Printer Friendly

American Eagle Outfitters Announces Restatement Due to Lease Accounting.

WARRENDALE, Pa. -- American Eagle Outfitters, Inc. (NASDAQ:AEOS) today announced a restatement of prior period financial statements due to changes in its accounting practices related to leasing transactions.

As disclosed in its March 2, 2005 preliminary earnings release, the Company, like many other retailers, determined that its method of accounting for rent holidays and tenant allowances was not in accordance with the views expressed by the Securities and Exchange Commission regarding generally accepted accounting principles. As the Company previously stated, it believes that the earnings impact of these changes is not material to any given period. The primary impact of these changes on the Company's January 29, 2005 balance sheet is an increase to property and equipment and accounts receivable of approximately $67 million, as well as a corresponding increase to a deferred lease credit. The primary impact of these changes on the Company's January 31, 2004 balance sheet is an increase to property and equipment and accounts receivable of approximately $64 million, as well as a corresponding increase to a deferred lease credit.

Historically, the Company has recognized straight line rent expense for leases beginning on the store opening date. This had the effect of excluding the build-out period of its stores from the calculation of the period over which it expenses rent and recognizes construction allowances. The Company is now changing this practice to include the build-out period in our calculations of rent expense and construction allowance amortization.

Additionally, the Company is changing its classification of construction allowances on its consolidated financial statements to record them as deferred liabilities, which will be amortized as a reduction to rent expense. Furthermore, construction allowances will be presented within operating activities on its consolidated statements of cash flows. Historically, construction allowances have been classified on the Company's consolidated balance sheets as a reduction of property and equipment and the related amortization has been classified as a reduction to depreciation and amortization expense (over the lesser of the useful life or the life of the lease) on the consolidated statements of operations. The Company's consolidated statements of cash flows have historically reflected construction allowances as a reduction of capital expenditures within investing activities.

The Company, along with its independent auditors, has completed its review of the respective accounting policies. As a result, Management determined that a restatement of its consolidated balance sheets, statements of stockholders' equity, statements of operations and statements of cash flows is deemed necessary and that those previously issued financial statements should no longer be relied upon. The Company will file a Form 8-K reporting these restatements under Item 4.02 and will file its restated financial statements within its fiscal year 2004 Form 10-K filing as well as its fiscal year 2005 Form 10-Q filings. Additionally, the Company updated its consolidated financial results for the fourth quarter and year-to-date periods ended January 29, 2005 and January 31, 2004 as presented below to reflect these changes.

American Eagle Outfitters (NASDAQ:AEOS) is a leading lifestyle retailer that designs, markets, and sells its own brand of relaxed, casual clothing for 15 to 25 year olds, providing high-quality merchandise at affordable prices. AE's collection includes modern basics like jeans, cargo pants, and graphic Ts as well as a stylish assortment of cool accessories, outerwear and footwear. American Eagle Outfitters currently operates 778 AE stores in 49 states, the District of Columbia and Puerto Rico, and 69 AE stores in Canada. AE also operates via its Web business, www.ae.com, which offers additional sizes and styles of favorite AE merchandise.
AMERICAN EAGLE OUTFITTERS, INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands)

 January 29, January 31,
 2005 2004
 -------------- -----------
 (Unaudited)(1) (1)
ASSETS
 Cash, cash equivalents and short-term
 investments $ 589,607 $ 337,812
 Merchandise inventory 137,991 120,586
 Other current assets 100,042 72,302
 --------------- -----------
 Total current assets 827,640 530,700
 --------------- -----------
 Property and equipment, net 353,213 340,955
 Goodwill, net 10,136 10,136
 Other assets, net 103,913 50,623
 --------------- -----------
 Total Assets $ 1,294,902 $ 932,414
 =============== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
 Accounts payable $ 76,344 $ 71,330
 Accrued compensation and payroll
 taxes 36,008 14,409
 Accrued rent 45,089 40,668
 Accrued income and other taxes 33,926 28,669
 Unredeemed stored value cards and
 gift certificates 32,724 25,785
 Current portion of note payable - 4,832
 Current portion of deferred lease
 credits 9,798 10,261
 Other current liabilities 19,376 13,025
 --------------- -----------
 Total current liabilities 253,265 208,979
 --------------- -----------
 Note payable - 13,874
 Deferred lease credits 57,758 53,936
 Other non-current liabilities 20,393 18,248
 --------------- -----------
 Total non-current liabilities 78,151 86,058
 --------------- -----------
 Total stockholders' equity 963,486 637,377
 --------------- -----------
 Total Liabilities and
 Stockholders' Equity $ 1,294,902 $ 932,414
 =============== ===========

 Current Ratio 3.27 2.54

(1) Amounts as of January 29, 2005 and January 31, 2004 have been
updated from those disclosed in the Company's preliminary earnings
release dated March 2, 2005 to reflect the impact of certain lease
accounting adjustments.


