Collective Brands Reports 2009 Fourth Quarter, Full Year Financial ResultsRecord Annual Free Cash Flow of $224 Million(1); Fourth Quarter Net Loss Improves to $10.9 Million, or $0.17 per Diluted Share
TOPEKA, KS -- (Marketwire - March 09, 2010) - Collective Brands, Inc. (NYSE: PSS) today reported financial results for its 2009 fourth quarter and fiscal year ended January 30, 2010. The fourth quarter 2009 net loss attributable to Collective Brands, Inc. was $10.9 million, or $0.17 per diluted share, compared to a net loss of $144.0 million, or $2.28 per share, in the fourth quarter of 2008. Taking adjustments(1) into account, the fourth quarter 2009 net loss attributable to Collective Brands, Inc. was $11.6 million, or $0.18 per diluted share, driven by significant gross margin expansion. This compares to a fourth quarter 2008 net loss of $38.1 million, or $0.60 per share.
Full year 2009 net earnings increased to $82.7 million, or $1.28 per diluted share, compared to a net loss of $68.7 million, or $1.09 per diluted share in 2008. Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA")(1) was $301.6 million for 2009 compared to $282.8 million in 2008. Collective Brands generated record free cash flow(1) of $223.6 million in 2009 due to effective working capital management, higher earnings, and reduced capital spending. As a result, net debt(1) decreased $208.1 million, to $455.8 million. In addition, the Company repaid over $40 million of long term debt during the fourth quarter of 2009.
"Our results were strong as we delivered fresh, innovative product throughout our portfolio of brands both domestically and internationally," said Matthew E. Rubel, Chairman, Chief Executive Officer and President of Collective Brands, Inc. "This focus on the consumer led to improved gross margins that, combined with actions that lowered operating costs, drove an 11% increase in adjusted operating profit for the year. As a result, we produced record free cash flow, strengthened our capital structure, and positioned Collective Brands for further growth."
Collective Brands' fourth quarter 2009 net sales were $741.7 million up 0.9%, or 3.3% on an adjusted(1) basis. The Company's fourth quarter 2009 comparable store sales(2) increased 0.7%. Comparable store sales for Payless increased 1.0% and comparable store sales for the Performance + Lifestyle Group (PLG) decreased 3.3%.
Consolidated Quarterly Results - Selected unaudited financial data (dollars in millions, except per share data) for the 13 weeks ended January 30, 2010 and January 31, 2009:
ADJUSTED(1)
------------------------
4th Qtr 4th Qtr
'09 vs '09 vs
4th Qtr 4th Qtr 4th Qtr 4th Qtr 4th Qtr 4th Qtr
2009 2008 '08 2009 2008 '08
------- -------- --------- ------- ------- -------
Net sales $ 741.7 $ 735.2 $ 6.5 $ 741.7 $ 717.9 $ 23.8
Gross margin % 32.9% 16.7% 1,620 bps 33.0% 28.3% 470 bps
Operating profit $ 4.7 ($ 158.5) $ 163.2 $ 3.6 ($ 29.0) $ 32.6
EBITDA $ 39.6 ($ 124.3) $ 163.9 $ 38.5 $ 5.2 $ 33.3
Net (loss)
attributable to
Collective Brands,
Inc. ($ 10.9) ($ 144.0) $ 133.1 ($ 11.6) ($ 38.1) $ 26.5
Diluted (loss) per
share ($ 0.17) ($ 2.28) $ 2.11 ($ 0.18) ($ 0.60) $ 0.42
- -- Net sales for the quarter increased from last year due primarily to
strong growth at PLG in Saucony and Sperry Top-Sider.
- -- The gross margin rate increased 470 basis points on an adjusted basis
due to lower product costs, lower markdowns as a result of a clean
inventory position, and leveraging occupancy and distribution center
expenses.
- -- Operating profit increased to $4.7 million as a result of higher net
sales and gross margin expansion.
Consolidated Full Year Results
Collective Brands' 2009 net sales were $3.31 billion, down 3.9% or 1.7% on an adjusted(1) basis. The Company's 2009 comparable store sales decreased 2.3%. Comparable store sales for Payless and PLG declined 2.3% and 1.6%, respectively. Adjusted 2009 net earnings attributable to Collective Brands, Inc.(1) were $84.5 million, or $1.31 per diluted share, compared to $62.2 million, or $0.99 per diluted share, in 2008.
