Exhibit 99.1
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 | | News |
FOR IMMEDIATE RELEASE
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| | Contact: | | Cathy Maloney, VP Investor Relations |
| | | | 508-651-6650 cmaloney@bjs.com |
BJ’S WHOLESALE CLUB ANNOUNCES FIRST QUARTER RESULTS
May 16, 2006, Natick, MA— BJ’s Wholesale Club, Inc. (NYSE: BJ) today reported net income of $15.4 million, or $0.23 per diluted share for the first quarter ended April 29, 2006. Results for the first quarter of 2006 included income of $2.1 million post-tax, or $0.03 per diluted share, for House2Home bankruptcy recoveries and expense of $2.4 million post-tax, or $0.04 per diluted share, for stock-based compensation expense.
For the first quarter of 2005, the Company reported net income of $18.6 million, or $0.27 per diluted share. Results for the first quarter of 2005 included income of $2.9 million post-tax, or $0.04 per diluted share, for House2Home bankruptcy recoveries, expense of $1.8 million post-tax, or $0.03 per diluted share, related to the Company’s reserve for credit card claims, and expense of $0.2 million post-tax for stock-based compensation.
During the first quarter of 2006, the Company implemented FASB Statement No. 123 (R), “Share-Based Payment,” using the modified prospective application transition method.
Net sales for the first quarter of 2006 increased by 6.3% to $1.9 billion and comparable club sales increased by 2.0%, including a contribution from sales of gasoline of 1.4%. For the first quarter of 2005, the Company reported a net sales increase of 9.8% and a comparable club sales increase of 5.8%, including a contribution from gasoline sales of 70 basis points.
The Company also announced that it repurchased 658,500 shares of BJ’s common stock during the first quarter at an average cost of $30.58 per share, for a total of approximately $20.1 million.
-More-
BJ’s Wholesale Club
May 16, 2006
Page 2
Conference Call Information for First Quarter Results
As previously announced, at 8:30 a.m. Eastern Time, on Tuesday, May 16, 2006, BJ’s management plans to hold a conference call to discuss the first quarter financial results and their outlook for BJ’s business in 2006. To access the webcast (including financial and other statistical information being presented, as well as reconciliation information with respect to any non-GAAP financial measures being presented), visitwww.bjsinvestor.com/medialist.cfm. An archive of the webcast will be available for approximately ninety days.
About BJs
BJ’s introduced the wholesale club concept to New England in 1984, and has since expanded to become a leading warehouse chain in the eastern United States. As of April 29, 2006, the end of the first quarter, the Company operated 165 BJ’s clubs and two ProFoods Restaurant supply clubs. BJ’s press releases and filings with the SEC are available on the Internet atwww.bjs.com.
-See Financial Tables-
BJ’s Wholesale Club, Inc. and Consolidated Subsidiaries
STATEMENTS OF INCOME (Unaudited)
(Dollars in Thousands Except Per Share Amounts)
| | | | | | | | |
| | | Thirteen Weeks Ended | |
| | | April 29, 2006 | | | April 30, 2005 | |
Net sales | | $ | 1,880,073 | | | $ | 1,768,789 | |
Membership fees and other | | | 42,488 | | | | 40,761 | |
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Total revenues | | | 1,922,561 | | | | 1,809,550 | |
| | | | | | | | |
Cost of sales, including buying and occupancy costs | | | 1,739,029 | | | | 1,635,981 | |
Selling, general and administrative expenses | | | 161,364 | | | | 144,491 | |
Provision for credit card claims | | | — | | | | 3,000 | |
Preopening expenses | | | 1,275 | | | | 1,097 | |
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Operating income | | | 20,893 | | | | 24,981 | |
Interest income, net | | | 1,076 | | | | 275 | |
Gain on contingent lease obligations | | | 3,119 | | | | 4,277 | |
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Income from continuing operations before income taxes | | | 25,088 | | | | 29,533 | |
Provision for income taxes | | | 9,599 | | | | 10,830 | |
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Income from continuing operations | | | 15,489 | | | | 18,703 | |
Loss from discontinued operations, net of income tax benefit | | | (73 | ) | | | (80 | ) |
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Net income | | $ | 15,416 | | | $ | 18,623 | |
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Basic earnings per common share: | | | | | | | | |
Income from continuing operations | | $ | 0.23 | | | $ | 0.27 | |
Loss from discontinued operations | | | — | | | | — | |
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Net income | | $ | 0.23 | | | $ | 0.27 | |
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Diluted earnings per common share: | | | | | | | | |
Income from continuing operations | | $ | 0.23 | | | $ | 0.27 | |
Loss from discontinued operations | | | — | | | | — | |
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Net income | | $ | 0.23 | | | $ | 0.27 | |
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Number of common shares for earnings per share computations: | | | | | | | | |
Basic | | | 67,214,677 | | | | 68,824,698 | |
Diluted | | | 68,097,030 | | | | 69,644,840 | |
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Clubs in operation - end of period | | | 167 | | | | 158 | |
BJ’s Wholesale Club, Inc. and Consolidated Subsidiaries
CONDENSED BALANCE SHEETS (Unaudited)
(Dollars in Thousands)