 AMERICAN EAGLE OUTFITTERS, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Dollars and shares in thousands, except per share amounts)

 Three Months Ended Twelve Months Ended
 -------------------------- --------------------------
 January 29, January 31, January 29, January 31,
 2005 2004 2005 2004
 -------------- ----------- -------------- -----------
 (Unaudited)(1) (1) (Unaudited)(1) (1)

Net sales $ 674,024 $ 490,580 $ 1,881,241 $ 1,435,436
Cost of sales,
 including
 certain buying,
 occupancy and
 warehousing
 expenses 341,647 299,800 1,003,433 885,939
 -------------- ----------- -------------- -----------
Gross profit 332,377 190,780 877,808 549,497
Selling, general
 and
 administrative
 expenses 142,386 105,782 446,829 356,261
Depreciation and
 amortization 18,304 15,704 68,273 59,965
 -------------- ----------- -------------- -----------
Operating income 171,687 69,294 362,706 133,271
Other income,
 net 3,343 469 4,129 2,016
 -------------- ----------- -------------- -----------
Income before
 income taxes 175,030 69,763 366,835 135,287
Provision for
 income taxes 68,086 26,953 142,603 52,179
 -------------- ----------- -------------- -----------
Income from
 continuing
 operations,
 net of tax 106,944 42,810 224,232 83,108
Loss from
 discontinued
 operations,
 net of income
 tax benefit (6,027) (7,816) (10,889) (23,486)
 -------------- ----------- -------------- -----------
Net income $ 100,917 $ 34,994 $ 213,343 $ 59,622
 ============== =========== ============== ===========

Basic per share
 amounts (post-
 split):
Income from
 continuing
 operations $ 0.73 $ 0.30 $ 1.55 $ 0.59
Loss from
 discontinued
 operations (0.04) (0.05) (0.08) (0.17)
 -------------- ----------- -------------- -----------
Net income per
 basic share $ 0.69 $ 0.25 $ 1.47 $ 0.42
 ============== =========== ============== ===========

Diluted per
 share amounts
 (post-split):
Income from
 continuing
 operations $ 0.70 $ 0.29 $ 1.49 $ 0.57
Loss from
 discontinued
 operations (0.04) (0.05) (0.07) (0.16)
 -------------- ----------- -------------- -----------
Net income per
 diluted share $ 0.66 $ 0.24 $ 1.42 $ 0.41
 ============== =========== ============== ===========

Weighted average
 common shares
 outstanding -
 basic
 (post-split) 147,094 142,358 145,150 142,226
Weighted average
 common shares
 outstanding -
 diluted
 (post-split) 153,402 144,502 150,244 144,414

----------------------------------------------------------------------

Total gross
 square footage
 at end of
 period: 4,540,095 4,239,497

Store count at
 end of period: 846 805

----------------------------------------------------------------------

(1) Amounts for the three and twelve months ended January 29, 2005 and
January 31, 2004 have been updated from those disclosed in the
Company's preliminary earnings release dated March 2, 2005 to reflect
the impact of certain lease accounting adjustments.
COPYRIGHT 2005 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2005, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

 
Article Details
Printer friendly Cite/link Email Feedback
Publication:Business Wire
Geographic Code:1USA
Date:Mar 10, 2005
Words:1198
Previous Article:Kitty Hawk Announces Fourth Quarter and Full Year 2004 Results.
Next Article:Congoleum Corporation Reports 2004 Results.
Topics:


Related Articles
American Eagle Outfitters signs 10-yr. lease. (Retail New York).
GE Consumer Finance and American Eagle Outfitters Sign Private Label Credit Card Extension.
American Eagle Outfitters Reports Third Quarter Earnings.
American Eagle Outfitters Reports Record Third Quarter EPS of $0.77 and Raises Fourth Quarter EPS Guidance to $1.00 - $1.03.
American Eagle Outfitters Reports Record March Sales of $184.6 Million, an Increase of 38.5%; Same Store Sales Increased 29.2%; Raises First Quarter...
American Eagle Outfitters Reports Record First Quarter EPS from Continuing Operations of $0.35 versus $0.18 Last Year; Comparable Store Sales...
American Eagle Outfitters Announces Management Change.
American Eagle Outfitters Reports Record Third Quarter EPS of $0.47 versus $0.39 from Continuing Operations Last Year.
American Eagle to Announce June Sales on Thursday, July 6th.

Terms of use | Privacy policy | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters