American Eagle Outfitters Reports Third Quarter Earnings.Business Editors WARRENDALE, Pa.--(BUSINESS WIRE)--Nov. 13, 2003 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: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 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: financial results for the third quarter ended November November: see month. 1, 2003: Third Quarter Ended November 1, 2003 -- Total sales decreased 0.2% to $373.8 million from $374.5 million for the quarter ended November 2, 2002. -- Sales for the third quarter 2003 included $22.8 million from the Bluenotes/Thriftys operation, compared to $21.7 million for the corresponding period last year. -- Comparable store sales for the American Eagle Outfitters stores declined 10.4% for the quarter ended November 1, 2003. -- Consolidated comparable store sales, which include American Eagle and Bluenotes/Thriftys stores, declined 10.3% when compared to the corresponding period last year. -- Reported net income for the quarter decreased to $10.1 million, or $0.14 per share on a 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. basis. Reported net income includes a non-cash goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge of $8.0 million, or $0.11 per share on a diluted basis. -- During the quarter ended November 1, 2003, the Company recognized an $8.0 million estimate for a non-cash goodwill impairment charge related to the Bluenotes The Bluenotes was a low cost Canadian brand was established in 1984, and has developed into Canada's leading denim retailer. Bluenotes were Thrifty's at clothing store chain and thrived in the 1980s and 1990s when teens and young adults who did not want to shop at their parent's segment due to continuing poor performance at this division. The Company has retained a third party to provide an independent valuation and will adjust the estimated impairment charge based on the valuation results in the fourth quarter. -- Adjusted net income(1) for the quarter, which excludes a non-cash goodwill impairment charge, decreased to $18.1 million, or $0.25 per share on a diluted basis, from net income of $27.1 million, or $0.37 per share on a diluted basis last year. Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. for the Nine Months Ended November 1, 2003 -- Total sales increased 3.2% to $1.003 billion from $971.6 million for the nine months ended November 2, 2002. -- Sales for the nine months ended November 1, 2003 included $57.9 million from the Bluenotes/Thriftys operation, compared to $58.0 million for the corresponding period last year. -- Comparable store sales for the American Eagle Outfitters stores declined 7.4% when compared to the same nine month period last year. -- Consolidated comparable store sales, which include American Eagle and Bluenotes/Thriftys stores, declined 7.6% when compared to the corresponding period last year. -- Reported net income for the year-to-date period decreased to $24.6 million, or $0.34 per share on a diluted basis. Reported net income includes a non-cash goodwill impairment charge of $8.0 million, or $0.11 per share on a diluted basis. -- Adjusted net income(1) for the year-to-date period, which excludes a non-cash goodwill impairment charge, decreased to $32.6 million, or $0.45 per share on a diluted basis from net income of $49.9 million, or $0.68 per share on a diluted basis last year. The Company stated that November month-to-date comparable store sales have declined in the low single-digits. Sales trends have improved since October October: see month. with more seasonable Within a reasonable time; timely. The term seasonable is usually used in connection with the performance of contractual obligations that must be completed "seasonably." The facts and circumstances of each case define a reasonable period of time. weather, the Company's clearance CLEARANCE, com. law. The name of a certificate given by the collector of a port, in which is stated the master or commander (naming him) of a ship or vessel named and described, bound for a port, named, and having on board goods described, has entered and cleared his ship or vessel sale and the holiday floorset. (1) A complete definition and discussion of the Company's use of non-GAAP measures, identified by (1), is located below. At 9:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy , on November 13, 2003, the Company's management team will host a conference call to review the financial results. To listen to the call, dial 877-601-0864 at least ten minutes prior to the start of the call. The conference call will also be simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics broadcast over 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.ae.com. A replay will be available beginning November 13th at 1:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. through November 27th. To listen to the replay, dial 1-800-642-1687 and reference confirmation code #3119592. An audio replay of the conference call will also be available at www.ae.com until February February: see month. 23, 2004. American Eagle Outfitters (Nasdaq:AEOS) is a leading lifestyle retailer that designs, markets, and sells its own brand of casual, fashion-right clothing for 15-25 year olds, providing high-quality merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain at affordable prices. AE's collection includes modern basics like jeans, surplus, 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, 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). and swimwear. AE's Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. subsidiary, Bluenotes/Thriftys, targets a slightly younger demographic See demographics. , offering a more urban/suburban, denim-driven collection for 12 to 22 year-olds. American Eagle Outfitters currently operates 736 AE stores in 49 states and 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). , 64 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 , and 111 Bluenotes/Thriftys stores in Canada. AE also operates via its internet business, ae.com. Non-GAAP Measure Disclosure The following definitions are provided for the two non-GAAP (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 ) measures used by the Company in this release. The two measures are adjusted net income and adjusted earnings per share. Each use is indicated by (1). We do not intend for these two non-GAAP measures to be considered in isolation or as a substitute for the related GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measures. Other companies may define the measures differently. Adjusted Financial Results In this release, adjusted net income and adjusted 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. each exclude the non-cash goodwill impairment charge of $8.0 million, or $0.11 per share, related to our Bluenotes operation. We believe that these adjusted measures provide investors with an important perspective on the current underlying operating performance of our businesses by isolating i·so·late tr.v. i·so·lat·ed, i·so·lat·ing, i·so·lates 1. To set apart or cut off from others. 2. To place in quarantine. 3. and excluding the impact of the non-cash impairment charge related to our acquisition of the Bluenotes business in fiscal 2000. -- Adjusted net income: In this release, we define "adjusted net income" to start with GAAP net income and then add back the $8.0 million Bluenotes non-cash goodwill impairment charge. The table below shows a reconciliation between GAAP net income and adjusted net income. -- Adjusted EPS: In this release, we define "adjusted EPS" to start with GAAP EPS and then add back the $0.11 per share Bluenotes non-cash goodwill impairment charge. The table below shows a reconciliation between GAAP EPS and adjusted EPS.
