ELIZABETH ARDEN, INC.
[Red Door Logo]
FOR IMMEDIATE RELEASE
ELIZABETH ARDEN, INC. REPORTS FIRST QUARTER RESULTS
~ Confirms Fiscal 2004 Guidance ~
~Net Sales and EPS In-Line with Recently Provided Estimates~
- -----------------------------------------------------------------------------
New York, New York (May 28, 2003) -- Elizabeth Arden, Inc. (NASDAQ:
RDEN), a leading global prestige fragrance and beauty products company, today
reported results for the first quarter of fiscal 2004 that are in-line with
previously provided estimates outlined in the Company's press release issued
on May 19, 2003.
Net sales for the first quarter ended April 26, 2003 were $134.8 million
as compared to net sales of $140.3 million for the first quarter of the prior
year. As previously stated, the weak retail environment in the U.S. and the
impact of the SARS (Severe Acute Respiratory Syndrome) epidemic, particularly
in Asia, Canada and the travel retail markets, more than offset increases with
the Company's mass customers and favorable foreign currency translation.
Selling, general and administrative expenses were $55.6 million compared
with $53.6 million in the prior year period, largely due to the Company's
increase in advertising expenditures to support its brands. Interest expense
declined to $10.1 million in the first fiscal quarter from $10.4 million in
the prior year period reflecting a reduction in the Company's long-term debt
and the benefit of lower interest rates under its bank credit facility.
Net loss before accretion and dividends on preferred stock was $15.7
million compared to a net loss of $9.9 million for the first quarter last
year. Net loss attributable to common shareholders was $16.7 million, or $0.93
per share, compared to a net loss of $10.8 million, or $0.61 per share, in the
prior year. After giving effect to an effective tax rate of 36% used during
the first quarter of the prior year, as compared to the 28.7% effective tax
rate used during the first quarter of this year, the net loss per share for
the first quarter of this year would have been $0.84.
The Company's total debt outstanding as of the end of the first fiscal
quarter this year declined by $18.5 million as compared to the end of the
first quarter of last year due to the Company's continued efforts to reduce
its debt balances. As of April 26, 2003, short-term borrowings under the
Company's senior credit facility were $59.5 million compared to $64.6 million
as of April 27, 2002.
E. Scott Beattie, Chairman and Chief Executive Officer of Elizabeth
Arden, Inc., commented, "While we had expected the first quarter to be
affected by the soft retail environment in the U.S., we did not anticipate the
disruption the SARS epidemic had on our travel retail business and in certain
local markets, namely in Asia and Canada, where business was severely
impacted, particularly in April. The impact of SARS in these local markets
and on our travel retail business represented approximately two-thirds of the
shortfall for the quarter. In the context of our overall business, however,
the sales and earnings shortfall is a modest amount relative to the full year.
The continued strength of our mass customers and the number of initiatives we
have slated for the remainder of the year, including the distribution of new
brands and a strong innovation calendar of new products, combined with
generally favorable foreign exchange benefits should positively impact our
results the rest of the year."
OUTLOOK
The Company's initial guidance for fiscal 2004 assumed some degree of
economic weakness due to the challenging retail environment. It did not
anticipate the adverse retail environment for the Company's international
business, particularly the travel retail business and in certain local
markets, associated with the SARS epidemic. If these events continue or are
slow to recover, the Company anticipates its results will continue to be
affected throughout the year. The Company still expects to achieve its
financial objectives for the year, led by the strength of its mass business
and new product and other initiatives. The Company confirms its previously
provided expectations for a 5% to 7% increase in annual net sales and a 20% to
25% increase in diluted earnings per share over the prior fiscal year.
With respect to the second quarter, the Company estimates net sales of
$130 million to $140 million and is comfortable with the analysts' consensus
estimate of a loss of $0.65 per share. After giving effect to the Company's
current effective tax rate of 28%, the loss per share in the second quarter of
the prior year would have been $0.69.
