Collective Brands Reports 2008 Fourth Quarter, Full Year Financial Results2008 Adjusted EBITDA(1) $297 Million, Up 17%; Fourth Quarter SG&A Lower Due To Further Cost Reductions; Non-Cash Tradename, Goodwill Impairment Charges of $130 Million
TOPEKA, KS -- (Marketwire - March 10, 2009) - Collective Brands, Inc. (NYSE: PSS) today reported financial results for the fourth quarter and fiscal year 2008 ended January 31, 2009. The Company generated $8.4 million of adjusted EBITDA in the quarter and $296.6 million for full-year 2008. At year-end, the Company had $249.3 million in cash and cash equivalents and $209.0 million of borrowing capacity available under its revolving credit facility for total liquidity of $458.3 million.
Collective Brands reported fourth quarter 2008 net sales of $735.2 million and a loss per diluted share of $2.28. Full year 2008 net sales were $3.44 billion. Comparable store sales(2) for the quarter and year were down 6.6% and 3.6%, respectively. The Company recorded non-cash tradename and goodwill impairment charges related to Stride Rite of $130.2 million in the quarter as a result of weakening economic conditions. The Company incurred additional charges, net of insurance recoveries related to litigation, of $2.5 million. The adjusted net loss(1), which excludes the impact of the charges, was $34.9 million, or $0.55 per diluted share, for the quarter.
"We strengthened the Company in 2008 as we maintained market share in a highly promotional domestic retail environment and delivered strong cash flows. We accomplished this by providing record customer satisfaction at Payless and growing Saucony and Sperry Top-Sider," said Matthew E. Rubel, Chairman, Chief Executive Officer and President of Collective Brands, Inc. "Internationally, we achieved strong growth in Payless Latin America and Stride Rite Europe."
Rubel continued, "We have continued to manage costs aggressively in the current economic climate. At the same time, we are managing inventories effectively to make sure fresh, on-trend product is flowing to our stores."
Consolidated Results - Selected Unaudited Financial Data (dollars in millions, except per share data)
Fourth Quarter Fiscal Year
--------------- -----------------
2008 2007 Change 2008 2007 Change
------- ------ ----- -------- -------- -----
Net sales $735.2 $776.8 -5.4% $3,442.0 $3,035.4 13.4%
Adjusted operating profit
(loss)(1) ($ 25.8) ($11.0) NM $ 158.7 $ 140.0 13.4%
Adjusted EBITDA(1) $ 8.4 $ 24.2 -65.3% $ 296.6 $ 254.4 16.6%
Net earnings (loss) ($144.0) ($46.6) NM ($ 68.7) $ 42.7 NM
Earnings (loss) per share ($ 2.28) ($0.73) NM ($ 1.09) $ 0.65 NM
Adjusted earnings (loss)
per share(1) ($ 0.55) ($0.36) NM $ 1.12 $ 1.10 1.8%
Capital expenditures $ 129.2 $ 167.4 -22.8%
NM = not meaningful
- -- Net sales of $735.2 million for the quarter were 5.4% lower than last
year primarily due to a comparable store sales decrease of 6.6% driven by
lower Payless store traffic partially offset by higher average unit retail
prices. Fourth quarter net sales for Payless and Stride Rite were $573.1
million and $162.1 million, respectively. Collective Brands net sales for
2008 were $3.44 billion, an increase of $0.41 billion, or 13.4%, compared
to 2007, due to a full year of Stride Rite sales in 2008. Net sales for
2008 at Payless and Stride Rite were $2.63 billion and $806.6 million,
respectively.
- -- Adjusted EBITDA of $296.6 million for the year was $42.2 million, or
16.6%, higher than last year. Fourth quarter adjusted EBITDA was $8.4
million, a decline from last year due to lower sales and gross margin. The
fourth quarter gross margin rate was favorably impacted by higher average
unit retail prices and by increased direct sourcing of product through the
Company's vertically-integrated sourcing organization and unfavorably
impacted by higher merchandise costs and negative sales leverage on Payless
occupancy costs. SG&A was lower due to cost reduction actions that
produced lower compensation expense and integration savings.
