BJ's Wholesale Club, Inc. Reports Record Third Quarter Sales and Earnings; Repurchases $26.2 Million of Common Stock.NATICK Natick (nā`tĭk), town (1990 pop. 30,510), Middlesex co., E Mass., a residential and industrial suburb of Boston, on Lake Cochituate; founded as a Native American village by John Eliot 1651, settled by colonial Americans 1718, inc. 1781. , Mass.--(BUSINESS WIRE)--Nov. 17, 1998--BJ's Wholesale Club, Inc. (NYSE NYSE See: New York Stock Exchange :BJ) today announced that net income for its third quarter ended October October: see month. 31, 1998 was $14.4 million, or $.38 per 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, compared with $13.8 million, or $.36 per diluted share, recorded in the third quarter of 1997. This year's financial results include the effect of changes in accounting methods for membership fees and preopening expenses (see Notes A1 and A2). Last year's results are not restated. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. , net income was $24.8 million, or $.65 per diluted share, compared with $35.8 million, or $.95 per diluted share, recorded in the first nine months of 1997. This year's results include a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. , noncash, post-tax charge of $19.3 million to reflect the cumulative effect of accounting changes and a non-recurring, post-tax pension termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. charge of $.9 million, each of which is recorded in the first quarter. The following table summarizes selected income statement data on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis, as if the newly adopted accounting principles had been in effect during each period. In addition, this year's data excludes the pension termination charge and last year's data is adjusted on an "analytical analytical, analytic pertaining to or emanating from analysis. analytical control control of confounding by analysis of the results of a trial or test. basis" for the effects of the company's 1997 spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. from Waban Waban (1604-1685?) was an American Indian tribal chief of the Nonantum Tribe and was the first American Indian converted to Christianity in Massachusetts.[1] On October 28, 1646, the Rev. Inc. (see Note B). -0-
Thirteen Weeks Ended Thirty-Nine Weeks Ended
Dollars in Millions, Except Per Share Amounts
Oct. 31, Oct. 25, % Oct. 31, Oct. 25, %
1998 1997 Incr. 1998 1997 Incr.
Operating Income $ 23.4 $ 21.2 10.4% $ 73.4 $ 66.4 10.6%
Net Income $ 14.4 $ 12.4 16.2% $ 45.0 $ 38.5 17.1%
Diluted Earnings
Per Share $ .38 $ .33 15.2% $ 1.18 $ 1.01 16.8%
Pro forma 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. in both the quarterly and year-to-date periods in 1998 reflects significantly higher preopening expenses, compared with last year. Third quarter 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 rose 11.4% to $828 million from $744 million recorded in the third quarter of last year, with a 5.8% increase in comparable club sales. In the first nine months, net sales increased by 12% to $2.4 billion from $2.2 billion recorded in the first nine months of 1997, with a comparable club increase of 5.6%. Jack Nugent Nugent may refer to one of the following:
BJ's also announced it repurchased 724,300 shares of common stock at an average price of $36.14 per share during the third quarter. On August 25, 1998, BJ's Board of Directors authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of up to $50 million of the company's common stock. Notes describing adjustments to third quarter and year-to-date financial results: Note A: On October 19, 1998, BJ's announced it was adopting new methods of accounting for membership income and pre-opening expenses, and was restating the first half of 1998 to reflect these changes: 1: Historically, BJ's had recognized annual membership fees as revenue when received on a cash basis. Under the new accounting method, BJ's will recognize membership income over the life of the membership, which is typically twelve months. Accordingly, BJ's recorded a one-time, noncash, post-tax charge of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $18.2 million to reflect the cumulative effect of the accounting change as of the beginning of this fiscal year, and restated the first two quarters of this year to reflect the accounting change. 2: Formerly, BJ's charged preopening expenses to operations between the date a new club opened and the end of that fiscal year. Under the new accounting method, costs associated with pre-opening activities will be expensed when incurred. BJ's recorded a one-time, noncash, post-tax charge of $1.1 million to reflect the cumulative effect of the accounting change. Note B: BJ's Wholesale Club BJ's Wholesale Club, Inc. NYSE: BJ is a membership-only warehouse club chain operating in the East Coast of the United States, as well as in the state of Ohio. History , Inc. commenced operations as an independent corporation following its July July: see month. 28, 1997 spin-off from HomeBase HomeBase was a home improvement warehouse chain in the Western United States based in Irvine, California. History Robert J. McNulty and George Handgis founded the chain as a warehouse club called the HomeClub , Inc. (formerly Waban Inc.). Therefore, reported financial results through the first half of the fiscal year ended January January: see month. 31, 1998 reflect BJ's historical financial performance as a division of Waban Inc. and, as such, may not be indicative indicative: see mood. of future performance. Accordingly, management has prepared an "analytical basis" presentation of quarterly and year-to-date income statement data which adjusts corporate overhead and interest expense to reflect BJ's new capital structure. BJ's Wholesale Club, Inc. introduced the wholesale club concept to New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. in 1984 and had since expanded to become a leading membership wholesale club in the eastern United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . BJ's currently operates 91 clubs compared with 84 one year ago. BJ's press releases are 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.bjswholesale.com and at Business Wire's Home Page at www.businesswire.com/cnn/bj/htm.
