-1-
| Fiscal Year Ended | ||||||||
| February 3, | February 4, | |||||||
| 2008 | 2007 | |||||||
| (In thousands, except share and per share data) | ||||||||
Net sales |
$ | 1,851,647 | $ | 1,907,776 | ||||
Cost of sales |
984,649 | 1,011,712 | ||||||
Gross profit |
866,998 | 896,064 | ||||||
Other costs and expenses: |
||||||||
Operating and administrative |
804,265 | 788,400 | ||||||
Investigation and restatement costs |
12,348 | 25,739 | ||||||
Securities class action settlement |
11,700 | | ||||||
Store closing costs |
1,983 | 1,487 | ||||||
Operating profit |
36,702 | 80,438 | ||||||
Interest expense |
54,163 | 48,767 | ||||||
Loss on debt retirement |
| 19,450 | ||||||
Income (loss) before income taxes and cumulative effect of change in
accounting principle |
(17,461 | ) | 12,221 | |||||
Income tax expense (benefit) |
(6,309 | ) | 4,991 | |||||
Income (loss) before cumulative effect of change in accounting principle |
(11,152 | ) | 7,230 | |||||
Cumulative effect of change in accounting principle, net of tax |
| (966 | ) | |||||
Net income (loss) |
$ | (11,152 | ) | $ | 6,264 | |||
Basic earnings (loss) per share: |
||||||||
Income (loss) before cumulative effect of change in accounting
principle |
$ | (0.25 | ) | $ | 0.16 | |||
Cumulative effect of change in accounting principle |
| (0.02 | ) | |||||
Net income (loss) per share |
$ | (0.25 | ) | $ | 0.14 | |||
Shares used in computing per share amounts |
43,971,417 | 43,876,533 | ||||||
Diluted earnings (loss) per share: |
||||||||
Income (loss) before cumulative effect of change in accounting
principle |
$ | (0.25 | ) | $ | 0.16 | |||
Cumulative effect of change in accounting principle |
| (0.02 | ) | |||||
Net income (loss) per share |
$ | (0.25 | ) | $ | 0.14 | |||
Shares used in computing per share amounts |
43,971,417 | 44,129,278 | ||||||
| Thirteen Weeks Ended | Fourteen Weeks Ended | |||||||
| February 3, | February 4, | |||||||
| 2008 | 2007 | |||||||
| (In thousands, except share and per share data) | ||||||||
Net sales |
$ | 426,999 | $ | 472,191 | ||||
Cost of sales |
225,542 | 250,762 | ||||||
Gross profit |
201,457 | 221,429 | ||||||
Other costs and expenses: |
||||||||
Operating and administrative |
193,360 | 205,585 | ||||||
Investigation and restatement costs |
1,725 | 3,371 | ||||||
Securities class action settlement |
11,700 | | ||||||
Store closing costs |
230 | 442 | ||||||
Operating profit (loss) |
(5,558 | ) | 12,031 | |||||
Interest expense |
14,491 | 14,139 | ||||||
Loss on debt retirement |
| 24 | ||||||
Loss before income taxes |
(20,049 | ) | (2,132 | ) | ||||
Income tax benefit |
(7,751 | ) | (864 | ) | ||||
Income (loss) before cumulative effect of change in accounting principle |
(12,298 | ) | (1,268 | ) | ||||
Cumulative effect of change in accounting principle, net of tax |
| | ||||||
Net loss |
$ | (12,298 | ) | $ | (1,268 | ) | ||
Basic and diluted loss per share: |
||||||||
Loss before cumulative effect of change in accounting principle |
$ | (0.28 | ) | $ | (0.03 | ) | ||
Cumulative effect of change in accounting principle |
| | ||||||
Basic and diluted loss per share |
$ | (0.28 | ) | $ | (0.03 | ) | ||
Shares used in computing per share amounts |
44,018,817 | 43,936,674 | ||||||
-2-
| February 3, | February 4, | |||||||
| 2008 | 2007 | |||||||
| (In thousands, except share data) | ||||||||