CONFERENCE CALL INFORMATION
The Company will host a conference call today at 10:00 a.m. Eastern Time
to discuss first quarter results as well as its outlook for the remainder of
fiscal year 2004. All interested parties can listen to a live web cast of the
Company's conference call by logging on to the Company's web site at
www.elizabetharden.com. An online archive of the broadcast will be available
within one hour of the completion of the call and will be accessible on the
Company's web site at www.elizabetharden.com until June 11, 2003.
Elizabeth Arden is a leading global prestige fragrance and beauty
products company. The Company's portfolio of leading brands includes the
fragrance brands Red Door, Elizabeth Arden green tea, 5th Avenue, ardenbeauty,
Elizabeth Taylor's White Diamonds, Passion and Forever Elizabeth, White
Shoulders, Geoffrey Beene's Grey Flannel, Halston, Halston Z-14, Unbound, PS
Fine Cologne for Men, Design and Wings; the Elizabeth Arden skin care line,
including Ceramides and Eight Hour Cream; and the Elizabeth Arden cosmetics
line.
Company Contact: Marcey Becker, Senior Vice President, Finance
(203) 462-5809
Investor Contact: Cara O'Brien/Athan Dounis
FD Morgen-Walke
(212) 850-5600
Press Contact: Laura Novak
FD Morgen-Walke
(212) 850-5600
In connection with the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995, Elizabeth Arden, Inc., is hereby providing
cautionary statements identifying important factors that could cause our
actual results to differ materially from those projected in forward-looking
statements (as defined in such act). Any statements that express, or involve
discussions as to, expectations, beliefs, plans, objectives, assumptions or
future events or performance (often, but not always, through the use of words
or phrases such as "will likely result," "are expected to," "will continue,"
"is anticipated," "estimated," "intends," "plans" and "projection") are not
historical facts and may be forward-looking and may involve estimates and
uncertainties which could cause actual results to differ materially from those
expressed in the forward-looking statements. Accordingly, any such statements
are qualified in their entirety by reference to, and are accompanied by, the
following key factors that have a direct bearing on our results of operations:
our substantial indebtedness and debt service obligations; our ability to
successfully and cost-effectively integrate acquired businesses or new brands;
our absence of contracts with customers or suppliers and our ability to
maintain and develop relationships with customers and suppliers; international
and domestic economic and business changes that could impact consumer
confidence; our customers' financial condition; our ability to access capital
for acquisitions; the assumptions underlying our critical accounting
estimates; the retention and availability of key personnel; changes in the
retail, fragrance and cosmetic industries; our ability to launch new products
and implement our growth strategy; the impact of competitive products and
pricing; changes in product mix to less profitable products; risks of
international operations, including foreign currency fluctuations; economic
and political consequences of terrorist attacks and political instability in
certain regions of the world; diseases affecting customer purchasing patterns
including the Severe Acute Respiratory Syndrome (SARS) epidemic; delays in
shipments, inventory shortages and higher costs of production due to
interruption of operations at key manufacturing or fulfillment facilities
that, after consolidations of manufacturing and fulfillment locations,
manufacture or provide logistic services for the majority of our supply of
certain products; changes in the legal, regulatory and political environment
that impact, or will impact, our business, including changes to customs or
trade regulations or accounting standards; legal and regulatory proceedings
that affect, or will affect, our business; and other risks and uncertainties.
We caution that the factors described herein could cause actual results to
differ materially from those expressed in any forward-looking statements we
make and that investors should not place undue reliance on any such forward-
looking statements. Further, any forward-looking statement speaks only as of
the date on which such statement is made, and we undertake no obligation to
update any forward-looking statement to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
anticipated or unanticipated events or circumstances. New factors emerge from
time to time, and it is not possible for us to predict all of such factors.
Further, we cannot assess the impact of each such factor on our results of
operations or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in any forward-
looking statements.