- -- Net debt(1) at the end of 2008 was $663.9 million, down $25.9 million
versus the prior year.
- -- Inventory was $492.0 million at the end of 2008, up 4.7% compared to
last year as a result of higher product costs. Payless average in-store
inventory was up at the end of 2008 while footwear units were lower. Aged
inventory as a percentage of total inventory was lower than the prior year
reflecting a cleaner inventory position.
- -- Capital expenditures were $129.2 million in 2008 compared to $167.4
million in 2007. The lower expenditures in 2008 reflect reduced spending
on certain multi-year capital projects such as the distribution centers and
new point-of-sale registers as well as lower spending on domestic stores.
During the fourth quarter of 2008, Collective Brands added 16 new stores
(11 Payless stores in Latin America and 5 Stride Rite stores), closed 29
stores (26 Payless and 3 Stride Rite), and relocated 5 Payless stores.
4th Quarter 4th Quarter 3rd Quarter
Retail Store Counts 2008 2007 2008
----------- ----------- -----------
Payless 4,522 4,552 4,537
Stride Rite 355 340 353
Total Stores 4,877 4,892 4,890
Outlook for Collective Brands
- -- Capital expenditures in 2009 are expected to total approximately $85
million.
- -- The 2009 effective tax rate is expected to be approximately 20%,
excluding adjustments and discrete events associated with the resolution of
outstanding tax audits.
- -- Depreciation and amortization in 2009 is expected to total
approximately $145 million, due to greater investments in supply chain and
stores in recent years as well as the 2007 acquisition of Stride Rite.
- -- Collective Brands retail store count is expected to decline by
approximately 60, net of store openings. Payless International and Stride
Rite anticipate adding about 35 and 5 stores, respectively, net of
closings. Payless domestic is expected to close about 100 stores, net of
openings.
Notes to Financial Data
(1) This release contains certain non-GAAP financial measures. These measures are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help explain underlying performance trends in Collective Brands business and provide useful information to both management and investors by excluding certain items that are not indicative of Collective Brands core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. Please see the reconciliations of the non-GAAP financial measures after the condensed consolidated statements of cash flows. The measures used in this release are as follows:
Adjusted EBITDA -- Defined as depreciation and amortization plus earnings before interest and taxes excluding adjustments related to asset impairments, litigation, and other charges such as cancellation of performance share units.
Adjusted loss per share -- Defined as loss per share excluding adjustments related to asset impairments, litigation, and other charges such as cancellation of performance share units.
Adjusted operating profit (loss) -- Defined as operating profit (loss) from continuing operations excluding adjustments related to asset impairments, litigation, and other charges such as cancellation of performance share units.
Net debt -- Defined as total debt minus cash and cash equivalents. Net Debt also provides useful information about the capacity of the Company to reduce its debt load and improve its capital structure.
(2) Comparable store sales include Payless stores from all regions. Stride Rite stores are excluded.
About Collective Brands and Forward-Looking Statements
Collective Brands, Inc. is a leader in bringing compelling lifestyle, fashion and performance brands for footwear and related accessories to consumers worldwide. Collective Brands, Inc. is the holding company of Payless ShoeSource, Stride Rite, and Collective Licensing International. Payless ShoeSource is the largest specialty family footwear retailer in the Western Hemisphere. It is dedicated to democratizing fashion and design in footwear and accessories and inspiring fun, fashion possibilities for the family at a great value. Stride Rite markets the leading brand of high-quality children's shoes in the United States. Stride Rite also markets products for children and adults under well-known brand names, including Sperry Top-Sider, Saucony, Keds, and Robeez. Collective Licensing International is a leading youth lifestyle marketing and global licensing business. Information about, and links for shopping at, each of Collective Brands' units can be found at www.collectivebrands.com.