| ASSETS |
||||||||
Cash and cash equivalents |
$ | 16,520 | $ | 20,169 | ||||
Receivables, net |
37,322 | 43,898 | ||||||
Inventories |
494,651 | 502,787 | ||||||
Deferred income taxes |
50,649 | 46,500 | ||||||
Prepaid expenses and other current assets |
35,842 | 31,585 | ||||||
Total current assets |
634,984 | 644,939 | ||||||
Property and equipment, net |
165,115 | 174,409 | ||||||
Intangibles, net |
63,020 | 67,507 | ||||||
Goodwill |
224,937 | 224,937 | ||||||
Deferred income taxes |
15,380 | 4,200 | ||||||
Other assets, net |
35,254 | 35,770 | ||||||
Total assets |
$ | 1,138,690 | $ | 1,151,762 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Accounts payable |
$ | 236,879 | $ | 260,146 | ||||
Accrued payroll and related expenses |
57,593 | 60,306 | ||||||
Accrued expenses and other current liabilities |
107,211 | 81,569 | ||||||
Current maturities of long-term debt |
50,551 | 56,098 | ||||||
Current maturities of capital lease obligations |
6,351 | 8,761 | ||||||
Total current liabilities |
458,585 | 466,880 | ||||||
Long-term debt |
452,420 | 451,367 | ||||||
Obligations under capital leases |
9,866 | 15,275 | ||||||
Other liabilities |
53,281 | 46,730 | ||||||
Total non-current liabilities |
515,567 | 513,372 | ||||||
Commitments and contingencies |
||||||||
Stockholders equity: |
||||||||
Common stock, $0.01 par value, 90,000,000 shares authorized,
44,030,644 and 43,950,751 shares issued and outstanding at
February 3, 2008 and February 4, 2007, respectively |
440 | 440 | ||||||
Additional paid-in capital |
438,092 | 433,912 | ||||||
Accumulated deficit |
(273,994 | ) | (262,842 | ) | ||||
Total stockholders equity |
164,538 | 171,510 | ||||||
Total liabilities and stockholders equity |
$ | 1,138,690 | $ | 1,151,762 | ||||
-3-
| Fiscal Year Ended | ||||||||||||
| February 3, | February 4, | January 29, | ||||||||||
| 2008 | 2007 | 2006 | ||||||||||
| (In thousands) | ||||||||||||
Cash flows provided by (used in) operating activities: |
||||||||||||
Net income (loss) |
$ | (11,152 | ) | $ | 6,264 | $ | 57,790 | |||||
Adjustments: |
||||||||||||
Depreciation and amortization on property and equipment |
40,668 | 40,645 | 36,628 | |||||||||
Amortization of other items |
5,513 | 7,585 | 4,231 | |||||||||
Amortization of debt discount and deferred financing costs |
5,701 | 4,539 | 2,161 | |||||||||
Stock-based compensation expense |
2,779 | 4,972 | 571 | |||||||||
Tax benefit relating to exercise of stock options |
| | 231 | |||||||||
Write downs of property, equipment and other assets |
4,459 | 3,354 | 2,145 | |||||||||
Loss on debt retirement |
| 8,496 | 1,600 | |||||||||
Deferred income taxes |
(6,593 | ) | 3,771 | 36,008 | ||||||||
Changes in operating assets and liabilities: |
||||||||||||
Receivables |
8,126 | (13,412 | ) | 6,747 | ||||||||
Inventories |
8,136 | 3,652 | (23,588 | ) | ||||||||
Prepaid expenses and other current assets |
(4,257 | ) | (11,538 | ) | 7,616 | |||||||
Accounts payable |
(23,267 | ) | 51,639 | 17,329 | ||||||||
Accrued payroll, accrued expenses and other current liabilities |
23,816 | 4,838 | 9,987 | |||||||||
Other operating activities |
185 | (5,165 | ) | 2,867 | ||||||||
Net cash provided by operating activities |
54,114 | 109,640 | 162,323 | |||||||||
Cash flows used in investing activities: |