BJ's Wholesale Club, Inc. and Consolidated Subsidiaries
STATEMENTS OF INCOME (Unaudited)
(Dollars in Thousands Except Per Share Amounts)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
Oct. 31, Oct. 25, Oct. 31, Oct. 25,
1998 1997 1998 1997
Net sales $828,477 $744,023 $2,442,828 $2,181,963
Membership fees and
other 19,335 18,828 54,902 45,290
Total revenues 847,812 762,851 2,497,730 2,227,253
Cost of sales,
including buying
and occupancy
costs 756,553 679,345 2,231,811 1,994,819
Selling, general
and administrative
expenses 65,311 58,569 187,402 164,165
Preopening expenses 2,531 1,414 5,094 1,414
Pension termination
costs -- -- 1,521 --
Operating income 23,417 23,523 71,902 66,855
Interest on debt and
capital leases (net) (236) 1,018 (456) 8,500
Income before income
taxes and cumulative
effect of accounting
changes 23,653 22,505 72,358 58,355
Provision for income
taxes 9,225 8,687 28,220 22,525
Income before
cumulative effect
of accounting changes 14,428 13,818 44,138 35,830
Cumulative effect of
accounting changes -- -- (19,326) --
Net income $ 14,428 $ 13,818 $ 24,812 $ 35,830
Net income per
common share:
Basic earnings per
share:
Income before
cumulative effect
of accounting
changes $ 0.39 $ 0.37 $ 1.18 $ 0.96
Cumulative effect of
accounting changes -- -- (0.52) --
Net income $ 0.39 $ 0.37 $ 0.66 $ 0.96
Diluted earnings per
share:
Income before
cumulative effect
of accounting
changes $ 0.38 $ 0.36 $ 1.16 $ 0.95
Cumulative effect of
accounting changes -- -- (0.51) --
Net income $ 0.38 $ 0.36 $ 0.65 $ 0.95
Number of common
shares for earnings
per share computations:
Basic 37,397,356 37,466,652 37,553,788 37,478,842
Diluted 37,981,438 37,989,464 38,188,435 37,653,113
Pro forma amounts
assuming accounting
changes are applied
retroactively:
Net income $ 14,428 $ 12,413 $ 44,138 $ 36,139
Earnings per common
share - basic $ 0.39 $ 0.33 $ 1.18 $ 0.96
Earnings per common
share - diluted $ 0.38 $ 0.33 $ 1.16 $ 0.96
Clubs in operation -
end of period 90 84
See Notes to Consolidated Condensed Financial Statements
BJ's Wholesale Club, Inc. and Consolidated Subsidiaries
CONDENSED BALANCE SHEETS (Unaudited)
(Dollars in Thousands)
Oct. 31, Oct. 25,
1998 1997
ASSETS
Current assets
Cash and cash equivalents $ 7,675 $ 8,330
Marketable securities 98 --
Accounts receivable 41,582 30,901
Merchandise inventories 430,373 401,291
Current deferred income taxes 7,492 6,827
Prepaid expenses 10,126 7,260
Total current assets 497,346 454,609
Property, net of depreciation 412,113 384,898
Property under capital leases, net of
amortization 4,311 4,477
Other assets 10,603 10,776
TOTAL ASSETS $924,373 $854,760
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $265,373 $245,338
Accrued expenses and other current
liabilities 96,916 73,242
Total current liabilities 362,289 318,580
Long-term debt 64,500 84,700
Long-term obligations under capital leases 2,297 2,473
Other noncurrent liabilities 38,409 33,848
Deferred income taxes 5,547 1,947
Stockholders' equity 451,331 413,212
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $924,373 $854,760
See Notes to Consolidated Condensed Financial Statements
BJ's Wholesale Club, Inc. and Consolidated Subsidiaries
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in Thousands)
Thirty-Nine Weeks Ended
Oct. 31, Oct. 25,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 24,812 $ 35,830
Cumulative effect of accounting changes 19,326 --
Depreciation and amortization 30,310 27,829
Increase in merchandise inventories,
net of accounts payable (33,112) (60,761)
Other 6,856 3,168
Net cash provided by operating activities 48,192 6,066
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of marketable securities (95) --
Property additions (55,390) (36,302)
Property disposals 214 301
Net cash used in investing activities (55,271) (36,001)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of capital lease obligations (121) (101)
Borrowings of long-term debt 22,000 84,700
Purchase of treasury stock (26,173) --
Proceeds from sale and issuance of
common stock 5,147 328
Contribution to capital by Waban Inc. 1,188 --
Decrease in loans and advances from
Waban Inc. -- (46,662)