This release contains forward-looking statements. The statements in this news release regarding the business outlook, expected performance and forward-looking guidance, as well as other statements that are not historical facts, are forward-looking statements. The words "expect," "anticipate," and "believe" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are estimates and projections reflecting management's judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. With respect to forward-looking statements, management has made assumptions regarding, among other things, customer spending patterns, trends, weather, pricing, operating costs, the timing of various events and the economic and regulatory environment. A variety of factors could cause actual results and experience to differ materially from the anticipated results or expectations expressed in forward-looking statements. These risks and uncertainties that may affect the operations, performance, and results of Collective Brands' business include, but are not limited to, outcomes of or future litigation including intellectual property and employment litigation; the inability to renew material leases, licenses, or contracts upon their expiration; the ability to identify and negotiate leases for new locations on acceptable terms or to terminate unwanted leases on acceptable terms; changes in consumer preferences, spending patterns and overall economic conditions; the impact of competition and pricing; changes in weather patterns; the financial condition of suppliers; changes in existing or potential duties, tariffs or quotas and the application thereof; changes in relationships between the U.S. and foreign countries as well as between foreign countries; changes in relationships between Canada and foreign countries; economic and political instability in foreign countries, or restrictive actions by the governments of foreign countries in which suppliers and manufacturers from whom the Company sources are located or in which the Company operates stores or otherwise does business; changes in trade, intellectual property, customs and/or tax laws; fluctuations in currency exchange rates, e.g. changes in the value of the dollar relative to the Chinese Yuan; the ability to hire, train and retain associates; performance of other parties in strategic alliances; general economic, business and social conditions in the countries from which Collective Brands sources products, supplies or has or intends to open stores; the ability to comply with local laws in foreign countries; threats or acts of terrorism or war; strikes, work stoppages and/or slowdowns by unions that play a significant role in the manufacture, distribution or sale of product; changes in commodity prices such as oil; and other risks referenced from time to time in filings of ours with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended February 2, 2008 in Part I, Item 1A, "Risk Factors" and, when filed, our Form 10-K for the year ended January 31, 2009. Collective Brands believes these forward-looking statements are reasonable; however, you should not place undue reliance on forward-looking statements, which are based on current expectations and speak only as of the date of this release. Collective Brands is not obligated to publicly release any revisions to forward-looking statements to reflect events after the date of this release.
All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Collective Brands does not undertake any obligation to release any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The unaudited condensed consolidated statements of (loss) earnings, balance sheets and statements of cash flows have been prepared in accordance with the company's accounting policies as described in the Company's 2007 Form 10-K, on file with the Securities and Exchange Commission, are subject to reclassification and adjustments and should be read in conjunction with the 2007 Annual Report to Shareowners. In the opinion of management, this information is fairly presented and all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the results for the interim periods have been included.
COLLECTIVE BRANDS, INC.
CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS
(UNAUDITED)
(Dollars and shares in
millions, except per share
data) 13 Weeks Ended 52 Weeks Ended
-------------------- --------------------
January February January February
31, 2, 31, 2,
2009 2008 2009 2008
--------- --------- --------- ---------
Net sales $ 735.2 $ 776.8 $ 3,442.0 $ 3,035.4
Cost of sales:
Cost of sales 524.4 562.6 2,344.6 2,044.5
Impairment of tradenames 88.2 - 88.2 -
--------- --------- --------- ---------
Total cost of sales 612.6 562.6 2,432.8 2,044.5
--------- --------- --------- ---------
Gross margin 122.6 214.2 1,009.2 990.9
Selling, general and
administrative expenses 239.1 248.9 1,007.2 899.4
Impairment of goodwill 42.0 - 42.0 -
Restructuring charges - - 0.2 0.2
--------- --------- --------- ---------
Operating (loss) profit from
continuing operations (158.5) (34.7) (40.2) 91.3
Interest expense 17.5 19.0 75.2 46.7
Interest income (1.6) (2.8) (8.1) (14.4)
--------- --------- --------- ---------
(Loss) earnings from continuing
operations before income
taxes and minority interest (174.4) (50.9) (107.3) 59.0
(Benefit) provision for income
taxes (34.6) (7.8) (48.0) 8.6
--------- --------- --------- ---------
(Loss) earnings from continuing
operations before minority
interest (139.8) (43.1) (59.3) 50.4
Minority interest, net of
income taxes (3.9) (3.5) (8.7) (7.7)
--------- --------- --------- ---------
Net (loss) earnings from
continuing operations (143.7) (46.6) (68.0) 42.7
Loss from discontinued
operations, net of
income taxes and minority
interest (0.3) - (0.7) -
--------- --------- --------- ---------
Net (loss) earnings $ (144.0) $ (46.6) $ (68.7) $ 42.7
========= ========= ========= =========
Basic (loss) earnings per
share:
(Loss) earnings from
continuing operations $ (2.28) $ (0.73) $ (1.08) $ 0.66
Loss from discontinued
operations - - (0.01) -
--------- --------- --------- ---------
Basic (loss) earnings per share $ (2.28) $ (0.73) $ (1.09) $ 0.66
========= ========= ========= =========
Diluted (loss) earnings per
share:
(Loss) earnings from
continuing operations $ (2.28) $ (0.73) $ (1.08) $ 0.65
Loss from discontinued
operations - - (0.01) -
--------- --------- --------- ---------
Diluted (loss) earnings per
share $ (2.28) $ (0.73) $ (1.09) $ 0.65
========= ========= ========= =========
Basic weighted average shares
outstanding 63.0 64.2 62.9 64.5
Diluted weighted average shares
outstanding 63.0 64.2 62.9 65.4
COLLECTIVE BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
January 31, February 2,
(dollars in millions) 2009 2008
------------- -------------
ASSETS:
Current assets:
Cash and cash equivalents $ 249.3 $ 232.5
Accounts receivable, net 97.5 86.1
Inventories 492.0 470.1
Current deferred income taxes 35.6 23.8
Prepaid expenses 58.7 93.4
Other current assets 25.3 31.5
Current assets of discontinued
operations 1.3 0.8
------------- -------------
Total current assets 959.7 938.2
Property and Equipment:
Land 8.6 9.3
Property, buildings and equipment 1,458.6 1,440.1
Accumulated depreciation and
amortization (945.8) (898.4)
------------- -------------
Property and equipment, net 521.4 551.0
Intangible assets, net 446.0 559.5
Goodwill 281.6 321.0
Deferred income taxes 1.7 1.5
Other assets 40.9 44.0
------------- -------------
TOTAL ASSETS $ 2,251.3 $ 2,415.2
============= =============
LIABILITIES AND EQUITY:
Current liabilities:
Current maturities of long-term debt $ 24.8 $ 7.4
Accounts payable 173.8 200.9
Accrued expenses 202.7 203.5
Current liabilities of discontinued
operations 1.9 1.3
------------- -------------
Total current liabilities 403.2 413.1
Long-term debt 888.4 914.9
Deferred income taxes 49.2 112.9
Other liabilities 264.2 254.2
Minority interest 23.7 17.2
Noncurrent liabilities of discontinued
operations 0.3 -
Total shareowners' equity 622.3 702.9
------------- -------------
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $ 2,251.3 $ 2,415.2