Inventory at the end of the year was $442.9 million, down 10.0% compared to the prior year end due to lower product costs and a decrease in footwear units. Capital expenditures were $84.0 million compared to $129.2 million last year. The lower capital expenditures reflect the completion of distribution centers and reduced spending on stores. During the fourth quarter of 2009, Collective Brands added 11 new Payless stores, closed 24 Payless stores, and relocated three stores (two Payless and one PLG). For the year, the Company opened 60 new stores (51 Payless and nine PLG), closed 104 stores (103 Payless and one PLG), and relocated 25 stores (22 Payless and three PLG).
Jan. 30, Oct. 31, Jan. 31,
Retail Store Counts 2010 2009 2009
----------- ----------- -----------
Payless ShoeSource 4,470 4,483 4,522
Performance + Lifestyle Group 363 363 355
----------- ----------- -----------
Total Stores 4,833 4,846 4,877
=========== =========== ===========
Quarterly Segment Results (dollars in millions)
Payless Payless PLG
Domestic International Wholesale PLG Retail Total
---------- ----------- ---------- ---------- --------
Fourth Quarter
2009
Net Sales $ 457.5 $ 123.9 $ 115.8 $ 44.5 $ 741.7
Operating
Profit /
(Loss) ($ 12.7) $ 16.7 $ 8.3 ($ 7.6) $ 4.7
Less:
Adjustments
for
Litigation $ 1.1 - - - $ 1.1
---------- ----------- ---------- ---------- --------
Adjusted
Operating
Profit /
(Loss)(1) ($ 13.7) $ 16.7 $ 8.3 ($ 7.6) $ 3.6
========== =========== ========== ========== ========
Fourth Quarter
2008
Net Sales $ 461.1 $ 112.0 $ 118.4 $ 43.7 $ 735.2
Less:
Adjustment
for Tommy
Hilfiger - - $ 17.3 - $ 17.3
---------- ----------- ---------- ---------- --------
Adjusted Net
Sales(1) $ 461.1 $ 112.0 $ 101.1 $ 43.7 $ 717.9
========== =========== ========== ========== ========
Operating
Profit /
(Loss) ($ 29.5) $ 10.3 ($ 89.7) ($ 49.6) ($ 158.5)
Add:
Adjustments $ 0.1 - $ 86.8 $ 42.6 $ 129.5
---------- ----------- ---------- ---------- --------
Adjusted
Operating
Profit /
(Loss)(1) ($ 29.4) $ 10.3 ($ 2.9) ($ 7.0) ($ 29.0)
========== =========== ========== ========== ========
Fourth Quarter
2009
Depreciation and
Amortization $ 24.6 $ 3.8 $ 4.6 $ 1.9 $ 34.9
- -- Payless Domestic - Net sales were virtually flat, as a comparable store
sales increase was offset by 73 fewer stores at year-end. Sales
increased in children's footwear, boots, and women's accessories. The
operating results improved primarily due to gross margin rate
expansion.
- -- Payless International - The net sales increase was driven primarily by
28 new store openings in Colombia and a $5 million benefit from foreign
exchange rates. The increase was partially offset by a sales decline in
Ecuador due to incremental tariffs. Operating profit increased due
primarily to a stronger holiday season and lower operating expenses
offset in part by increased costs to comply with incremental tariffs in
Ecuador. Fourth quarter operating profit in Payless International is
seasonally greater than Payless Domestic due to the importance of the
holiday season in Latin America and Puerto Rico.
- -- PLG Wholesale - Higher net sales at Saucony and Sperry Top-Sider were
more than offset by the expiration of the Tommy Hilfiger adult footwear
licensing agreement. Operating profit increased due to not incurring
charges as in 2008, gross margin rate expansion, and higher net sales
at Saucony and Sperry Top-Sider.
- -- PLG Retail - Net sales increased due to eight additional stores at
quarter-end offset in part by lower comparable store sales. The
operating loss narrowed due to not incurring charges as in 2008.
Outlook for Collective Brands
- -- The 2010 effective tax rate is expected to be approximately 20%,
excluding discrete events primarily associated with the resolution of
outstanding tax audits.
- -- Depreciation and amortization in 2010 is expected to total $140
million.
- -- Capital expenditures in 2010 are expected to total approximately $100
million.
- -- Collective Brands 2010 retail store count is expected to decline by
approximately 15 stores, net of store openings.
Open Close Change
-------- -------- -------
Payless
Payless Domestic 54 114 (60)
-------- -------- -------
Payless International 36 11 25
-------- -------- -------
Payless Total 90 125 (35)
-------- -------- -------
PLG Total 20 0 20
-------- -------- -------
Collective Brands Total 110 125 (15)
======== ======== =======
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:
EBITDA - Defined as earnings before interest, taxes, depreciation and amortization.
Free cash flow - Defined as cash flow provided by operating activities less capital expenditures. Free cash flow provides useful information about the Company's liquidity, its ability to make investments and to service debt.
Net debt - Defined as total debt minus cash and cash equivalents. Net debt provides useful information about the capacity of the Company to reduce its debt and improve its capital structure.
Adjusted net loss attributable to Collective Brands, Inc. - Defined as net loss attributable to Collective Brands, Inc. adjusted for litigation and the related income tax impact for 2009. For 2008, net loss attributable to Collective Brands, Inc. excluding adjustments related to litigation, asset impairments, severance, cancellation of performance share units, and the expiration of the Tommy Hilfiger adult footwear license, as well as their related income tax impacts.
Adjusted diluted loss per share - Defined as diluted loss per share excluding adjustments for litigation and the related income tax impact for 2009. For 2008, diluted loss per share excluding adjustments related to litigation, asset impairments, severance, cancellation of performance share units, and the expiration of the Tommy Hilfiger adult footwear license, as well as their related income tax impacts.
Adjusted net sales - Defined as net sales excluding adjustments related to the expiration of the Tommy Hilfiger adult footwear license.
Adjusted gross margin - Defined as gross margin as a percentage of sales excluding adjustments related to litigation for 2009. For 2008, gross margin as a percentage of sales excluding adjustments related to litigation, asset impairments, and the expiration of the Tommy Hilfiger adult footwear license.
Adjusted operating margin - Defined as operating profit as a percentage of sales excluding adjustments related to litigation for 2009. For 2008, operating profit as a percentage of sales excluding adjustments related to litigation, asset impairments, severance, cancellation of performance share units, and the expiration of the Tommy Hilfiger adult footwear license.
Adjusted EBITDA - Defined as EBITDA excluding adjustments related to litigation for 2009. For 2008, EBITDA excluding adjustments related to litigation, asset impairments, severance, cancellation of performance share units, and the expiration of the Tommy Hilfiger adult footwear license.
Adjusted operating loss - Defined as operating loss excluding adjustments related to litigation for 2009. For 2008, operating loss excluding adjustments related to litigation, asset impairments, severance, cancellation of performance share units, and the expiration of the Tommy Hilfiger adult footwear license.
(2) Comparable store sales include Payless stores from all regions and PLG stores.
