BJ's Wholesale Club Reports First Quarter Results.Business Editors 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)--May 18, 2004 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. (NYSE NYSE See: New York Stock Exchange :BJ) today reported net income of $16.1 million, or $.23 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, for its first quarter ended May 1, 2004, compared to income before the cumulative effect of accounting principle changes of $12.5 million, or $.18 per diluted share, for last year's first quarter. Including the cumulative effect of accounting principle changes, net income for last year's first quarter was $11.3 million, or $.16 per diluted share. Results for the quarter ended May 3, 2003, included a post-tax gain of $0.7 million, or $.01 per diluted share, as a result of reducing the Company's reserves for House2Home lease obligations. (See notes to attached statements.) 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 for the first quarter increased by 12.1% to $1.6 billion, and comparable club sales increased by 6.6%, including a contribution from sales of gasoline gasoline or petrol, light, volatile mixture of hydrocarbons for use in the internal-combustion engine and as an organic solvent, obtained primarily by fractional distillation and "cracking" of petroleum, but also obtained from natural gas, by of 0.4%. President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Mike Wedge wedge, piece of wood or metal thick at one end and sloping to a thin edge at the other; an application of the inclined plane. It is employed in separating two objects from each other or in separating one part of a solid object from an adjoining part, as in splitting commented, "Our results for the first quarter reflect significant investments to become a truly member-centric organization. Based on our Member Insight findings, we re-merchandised approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 75% of the aisles in our clubs during the first quarter. On a comparable club sales basis, food increased by approximately 9% and general 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 increased by approximately 4% during the first quarter." The Company also announced that it repurchased approximately 317,000 shares of BJ's common stock during the first quarter at an average price of $25.10 per share, for a total of approximately $8.0 million. First Quarter Results/Conference Call As previously announced, BJ's plans to hold a conference call today at 8:30 a.m. Eastern Time to discuss the first quarter results and outlook for the remainder of 2004. To access the webcast (including financial and other statistical information being presented, as well as reconciliation information with respect to any non-GAAP financial measures being presented), visit www.bjsinvestor.com/medialist.cfm to hear the call live or to listen to an archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. of the call, which will be available for approximately ninety days following the call. BJ's 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 has since expanded to become a leading warehouse chain 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. . The Company currently operates 150 clubs and 78 gas stations compared with 143 clubs and 71 gas stations one year ago. BJ's press releases and filings with the SEC 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.bjs.com. See Financial Tables
BJ's Wholesale Club, Inc. and Consolidated Subsidiaries
STATEMENTS OF INCOME (Unaudited)
(Dollars in Thousands Except Per Share Amounts)
Thirteen Weeks Ended
------------------------
May 1, May 3,
2004 2003
----------- -----------
Net sales $ 1,610,958 $ 1,437,549
Membership fees and other 36,666 33,572
----------- -----------
Total revenues 1,647,624 1,471,121
----------- -----------
Cost of sales, including buying
and occupancy costs 1,497,600 1,333,423
Selling, general and administrative expenses 123,200 113,916
Preopening expenses 219 3,989
----------- -----------
Operating income 26,605 19,793
Interest expense, net (111) (68)
Gain (loss) on contingent lease obligations (73) 814
----------- -----------
Income from continuing operations before
income taxes and cumulative effect of
accounting principle changes 26,421 20,539
Provision for income taxes 10,171 7,870
----------- -----------
Income from continuing operations before
cumulative effect of accounting principle
changes 16,250 12,669
Loss from discontinued operations, net of
income tax benefit (132) (149)
----------- -----------
Income before cumulative effect of
accounting principle changes 16,118 12,520
Cumulative effect of accounting principle
changes - (1,253)
----------- -----------
Net income $ 16,118 $ 11,267
=========== ===========
Basic and diluted earnings per common share:
Income from continuing operations
before cumulative effect of
accounting principle changes $ 0.23 $ 0.18
Loss from discontinued operations - -
Cumulative effect of accounting
principle changes - (0.02)
----------- -----------
