American Eagle Outfitters Announces Restatement Due to Lease Accounting.WARRENDALE, Pa. -- American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Eagle Outfitters, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :AEOS AEOS American Eagle Outfitters Inc. (stock symbol) AEOS Advanced Electro-Optical System (3.67 meter adaptive optical telescope on Maui) AEOS Advanced Electro Optical Sensor ) today announced a restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of prior period financial statements due to changes in its accounting practices related to leasing transactions. As disclosed in its March 2, 2005 preliminary earnings release, the Company, like many other retailers, determined that its method of accounting for rent holidays and tenant allowances was not in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the views expressed by the Securities and Exchange Commission regarding generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . As the Company previously stated, it believes that the earnings impact of these changes is not material to any given period. The primary impact of these changes on the Company's January January: see month. 29, 2005 balance sheet is an increase to property and equipment and accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying of approximately $67 million, as well as a corresponding increase to a deferred lease credit. The primary impact of these changes on the Company's January 31, 2004 balance sheet is an increase to property and equipment and accounts receivable of approximately $64 million, as well as a corresponding increase to a deferred lease credit. Historically, the Company has recognized straight line rent expense for leases beginning on the store opening date. This had the effect of excluding the build-out Build-out is an urban planner’s estimate of the amount and location of potential development for an area. Build-out is one step of the land use planning process. Evaluation of potential development impacts begins with a build-out analysis. period of its stores from the calculation of the period over which it expenses rent and recognizes construction allowances. The Company is now changing this practice to include the build-out period in our calculations of rent expense and construction allowance amortization. Additionally, the Company is changing its classification of construction allowances on its consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge to record them as deferred liabilities, which will be amortized as a reduction to rent expense. Furthermore, construction allowances will be presented within operating activities on its consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of cash flows. Historically, construction allowances have been classified on the Company's consolidated balance sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. as a reduction of property and equipment and the related amortization has been classified as a reduction to depreciation and amortization expense (over the lesser of the useful life or the life of the lease) on the consolidated statements of operations. The Company's consolidated statements of cash flows have historically reflected construction allowances as a reduction of capital expenditures within investing activities. The Company, along with its independent auditors Independent Auditor An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report. Notes: These auditors aren't affiliated with the company being audited. , has completed its review of the respective accounting policies. As a result, Management determined that a restatement of its consolidated balance sheets, statements of stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. , statements of operations and statements of cash flows is deemed necessary and that those previously issued financial statements should no longer be relied upon. The Company will file a Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. reporting these restatements under Item 4.02 and will file its restated financial statements within its fiscal year 2004 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. filing as well as its fiscal year 2005 Form 10-Q Form 10-Q See 10-Q. filings. Additionally, the Company updated its consolidated financial results for the fourth quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. periods ended January 29, 2005 and January 31, 2004 as presented below to reflect these changes. American Eagle Outfitters (NASDAQ:AEOS) is a leading lifestyle retailer that designs, markets, and sells its own brand of relaxed, casual clothing for 15 to 25 year olds, providing high-quality merchandise at affordable prices. AE's collection includes modern basics like jeans, cargo pants cargo pants or trousers Noun, pl loose trousers with a large external pocket on the side of each leg , and graphic Ts as well as a stylish Stylish is a free Mozilla extension that allows for the manipulation of web pages and XUL application user interfaces through the use of CSS or user styles available localy or from centralized web-site [1], which allows style sharing. assortment assortment /as·sort·ment/ (ah-sort´ment) the random distribution of nonhomologous chromosomes to daughter cells in metaphase of the first meiotic division. as·sort·ment n. of cool accessories, outerwear and footwear Footwear consists of garments worn on the feet. It is worn for a variety of reasons, including protection against the environment, hygiene and adornment. Usually, socks and other hosiery are worn between the feet and the footwear, except for sandals and flip flops (thongs). . American Eagle Outfitters currently operates 778 AE stores in 49 states, the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). and Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. , and 69 AE stores in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . AE also operates via its Web business, www.ae.com, which offers additional sizes and styles of favorite AE merchandise.