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 for Payless ShoeSource, Collective Brands Performance + Lifestyle Group, 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. The Collective Brands Performance + Lifestyle Group markets lifestyle and performance branded footwear for children and adults sold primarily through wholesale and retail under well-known brand names including Stride Rite, Saucony, Sperry Top-Sider, 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 "expected," "believes," 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, 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 or Canadian dollar; 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 January 31, 2009 in Part I, Item 1A, "Risk Factors". 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 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 2008 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 2008 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 EARNINGS
(UNAUDITED)
(dollars and shares in
millions, except per share
data) 13 Weeks Ended 52 Weeks Ended
-------------------- --------------------
January January January January
30, 31, 30, 31,
2010 2009 2010 2009
--------- --------- --------- ---------
Net sales $ 741.7 $ 735.2 $ 3,307.9 $ 3,442.0
Cost of sales:
Cost of sales 498.0 524.4 2,166.9 2,344.6
Impairment of tradenames - 88.2 - 88.2
--------- --------- --------- ---------
Total cost of sales 498.0 612.6 2,166.9 2,432.8
--------- --------- --------- ---------
Gross margin 243.7 122.6 1,141.0 1,009.2
Selling, general and
administrative expenses 238.9 239.1 982.4 1,007.2
Impairment of goodwill - 42.0 - 42.0
Restructuring charges 0.1 - 0.1 0.2
--------- --------- --------- ---------
Operating profit (loss) from
continuing operations 4.7 (158.5) 158.5 (40.2)
Interest expense 14.4 17.5 60.8 75.2
Interest income (0.1) (1.6) (1.1) (8.1)
Loss on early extinguishment of
debt 1.2 - 1.2 -
--------- --------- --------- ---------
Net (loss) earnings from
continuing operations before
income taxes (10.8) (174.4) 97.6 (107.3)
(Benefit) provision for income
taxes (3.7) (34.6) 9.4 (48.0)
--------- --------- --------- ---------
Net (loss) earnings from
continuing operations (7.1) (139.8) 88.2 (59.3)
Earnings (loss) from
discontinued operations, net
of income taxes 0.3 (0.3) 0.1 (0.7)
--------- --------- --------- ---------
Net (loss) earnings (6.8) (140.1) 88.3 (60.0)
Net earnings attributable to
noncontrolling interests (4.1) (3.9) (5.6) (8.7)
--------- --------- --------- ---------
Net (loss) earnings
attributable to Collective
Brands, Inc. $ (10.9) $ (144.0) $ 82.7 $ (68.7)
========= ========= ========= =========
Basic (loss) earnings per share
attributable to Collective
Brands, Inc. common
shareholders:
(Loss) earnings from
continuing operations $ (0.18) $ (2.28) $ 1.29 $ (1.08)
Earnings (loss) from
discontinued operations 0.01 - - (0.01)
--------- --------- --------- ---------
Basic (loss) earnings per share $ (0.17) $ (2.28) $ 1.29 $ (1.09)
========= ========= ========= =========
Diluted (loss) earnings per
share attributable to
Collective Brands, Inc.
Common shareholders:
(Loss) earnings from
continuing operations $ (0.18) $ (2.28) $ 1.28 $ (1.08)
Earnings (loss) from
discontinued operations 0.01 - - (0.01)
--------- --------- --------- ---------
Diluted (loss) earnings per
share $ (0.17) $ (2.28) $ 1.28 $ (1.09)
========= ========= ========= =========
Basic weighted average shares
outstanding 63.3 63.0 63.1 62.9
Diluted weighted average shares
outstanding 63.3 63.0 63.5 62.9
COLLECTIVE BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
January 30, January 31,
(dollars in millions) 2010 2009
----------- -----------
ASSETS:
Current assets:
Cash and cash equivalents $ 393.5 $ 249.3
Accounts receivable, net 95.5 97.5
Inventories 442.9 492.0
Current deferred income taxes 42.1 35.6
Prepaid expenses 48.9 58.7
Other current assets 21.7 25.3
Current assets of discontinued operations 0.5 1.3
----------- -----------
Total current assets 1,045.1 959.7
Property and Equipment:
Land 7.0 8.6
Property, buildings and equipment 1,403.1 1,458.6
Accumulated depreciation and amortization (945.9) (945.8)
----------- -----------
Property and equipment, net 464.2 521.4
Intangible assets, net 445.5 446.0
Goodwill 279.8 281.6
Deferred income taxes 6.5 1.7
Other assets 43.2 40.9
----------- -----------
TOTAL ASSETS $ 2,284.3 $ 2,251.3
=========== ===========
LIABILITIES AND EQUITY:
Current liabilities:
Current maturities of long-term debt $ 6.9 $ 24.8
Accounts payable 195.9 173.8
Accrued expenses 181.8 202.7
Current liabilities of discontinued
operations 1.3 1.9
----------- -----------
Total current liabilities 385.9 403.2
Long-term debt 842.4 888.4
Deferred income taxes 65.5 49.2
Other liabilities 226.3 264.2