(Financial Tables To Follow)
ELIZABETH ARDEN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS DATA
(Unaudited)
(In thousands, except percentages and per share data)
Three Months Ended
April 26, 2003 April 27, 2002
-------------- --------------
Net Sales $134,754 $140,284
Cost of Sales 86,022 86,379
-------- --------
Gross Profit 48,732 53,905
Gross Profit Percentage (a) 36.2% 38.4%
Selling, General and Administrative
Expenses 55,609 53,630
Depreciation and Amortization 5,129 5,368
-------- --------
Total Operating Expenses 60,738 58,998
Interest Expense (10,134) (10,404)
Other Income (Expense) 152 (19)
Loss Before Income Taxes (21,988) (15,516)
Benefit from Income Taxes (6,313) (5,587)
-------- --------
Net Loss (15,675) (9,929)
Accretion of Preferred Stock 976 914
-------- --------
Net Loss Attributable to
Common Shareholders $(16,651) $(10,843)
======== ========
Basic Loss per Share $ (0.93) $ (0.61)
Diluted Loss per Share $ (0.93) $ (0.61)
Basic Shares 17,889 17,712
Diluted Shares 17,889 17,712
EBITDA (b) $ (6,725) $ 256
EBITDA Percentage (a) (5.0)% 0.2%
---------------------
(a) Based on the percentages of net sales for the periods.
more --
(b) EBITDA is defined as net income plus the provision for income taxes or
net loss less the benefit from income taxes, plus interest expense,
plus depreciation and amortization. EBITDA should not be considered
as an alternative to operating income (loss) or net income (loss) (as
determined in accordance with generally accepted accounting
principles) as a measure of our operating performance or to net cash
provided by operating, investing and financing activities (as
determined in accordance with generally accepted accounting
principles) as a measure of our ability to meet cash needs. We
believe that EBITDA is a measure commonly reported and widely used by
investors and other interested parties as a measure of a company's
operating performance and debt servicing ability because it assists in
comparing performance on a consistent basis without regard to capital
structure (particularly when acquisitions are involved), depreciation
and amortization, which can vary significantly depending upon
accounting methods (particularly when acquisitions are involved) or
non-operating factors (such as historical cost). Accordingly, as a
result of our capital structure and the accounting method used for our
acquisitions, we believe EBITDA is a relevant measure. This
information has been disclosed here to permit a more complete
comparative analysis of our operating performance relative to other
companies and of our debt servicing ability. EBITDA may not, however,
be comparable in all instances to other similar types of measures.
The following is a reconciliation of net loss, as determined in
accordance with generally accepted accounting principles, to EBITDA:
(For a reconciliation of net loss to EBITDA for prior periods, see
the Company's Annual Report on form 10-K for the fiscal year ended
January 31, 2003 which can be found on the Company's website at
www.elizabetharden.com).
Quarter Ending Quarter Ending
April 26, 2003 April 27, 2002
-------------- --------------
Net loss $(15,675) $(9,929)
Plus (less):
Benefit from income taxes (6,313) (5,587)
Interest expense 10,134 10,404
Depreciation and amortization 5,129 5,368
-------- -------
EBITDA $ (6,725) $ 256
======== =======
-- more -
ELIZABETH ARDEN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited except for January 31, 2003)
(In thousands)
---------------------- As of ----------------------
April 26, 2003 January 31, 2003 April 27, 2002
-------------- ---------------- --------------
Cash $ 20,933 $ 22,663 $ 29,050
Accounts Receivable, Net 127,476 118,844 118,169
Inventories 215,453 200,876 194,112
Property and Equipment, Net 34,963 36,216 37,429
Brand Licenses and
Trademarks, Net 203,200 205,534 209,699
Total Assets 648,494 627,620 650,452
Short-Term Debt 59,500 2,068 64,575
Current Liabilities 192,067 150,833 201,407
Long-Term Liabilities 323,657 329,309 334,226
Total Debt 374,397 322,397 392,890
Preferred Stock 16,609 15,634 12,894
Shareholders' Equity 116,161 131,844 101,925
Working Capital 199,981 216,461 182,432
# # #