Exhibit 99.1
| FOR: | BROOKSTONE, INC. |
| CONTACT: | Philip Roizin |
| EVP of Finance and Administration |
| (603) 880-9500 |
FOR IMMEDIATE RELEASE
Brookstone Announces Second Quarter and Year to Date 2006 Financial Results
MERRIMACK, N.H., July 26, 2006 — Innovative product development company and specialty lifestyle retailer Brookstone, Inc. today announced financial results for the second quarter and year to date ended July 1, 2006. Results in this release relating to the Company’s Gardeners Eden brand are reflected as discontinued operations.
For the 13-week period ended July 1, 2006, Brookstone reported total net sales of $91.3 million, which is a 4.3 percent increase compared to the 13-week period ending July 30, 2005. Same-store sales for the 13-week period ended July 1, 2006 increased 1.0 percent from the comparable 13-week period ending July 2, 2005.
For the 26-week period ended July 1, 2006, Brookstone reported total net sales of $168.0 million, which is a 2.3 percent increase compared to the 26-week period ending July 30, 2005. Same-store sales for the 26-week period ended July 1, 2006 decreased 6.4 percent from the comparable 26-week period ending July 2, 2005.
Lou Mancini, Chief Executive Officer of Brookstone, said: “We’re encouraged by our performance in the second quarter of 2006, particularly our improving trend in same-store sales. We believe that the initiatives we’ve put in place, including a more appealing product mix and sales incentive programs, are beginning to positively impact sales. We have several important product launches planned for the third and fourth quarters, including certain exclusive OSIM healthy lifestyle products, and we believe these new introductions will contribute positively to the Company’s overall operations and financial performance.”
Brookstone ended the second quarter with approximately $24 million in cash and no cash borrowings under the Company’s asset-backed lending agreement.
In November of 2005, the Company changed its fiscal year end from the Saturday closest to the end of January to the Saturday closest to the end of December. As a result of this change, our presentations through the fourth quarter of 2006 will compare the new quarter end results with the historical results from the old quarter ends. We believe these period-to-period comparisons will be informative given the fact that while the seasonality of the business is skewed towards the Holiday selling season, both the old and new fiscal fourth-quarter periods will encompass the Holiday selling season.
On October 4, 2005, Brookstone, Inc. was acquired through a merger transaction with Brookstone Acquisition Corp., a Delaware corporation formed by OSIM International Ltd and affiliates of J.W. Childs Equity Partners III, L.P. and Temasek (Private) Capital Limited. As a result of the acquisition, Brookstone, Inc. became a privately held, wholly owned subsidiary of OSIM Brookstone Holdings, L.P., the general partner of which is OSIM Brookstone Holdings, Inc. and the majority shareholder of which is OSIM International Ltd.
On June 29, 2005, the Company announced its plans to sell its Gardeners Eden business, which currently consists of one Gardeners Eden store. As a result, commencing with the second quarter of Fiscal 2005, the Company began reflecting the results of operations from the Gardeners Eden business as a discontinued operation.
Brookstone, Inc. is an innovative product development and specialty lifestyle retail Company that operates 307 Brookstone Brand stores nationwide and in Puerto Rico. Typically located in high-traffic regional shopping malls and airports, the stores feature unique and innovative consumer products. The Company also operates one store under the Gardeners Eden Brand, and a Direct Marketing business that includes the Brookstone and Hard-to-Find Tools catalogs and an e-commerce website at http://www.brookstone.com.
# # #
Statements in this release which are not historical facts, including statements about the Company’s confidence or expectations, earnings, anticipated operations of its e-commerce sites and those of third-party service providers, and other statements about the Company’s operational outlook are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (“Reform Act”) and are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in such forward-looking statements. Such risks and uncertainties include, without limitation, risks of changing market conditions in the overall economy and the retail industry, consumer demand, the effectiveness of e-commerce technology and marketing efforts, availability of products, availability of adequate transportation of such products. Words such as “estimate”, “project”, “plan”, “believe”, “feel”, “anticipate”, “assume”, “may”, “will”, “should” and similar words and phrases may identify forward-looking statements. Statements about a possible sale or divestiture of its Gardeners Eden business constitute forward-looking statements. The Company may not be able to complete a divestiture on acceptable terms because of a number of factors, including failure to reach agreement with a purchaser. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. The Company undertakes no obligations to publicly release any revisions to these forward-looking statements or reflect events or circumstances after the date hereof.
Brookstone, Inc.