||||||||||||
Capital expenditures |
(34,772 | ) | (37,529 | ) | (36,775 | ) | ||||||
Business acquisitions, net of cash acquired |
| (4,292 | ) | (177,658 | ) | |||||||
Other investing activities |
(1,623 | ) | (1,778 | ) | (1,499 | ) | ||||||
Net cash used in investing activities |
(36,395 | ) | (43,599 | ) | (215,932 | ) | ||||||
Cash flows provided by (used in) financing activities: |
||||||||||||
Payments under senior credit facility term loan |
| | (252,450 | ) | ||||||||
Borrowings under senior credit facility line of credit |
258,300 | 84,800 | 230,300 | |||||||||
Payments under senior credit facility line of credit |
(263,800 | ) | (126,800 | ) | (136,300 | ) | ||||||
Borrowings under term loan facility |
| 350,000 | | |||||||||
Payments under term loan facility |
(3,478 | ) | (875 | ) | | |||||||
Payment of debt financing costs |
(5,376 | ) | (13,166 | ) | (9,612 | ) | ||||||
Proceeds from issuance of 4.625% exchangeable notes |
| | 100,000 | |||||||||
Proceeds from issuance of 3.375% exchangeable notes |
| | 125,000 | |||||||||
Retirement of 3.375% exchangeable notes |
| (125,000 | ) | | ||||||||
Retirement of 7% senior notes |
| (225,000 | ) | | ||||||||
Payments on capital lease obligations |
(8,513 | ) | (10,301 | ) | (10,893 | ) | ||||||
Proceeds from seller financing arrangements |
2,145 | 428 | 3,164 | |||||||||
Payments on seller financing arrangements |
(685 | ) | (484 | ) | (381 | ) | ||||||
Proceeds from repayment of stockholder receivable |
| | 10 | |||||||||
Proceeds from exercise of stock options |
443 | 1,196 | 1,130 | |||||||||
Purchase of common stock |
| | (25,029 | ) | ||||||||
Net proceeds from termination of common stock
call option and warrants |
| 1,555 | | |||||||||
Premium on common stock call option |
| | (26,992 | ) | ||||||||
Premium from common stock warrants |
| | 17,820 | |||||||||
Other financing activities |
(404 | ) | (189 | ) | (423 | ) | ||||||
Net cash (used in) provided by financing activities |
(21,368 | ) | (63,836 | ) | 15,344 | |||||||
Net increase (decrease) in cash |
(3,649 | ) | 2,205 | (38,265 | ) | |||||||
Cash and cash equivalents, beginning of period |
20,169 | 17,964 | 56,229 | |||||||||
Cash and cash equivalents, end of period |
$ | 16,520 | $ | 20,169 | $ | 17,964 | ||||||
-4-
| Thirteen Weeks Ended | Fourteen Weeks Ended | Fiscal Year Ended | ||||||||||||||
| February 3, 2008 | February 4, 2007 | February 3, 2008 | February 4, 2007 | |||||||||||||
Income (loss) before income taxes
and cumulative effect of change in
accounting principle |
$ | (20,049 | ) | $ | (2,132 | ) | $ | (17,461 | ) | $ | 12,221 | |||||
Interest expense |
14,491 | 14,139 | 54,163 | 48,767 | ||||||||||||
Depreciation |
9,648 | 10,491 | 40,668 | 40,645 | ||||||||||||
Amortization |
1,480 | 847 | 5,513 | 7,585 | ||||||||||||
EBITDA |
5,570 | 23,345 | 82,883 | 109,218 | ||||||||||||
Non-cash stock compensation expense |
1,036 | 1,647 | 2,779 | 4,972 | ||||||||||||
Investigation and restatement |
1,725 | 3,371 | 12,348 | 25,739 | ||||||||||||
Asset retirements and impairment |
789 | 457 | 4,732 | 3,902 | ||||||||||||
Securities class action settlement |
11,700 | | 11,700 | | ||||||||||||
Non-recurring charges |
1,263 | 24 | 4,853 | 21,287 | ||||||||||||
EBITDA, as adjusted |
$ | 22,083 | $ | 28,844 | $ | 119,295 | $ | 165,118 | ||||||||
-5-