============= =============
COLLECTIVE BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Year ended Year ended
------------ ------------
January 31, February 2,
(dollars in millions) 2009 2008
------------ ------------
OPERATING ACTIVITIES:
Net (loss) earnings $ (68.7) $ 42.7
Loss from discontinued operations, net of
income taxes and minority interest 0.7 -
------------ ------------
Net (loss) earnings from continuing operations (68.0) 42.7
Adjustments for non-cash items included in
net (loss) earnings:
Loss on impairment and disposal of
assets 25.6 7.2
Impairment of goodwill and
indefinite-lived tradenames 130.2 -
Depreciation and amortization 140.9 117.3
Provision for losses on accounts
receivable 3.4 1.5
Share-based compensation expense 20.7 14.6
Deferred income taxes (75.2) (25.1)
Minority interest, net of income taxes 8.7 7.7
Income tax benefit from share-based
compensation - 2.6
Excess tax benefits from share-based
compensation - (2.4)
Other, net (0.5) (0.6)
Changes in working capital:
Accounts Receivable (15.3) 12.7
Inventories (29.4) 80.6
Prepaid expenses and other current
assets 35.8 (23.5)
Accounts payable (23.4) (42.0)
Accrued expenses 13.0 (30.7)
Other assets and liabilities, net 0.2 31.5
Contributions to pension plans (5.3) (0.8)
Net cash used in discontinued operations (0.3) (0.5)
------------ ------------
Cash flow provided by operating activities 161.1 192.8
------------ ------------
INVESTING ACTIVITIES:
Capital expenditures (129.2) (167.4)
Restricted cash - 2.0
Proceeds from the sale of property and
equipment 1.1 2.9
Intangible asset additions - (0.6)
Purchases of investments - (6.1)
Sales and maturities of investments - 96.7
Acquisition of businesses, net of cash
acquired - (877.7)
------------ ------------
Cash flow used in investing activities (128.1) (950.2)
------------ ------------
FINANCING ACTIVITIES:
Repayment of notes payable - (2.0)
Issuance of debt - 725.0
Proceeds from revolving loan facility 215.0 -
Repayment of revolving loan facility (215.0) -
Repayment of debt (8.9) (55.3)
Payment of deferred financing costs (0.1) (12.7)
Issuances of common stock 1.2 8.7
Purchases of common stock (1.9) (48.4)
Excess tax benefits from share-based
compensation - 2.4
Contributions by minority owners 4.6 -
Distribution to minority owners (6.1) (2.4)
------------ ------------
Cash flow (used in) provided by financing
activities (11.2) 615.3
------------ ------------
Effect of exchange rate changes on cash (5.0) 3.2
Increase (Decrease) in cash and cash
equivalents 16.8 (138.9)
Cash and cash equivalents, beginning of year 232.5 371.4
------------ ------------
Cash and cash equivalents, end of period $ 249.3 $ 232.5
============ ============
COLLECTIVE BRANDS, INC.
RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENT OF (LOSS)
EARNINGS
FOR THE THIRTEEN WEEKS ENDED JANUARY 31, 2009
(UNAUDITED)
(Dollars and shares in millions,
except per share data)
As Reported
(GAAP Non-GAAP
Basis) Adjustments Basis
----------- ----------- -----------
Net sales $ 735.2 $ - $ 735.2
Cost of sales:
Cost of sales 524.4 3.6 (a) 528.0
Impairment of tradenames 88.2 (88.2)(b) -
----------- ----------- -----------
Total cost of sales 612.6 (84.6) 528.0
----------- ----------- -----------
Gross margin 122.6 84.6 207.2
Selling, general and
administrative expenses 239.1 (6.1)(c) 233.0
Impairment of goodwill 42.0 (42.0)(d) -
Restructuring charges - - -
----------- ----------- -----------
Operating (loss) profit from
continuing operations (158.5) 132.7 (25.8)
Interest expense 17.5 - 17.5
Interest income (1.6) - (1.6)
----------- ----------- -----------
(Loss) earnings from continuing
operations before income
taxes and minority interest (174.4) 132.7 (41.7)
(Benefit) provision for income
taxes (34.6) 23.6(e) (11.0)
----------- ----------- -----------
(Loss) earnings from continuing
operations before minority
