Elder-Beerman Reports First Quarter 2002 Operating Results.Business Editors DAYTON Dayton, city (1990 pop. 182,044), seat of Montgomery co., SW Ohio, on the Great Miami River where it is joined by the Stillwater River; inc. 1805. It is the trade center for a fertile farm area, but is best known for its involvement with industry, invention, and , Ohio--(BUSINESS WIRE)--May 23, 2002 The Elder-Beerman Stores Corp. (Nasdaq:EBSC EBSC Elder-Beerman Stores Corp. EBSC East Bay Sanctuary Covenant (Berkeley, CA) EBSC Embedded Bitmap Scaling EBSC Elmbrook Swim Club (Brookfield, Wisconsin) EBSC English Bay Swim Club ) reported a net loss of $3.5 million for the first quarter ended May 4, 2002, versus a $0.2 million net loss in the same period in 2001, before the effects of the Company's adoption of the Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ," effective February 4, 2002. The net loss per share was $0.31 for the first quarter 2002 compared to a net loss per share of $0.02 in the same period last year. Total revenues for the quarter increased 1.1 percent versus last year to $149.0 million. As previously reported, first quarter total sales increased 1.2 percent and comparable sales decreased 2.8 percent. Change in Accounting for Goodwill The new accounting standards for goodwill and other intangible assets require that goodwill and intangible assets with indefinite INDEFINITE. That which is undefined; uncertain. INDEFINITE, NUMBER. A number which may be increased or diminished at pleasure. 2. When a corporation is composed of an indefinite number of persons, any number of them consisting of a majority of those useful lives no longer be amortized but instead be tested for 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. , at least annually. Elder-Beerman completed this impairment test in the first quarter. The results of the test required the company to record an after tax charge of $14.1 million, representing the cumulative effect of the accounting change, and Elder-Beerman's remaining unamoritized goodwill. Including this accounting change, the net loss for the first quarter 2002 was $17.5 million or $1.54 per share. Other Charges Reflected in First Quarter Earnings First quarter 2002 results included $1.4 million in pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern charges related to the closing of the downtown store in Dayton, Ohio Dayton is a city in southwestern Ohio, United States. It is the county seat and largest city of Montgomery County. As of the 2005 census estimate, the population of Dayton was 158,873. , $0.7 million in pretax severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when charges related to implementation of expense initiatives, $1.0 million in pretax charges related to a write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of long-term assets Long-Term Assets 1. Reported on the balance sheet, it's the value of a company's property, equipment and other capital assets, less depreciation. 2. A stock, bond or other asset that you plan on holding in your portfolio for a lengthy period of time. to reflect their current fair value, and $0.6 million of miscellaneous income from a sale of noncore assets and insurance proceeds. Excluding these items and the change in accounting for goodwill, Elder-Beerman would have incurred a net loss of $1.9 million dollars or $0.17 per share compared to a net loss per share of $0.02 in the same period last year. Management Outlook Byron ("Bud") L. Bergren, Elder-Beerman's 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. , stated, "Our goals for the first quarter were realistic and we were able to meet those goals. We expect to continue to feel the effects of a soft economy for at least the first half of the year and have planned our business accordingly. In the first quarter we implemented initiatives focused on improving our performance going forward. "We are making progress in several areas. Our inventory levels are lower and the currency is higher than last year, and we plan further improvement in that area. We opened a new store in Coldwater, Michigan Coldwater is a city in the U.S. state of Michigan. As of the 2000 census, the city population was 12,697. It is the county seat of Branch County6. The city is located at the center of Coldwater Township, though it is politically independent. in March and are actively looking at sites for 2003. Finally, as we announced in April, we implemented new expense initiatives through a headcount reduction, a payroll savings of $3.6 million on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis that will help the bottom line going forward," Bergren concluded. A conference call to discuss 2002 first quarter results will take place today at 11:00 a.m., Eastern Time. The call will be webcast live on the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of Elder-Beerman's web site at www.elder-beerman.com and on www.streetevents.com. A replay will be available online at those sites until midnight on May 31, 2002. The nation's ninth largest independent department store chain, The Elder-Beerman Stores Corp. is headquartered in Dayton, Ohio and operates 67 stores in Ohio, West Virginia West Virginia, E central state of the United States. It is bordered by Pennsylvania and Maryland (N), Virginia (E and S), and Kentucky and, across the Ohio R., Ohio (W). Facts and Figures Area, 24,181 sq mi (62,629 sq km). Pop. , Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). , Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). , Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , Kentucky Kentucky, state, United States Kentucky (kəntŭk`ē, kĭn–), one of the so-called border states of the S central United States. It is bordered by West Virginia and Virginia (E); Tennessee (S); the Mississippi R. , Wisconsin Wisconsin, state, United States Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee and Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York . Elder-Beerman also operates two furniture galleries. For more information about the company see Elder-Beerman's web site at www.elder-beerman.com. Please note: This press release may contain "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. ," including predictions of future operating performance, events or developments such as our future sales, profits, expenses, income and earnings per share. In addition, words such as "expects," "anticipates," "intends," "plans," "believes," "hopes," and "estimates," and variations of such words and similar