EXIBIT 99.1
BOOKS-A-MILLION News Release
402 Industrial Lane
Birmingham, AL 35211
205-942-3737
Contact: Richard S. Wallington
Chief Financial Officer
205) 942-3737
BOOKS-A-MILLION, INC. ANNOUNCES FOURTH QUARTER RESULTS
__________________________________________________________
Net Income Increases 20.3%
Comparable Store Sales Increase 2.7%
Announces Restatement For Lease Accounting
BIRMINGHAM, Ala. (March 9, 2005) Books-A-Million, Inc. (Nasdaq/NM:BAMM)
today announced financial results for the fourth quarter and fiscal year ended
January 29, 2005.
Net sales for the 13-week period ended January 29, 2005, increased 2.9% to
$149.4 million from sales of $145.2 million for the 13-week period ended January
31, 2004. Comparable store sales for the quarter increased 2.7%. Net income for
the quarter was $9.2 million, or $0.54 per diluted share, compared with net
income of $7.6 million, or $0.44 per diluted share, in the year-earlier period.
In the Company's January 2005 holiday sales press release it was stated that the
fourth quarter would include a gain on insurance recoveries related to stores
damaged by hurricanes. Due to the timing of the completion of rebuilding those
stores and the related collection of the proceeds, the insurance gain will not
be recorded until fiscal 2006. The Company expects to report a gain of $0.03 to
$0.05 per diluted share at that time.
For the 52-week period ended January 29, 2005, net sales increased 3.7% to
$475.2 million, compared with $458.3 million in the prior year. Comparable store
sales increased 2.5% when compared with the same 52-week period of the prior
year. For fiscal 2005, the Company reported net income of $10.2 million, or
$0.59 per diluted share, compared to $7.1 million, or $0.42 per diluted share,
for fiscal 2004.
Commenting on the results, Sandra B. Cochran, Chief Executive Officer and
President, said, "We are pleased with the positive trends from the holiday
season, which, combined with solid execution in the stores, gave us momentum
going into January and delivered a strong finish to the fiscal year. Our balance
sheet reflects the continued progress we are making in inventory management,
margin improvement and debt reduction. Sales in several categories helped drive
the business in the fourth quarter: Jon Stewart's America: The Book fueled
growth in the humor category, and we saw gains in children's books due to the
success of the Series Of Unfortunate Events and Polar Express movies. Joel
Osteen's Your Best Life Now was a huge bestseller in the inspirational book
category, and Michael Crichton, John Grisham, Jimmy Buffett and James Patterson
contributed bestsellers in fiction."
Books-a-Million has evaluated its lease accounting practices as a result of
a clarification issued by the Securities and Exchange Commission (SEC) on
February 7, 2005, in a letter to the American Institute of Certified Public
Accountants (AICPA) and has corrected its accounting for leases. Specifically,
the Company has corrected its computation of depreciation for leasehold
improvements, the accounting for rent holidays and the classification of
landlord allowances related to leasehold improvements. The Company will provide
comparable historical results by restating its prior financial statements. The
financial results released today include the impact of these lease accounting
adjustments.
For the first nine months of fiscal 2005, the impact of the adjustments on
net income after taxes was an additional expense of $55,000. The impact on net
income after taxes for the five fiscal years from fiscal 2000 through fiscal
2004 was additional (income) or expense of $22,000, ($32,000), ($25,000),
$48,000 and $74,000, respectively. As of year-end fiscal 2005, property and
equipment on the balance sheet will increase by approximately $9.5 million and
other long-term liabilities will increase by approximately the same dollar
amount. This restatement will not have an impact on historical or future net
cash flows.
In previous periods, the Company had depreciated leasehold improvements
over a period of 10 years, regardless of the term of the lease for the store.
The Company has changed its depreciable life for leasehold improvements to the
lesser of the economic useful life of the asset or the term of the lease. Also,
when calculating the straight-line rent expense per store, the Company had
previously used the store opening date as the starting date for the rent expense
calculation. The Company has changed this calculation to start straight-line
rent expense on the date the Company takes possession of the building for
initial set-up of fixtures and merchandise.
The Company also corrected its method of classification of landlord
allowances. For certain new stores, the Company receives funding from landlords
for the construction of leasehold improvements. Historically, landlord
allowances have been classified on the Company's balance sheets as reductions of
property and equipment and as a reduction in capital expenditures in the
Company's statements of cash flows. However, the Company will now classify
landlord allowances as a deferred rent liability in the balance sheets and as an
operating activity in the statements of cash flows.
