or exchange of property between two parties, one of whom wants to dispose of an item that the other wants to obtain. Wholesale. 99 Cents Only Stores emphasizes name-brand consumables, priced at an excellent value, in attractively merchandised stores. The Company's first Fort Worth-area store will open this Thursday Thursday: see week. , April 22, in Colleyville, Texas Colleyville is a city in Tarrant County, Texas, United States. The population was 19,636 at the 2000 census. Geography Colleyville is located at (32.885062, -97.149233)GR1. . This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , as referenced in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 (the "Act"). Forward-looking statements are inherently unreliable and actual results may differ. Factors which could cause actual results to differ materially from these forward-looking statements include changes in the competitive market place, general economic conditions, factors affecting the retail industry in general, the timing of new store openings, the ability of the Company to identify and obtain leases for new stores, the ability of the Company to acquire inventory at favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. costs, and other factors discussed in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
99 CENTS ONLY STORES
STATEMENTS OF INCOME
(Amounts in thousands except per share amounts)
Three Months Ended March 31
(Unaudited)
2004 2003
---------------- ----------------
Net sales:
99 Cents Only Stores $218,812 95.1% $184,713 94.0%
Bargain Wholesale 11,238 4.9% 11,710 6.0%
--------- ------ --------- ------
230,050 100.0% 196,423 100.0%
Cost of sales 138,417 60.2% 117,025 59.6%
--------- ------ --------- ------
Gross profit 91,633 39.8% 79,398 40.4%
Selling, General and Administrative
Expenses:
Operating expenses 70,518 30.7% 51,349 26.2%
Depreciation 7,453 3.2% 5,134 2.6%
--------- ------ --------- ------
77,971 33.9% 56,483 28.8%
--------- ------ --------- ------
Operating income 13,662 5.9% 22,915 11.6%
Interest & other income (expense)
net 1,596 0.7% 1,194 0.6%
Income before income taxes 15,258 6.6% 24,109 12.2%
Provision for income taxes 5,973 2.6% 9,500 4.8%
--------- ------ --------- ------
Net income $9,285 4.0% $14,609 7.4%
========= ====== ========= ======
Basic earnings per share
Net income $0.13 $0.21
========= =========
Diluted earnings per share
Net income $0.13 $0.20
========= =========
Weighted average number of
Common shares outstanding:
Basic 72,064 70,469
Diluted 72,717 71,536
99 CENTS ONLY STORES
BALANCE SHEETS
(Unaudited)
(Amounts in thousands)
March 31, December 31, March 31,
2004 2003 2003
----------- ------------- ---------
ASSETS:
Cash $393 $318 $289
Short-term investments 135,921 145,670 140,429
Receivables, net 2,447 2,245 2,670
Due from shareholder - - 735
Income tax receivable - 841 -
Deferred income tax 15,927 15,927 11,927
Inventories 116,189 107,409 86,523
Other current assets 3,520 2,717 2,630
----------- ------------- ---------
Total current assets 274,397 275,127 245,203
Property and Equipment, net 204,840 202,565 157,811
Long-term investments 63,625 52,789 34,217
Other assets 18,292 22,757 18,921
----------- ------------- ---------
Total assets $561,154 $553,238 $456,152
=========== ============= =========
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Current portion of capitalized
lease $40 $40 $40
Accounts payable 14,889 27,903 13,381
Accrued expenses 19,552 12,963 9,536
Workers compensation 16,329 16,319 8,034
Income tax payable 4,255 - 6,907
Due to shareholder - - -
----------- ------------- ---------
Total current liabilities 55,065 57,225 37,898
Deferred rent 2,520 2,460 2,270
Capitalized lease obligation 1,542 1,553 1,586
Deferred compensation 2,279 2,114 1,220
----------- ------------- ---------
6,341 6,127 5,076
Shareholders' equity 499,748 489,886 413,178
----------- ------------- ---------
Total liabilities and
shareholders' equity $561,154 $553,238 $456,152
=========== ============= =========
99 CENTS ONLY STORES
STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
Quarter Ended
March 31,
2004 2003
-------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $9,285 $14,609
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 7,453 5,134
Tax benefit from exercise of non-
qualified employee stock options 193 847
Changes in assets and liabilities
associated with operating
activities:
Accounts receivable (202) 83
Inventories (8,780) (3,346)
Other assets 3,662 (273)
Accounts payable (13,014) (3,565)
Accrued expenses 6,589 (622)
Due from shareholder - 497
Workers' compensation 10 310
Income taxes 5,096 3,389
Deferred compensation 165 -
Deferred rent 60 60
Net cash provided by operating
activities 10,517 17,123
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (9,728) (35,385)
Sales (purchases) of short- and long-
term investments (1,087) 9,434
Investments in partnerships - 36
Net cash used in investing
activities (10,815) (25,915)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of capital lease
obligation (11) (11)
Proceeds from exercise of stock
options 384 1,107
Net cash provided by financing
activities 373 1,096
NET INCREASE (DECREASE) IN CASH 75 (7,696)
CASH, beginning of period 318 7,985
CASH, end of period $393 $289
Note to Editors: 99 Cents Only Stores(R) news releases and information available on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.99only.com. |
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