interest (139.8) 109.1 (30.7)
Minority interest, net of income
taxes (3.9) - (3.9)
----------- ----------- -----------
Net (loss) earnings from
continuing operations (143.7) 109.1 (34.6)
Loss from discontinued
operations, net of
income taxes and minority
interest (0.3) - (0.3)
----------- ----------- -----------
Net (loss) earnings $ (144.0) $ 109.1 $ (34.9)
=========== =========== ===========
Basic (loss) earnings per share:
(Loss) earnings from
continuing operations $ (2.28) $ 1.73 $ (0.55)
Loss from discontinued
operations - - -
----------- ----------- -----------
Basic (loss) earnings per share: $ (2.28) $ 1.73 $ (0.55)
=========== =========== ===========
Diluted (loss) earnings per
share
(Loss) earnings from
continuing operations $ (2.28) $ 1.73 $ (0.55)
Loss from discontinued
operations - - -
----------- ----------- -----------
Diluted (loss) earnings per
share $ (2.28) $ 1.73 $ (0.55)
=========== =========== ===========
Basic weighted average shares
outstanding 63.0 63.0 63.0
Diluted weighted average shares
outstanding 63.0 63.0 63.0
Notes to adjustments:
(a) Represents $16.8 million of net pre-tax litigation recoveries,
partially offset by tangible asset impairments and other charges of
$13.2 million
(b) Represents the tradename impairments.
(c) Represents $6.1 million of charges related to severance and the
cancellation of performance share units.
(d) Represents the goodwill impairment.
(e) Represents the impact of the above adjustments on the GAAP income tax
provision.
COLLECTIVE BRANDS, INC.
RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENT OF (LOSS)
EARNINGS
FOR THE YEAR ENDED JANUARY 31, 2009
(UNAUDITED)
(Dollars and shares in millions,
except per share data)
As Reported
(GAAP Non-GAAP
Basis) Adjustments Basis
--------- ----------- ---------
Net sales $ 3,442.0 $ - $ 3,442.0
Cost of sales:
Cost of sales 2,344.6 (61.8)(a) 2,282.8
Impairment of tradenames 88.2 (88.2)(b) -
--------- ----------- ---------
Total cost of sales 2,432.8 (150.0) 2,282.8
--------- ----------- ---------
Gross margin 1,009.2 150.0 1,159.2
Selling, general and administrative
expenses 1,007.2 (6.9)(c) 1,000.3
Impairment of goodwill 42.0 (42.0)(d) -
Restructuring charges 0.2 - 0.2
--------- ----------- ---------
Operating (loss) profit from
continuing operations (40.2) 198.9 158.7
Interest expense 75.2 - 75.2
Interest income (8.1) - (8.1)
--------- ----------- ---------
(Loss) earnings from continuing
operations before income
taxes and minority interest (107.3) 198.9 91.6
(Benefit) provision for income taxes (48.0) 59.7 (e) 11.7
--------- ----------- ---------
(Loss) earnings from continuing
operations before minority interest (59.3) 139.2 79.9
Minority interest, net of income taxes (8.7) - (8.7)
--------- ----------- ---------
Net (loss) earnings from continuing
operations (68.0) 139.2 71.2
Loss from discontinued operations,
net of income taxes and
minority interest (0.7) - (0.7)
--------- ----------- ---------
Net (loss) earnings $ (68.7) $ 139.2 $ 70.5
========= =========== =========
Basic (loss) earnings per share:
(Loss) earnings from continuing
operations $ (1.08) $ 2.21 $ 1.13
Loss from discontinued
operations (0.01) - (0.01)
--------- ----------- ---------
Basic (loss) earnings per share: $ (1.09) $ 2.21 $ 1.12
========= =========== =========
Diluted (loss) earnings per share
(Loss) earnings from continuing
operations $ (1.08) $ 2.21 $ 1.13
Loss from discontinued
operations (0.01) - (0.01)
--------- ----------- ---------
Diluted (loss) earnings per share $ (1.09) $ 2.21 $ 1.12
========= =========== =========
Basic weighted average shares
outstanding 62.9 62.9 62.9
Diluted weighted average shares
outstanding 62.9 62.9 62.9
Notes to adjustments:
(a) Represents $45.1 million of net pre-tax litigation charges, $13.2
million of tangible asset impairments and other charges and $3.5
million of the flow through of inventory recorded at fair value.