Non-GAAP Financial Measures:
Reconciliation of GAAP Net Income and EPS to
Adjusted Net Income and EPS
Three Months Ended Nine Months Ended
----------------------- ------------------------
November 1, November 2, November 1, November 2,
2003 2002 2003 2002
---- ---- ---- ----
Reported GAAP
Net Income $10,139 $27,061 $24,646 $49,859
Non-Cash Goodwill
Impairment Charge 8,000 - 8,000 -
-----------------------------------------------
Adjusted Net Income $18,139 $27,061 $32,646 $49,859
===============================================
Reported GAAP EPS $0.14 $0.37 $0.34 $0.68
Non-Cash Goodwill
Impairment Charge 0.11 - 0.11 -
-----------------------------------------------
Adjusted EPS $0.25 $0.37 $0.45 $0.68
===============================================
AMERICAN EAGLE OUTFITTERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited) (Unaudited)
November 1, February 1, November 2,
2003 2003 2002
------------ ------------ -----------
ASSETS
Cash, cash equivalents
and short-term
investments $ 206,078 $ 241,573 $ 172,972
Merchandise inventory 193,796 124,708 181,916
Other current assets 84,740 61,597 65,894
------------ ------------ -----------
Total current assets 484,614 427,878 420,782
------------ ------------ -----------
Property and equipment,
net 288,230 267,479 270,283
Goodwill, net 15,614 23,614 23,966
Other assets, net 44,905 22,368 26,076
------------ ------------ -----------
Total Assets $ 833,363 $ 741,339 $ 741,107
============ ============ ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable $ 98,018 $ 50,608 $ 94,151
Accrued compensation and
payroll taxes 18,073 13,001 19,093
Accrued rent 29,079 28,476 26,998
Accrued income and other
taxes 17,769 12,655 8,277
Unredeemed stored value
cards and gift certificates 13,507 22,837 10,216
Current portion of note
payable 4,874 4,225 8,929
Other current liabilities 13,269 9,784 8,400
------------ ------------ -----------
Total current
liabilities 194,589 141,586 176,064
------------ ------------ -----------
Note Payable 15,213 16,356 16,663
Other non-current
liabilities 15,050 5,915 8,837
------------ ------------ -----------
Total non-current
liabilities 30,263 22,271 25,500
------------ ------------ -----------
Total stockholders'
equity 608,511 577,482 539,543
------------ ------------ -----------
Total Liabilities and
Stockholders' Equity $ 833,363 $ 741,339 $ 741,107
============ ============ ===========
Current Ratio 2.49 3.02 2.39
AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and shares in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
----------------------- -----------------------
November 1, November 2, November 1, November 2,
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net sales $ 373,800 $ 374,471 $1,002,713 $ 971,587
Cost of sales,
including
certain buying,
occupancy and
warehousing
expenses 231,531 228,164 643,267 605,507
----------- ----------- ----------- -----------
Gross profit 142,269 146,307 359,446 366,080
Selling, general
and administrative
expenses 98,732 89,845 266,414 249,138
Depreciation and
amortization 14,373 12,969 41,552 37,414
Goodwill impairment
loss 8,000 - 8,000 -
----------- ----------- ----------- -----------
Operating income 21,164 43,493 43,480 79,528
Other income, net 483 284 1,638 1,141
----------- ----------- ----------- -----------
Income before
income taxes 21,647 43,777 45,118 80,669
Provision for
income taxes 11,508 16,716 20,472 30,810
----------- ----------- ----------- -----------
Net income $ 10,139 $ 27,061 $ 24,646 $ 49,859
=========== =========== =========== ===========
Basic income per
common share $ 0.14 $ 0.38 $ 0.35 $ 0.69
Diluted income per
common share $ 0.14 $ 0.37 $ 0.34 $ 0.68
Weighted average
common shares
outstanding -
basic 71,130 71,559 71,091 71,901
Weighted average
common shares
outstanding -
diluted 72,234 72,405 72,189 73,088
------------------------------------------- -----------------------
Total gross square
footage at end of
period:
American Eagle
Outfitters Stores 4,157,046 3,743,677
Bluenotes/Thriftys
Stores 354,206 352,210
------------------------------------------- -----------------------
Store count at
end of period:
American Eagle
Outfitters Stores 798 743
Bluenotes/Thriftys
Stores 111 111
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