Net income $ 0.23 $ 0.16
=========== ===========
Number of common shares for earnings
per share computations:
Basic 69,809,300 69,288,640
Diluted 70,362,007 69,396,765
Pro forma amounts assuming accounting
principle changes are applied retroactively:
Net income $ 16,118 $ 12,520
=========== ===========
Basic and diluted earnings per common
share $ 0.23 $ 0.18
=========== ===========
Clubs in operation - end of period 150 143
BJ's Wholesale Club, Inc. and Consolidated Subsidiaries
CONDENSED BALANCE SHEETS (Unaudited)
(Dollars in Thousands)
May 1, May 3,
2004 2003
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 75,954 $ 42,100
Accounts receivable 63,332 57,100
Merchandise inventories 707,651 659,046
Current deferred income taxes 18,998 19,280
Prepaid expenses 19,465 17,253
---------- ----------
Total current assets 885,400 794,779
Property, net of depreciation 778,345 720,700
Other assets 23,016 23,292
---------- ----------
TOTAL ASSETS $1,686,761 $1,538,771
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ - $ 40,000
Current installments of long-term debt 407 -
Accounts payable 488,944 442,279
Closed store lease obligations 8,428 21,214
Accrued expenses and other current
liabilities 214,935 190,569
---------- ----------
Total current liabilities 712,714 694,062
Long-term debt, less portion due within one
year 3,521 -
Noncurrent closed store lease obligations 11,055 21,663
Other noncurrent liabilities 61,468 52,894
Deferred income taxes 35,429 18,008
Stockholders' equity 862,574 752,144
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,686,761 $1,538,771
========== ==========
BJ's Wholesale Club, Inc. and Consolidated Subsidiaries
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in Thousands)
Thirteen Weeks Ended
------------------
May 1, May 3,
2004 2003
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 16,118 $ 11,267
(Gain) loss on contingent lease obligations 73 (814)
Provision for store closing costs 220 248
Cumulative effect of accounting principle
changes - 1,253
Depreciation and amortization 24,413 20,256
Deferred income taxes 1,589 6,803
Increase in merchandise inventories, net
of accounts payable (10,347) (7,543)
Decrease in closed store lease obligations (2,728) (14,890)
Other 10,044 6,634
-------- --------
Net cash provided by operating activities 39,382 23,214
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Property additions (30,446) (55,636)
Property disposals 390 15
-------- --------
Net cash used in investing activities (30,056) (55,621)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing of short-term debt, net - 40,000
Purchase of treasury stock (7,960) -
Proceeds from issuance of common stock 1,951 51
Changes in book overdrafts (5,986) 1,773
Repayment of long-term debt (97) -
-------- --------
Net cash provided by (used in) financing
activities (12,092) 41,824
-------- --------
Net increase (decrease) in cash and cash
equivalents $ (2,766) $ 9,417
======== ========
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Last year's first quarter gain on contingent lease obligations
included a pretax credit of $1.2 million ($0.7 million after tax)
to reduce the Company's House2Home lease obligations.
2. During last year's first quarter ended May 3, 2003, the Company
adopted the provisions of Statement of Financial Accounting
Standards No. 143, "Accounting for Asset Retirement Obligations"
("SFAS No. 143"). The Company recorded a post-tax charge of
$1,253,000, or $.02 per diluted share, to reflect the cumulative
effect of adopting this accounting principle change as of the
beginning of the fiscal year.
3. During this year's first quarter ended May 1, 2004, the Company
adopted the provisions of Emerging Issues Task Force Issue 03-10,
"Application of EITF Issue No. 02-16 by Resellers to Sales
Incentives Offered to Consumers by Manufacturers" ("EITF 03-10").
This pronouncement provides guidance for the reporting of vendor
consideration received by a reseller as it relates to
manufacturers' incentives (such as rebates or coupons) tendered by
consumers. Vendor consideration may be included in revenues only
if defined criteria are met. Otherwise, such consideration is
recorded as a decrease in cost of sales. The provisions of EITF
03-10 became effective as of the beginning of 2004. Implementation
of EITF 03-10 has no effect on gross margin dollars, net income or
cash flows, but certain vendor coupons or rebates which had been
recorded in sales in the past are being recorded as a reduction of
cost of sales in this year's first quarter. This resulted in
decreases in both sales and cost of sales of $10.3 million in this
year's first quarter versus $4.1 million in last year's first
quarter. As permitted by the transition provisions of EITF 03-10,
sales and cost of sales in last year's statement of income have
been recast to conform with this year's presentation.
4. Certain amounts in the prior year's financial statements have been
reclassified for comparative purposes.
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