Wilsons Leather Announces Third Quarter 2003 Results.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Nov. 18, 2003 Wilsons The Leather Experts Inc. (Nasdaq:WLSN) today reported third quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. operating results. The Company reported a net loss per share in the quarter ended November November: see month. 1, 2003, of $0.57 per basic and 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, or $11.6 million, compared to a net loss per share of $0.84 per basic and diluted share, or $17.0 million, in the third quarter of 2002. Results from the third quarter of 2002 included a $4.2 million net loss, or $0.21 per basic and diluted share, from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of the Travel Subsidiaries. The net loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the quarter was $11.6 million, a 9.2% improvement from the net loss of $12.8 million from continuing operations in the third quarter last year. 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 quarter decreased 11.2% to $97.9 million, compared to $110.2 million in the third quarter last year. Comparable store sales for the quarter decreased 9.0% versus a 6.8% decrease in the prior-year third quarter. Aggressive actions to reduce selling, general and administrative expenses, lower buying and occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal , and improve margin rates, helped to offset the sales volume shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. during the quarter. Year-to-date net sales for the current fiscal year decreased 5.8% to $252.9 million from $268.4 million a year ago. Year-to-date comparable store sales results decreased 4.9% versus a 5.5% decrease in the same period last year. The net loss for the current nine-month period was $46.0 million, or $2.24 per basic and diluted share, compared to a net loss of $83.3 million, or $4.17 per basic and diluted share in the same period last year. Included in the year-to-date results for 2002 is a $14.6 million net loss from discontinued operations of the Travel Subsidiaries and a $24.6 million cumulative effect of a change in accounting principle, which total $39.2 million, or $1.96 per basic and diluted share. "Our third quarter results show progress in implementing strategies to improve our business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets ," said Joel Joel, book of the Bible Joel, prophetic book of the Bible. It is a collection of the oracles of an otherwise unknown prophet, dated variously from the 9th to the 3d cent. B.C., though a date in c.400 B.C. is likely. Waller Wal·ler , Edmund 1606-1687. English poet known for his harmonious love lyrics, including "Go, Lovely Rose" (1645). Noun 1. Waller - United States jazz musician (1904-1943) Fats Waller, Thomas Wright Waller , Chief Executive Officer. "The actions we've we've Contraction of we have. we've have taken to lower our cost base and tighten our inventories have significantly improved our liquidity position entering the fourth quarter and further enable us to drive an increase in product margins." Mr. Waller continued, "During the first two weeks of November, comparable store sales are down 15.1%, but have been improving as the weather becomes 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. . While sales are running down when compared to last year, we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that they will continue to improve as we go into the all-important all-im·por·tant adj. Of the greatest importance; crucial. all  -im·por Thanksgiving Thanksgivingannual U.S. holiday celebrating harvest and yearly blessings; originated with Pilgrims (1621). [Am. Culture: EB, IX: 922] See : America Thanksgiving national holiday with luxurious dinner as chief ritual. [Am. Pop. weekend and Holiday shopping season. On a positive note, margins are running significantly better than last year. However, we are prepared to be more aggressive in both price and promotion if we do not see the improvement in sales that we anticipate. We believe that we have the right merchandise mix, an effective marketing program to drive traffic into our stores, and sound business fundamentals business fundamentals The general background within which an economy operates including earnings, sales, wage rates, taxes, and inflation. Improving business fundamentals are generally viewed as bullish for stocks, although stock prices at any given point in place for a successful fourth quarter and year end." About Wilsons Leather Wilsons Leather is a major leather retailer, selling products such as jackets, belts,shoes, handbags, and gloves. The company began as Berman's Leather in 1899. In 1988 Berman's Leather combined with Wilson's House of Suede and Leather and became Wilsons Leather. Wilsons Leather is the leading specialty retailer of leather outerwear, accessories and apparel in the 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. . As of November 1, 2003, Wilsons Leather operated 607 stores located in 45 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). including 473 mall mall: see shopping center. (World-Wide Web) mall - A collection of World-Wide Web documents featuring commercial products and services, usually served by one particualr Internet access provider. stores, 114 outlet stores An outlet store or factory outlet is a retail store in which manufacturers sell their stock directly to the public through their own branded stores. The stores can be can be brick and mortar or online. and 20 airport stores. The Company, which regularly supplements its permanent mall stores with seasonal stores during its peak selling season from October October: see month. through January January: see month. , operated 284 seasonal stores in 2002 and plans to operate approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 225 in 2003. Except for historical information, matters discussed in this press release are 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. that involve risks and uncertainties, and actual results may be materially different. Factors that could cause actual results to differ include: unseasonable un·sea·son·a·ble adj. 1. Not suitable to or appropriate for the season. 2. Not characteristic of the time of year: unseasonable weather. 3. Poorly timed; inopportune. weather; seasonality of the business; economic downturns; failure of results of operations to meet expectations of research analysts; risks associated with estimates made in our critical accounting policies; risks associated with future growth; risks associated with our debt service; changes in customer shopping patterns; change in consumer preferences and fashion trends away from leather; risks associated with foreign sourcing and international business; disruptions in product supplies; decreased availability and increased cost of leather; competition in our markets; loss of key members of our management team; reliance on third parties for maintaining our management information systems; concentration of our common stock; anti-takeover effects of classified board provisions in our articles of incorporation The document that must be filed with an appropriate government agency, commonly the office of the Secretary of State, if the owners of a business want it to be given legal recognition as a corporation. and by-laws BY-LAWS. Rules and ordinances made by a corporation for its own government. 2. The power to make by-laws is usually conferred by express terms of the charter creating the corporation, though, when not expressly granted, it is given by implication, and it is ; volatility of our common stock; war, acts of terrorism or the threat of either; and interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. in the operation of corporate offices and distribution centers. The information included in this press release is operative OPERATIVE. A workman; one employed to perform labor for another. 2. This word is used in the bankrupt law of 19th August, 1841, s. 5, which directs that any person who shall have performed any labor as an operative in the service of any bankrupt shall be as of this date only. Wilsons Leather does not undertake any obligation to update its forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrence of unanticipated events. In order to ensure that all investors continue to have equal access to the same information, Wilsons Leather will refrain from updating projections made in this press release unless it does so through means designed to provide broad distribution of the information to the public.