Noncurrent liabilities of discontinued operations 0.3 0.3
Equity:
Collective Brands, Inc. shareowners' equity 735.2 622.3
Noncontrolling interests 28.7 23.7
----------- -----------
Total equity 763.9 646.0
----------- -----------
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $ 2,284.3 $ 2,251.3
=========== ===========
COLLECTIVE BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
52 Weeks Ended
------------------------
January 30, January 31,
(dollars in millions) 2010 2009
----------- -----------
OPERATING ACTIVITIES:
Net earnings (loss) $ 88.3 $ (60.0)
(Earnings) loss from discontinued operations, net
of income taxes (0.1) 0.7
Adjustments for non-cash items included in net
earnings (loss):
Loss on impairment and disposal of assets 11.8 25.6
Impairment of goodwill and indefinite-lived
tradenames - 130.2
Depreciation and amortization 143.2 140.9
Provision for losses on accounts receivable 2.9 3.4
Share-based compensation expense 16.4 20.7
Deferred income taxes 3.8 (75.2)
Loss on extinguishment of debt 1.2 -
Other, net (0.1) (0.5)
Changes in working capital:
Accounts Receivable 0.6 (15.3)
Inventories 53.2 (29.4)
Prepaid expenses and other current assets 15.2 35.8
Accounts payable 20.2 (23.4)
Accrued expenses (24.6) 13.0
Changes in other assets and liabilities, net (15.2) 0.2
Contributions to pension plans (9.5) (5.3)
Net cash provided by (used in) discontinued
operations 0.3 (0.3)
----------- -----------
Cash flow provided by operating activities 307.6 161.1
----------- -----------
INVESTING ACTIVITIES:
Capital expenditures (84.0) (129.2)
Intangible asset additions (19.0) -
Proceeds from the sale of property and equipment 2.8 1.1
----------- -----------
Cash flow used in investing activities (100.2) (128.1)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from notes payable 0.9 -
Repayment of notes payable (0.9) -
Proceeds from revolving loan facility - 215.0
Repayment of revolving loan facility - (215.0)
Proceeds from issuance of debt 1.2 -
Repayment of debt (66.1) (8.9)
Payment of deferred financing costs - (0.1)
Issuances of common stock 8.2 1.2
Purchases of common stock (7.6) (1.9)
Contributions by noncontrolling interests 5.5 4.6
Distribution to noncontrolling interests (6.2) (6.1)
----------- -----------
Cash flow used in financing activities (65.0) (11.2)
----------- -----------
Effect of exchange rate changes on cash 1.8 (5.0)
Increase in cash and cash equivalents 144.2 16.8
Cash and cash equivalents, beginning of year 249.3 232.5
----------- -----------
Cash and cash equivalents, end of year $ 393.5 $ 249.3
=========== ===========
COLLECTIVE BRANDS, INC.
RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENT OF EARNINGS
FOR THE THIRTEEN WEEKS ENDED JANUARY 30, 2010
(UNAUDITED)
(dollars and shares in millions,
except per share data)
As
Reported
(GAAP Non-GAAP
Basis) Adjustments Basis
---------- ---------- ----------
Net sales $ 741.7 $ - $ 741.7
Cost of sales 498.0 (1.0)(a) 497.0
---------- ---------- ----------
Gross margin 243.7 1.0 244.7
Selling, general and administrative
expenses 238.9 2.1(b) 241.0
Restructuring charges 0.1 - 0.1
---------- ---------- ----------
Operating profit from continuing
operations 4.7 (1.1) 3.6
Interest expense 14.4 - 14.4
Interest income (0.1) - (0.1)
Loss on extinguishment of debt 1.2 - 1.2
---------- ---------- ----------
Loss from continuing operations
before income taxes (10.8) (1.1) (11.9)
Benefit for income taxes (3.7) (0.4)(c) (4.1)
---------- ---------- ----------
Loss from continuing operations (7.1) (0.7) (7.8)
Earnings from discontinued
operations, net of income taxes 0.3 - 0.3
---------- ---------- ----------
Net loss (6.8) (0.7) (7.5)
Net earnings attributable to
noncontrolling interests (4.1) - (4.1)
---------- ---------- ----------
Net loss attributable to Collective
Brands, Inc. $ (10.9) $ (0.7) $ (11.6)
========== ========== ==========
Basic loss per share attributable
to Collective Brands, Inc. common
shareholders:
Loss from continuing operations $ (0.18) $ (0.01) $ (0.19)
Earnings from discontinued
operations 0.01 - 0.01
---------- ---------- ----------
Basic loss per share attributable
to Collective Brands, Inc. common
shareholders $ (0.17) $ (0.01) $ (0.18)
========== ========== ==========
Diluted loss per share attributable
to Collective Brands, Inc. common
shareholders:
Loss from continuing operations $ (0.18) $ (0.01) $ (0.19)
Earnings from discontinued
operations 0.01 - 0.01
---------- ---------- ----------
Diluted loss per share attributable
to Collective Brands, Inc. common
shareholders $ (0.17) $ (0.01) $ (0.18)
========== ========== ==========
Basic weighted average shares
outstanding 63.3 63.3 63.3
Diluted weighted average shares
outstanding 63.3 63.3 63.3
Notes to adjustments:
(a) Represents $1.0 million of litigation charges.