(b) Represents the tradename impairments.
(c) Represents $6.9 million of other charges related to severance and the
cancellation of performance share units.
(d) Represents the goodwill impairment.
(e) Represents the impact of the above adjustments on the GAAP income tax
provision.
COLLECTIVE BRANDS, INC.
RECONCILIATION OF GAAP TO NON-GAAP CONDENSED CONSOLIDATED STATEMENT OF
EARNINGS (LOSS)
FOR THE THIRTEEN WEEKS ENDED FEBRUARY 2, 2008
(UNAUDITED)
(Dollars and shares in millions,
except per share data)
As Reported
(GAAP Non-GAAP
Basis) Adjustments Basis
--------- ----------- ---------
Net sales $ 776.8 $ - $ 776.8
Cost of sales 562.6 (23.7)(a) 538.9
--------- ----------- ---------
Gross margin 214.2 23.7 237.9
Selling, general and administrative
expenses 248.9 - 248.9
Restructuring charges - - -
--------- ----------- ---------
Operating profit (loss) from
continuing operations (34.7) 23.7 (11.0)
Interest expense 19.0 - 19.0
Interest income (2.8) - (2.8)
--------- ----------- ---------
Earnings (loss) from continuing
operations before income
taxes and minority interest (50.9) 23.7 (27.2)
(Benefit) provision for income taxes (7.8) 0.2 (b) (7.6)
--------- ----------- ---------
Earnings (loss) from continuing
operations before minority interest (43.1) 23.5 (19.6)
Minority interest, net of income
taxes (3.5) - (3.5)
--------- ----------- ---------
Net earnings (loss) from continuing
operations (46.6) 23.5 (23.1)
Loss from discontinued operations,
net of income taxes and
minority interest - - -
--------- ----------- ---------
Net earnings (loss) $ (46.6) $ 23.5 $ (23.1)
========= =========== =========
Basic earnings (loss) per share:
Earnings (loss) from continuing
operations $ (0.73) $ 0.37 $ (0.36)
Loss from discontinued
operations - - -
--------- ----------- ---------
Basic earnings (loss) per share: $ (0.73) $ 0.37 $ (0.36)
========= =========== =========
Diluted earnings (loss) per share
Earnings (loss) from continuing
operations $ (0.73) $ 0.37 $ (0.36)
Loss from discontinued
operations - - -
--------- ----------- ---------
Diluted earnings (loss) per share $ (0.73) $ 0.37 $ (0.36)
========= =========== =========
Basic weighted average shares
outstanding 64.2 64.2 64.2
Diluted weighted average shares
outstanding 64.2 64.2 64.2
Notes to adjustments:
(a) Represents the flow through of inventory recorded at fair value
($23.7 pre-tax).
(b) Impact of purchase accounting expenses on the 2007 GAAP income tax
provision, in excess of the impact of purchase accounting expenses
on the GAAP income tax provision recorded through the third quarter
of 2007.
COLLECTIVE BRANDS, INC.