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| | | April 29,
2006 | | April 30,
2005 |
ASSETS | | | | | | |
Current assets: | | | | | | |
Cash and cash equivalents | | $ | 115,866 | | $ | 93,262 |
Accounts receivable | | | 93,343 | | | 77,250 |
Merchandise inventories | | | 857,133 | | | 780,795 |
Current deferred income taxes | | | 25,234 | | | 25,303 |
Prepaid expenses | | | 24,435 | | | 22,758 |
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Total current assets | | | 1,116,011 | | | 999,368 |
Property, net of depreciation | | | 849,604 | | | 812,336 |
Other assets | | | 23,332 | | | 23,496 |
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TOTAL ASSETS | | $ | 1,988,947 | | $ | 1,835,200 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
Current liabilities: | | | | | | |
Current installments of long-term debt | | $ | 468 | | $ | 436 |
Accounts payable | | | 580,263 | | | 518,339 |
Closed store lease obligations | | | 699 | | | 7,108 |
Accrued expenses and other current liabilities | | | 268,596 | | | 257,390 |
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Total current liabilities | | | 850,026 | | | 783,273 |
Long-term debt, less portion due within one year | | | 2,616 | | | 3,084 |
Noncurrent closed store lease obligations | | | 8,172 | | | 8,606 |
Other noncurrent liabilities | | | 78,624 | | | 71,802 |
Deferred income taxes | | | 24,590 | | | 31,360 |
Stockholders’ equity | | | 1,024,919 | | | 937,075 |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 1,988,947 | | $ | 1,835,200 |
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BJ’s Wholesale Club, Inc. and Consolidated Subsidiaries
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in Thousands)
| | | | | | | | |
| | | Thirteen Weeks Ended | |
| | | April 29,
2006 | | | April 30,
2005 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | |
Net income | | $ | 15,416 | | | $ | 18,623 | |
Provision for credit card claims | | | — | | | | 3,000 | |
Provision for store closing costs | | | 122 | | | | 133 | |
Depreciation and amortization | | | 26,666 | | | | 26,406 | |
Stock compensation expense | | | 4,044 | | | | 338 | |
Deferred income taxes | | | (471 | ) | | | (676 | ) |
Increase in merchandise inventories, net of accounts payable | | | (30,917 | ) | | | (26,259 | ) |
Decrease in closed store lease obligations | | | (205 | ) | | | (410 | ) |
Other | | | (9,686 | ) | | | (13,301 | ) |
| | | | | | | | |
Net cash provided by operating activities | | | 4,969 | | | | 7,854 | |
| | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
Property additions | | | (50,990 | ) | | | (31,243 | ) |
Property disposals | | | 7 | | | | 51 | |
Purchase of marketable securities | | | — | | | | (95,825 | ) |
Sale of marketable securities | | | — | | | | 120,625 | |
| | | | | | | | |
Net cash used in investing activities | | | (50,983 | ) | | | (6,392 | ) |
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CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
Tax benefit from exercise of stock options | | | 1,681 | | | | — | |
Purchase of treasury stock | | | (20,134 | ) | | | (33,599 | ) |
Proceeds from issuance of common stock | | | 7,933 | | | | 9,746 | |
Changes in book overdrafts | | | 10,349 | | | | (9,800 | ) |
Repayment of long-term debt | | | (113 | ) | | | (105 | ) |
| | | | | | | | |
Net cash used in financing activities | | | (284 | ) | | | (33,758 | ) |
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Net decrease in cash and cash equivalents | | $ | (46,298 | ) | | $ | (32,296 | ) |
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
| 1. | In the first quarter ended April 29, 2006, the Company implemented Statement of Financial Accounting Standards No. 123 (R), “Share-Based Payment,” using the modified prospective application (“MPA”) transition method. Under this approach, the Company began recognizing the fair value of stock options in this year’s first quarter. The Company recorded pretax stock-based compensation of $4.0 million ($2.4 million post-tax, or $.04 per diluted share) in the first quarter. |
Prior to this fiscal year, the Company accounted for stock-based employee compensation under APB Opinion No. 25 and related interpretations, and no expense for stock options was reflected in net income, as all options granted under our plans had an exercise price equal to the market value of the underlying common stock on the grant date. In last year’s first quarter, the Company recorded stock-based compensation of $0.3 million ($0.2 million post-tax).
We have included stock-based employee compensation for restricted stock in net income in both this year and prior years.
| 2. | In last year’s first quarter, the Company recorded pretax charges of $3.0 million ($1.8 million post-tax, or $.03 per diluted share) to increase its reserve for claims seeking reimbursement for fraudulent credit and debit card charges and the cost of replacing cards, monitoring expenses and related fees and expenses. |
| 3. | During this year’s first quarter, the Company received pretax recoveries of House2Home bankruptcy claims of $3.1 million, which are included in gain on contingent lease obligations. On a post-tax basis, these gains were $2.1 million, or $.03 per diluted share. |
In last year’s first quarter, the Company received pretax recoveries of House2Home bankruptcy claims of $4.3 million. On a post-tax basis, these gains were $2.9 million, or $.04 per diluted share.
| 4. | Certain amounts in the prior year’s financial statements have been reclassified for comparative purposes. |