(b) Represents $2.1 million of proceeds received for Visa settlement.
(c) Represents the tax impact of the above adjustments.
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 $ (17.3)(a) $ 717.9
Cost of sales:
Cost of sales 524.4 (9.8)(b) 514.6
Impairment of tradenames 88.2 (88.2)(c) -
---------- ---------- ----------
Total cost of sales 612.6 (98.0) 514.6
---------- ---------- ----------
Gross margin 122.6 80.7 203.3
Selling, general and administrative
expenses 239.1 (6.8)(d) 232.3
Impairment of goodwill 42.0 (42.0)(e) -
Restructuring charges - - -
---------- ---------- ----------
Operating loss from continuing
operations (158.5) 129.5 (29.0)
Interest expense 17.5 - 17.5
Interest income (1.6) - (1.6)
---------- ---------- ----------
Loss from continuing operations
before income taxes (174.4) 129.5 (44.9)
Benefit for income taxes (34.6) 23.6(f) (11.0)
---------- ---------- ----------
Loss from continuing operations (139.8) 105.9 (33.9)
Loss from discontinued operations,
net of income taxes (0.3) - (0.3)
---------- ---------- ----------
Net loss (140.1) 105.9 (34.2)
Net earnings attributable to
noncontrolling interests (3.9) - (3.9)
---------- ---------- ----------
Net loss attributable to Collective
Brands, Inc. $ (144.0) $ 105.9 $ (38.1)
========== ========== ==========
Basic and diluted loss per share
attributable to Collective Brands,
Inc. common shareholders:
Loss from continuing operations $ (2.28) $ 1.68 $ (0.60)
Loss from discontinued operations - - -
---------- ---------- ----------
Basic and diluted loss per share
attributable to Collective Brands,
Inc. common shareholders $ (2.28) $ 1.68 $ (0.60)
========== ========== ==========
Basic and diluted weighted average
shares outstanding 63.0 63.0 63.0
Notes to adjustments:
(a) Represents sales associated with the Tommy Hilfiger adult footwear
license.
(b) Represents tangible asset impairments and other charges of $13.2
million and $13.4 million of cost of sales associated with the
expiration of the Tommy Hilfiger adult footwear license,
offset by $16.8 million of net pre-tax litigation recoveries.
(c) Represents the tradename impairments related to PLG.
(d) Represents $6.1 million of charges related to severance and the
cancellation of performance share units and $0.7 million of selling,
general, and administrative expenses associated with the Tommy
Hilfiger adult footwear license.
(e) Represents the goodwill impairment related to PLG.
(f) Represents the impact of the above adjustments.
COLLECTIVE BRANDS, INC.
RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED JANUARY 30, 2010
(UNAUDITED)
(dollars and shares in millions,
except per share data)
As
Reported
(GAAP Non-GAAP
Basis) Adjustments Basis
---------- ---------- ----------
Net sales $ 3,307.9 $ - $ 3,307.9
Cost of sales 2,166.9 (4.1)(a) 2,162.8
---------- ---------- ----------
Gross margin 1,141.0 4.1 1,145.1
Selling, general and administrative
expenses 982.4 1.1(b) 983.5
Restructuring charges 0.1 - 0.1
---------- ---------- ----------
Operating profit from continuing
operations 158.5 3.0 161.5
Interest expense 60.8 - 60.8
Interest income (1.1) - (1.1)
Loss on extinguishment of debt 1.2 - 1.2
---------- ---------- ----------
Earnings from continuing operations
before income taxes 97.6 3.0 100.6
Provision for income taxes 9.4 1.2(c) 10.6
---------- ---------- ----------
Earnings from continuing operations 88.2 1.8 90.0
Earnings from discontinued
operations, net of income taxes 0.1 - 0.1
---------- ---------- ----------
Net earnings 88.3 1.8 90.1
Net earnings attributable to
noncontrolling interests (5.6) - (5.6)
---------- ---------- ----------
Net earnings attributable to
Collective Brands, Inc. $ 82.7 $ 1.8 $ 84.5
========== ========== ==========
Basic earnings per share
attributable to Collective Brands,
Inc. common shareholders:
Earnings from continuing
operations $ 1.29 $ 0.03 $ 1.32
Earnings from discontinued
operations - - -
---------- ---------- ----------
Basic earnings per share
attributable to Collective Brands,
Inc. common shareholders $ 1.29 $ 0.03 $ 1.32
========== ========== ==========
Diluted earnings per share
attributable to Collective Brands,
Inc. common shareholders:
Earnings from continuing
operations $ 1.28 $ 0.03 $ 1.31
Earnings from discontinued
operations - - -
---------- ---------- ----------
Diluted earnings per share
attributable to Collective Brands,
Inc. common shareholders $ 1.28 $ 0.03 $ 1.31
========== ========== ==========
Basic weighted average shares
outstanding 63.1 63.1 63.1
Diluted weighted average shares
outstanding 63.5 63.5 63.5
Notes to adjustments:
(a) Represents $3.5 million of litigation charges and $0.6 million of
severance charges.
(b) Represents $2.1 million of proceeds received for Visa settlement
partially offset by $1.0 of severance charges.
(c) Represents the tax impact of the above adjustments.
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 $ (77.0)(a) $ 3,365.0
Cost of sales:
Cost of sales 2,344.6 (118.6)(b) 2,226.0
Impairment of tradenames 88.2 (88.2)(c) -
---------- ---------- ----------
Total cost of sales 2,432.8 (206.8) 2,226.0
---------- ---------- ----------
Gross margin 1,009.2 129.8 1,139.0
Selling, general and administrative
expenses 1,007.2 (13.3)(d) 993.9
Impairment of goodwill 42.0 (42.0)(e) -
Restructuring charges 0.2 - 0.2
---------- ---------- ----------
Operating (loss) profit from
continuing operations (40.2) 185.1 144.9
Interest expense 75.2 - 75.2
Interest income (8.1) - (8.1)
---------- ---------- ----------
(Loss) earnings from continuing
operations before income taxes (107.3) 185.1 77.8
(Benefit) provision for income
taxes (48.0) 54.2(f) 6.2
---------- ---------- ----------
(Loss) earnings from continuing
operations (59.3) 130.9 71.6
Loss from discontinued operations,
net of income taxes (0.7) - (0.7)
---------- ---------- ----------
Net (loss) earnings (60.0) 130.9 70.9
Net earnings attributable to
noncontrolling interests (8.7) - (8.7)
---------- ---------- ----------
Net (loss) earnings $ (68.7) $ 130.9 $ 62.2
========== ========== ==========
Basic and diluted (loss) earnings
per share attributable to
Collective Brands, Inc. common
shareholders:
(Loss) earnings from
continuing operations $ (1.08) $ 2.08 $ 1.00
Loss from discontinued
operations (0.01) - (0.01)
---------- ---------- ----------
Basic and diluted (loss) earnings
per share attributable to
Collective Brands, Inc. common
shareholders $ (1.09) $ 2.08 $ 0.99
========== ========== ==========
Basic and diluted weighted average
shares outstanding 62.9 62.9 62.9
Notes to adjustments:
(a) Represents sales associated with the Tommy Hilfiger adult footwear
license.