AMERICAN EAGLE OUTFITTERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
January 29, January 31,
2005 2004
-------------- -----------
(Unaudited)(1) (1)
ASSETS
Cash, cash equivalents and short-term
investments $ 589,607 $ 337,812
Merchandise inventory 137,991 120,586
Other current assets 100,042 72,302
--------------- -----------
Total current assets 827,640 530,700
--------------- -----------
Property and equipment, net 353,213 340,955
Goodwill, net 10,136 10,136
Other assets, net 103,913 50,623
--------------- -----------
Total Assets $ 1,294,902 $ 932,414
=============== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 76,344 $ 71,330
Accrued compensation and payroll
taxes 36,008 14,409
Accrued rent 45,089 40,668
Accrued income and other taxes 33,926 28,669
Unredeemed stored value cards and
gift certificates 32,724 25,785
Current portion of note payable - 4,832
Current portion of deferred lease
credits 9,798 10,261
Other current liabilities 19,376 13,025
--------------- -----------
Total current liabilities 253,265 208,979
--------------- -----------
Note payable - 13,874
Deferred lease credits 57,758 53,936
Other non-current liabilities 20,393 18,248
--------------- -----------
Total non-current liabilities 78,151 86,058
--------------- -----------
Total stockholders' equity 963,486 637,377
--------------- -----------
Total Liabilities and
Stockholders' Equity $ 1,294,902 $ 932,414
=============== ===========
Current Ratio 3.27 2.54
(1) Amounts as of January 29, 2005 and January 31, 2004 have been
updated from those disclosed in the Company's preliminary earnings
release dated March 2, 2005 to reflect the impact of certain lease
accounting adjustments.
AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and shares in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
-------------------------- --------------------------
January 29, January 31, January 29, January 31,
2005 2004 2005 2004
-------------- ----------- -------------- -----------
(Unaudited)(1) (1) (Unaudited)(1) (1)
Net sales $ 674,024 $ 490,580 $ 1,881,241 $ 1,435,436
Cost of sales,
including
certain buying,
occupancy and
warehousing
expenses 341,647 299,800 1,003,433 885,939
-------------- ----------- -------------- -----------
Gross profit 332,377 190,780 877,808 549,497
Selling, general
and
administrative
expenses 142,386 105,782 446,829 356,261
Depreciation and
amortization 18,304 15,704 68,273 59,965
-------------- ----------- -------------- -----------
Operating income 171,687 69,294 362,706 133,271
Other income,
net 3,343 469 4,129 2,016
-------------- ----------- -------------- -----------
Income before
income taxes 175,030 69,763 366,835 135,287
Provision for
income taxes 68,086 26,953 142,603 52,179
-------------- ----------- -------------- -----------
Income from
continuing
operations,
net of tax 106,944 42,810 224,232 83,108
Loss from
discontinued
operations,
net of income
tax benefit (6,027) (7,816) (10,889) (23,486)
-------------- ----------- -------------- -----------
Net income $ 100,917 $ 34,994 $ 213,343 $ 59,622
============== =========== ============== ===========
Basic per share
amounts (post-
split):
Income from
continuing
operations $ 0.73 $ 0.30 $ 1.55 $ 0.59
Loss from
discontinued
operations (0.04) (0.05) (0.08) (0.17)
-------------- ----------- -------------- -----------
Net income per
basic share $ 0.69 $ 0.25 $ 1.47 $ 0.42
============== =========== ============== ===========
Diluted per
share amounts
(post-split):
Income from
continuing
operations $ 0.70 $ 0.29 $ 1.49 $ 0.57
Loss from
discontinued
operations (0.04) (0.05) (0.07) (0.16)
-------------- ----------- -------------- -----------
Net income per
diluted share $ 0.66 $ 0.24 $ 1.42 $ 0.41
============== =========== ============== ===========
Weighted average
common shares
outstanding -
basic
(post-split) 147,094 142,358 145,150 142,226
Weighted average
common shares
outstanding -
diluted
(post-split) 153,402 144,502 150,244 144,414
----------------------------------------------------------------------
Total gross
square footage
at end of
period: 4,540,095 4,239,497
Store count at
end of period: 846 805
----------------------------------------------------------------------
(1) Amounts for the three and twelve months ended January 29, 2005 and
January 31, 2004 have been updated from those disclosed in the
Company's preliminary earnings release dated March 2, 2005 to reflect
the impact of certain lease accounting adjustments.
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