ELIZABETH ARDEN
[Red Door Logo]
FOR IMMEDIATE RELEASE
ELIZABETH ARDEN, INC. REPORTS THIRD QUARTER RESULTS
- - EPS of $1.59, Before Non-Cash Charge, Ahead of Consensus Estimate of $1.50 -
- Company Affirms Full Year Guidance -
- ------------------------------------------------------------------------------
New York, New York (December 5, 2003) - Elizabeth Arden, Inc. (NASDAQ:
RDEN), a global prestige fragrance and beauty products company, today reported
results for the third quarter and the nine months ended October 25, 2003.
THIRD QUARTER RESULTS
Net sales for the third quarter increased to $321.3 million compared with
$314.8 million for the same quarter last year and are in line with the
Company's prior guidance. As previously indicated, sales results for the
third quarter reflect a shift in promotional and fragrance innovation
activities between the Company's third and fourth fiscal quarters as compared
to the prior year period.
Net income increased to $38.9 million compared with $37.7 million for the
same period last year. Third quarter earnings per fully diluted share were
$1.59, before giving effect to a non-cash charge for the accretion associated
with the Series D Convertible Preferred Stock converted into common stock
which was sold in the Company's recent public offering. This exceeded the
analysts' consensus estimate of $1.50 per share. Reported earnings, after
giving effect to the above charge, was $0.88 per fully diluted share.
Earnings per fully diluted share of $1.59 were based on 24.5 million
weighted average shares outstanding. This compares to $1.64 per fully diluted
share, based on 23.0 million weighted average shares outstanding, in the prior
year period. The increase in the number of shares is the result of the public
offering of common stock completed in October 2003, as well as an increase in
the Company's stock price, which increases the number of fully diluted shares
based on the treasury method of accounting for the Company's outstanding stock
options.
E. Scott Beattie, Chairman and Chief Executive Officer of Elizabeth
Arden, Inc., commented, "The third quarter was an eventful one. The
successful equity offering completed in October allowed to us to accelerate
our de-leveraging strategy and increase our market float by over 40%.
Including the $20 million of bonds we just called, we have reduced our long-
term debt by over $100 million since the beginning of the year. All of our
selling units performed as expected, and our mass business in particular
continued to strengthen throughout the quarter."
Mr. Beattie continued, "We are optimistic as we enter the holiday selling
season. While it is still early, we are encouraged by our solid retail
performance to date. Moreover, we are excited about the impact our advertising
efforts will have on our brands across all of our channels of distribution
this season. Our first television commercial featuring global spokesperson
Catherine Zeta-Jones just recently began to air and, along with television
commercials supporting our Elizabeth Taylor fragrances, will continue
throughout the holiday season."
NINE MONTHS RESULTS
Net sales for the first nine months of fiscal 2004 increased to $600.5
million compared with $582.3 million for the same period of the prior fiscal
year. Net income for the nine-month period was $13.1 million compared with
net income of $17.7 million for the same period last fiscal year.
REDEMPTION OF SENIOR SECURED NOTES AND SENIOR NOTES
On November 21, 2003, the Company redeemed $56 million principal amount
of its 11 3/4% Senior Secured Notes due 2011 at a redemption price of 111.75%,
plus accrued interest. The Company funded the repurchase with the net
proceeds from its public offering of 5,750,000 shares of common stock, which
it closed on October 22, 2003. The Company sold 3,666,667 shares in the
offering, and Unilever sold 2,083,333 shares, at an offering price of $18.25
per share.
As previously announced, on October 24, 2003, the Company repurchased $20
million aggregate principal amount of its 10 3/8% Senior Notes due 2007 at a
redemption price of 103.458%, plus accrued interest.
Also, on November 18, 2003, the Company called for redemption an
additional $20 million of its 10 3/8% Senior Notes due 2007 at the same
redemption price, plus accrued interest. The redemption date will be
December 17, 2003.
OUTLOOK
Based on the continued strength of the mass business, increases in the
Company's advertising and promotional activities, and an anticipated
improvement in the holiday selling season as compared to last year, the
Company confirms its previous expectations for the full fiscal year ended
January 31, 2004. Annual net sales are expected to be in the range of $790
million to $805 million. Annual earnings per fully diluted share are expected
to range between $0.90 and $0.95, before the non-cash charge for the accretion
associated with the Series D Convertible Preferred Stock mentioned earlier,
charges related to the early extinguishment of debt, and approximately $2.0
million to $2.5 million charge related to the recently announced consolidation
of its distribution facilities.