(b) Represents $45.1 million of net pre-tax litigation charges, $13.2
million of tangible asset impairments and other charges, $3.5 million
of the flow through of inventory recorded at fair value, and
$56.8 million of cost of sales associated with the expiration of the
Tommy Hilfiger adult footwear license.
(c) Represents the tradename impairments related to PLG.
(d) Represents $6.9 million of other charges related to severance and the
cancellation of performance share units and $6.4 million of selling,
general, and administrative expenses associated with the Tommy
Hilfiger adult footwear license.
(e) Represents the goodwill impairment related to PLG.
(f) Represents the impact of the above adjustments.
COLLECTIVE BRANDS, INC.
CALCULATION OF NON-GAAP CONSOLIDATED FREE CASH FLOW
(UNAUDITED)
(dollars in millions)
52 weeks ended
-------------------------
January 30, January 31,
2010 2009
------------ ------------
Cash flow provided by operating activities $ 307.6 $ 161.1
Less: Capital expenditures 84.0 129.2
------------ ------------
Free cash flow $ 223.6 $ 31.9
============ ============
COLLECTIVE BRANDS, INC.
CALCULATION OF NON-GAAP CONSOLIDATED NET DEBT
(UNAUDITED)
(dollars in millions)
January 30, January 30,
2010 2009
------------ ------------
Total debt: $ 849.3 $ 913.2
Less: cash and cash equivalents 393.5 249.3
------------ ------------
Net debt $ 455.8 $ 663.9
============ ============
COLLECTIVE BRANDS, INC.
RECONCILIATION OF GAAP CASH FLOW PROVIDED BY OPERATING ACTIVITIES TO
NON-GAAP EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
(dollars in millions)
13 weeks 13 weeks
ended ended
January 30, January 31,
2010 2009
------------ ------------
Cash flow provided by operating activities $ 4.8 $ (36.7)
Changes in working capital 23.7 30.7
Adjustments for non-cash items (excluding
depreciation and non debt related amortization)
included in net earnings (11.6) (106.9)
Changes in other assets and liabilities, net,
and contributions to pension plan 11.0 7.0
Net cash provided by discontinued operations (0.1) 0.3
Benefit for income taxes (3.7) (34.6)
Net interest expense 14.3 15.9
Loss on early extinguishment of debt 1.2 -
------------ ------------
EBITDA $ 39.6 $ (124.3)
------------ ------------
Impact of Litigation 1.0 (16.8)
Impairment of tradenames - 88.2
Impairment of goodwill - 42.0
Impact of expiration of Tommy Hilfiger adult
footwear license - (3.2)
Other Charges (2.1) 19.3
------------ ------------
Adjusted EBITDA $ 38.5 $ 5.2
============ ============
COLLECTIVE BRANDS, INC.
RECONCILIATION OF GAAP CASH FLOW PROVIDED BY OPERATING ACTIVITIES TO
NON-GAAP EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
(dollars in millions)
52 weeks 52 weeks
ended ended
January 30, January 31,
2010 2009
------------ ------------
Cash flow provided by operating activities $ 307.6 $ 161.1
Changes in working capital (64.6) 19.3
Adjustments for non-cash items (excluding
depreciation and non debt related amortization)
included in net earnings (39.1) (107.2)
Contributions to pension plan and changes in
Other assets and liabilities, net 24.7 5.1
Net cash provided by discontinued operations (0.3) 0.3
(Benefit) Provision for income taxes 9.4 (48.0)
Net interest expense 59.7 67.1
Loss on early extinguishment of debt 1.2 -
------------ ------------
EBITDA $ 298.6 $ 97.7
------------ ------------
Impact of Litigation 3.5 45.1
Impairment of tradenames - 88.2
Impairment of goodwill - 42.0
Flow through of inventory recorded at fair
value - 3.5
Impact of expiration of Tommy Hilfiger adult
footwear license - (13.8)
Other Charges (0.5) 20.1
------------ ------------
Adjusted EBITDA $ 301.6 $ 282.8
============ ============
Investment Community Contact:
James Grant
(785) 559-5321
Media Contact:
Mardi Larson
(612) 928-0202