Consolidated Statement of Operations
($ in thousands)
(Unaudited)
| Thirteen-weeks ended | Twenty-six weeks ended | |||||||||||||||
| Successor | Predecessor | Successor | Predecessor | |||||||||||||
| July 1, 2006 | July 30, 2005 | July 1, 2006 | July 30, 2005 | |||||||||||||
| Net sales |
$ | 91,322 | $ | 87,521 | $ | 168,031 | $ | 164,308 | ||||||||
| Cost of sales |
66,410 | 63,027 | 127,351 | 120,653 | ||||||||||||
| Gross profit |
24,912 | 24,494 | 40,680 | 43,655 | ||||||||||||
| Selling, general and administrative expenses |
31,120 | 28,468 | 61,478 | 57,480 | ||||||||||||
| Loss from continuing operations |
(6,208 | ) | (3,974 | ) | (20,798 | ) | (13,825 | ) | ||||||||
| Interest (income) expense, net |
6,178 | (87 | ) | 11,977 | (103 | ) | ||||||||||
| Loss before taxes, other party interests in consolidated entities and discontinued operations |
(12,386 | ) | (3,887 | ) | (32,775 | ) | (13,722 | ) | ||||||||
| Other party interests in consolidated entities |
359 | 247 | 646 | 506 | ||||||||||||
| Loss before taxes and discontinued operations |
(12,745 | ) | (4,134 | ) | (33,421 | ) | (14,228 | ) | ||||||||
| Income tax benefit |
(1,859 | ) | (1,575 | ) | (11,513 | ) | (5,470 | ) | ||||||||
| Loss from continuing operations |
(10,886 | ) | (2,559 | ) | (21,908 | ) | (8,758 | ) | ||||||||
| Discontinued operations, net of tax |
(76 | ) | (3,190 | ) | (318 | ) | (3,770 | ) | ||||||||
| Net loss |
$ | (10,962 | ) | $ | (5,749 | ) | $ | (22,226 | ) | $ | (12,528 | ) | ||||
Brookstone, Inc.
Condensed Consolidated Balance Sheet
($ in thousands)
(Unaudited)
| Successor | Predecessor | ||||||||
| July 1, 2006 |
December 31, 2005 |
July 30, 2005 | |||||||
| Current Assets: |
|||||||||
| Cash and cash equivalents |
$ | 23,604 | $ | 76,326 | $ | 46,613 | |||
| Receivables, net |
9,663 | 10,906 | 7,923 | ||||||
| Merchandise inventories |
73,776 | 75,716 | 75,879 | ||||||
| Deferred income taxes, net |
16,704 | 4,947 | 12,271 | ||||||
| Prepaid expenses |
9,003 | 9,117 | 7,315 | ||||||
| Total current assets |
132,750 | 177,012 | 150,001 | ||||||
| Deferred income taxes, net |
— | — | 5,228 | ||||||
| Property, plant and equipment, net |
74,631 | 76,328 | 74,362 | ||||||
| Intangible assets, net |
131,813 | 132,271 | — | ||||||
| Goodwill |
192,453 | 192,453 | — | ||||||
| Other assets |
17,300 | 19,363 | 3,213 | ||||||
| Total assets |
$ | 548,947 | $ | 597,427 | $ | 232,804 | |||
| Liabilities and Shareholders’ Equity |
|||||||||
| Current Liabilities: |
|||||||||
| Accounts payable |
$ | 12,562 | $ | 22,012 | $ | 12,076 | |||
| Other current liabilities |
41,098 | 54,714 | 29,224 | ||||||
| Total current liabilities |
53,660 | 76,726 | 41,300 | ||||||
| Other long term liabilities |
19,700 | 18,962 | 22,668 | ||||||
| Long term debt |
190,551 | 190,849 | 8,308 | ||||||
| Deferred income taxes |
43,430 | 43,392 | — | ||||||
| Commitments and Contingencies |
|||||||||
| Other party interests in consolidated entities |
1,296 | 1,176 | 1,004 | ||||||
| Total shareholders’ equity |
240,310 | 266,322 | 159,524 | ||||||
| Total liabilities and shareholders’ equity |
$ | 548,947 | $ | 597,427 | $ | 232,804 | |||
# # #
EBITDA
EBITDA is a financial measure used by management of the Company and which management believes provide useful information to investors regarding the Company’s results of operations because such measure assists in analyzing the operating performance of the Company and its ability to service debt. We define EBITDA as net income (loss) plus interest expense, depreciation, amortization and income taxes. Other companies may define EBITDA differently, and as a result, our measure of EBITDA may not be directly comparable to EBITDA of other companies. EBITDA should not be considered alternatives to net income, operating income or any other measure of performance or liquidity presented in accordance with GAAP. For the thirteen-week and twenty-six week periods ended July 1, 2006 and July 30, 2005, EBITDA, reconciled to our reported net income for such periods, are as follows:
| Successor | Predecessor | |||||||
| Thirteen weeks ended July 1, 2006 |
Thirteen weeks ended July 30, 2005 |
|||||||
| Net loss – as reported |
$ | (10,962 | ) | $ | (5,749 | ) | ||
| Add: Income tax benefit |
(1,896 | ) | (3,614 | ) | ||||
| Add: Interest expense |
6,526 | 391 | ||||||
| Add: Depreciation and amortization |
3,356 | 3,450 | ||||||
| EBITDA |
$ | (2,976 | ) | $ | (5,522 | ) | ||
| Successor | Predecessor | |||||||
| Twenty-six weeks ended July 1, 2006 |
Twenty-six weeks ended July 30, 2005 |
|||||||
| Net loss – as reported |
$ | (22,226 | ) | $ | (12,528 | ) | ||
| Add: Income tax benefit |
(11,686 | ) | (7,912 | ) | ||||
| Add: Interest expense |
12,971 | 836 | ||||||
| Add: Depreciation and amortization |
6,626 | 6,908 | ||||||
| EBITDA |
$ | (14,315 | ) | $ | (12,696 | ) | ||