Net cash provided by financing activities 2,041 38,265
Net increase (decrease) in cash and
cash equivalents $ (5,038) $ 8,330
See Notes to Consolidated Condensed Financial Statements
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. BJ's Wholesale Club, Inc. (the "Company"), which previously
had been a wholly owned subsidiary of Waban Inc. ("Waban"),
became a separate public entity on July 28, 1997, when Waban
distributed to its stockholders on a pro rata basis all of the
Company's outstanding common stock (the "spin-off"). The
financial statements of the Company include the financial
results of those subsidiaries of Waban which, prior to the
spin-off, operated Waban's BJ's Wholesale Club Division.
As of July 26, 1997, Waban transferred all of the assets and
liabilities of its BJ's Wholesale Club Division to the Company
and contributed all of the Company's intercompany debt of $101
million to the Company's equity.
The historical capitalization of the Company has been
retroactively restated to reflect the issuance of 37,484,937
shares of common stock, the number of shares of the Company's
common stock distributed to Waban's stockholders on July 28,
1997.
2. Waban's Board of Directors approved the termination of the
Waban Inc. Retirement Plan effective July 26, 1997. In
accordance with generally accepted accounting principles, the
costs to terminate the Plan were not recognized until the Plan
was settled, which occurred in this year's first quarter.
Accordingly, during the thirty-nine weeks ended October 1,
1998, the Company recorded a pre-tax charge of $1.5 million in
connection with the settlement of the Plan, in which certain
of the Company's employees participated. On a post-tax basis,
this charge amounted to $.9 million, or $.02 per diluted
share.
3. During the quarter ended October 31, 1998, the Company adopted
changes in methods of accounting for membership fee revenues
and preopening expenses.
The Company had previously recognized membership fee revenues
when received. Under its new accounting method, the Company
now recognizes membership fee revenues as income over the life
of the membership, which is typically twelve months. The
Company has recorded a noncash, post-tax charge of $18.2
million as of the beginning of the fiscal year and has
restated the first two quarters of the fiscal year to reflect
this accounting change. The effect of this change on the
current year's reported results was to decrease income before
the cumulative effect of accounting changes by $1.9 million,
or $.05 per diluted share, in the third quarter and to
increase income before the cumulative effect of accounting
changes by $43 thousand year-to-date.
In adopting the provisions of the American Institute of CPA's
Statement of Position 98-5, "Reporting on the Costs of
Start-up Activities," the Company now recognizes club
preopening expenses when incurred. Previously, preopening
expenses were charged ratably to operations between the date a
new club opened and the end of the fiscal year. The Company
has recorded a noncash, post-tax charge of $1.1 million as of
the beginning of the fiscal year and has restated the first
two quarters of the fiscal year to reflect this accounting
change. The effect of this change on the current year's
reported results was to decrease income before the cumulative
effect of accounting changes by $.5 million, or $.01 per
diluted share, in the third quarter and by $1.4 million, or
$.04 per diluted share, year-to-date.
The pro forma amounts shown in the statements of income
reflect net income and earnings per share as if the newly
adopted accounting principles had been applied during each
period presented.
Excluding this year's pension termination charge, and
adjusting last year's results for differences in corporate
overhead and interest as a result of the spin-off,
year-to-date pro forma net income is $45.0 million, or $1.18
per diluted share, this year versus $38.5 million, or $1.01
per diluted share, last year.
4. Certain amounts in the prior year's financial statements have
been reclassified for comparative purposes.
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