The current earnings per share guidance includes the interest savings
resulting from the repurchase of senior notes with the net proceeds from the
Company's recently completed common stock offering and is based on 25.1
million weighted average shares outstanding. The Company's prior guidance of
earnings of $0.93 to $0.98 per fully diluted share was based on 23.4 million
common shares outstanding. The increase in the weighted average number of
fully diluted outstanding common shares reflects the common stock offering.
CONFERENCE CALL INFORMATION
The Company will host a conference call today at 10:00 a.m. Eastern Time
to discuss third 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 December 19, 2003.
Elizabeth Arden is a global prestige fragrance and beauty products
company. The Company's portfolio of leading brands includes the fragrance
brands Red Door, Red Door Revealed, Elizabeth Arden green tea, 5th Avenue,
ardenbeauty, Elizabeth Taylor's White Diamonds, Passion, Forever Elizabeth and
Gardenia, 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/Lila Sharifian
Financial Dynamics
(212) 850-5600
Press Contact: Stephanie Sampiere
Financial Dynamics
(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,
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 Nine Months Ended
October 25, October 26, October 25, October 26,
2003 2002 2003 2002
----------- ----------- ---------- -----------
Net Sales $321,313 $314,807 $600,490 $582,277
Cost of Sales 186,276 177,738 359,331 342,577
-------- -------- -------- --------
Gross Profit 135,037 137,069 241,159 239,700
Gross Profit Percentage (a) 42.0% 43.5% 40.2% 41.2%
Selling, General and
Administrative Expenses 64,490 61,537 176,384 163,196
Depreciation and
Amortization 5,038 5,874 15,253 17,280
-------- -------- -------- --------
Total Operating Expenses 69,528 67,411 191,637 180,476
Interest Expense, Net (10,631) (11,265) (31,007) (32,321)
Other Income (Expense) (293) 77 (145) 218
Income Before Income Taxes 54,585 58,470 18,370 27,121
Provision for Income Taxes 15,664 20,738 5,272 9,455
-------- -------- -------- --------
Net Income 38,921 37,732 13,098 17,666
-------- -------- -------- --------
Accretion and Dividend on
Preferred Stock 1,001 913 2,963 2,740
Accelerated Accretion on
Converted Preferred Stock 18,584 -- 18,584 --
-------- -------- -------- --------
Net Income (Loss)
Attributable to Common
Shareholders $ 19,336 $ 36,819 $ (8,449) $ 14,926
======== ======== ======== ========
As reported:
- -----------
Basic Income (Loss)
Per Share $ 1.07 $ 2.07 $ (0.47) $ 0.84
Diluted Income (Loss)
Per Share $ 0.88 $ 1.64 $ (0.47) $ 0.77
Basic Shares 18,097 17,765 17,966 17,733
Diluted Shares 22,468 22,980 17,966 23,040
EBITDA (b) $ 70,254 $ 75,609 $ 64,630 $ 76,722
EBITDA Percentage (a) 21.9% 24.0% 10.8% 13.2%
Adjusted before giving
effect to the converted
Series D Convertible
Preferred Stock (c)
- ------------------------
Basic Income Per Share $ 2.10 $ 2.07 $ 0.56 $ 0.84
Diluted Income Per Share $ 1.59 $ 1.64 $ 0.55 $ 0.77
Basic Shares 18,097 17,765 17,966 17,733
Diluted Shares 24,529 22,980 23,879 23,040
- ------------------------
(a) Based on the percentages of net sales for the periods.
(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 income, as determined in
accordance with generally accepted accounting principles, to EBITDA: (For a
reconciliation of net income to EBITDA for prior fiscal year 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).