Excluding the gain from insurance recoveries that will be recorded in
fiscal 2006, the Company is projecting net income for fiscal 2006 in the range
of $0.67 to $0.69 per diluted share versus the fiscal 2005 net income of $0.59
per diluted share. Projected net income for the year, including the one-time
insurance gain, is $0.70 to $0.74 per diluted share. Net income for the first
quarter of fiscal 2006 is expected to be in the range of $0.03 to $0.05 per
diluted share versus last year's net income of $0.07 per diluted share. The
lower projected first quarter net income for fiscal 2006 is partially due to
increased new store opening costs during the first quarter. Also, there will be
a shift of inventory counting costs to the first quarter from later quarters for
the current year.
Books-A-Million is one of the nation's leading book retailers and sells on
the Internet at www.booksamillion.com. The Company presently operates 207 stores
in 19 states and the District of Columbia. The Company operates four distinct
store formats, including large superstores operating under the names
Books-A-Million and Books & Co., traditional bookstores operating under the
names Books-A-Million and Bookland, and Joe Muggs Newsstands.
BOOKS-A-MILLION, INC.
Unaudited Consolidated Financial Highlights
(In thousands, except per share data)
13 Weeks Ended 52 Weeks Ended
--------------------- ---------------------
(as restated) (as restated)
Jan. 29, Jan. 31, Jan. 29, Jan. 31,
2005 2004 2005 2004
--------- --------- --------- ---------
NET SALES $ 149,398 $ 145,225 $ 475,226 $ 458,290
Cost of sales
(including warehouse,
distribution and
store occupancy
costs) 103,123 101,492 339,851 330,909
--------- --------- --------- ---------
GROSS PROFIT 46,275 43,733 135,375 127,381
Operating, selling
and administrative
expenses 26,889 26,374 99,399 94,155
Depreciation and
amortization 4,461 4,556 17,792 18,068
--------- --------- --------- ---------
OPERATING INCOME 14,925 12,803 18,184 15,158
Interest expense,
net 366 445 1,874 2,909
--------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 14,559 12,358 16,310 12,249
Income tax provision 5,387 4,696 6,035 4,648
--------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS 9,172 7,662 10,275 7,601
DISCONTINUED OPERATIONS:
Loss from discontinued
operations (including
loss on disposal) (28) (88) (121) (754)
Income tax benefit 11 33 45 279
--------- --------- --------- ---------
LOSS FROM DISCONTINUED
OPERATIONS (17) (55) (76) (475)
--------- --------- --------- ---------
NET INCOME $ 9,155 $ 7,607 $ 10,199 $ 7,126
========= ========= ========= =========
NET INCOME PER COMMON SHARE:
Basic:
Income from
continuing
operations $ 0.56 $ 0.46 $ 0.62 $ 0.47
Loss from
discontinued
operations -- -- -- (0.03)
--------- --------- --------- ---------
Net income $ 0.56 $ 0.46 $ 0.62 $ 0.44
========= ========= ========= =========
Diluted:
Income from
continuing
operations $ 0.54 $ 0.44 $ 0.59 $ 0.45
Loss from
discontinued
operations -- -- -- (0.03)
--------- --------- --------- ---------
Net income $ 0.54 $ 0.44 $ 0.59 $ 0.42
========= ========= ========= =========
Weighted average shares
outstanding:
Basic 16,290 16,371 16,453 16,279
========= ========= ========= =========
Diluted 17,029 17,132 17,178 16,789
========= ========= ========= =========
Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995:
This document contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that involve a
number of risks and uncertainties. A number of factors could cause actual
results, performance, achievements of the Company, or industry results to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. These factors include,
but are not limited to, the competitive environment in the book retail industry
in general and in the Company's specific market area; inflation; economic
conditions in general and in the Company's specific market areas; the number of
store openings and closings; the profitability of certain product lines, capital
expenditures and future liquidity; liability and other claims asserted against
the Company; uncertainties related to the Internet and the Company's Internet
initiative. In addition, such forward-looking statements are necessarily
dependent upon assumptions, estimates and dates that may be incorrect or
imprecise and involve known and unknown risks, uncertainties and other factors.
Accordingly, any forward-looking statements included herein do not purport to be
predictions of future events or circumstances and may not be realized. Given
these uncertainties, shareholders and prospective investors are cautioned not to
place undue reliance on such forward-looking statements. The Company disclaims
any obligations to update any such factors or to publicly announce the results
of any revisions to any of the forward-looking statements contained herein to
reflect future events or developments.