expressions, are intended to identify forward-looking statements. Because forward-looking statements are based on a number of beliefs, estimates and assumptions by management that could ultimately prove inaccurate, there is no assurance that forward-looking statements will prove to be accurate. Many factors could materially affect our actual future operations and results. Factors that could materially affect performance include the following: increasing price and product competition; fluctuations in consumer demand and confidence, especially in light of current uncertain general economic conditions; the availability and mix of inventory; fluctuations in costs and expenses; consumer response to the Company's 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. strategies, advertising, marketing and promotional programs; the effectiveness of management; the timing and effectiveness of new store openings, particularly its new concept stores opened in Fall Season of 2001 (DuBois, PA, Alliance, OH and Kohler Kohler, village (1990 pop. 1,817), Sheboygan co., E Wis., on the Sheboygan River; inc. 1912. The Kohler plumbing-fixtures plant there, which still produces its famous stainless-steel products, has been the scene of some of the longest and most bitter labor disputes , WI) and in Spring Season 2002 (Coldwater, MI); weather conditions that affect consumer traffic in stores; the continued availability and terms of bank and lease financing and trade credit; the outcome of pending and future 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. ; consumer debt levels and paydown Paydown A payment made towards an outstanding loan balance. Notes: Every time you make a mortgage payment you are "paying down" your loan. See also: Loan, Mortgage, Principal paydown In a corporate or U.S. rates on consumer debts, including amounts owed to the Company; the impact of any new consumer bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most laws; inflation and interest rates and the condition of the capital markets. National security threats and warnings in the wake of the national tragedy of September 11, 2001 could magnify mag·ni·fy v. To increase the apparent size of, especially with a lens. some of those factors. Elder-Beerman undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
THE ELDER-BEERMAN STORES CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
Normalized (A)
13-weeks ended 13-weeks ended 13-weeks ended
May 4, % Sales May 4, % Sales May 5, % Sales
2002 2002 2001
--------------- --------------- ----------------
Revenues:
Net sales $141,166 100.0% $141,166 100.0% $139,494 100.0%
Financing 7,158 5.1% 7,158 5.1% 7,149 5.1%
Other 688 0.5% 688 0.5% 704 0.5%
-------- ------ -------- ------ -------- ------
Total revenues 149,012 105.6% 149,012 105.6% 147,347 105.6%
-------- ------ -------- ------ -------- ------
Costs and expenses:
Cost of
merchandise sold,
occupancy, and
buying expenses 105,145 74.5% 104,195 73.8% 99,105 71.0%
Selling, general,
administrative,
and other expenses 41,495 29.4% 39,963 28.3% 40,543 29.1%
Depreciation and
amortization 4,971 3.5% 4,971 3.5% 4,693 3.4%
Interest expense 2,840 2.0% 2,840 2.0% 3,337 2.4%
-------- ------ -------- ------ -------- ------
Total costs
and expenses 154,451 109.4% 151,969 107.7% 147,678 105.9%
-------- ------ -------- ------ -------- ------
Loss before
income tax benefit (5,439) -3.9% (2,957) -2.1% (331) -0.2%
Income tax benefit (1,958) -1.4% (1,065) -0.8% (119) -0.1%
-------- ------ -------- ------ -------- ------
Loss before
cumulative effect
of a change in
accounting principle (3,481) -2.5% (1,892) -1.3% (212) -0.2%
Cumulative effect of
a change in
accounting
principle (14,060) -10.0% -- 0.0% -- 0.0%
-------- ------ -------- ------ -------- ------
Net loss $(17,541) -12.4% $ (1,892) -1.3% $ (212) -0.2%
======== ====== ======== ====== ======== ======
Net loss per common
share - basic and
diluted
Loss before
cumulative effect
of a change in
accounting
principle $ (0.31) $ (0.17) $ (0.02)
Cumulative effect
of a change in
accounting
principle (1.23) - -
-------- -------- --------
Net loss $ (1.54) $ (0.17) $ (0.02)
Weighted average
number of shares
outstanding 11,369,834 11,369,834 11,314,851
(A) Normalized information is shown for illustrative purposes and is
not in accordance with GAAP. Normalized May 4, 2002 results
exclude: (1) $1.4 million of pre-tax charges to reflect the
write-down of amounts and expenses related to the closing of one
store; (2) $0.7 million of pre-tax severance costs incurred due to
the implementation of expense reduction initiatives; (3) $1.0
million of pre-tax charges to write-down long-term assets to their
fair value; (4) a charge of $14.1 million, net of tax, to reflect
the cumulative effect of a change in accounting principle related
to the write-off of goodwill in accordance with the adoption of
Statement of Financial Accounting Standard No. 142, Goodwill and
Other Intangible Assets; and (5) $0.6 million of miscellaneous
income from a sale of noncore assets and insurance proceeds.
THE ELDER-BEERMAN STORES CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
May 4, 2002 Feb. 2, 2002
------------- -------------
ASSETS
Current assets:
Cash and equivalents $ 7,532 $ 7,142
Customer accounts receivable
(less allowance for doubtful
accounts: May 4, 2002 - $2,677;
February 2, 2002 - $2,985) 123,973 129,121
Merchandise inventories 150,562 151,761
Other current assets 21,215 21,435
--------- ---------
Total current assets 303,282 309,459
--------- ---------
Property, fixtures and equipment,
less accumulated depreciation
and amortization 98,833 98,078
Goodwill -- 16,012
Other Assets 25,263 27,513
--------- ---------
Total assets $ 427,378 $ 451,062
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations $ 7,329 $ 5,531
Accounts payable 39,548 39,108
Other accrued liabilities 24,812 26,819
--------- ---------
Total current liabilities 71,689 71,458
--------- ---------
Long-term obligations,
less current portion 141,112 148,489
Deferred items 14,379 13,905
Shareholders' equity:
Common stock, no par,
11,531,554 shares at May 4, 2002
and 11,494,266 shares at
February 2, 2002 issued and outstanding 242,373 242,273
Unearned compensation - restricted stock (338) (302)
Deficit (37,411) (19,870)
Other comprehensive loss (4,426) (4,891)
--------- ---------
Total shareholders' equity 200,198 217,210
--------- ---------
Total liabilities and
shareholders' equity $ 427,378 $ 451,062
========= =========
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