Wilsons The Leather Experts Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In Thousands)
November 1, February 1, November 2,
Assets 2003 2003 (1) 2002 (2, 3)
------ -----------------------------------
(Unaudited) (Restated
and
unaudited)
Current Assets:
Cash and cash equivalents $- $30,442 $-
Accounts receivable, net 6,296 5,162 6,973
Inventories 174,520 118,701 205,437
Prepaid expenses 9,128 3,812 12,474
Assets of discontinued operations 40 3,379 40,525
Deferred income taxes - 3,777 -
Refundable income taxes - 3,064 22,700
-----------------------------------
Total current assets 189,984 168,337 288,109
Property and equipment, net 67,578 73,974 75,936
Goodwill and other assets, net 3,000 3,315 3,140
Other assets of discontinued
operations - - 29,378
Deferred income taxes 19,865 865 6,635
-----------------------------------
Total assets $280,427 $246,491 $403,198
===================================
Liabilities and Shareholders' Equity
------------------------------------
Current Liabilities:
Accounts payable $47,354 $19,492 $48,797
Notes payable 61,633 - 134,048
Current portion of long-term debt 30,635 - -
Accrued expenses 24,343 25,219 20,744
Liabilities of discontinued
operations 814 15,075 15,000
Income taxes payable 1,529 - -
Deferred income taxes 2,245 - 4,705
-----------------------------------
Total current liabilities 168,553 59,786 223,294
Long-term debt 25,075 55,695 50,895
Other long-term liabilities 14,073 13,782 13,500
Other liabilities of discontinued
operations - - 1,178
Total shareholders' equity 72,726 117,228 114,331
-----------------------------------
Total liabilities and
shareholders' equity $280,427 $246,491 $403,198
===================================
-----------------------------------
1. Derived from audited consolidated financial statements.
2. Tax effect of $1.7 million restatement related to reserve reversals
as reported in "Item 6. Selected Financial Data" in the Company's most
recent Form 10-K dated February 1, 2003.
3. Reclassified for the presentation of discontinued operations for
the Travel Subsidiaries.
Note: The Company's inventories are determined by the retail method on
the last-in, first-out (LIFO) basis. The difference in inventories
between the LIFO method and the first-in, first-out (FIFO) method was
not material as of November 1, 2003, February 1, 2003 or November 2,
2002.
Wilsons The Leather Experts Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
------------------------
November 1, November 2,
2003 2002 (1)
------------------------
Net sales $97,880 $110,187
Cost of goods sold, buying and occupancy
costs 75,003 83,848
------------------------
Gross margin 22,877 26,339
Selling, general and administrative expenses 35,124 40,504
Depreciation and amortization 4,226 3,939
------------------------
Operating loss (16,473) (18,104)
Interest expense, net 2,889 3,208
------------------------
Loss from continuing operations before
income taxes (19,362) (21,312)
Income tax benefit (7,744) (8,513)
------------------------
Loss from continuing operations (11,618) (12,799)
Loss from discontinued operations, net of
tax - (4,212)
------------------------
Net loss $(11,618) $(17,011)
========================
Basic and diluted loss per share:
Loss from continuing operations $(0.57) $(0.63)
Loss from discontinued operations - (0.21)
------------------------
Basic and diluted loss per share $(0.57) $(0.84)
========================
Weighted average shares outstanding - basic
and diluted 20,551 20,329
========================
----------------------------------------------
1. Reclassified for the presentation of discontinued operations for
the Travel Subsidiaries.
Wilsons The Leather Experts Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Year to Date Period
Ended
-----------------------
November 1, November 2,
2003 2002 (1)
-----------------------
Net sales $252,931 $268,439
Cost of goods sold, buying and occupancy
costs 208,990 216,400
-----------------------
Gross margin 43,941 52,039
Selling, general and administrative expenses 100,369 106,777
Depreciation and amortization 12,532 11,497
-----------------------
Operating loss (68,960) (66,235)
Interest expense, net 7,631 7,289
-----------------------
Loss from continuing operations before
income taxes (76,591) (73,524)
Income tax benefit (30,636) (29,411)
-----------------------
Loss from continuing operations (45,955) (44,113)
Loss from discontinued operations, net of tax - (14,612)
Cumulative effect of a change in accounting
principle, net of tax - (24,567)
-----------------------
Net loss $(45,955) $(83,292)
=======================
Basic and diluted loss per share:
Loss from continuing operations $(2.24) $(2.21)
Loss from discontinued operations - (0.73)
Cumulative effect of a change in accounting
principle - (1.23)
-----------------------
Basic and diluted loss per share $(2.24) $(4.17)
=======================
Weighted average shares outstanding - basic and
diluted 20,488 19,956
=======================
-----------------------------------------------
1. Reclassified for the presentation of discontinued operations for
the Travel Subsidiaries.
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