(In thousands)
Three Months Ended Nine Months Ended
October 25, October 26, October 25, October 26,
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net income $ 38,921 $ 37,732 $ 13,098 $ 17,666
Plus:
Provision for
income taxes 15,664 20,738 5,272 9,455
Interest expense 10,631 11,265 31,007 32,321
Depreciation and
amortization 5,038 5,874 15,253 17,280
-------- -------- -------- --------
EBITDA 70,254 75,609 64,630 76,722
Debt extinguishment
charges 290 - 168 -
-------- -------- -------- --------
EBITDA excluding debt
extinguishment charges $ 70,544 $ 75,609 $ 64,798 $ 76,722
======== ======== ======== ========
[Remainder of Page Intentionally Left Blank]
(c) The following tables reconcile the calculation of net income (loss) per
share on a basic and fully diluted basis from the amounts reported in
accordance with generally accepted accounting principles ("GAAP") to such
amounts before giving effect to the accretion on the converted Series D
Convertible Preferred Stock ("Preferred Stock"). This disclosure is being
provided as we believe it is meaningful to our investors and other interested
parties to understand the Company's operating performance on a consistent
basis without regard to the anti-dilutive effects of the timing of the
accretion charges on the Preferred Stock. The presentation of the non-GAAP
information titled "Net income per share as adjusted" or "Net income per
diluted share as adjusted" is not meant to be considered in isolation or as a
substitute for net income or diluted income per share prepared in accordance
with GAAP
Three Months Ended Nine Months Ended
October 25, October 26, October 25, October 26,
2003 2002 2003 2002
----------- ----------- ----------- -----------
As reported:
- -----------
Basic
Net income (loss) attributable to
common shareholders as reported $19,336 $36,819 $(8,449) $14,926
======= ======= ======= =======
Weighted average shares
outstanding as reported 18,097 17,765 17,966 17,187
====== ====== ====== ======
Net income (loss) per
basic share as reported $1.07 $2.07 $(0.47) $0.84
===== ===== ===== ======
Diluted
Net income (loss) attributable to
common shareholders as reported $19,336 $36,819 $(8,449) $14,926
Accretion and dividend on the
Preferred Stock not converted during
the period 500 913 -- 2,740
------- ------- ------- -------
Net income (loss) as adjusted $19,836 $37,732 $(8,449) $17,666
======= ======= ======= =======
Weighted average basic shares
outstanding as reported 18,097 17,765 17,966 17,733
Potential common shares --
treasury method 2,130 1,048 -- 1,140
Assumed conversion of Preferred Stock 2,083 4,167 -- 4,167
Dividend shares on the Preferred Stock 158 --
------- ------- ------- -------
Weighted average shares and potential
dilutive shares as reported 22,468 22,980 17,966 23,040
======= ======= ======= =======
Net income (loss) per diluted share
as reported $0.88 $1.64 $(0.47) $0.77
===== ===== ====== =====
Adjusted before giving effect to the
converted Preferred Stock:
- ------------------------------------
Basic
Net income (loss) attributable to
common shareholders as reported $19,336 $36,819 $(8,449) $14,926
Accelerated accretion on the converted
Preferred Stock 18,584 18,584 --
------- ------- ------- -------
Net income attributable to common
shareholders as adjusted $37,920 $36,819 $10,135 $14,926
======= ======= ======= =======
Weighted average shares
outstanding as reported 18,097 17,765 17,966 17,733
====== ====== ====== ======
Net income per share as adjusted $2.10 $2,07 $0.56 $0.84
===== ===== ===== =====
Diluted
Net income (loss) as adjusted $19,836 $37,732 $(8,449) $17,666
Accretion and dividend on the
Preferred Stock converted during
the period 501 -- 2,963 --
Accelerated accretion on the Preferred
Stock converted during the period 18,584 -- 18,584 --
------- ------- ------- -------
Net income as adjusted before
giving effect to the converted
Preferred Stock $38,921 $37,732 $13,098 $17,666
======= ======= ======= =======
Weighted average shares and potential
dilutive shares as reported 22,468 22,980 17,966 23,040
Potential common shares -- treasury
method -- -- 1,596 --
Effect of assumed conversion of
Preferred Stock at beginning of
period 2,061 -- 4,159 --
Dividend shares on the Preferred Stock - - 158 -
------- ------- ------- -------
Weighted average shares and potential
dilutive shares as adjusted 24,529 22,980 23,879 23,040
======= ====== ======= =======
Net income per diluted share as
adjusted before giving effect to the
converted Preferred Stock $1.59 $1.64 $0.55 $0.77
===== ===== ===== =====
ELIZABETH ARDEN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited except for January 31, 2003)
(In thousands)
----------------------- As of ----------------------
October 25, 2003 January 31, 2003 October 26, 2002
---------------- ---------------- ----------------
Cash $ 22,771 $ 22,663 $ 14,347
Accounts Receivable, Net 275,916 118,844 285,367
Inventories 213,251 200,876 199,702
Property and Equipment, Net 36,516 36,216 35,843
Exclusive Brand Licenses,
Trademarks and
Intangibles, Net 196,702 205,534 204,773
Total Assets 786,820 627,620 791,198
Short-Term Debt 87,010 2,068 125,000
Current Liabilities 264,286 150,833 312,557
Long-Term Liabilities 295,391 329,309 333,741
Total Debt 378,842 322,397 450,962
Preferred Stock 10,253 15,634 14,720
Shareholders' Equity 216,890 131,844 130,180
Working Capital 272,960 216,461 218,618
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