RECONCILIATION OF GAAP TO NON-GAAP CONDENSED CONSOLIDATED STATEMENT OF
EARNINGS
FOR THE YEAR ENDED FEBRUARY 2, 2008
(UNAUDITED)
(Dollars and shares in millions,
except per share data)
As Reported
(GAAP Non-GAAP
Basis) Adjustments Basis
--------- ----------- ---------
Net sales $ 3,035.4 $ - $ 3,035.4
Cost of sales 2,044.5 (48.7)(a) 1,995.8
--------- ----------- ---------
Gross margin 990.9 48.7 1,039.6
Selling, general and administrative
expenses 899.4 - 899.4
Restructuring charges 0.2 - 0.2
--------- ----------- ---------
Operating profit from continuing
operations 91.3 48.7 140.0
Interest expense 46.7 - 46.7
Interest income (14.4) - (14.4)
--------- ----------- ---------
Earnings from continuing operations
before income
taxes and minority interest 59.0 48.7 107.7
Provision for income taxes 8.6 19.4 (b) 28.0
--------- ----------- ---------
Earnings from continuing operations
before minority interest 50.4 29.3 79.7
Minority interest, net of income
taxes (7.7) - (7.7)
--------- ----------- ---------
Net earnings from continuing
operations 42.7 29.3 72.0
Loss from discontinued operations,
net of income taxes and
minority interest - - -
--------- ----------- ---------
Net earnings $ 42.7 $ 29.3 $ 72.0
========= =========== =========
Basic earnings per share:
Earnings from continuing
operations $ 0.66 $ 0.45 $ 1.12
Loss from discontinued
operations - - -
--------- ----------- ---------
Basic earnings per share: $ 0.66 $ 0.45 $ 1.12
========= =========== =========
Diluted earnings per share
Earnings from continuing
operations $ 0.65 $ 0.45 $ 1.10
Loss from discontinued
operations - - -
--------- ----------- ---------
Diluted earnings per share $ 0.65 $ 0.45 $ 1.10
========= =========== =========
Basic weighted average shares
outstanding 64.5 64.5 64.5
Diluted weighted average shares
outstanding 65.4 65.4 65.4
Notes to adjustments:
(a) Represents the flow through of inventory recorded at fair value
($48.7 pre-tax).
(b) Impact of purchase accounting expenses on the 2007 GAAP income tax
provision.
COLLECTIVE BRANDS, INC.
RECONCILIATION OF GAAP CASH FLOW PROVIDED BY OPERATING ACTIVITIES TO
NON-GAAP ADJUSTED EBITDA
(UNAUDITED)
(Dollars in millions)
13 WEEKS ENDED 52 WEEKS ENDED
-------------------- --------------------
JANUARY FEBRUARY JANUARY FEBRUARY
31, 2009 2, 2008 31, 2009 2, 2008
--------- --------- --------- ---------
Cash flow (used in) provided by
operating activities $ (36.7) $ 11.6 $ 161.1 $ 192.8
Changes in working capital 30.7 (24.9) 19.3 2.9
Adjustments for non-cash items
(excluding minority interest,
depreciation and non debt
related amortization)
included in net earnings (106.9) 13.9 (107.2) (0.7)
Changes in other assets and
liabilities, net, and
contributions to
pension plan 7.0 (8.7) 5.1 (30.7)
Net cash used in discontinued
operations 0.3 0.2 0.3 0.5
(Benefit) Provision for income
taxes (34.6) (7.8) (48.0) 8.6
Net interest expense 15.9 16.2 67.1 32.3
--------- --------- --------- ---------
EBITDA (124.3) 0.5 97.7 205.7
Impact of Litigation (16.8) - 45.1 -
Impairment of tradenames 88.2 - 88.2 -
Impairment of goodwill 42.0 - 42.0 -
Other Charges 19.3 - 20.1 -
Flow through of inventory
recorded at fair value - 23.7 3.5 48.7
--------- --------- --------- ---------
Adjusted EBITDA $ 8.4 $ 24.2 $ 296.6 $ 254.4
========= ========= ========= =========
COLLECTIVE BRANDS, INC.
CALCULATION OF NON-GAAP CONSOLIDATED NET DEBT
(UNAUDITED)
(Dollars in millions)
As of As of
January 31, 2009 February 2, 2008
----------------- -----------------
Total debt: $ 913.2 $ 922.3
Less: cash and cash equivalents 249.3 232.5
----------------- -----------------
Net debt $ 663.9 $ 689.8
================= =================
Contact:
James Grant
(785) 559-5321
