EXHIBIT 99
FOR IMMEDIATE RELEASE: March 24, 1999
Heilig-Meyers Company Hires a New President and Chief Operating Officer,
Announces Aggressive Strategic Plans and Reports 4th Quarter Results
Richmond, VA: Heilig-Meyers Company (NYSE: HMY) today announced that
Don Shaffer has been hired as President and Chief Operating Officer and will
join the Company on April 1, 1999. Mr. Shaffer has over 30 years of retail
experience. From 1994 to 1996 Mr. Shaffer served as President and CEO, Sears
Canada, leading this $4 billion retail and catalogue business to significantly
improved levels of profitability. In his most recent position as Chairman and
CEO, Western Auto Supply Company, a division of Sears, Roebuck and Company, Mr.
Shaffer successfully orchestrated a major turnaround in this retail concept.
William C. DeRusha, Chairman and Chief Executive Officer, also
announced today that in an effort to substantially improve the overall financial
position of the Company and to refocus on its core home furnishings operation,
management is taking an aggressive review of strategic divestiture options of
all non-core operating assets. He added that Salomon Smith Barney had been
retained by the Company to advise on the possible divestiture of its Rhodes
division and that management was currently evaluating potential transactions and
other strategic options. Additionally, the Company has engaged Goldman Sachs &
Co. and Nationsbanc Montgomery Securities LLC to pursue the possible divestiture
of Mattress Discounters. The net proceeds from these two potential transactions
would be used to pay down debt, resulting in significant interest savings, and
also would likely result in a net one-time gain upon completion of both
divestitures.
The Company reported consolidated results for the fourth quarter and
fiscal year ended February 28, 1999. Total revenues for the quarter increased
3.1% to $654.2 million, compared to $634.7 million in the prior year quarter.
For the three month period ended February 28, 1999, the Company recorded a net
loss of $27.2 million, or $0.45 per share compared to a net loss of $29.1
million or $0.50 per share in the prior year quarter. Impacting results for the
quarter were approximately $25.5 million in pre-tax costs, or $0.27 per share,
resulting from severance payments, third-party contract pay-outs, and asset
write-downs, primarily associated with a $30.0 million expense reduction plan
implemented in the fourth quarter.
For the twelve months ended February 28, 1999, total revenues increased
10.4% to $2.7 billion from $2.5 billion in the prior year period. Including
pre-tax costs of $25.5 million, or $0.27 per share, primarily related to an
expense reduction plan, for the fiscal year ended February 28, 1999, the Company
recorded a net loss of $2.0 million, or $0.03 per share, versus a net loss of
$55.1 million or $0.98 per share in the prior fiscal year.
Mr. DeRusha noted that overall sales trends and customer traffic
patterns were significantly improved during the last half of the fourth quarter.
He added that the Heilig-Meyers division was well above plan in the month of
February and that these positive trends would carry momentum into the new fiscal
year. However, due to slower sales in the critical December month and the
transition underway at the Company's Rhodes division, earnings from operations
for the quarter ended February 28, 1999, were below management's expectations.
Management noted that the fourth quarter was transitional in nature as the
Company worked to implement a cost reduction plan and certain strategic changes
to better position its operations for the upcoming fiscal year.
In a closing statement Mr. DeRusha commented that the management of
Heilig-Meyers Company was committed to taking the necessary steps to improve
shareholder value and that during the fourth quarter management had taken
aggressive steps to lower operating costs in the upcoming fiscal year. He added
that the Company's core business was making solid progress towards stated
objectives and that a more streamlined and keenly focused business strategy
should be instrumental in improving overall operating performance.
Heilig-Meyers Company is the Nation's largest retailer of furniture,
bedding and related items. As of February 28, 1999, the Company operated 1,249
stores: 815 as Heilig-Meyers, 236 as Mattress Discounters, 96 as Rhodes, 70 as
The RoomStore and 32 in Puerto Rico as Berrios.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: The forward-looking statements made above and identified by such words as
"expects," "should," and "believes" reflect the Company's reasonable judgments
with respect to future events and is subject to risks and uncertainties that
could cause actual results to differ materially from those in the
forward-looking statement. Such factors include but are not limited to, the
customer's willingness, need and financial ability to purchase home furnishings
and related items, the costs and effectiveness of promotional activities, the
Company's access to, and cost of, capital as well as valuations at which certain
potential divestitures may occur. Other factors such as changes in tax laws,
consumer credit and bankruptcy trends, recessionary or expansive trends in the
Company's markets, inflation rates and regulations and laws which affect the
Company's ability to do business in its markets may also impact the outcome of
the forward-looking statement.
HEILIG-MEYERS COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands except per share data )
Three Months Ended Twelve Months Ended
February 28, February 28,
---------------------------------- -----------------------------------
1999 1998 1999 1998
---- ---- ---- ----
Revenues:
Sales $ 586,303 $ 554,018 $ 2,431,152 $ 2,160,223
Other income 67,900 80,714 295,206 309,513
-------------- -------------- --------------- ---------------
Total revenues 654,203 634,732 2,726,358 2,469,736
-------------- -------------- --------------- ---------------
Costs and expenses:
Costs of sales 403,641 388,409 1,637,901 1,451,560
Selling, general and administrative 243,132 214,738 907,913 828,105
Interest 18,429 19,260 75,676 67,283
Provision for doubtful accounts 31,578 32,117 107,916 181,645
Store closing and other charges - 25,530 - 25,530
-------------- -------------- --------------- ---------------
Total costs and expenses 696,780 680,054 2,729,406 2,554,123
-------------- -------------- --------------- ---------------
Loss before income tax benefit (42,577) (45,322) (3,048) (84,387)
Income tax benefit (15,384) (16,261) (1,081) (29,244)
-------------- -------------- --------------- ---------------
Net loss $ (27,193) $ (29,061) $ (1,967) $ (55,143)
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Net loss per share of common stock:
Basic $ (0.45) $ (0.50) $ (0.03) $ (0.98)
============== ============== =============== ===============
Diluted $ (0.45) $ (0.50) $ (0.03) $ (0.98)
============== ============== =============== ===============
Weighted average shares:
Basic 59,808 58,088 59,331 56,312
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Diluted 59,808 58,088 59,331 56,312
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Cash dividends per share of common stock $ $ $ $
0.07 0.07 0.28 0.28
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HEILIG-MEYERS COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
February 28, February 28,
1999 1998
---------------------- ------------------
ASSETS
Current assets:
Cash $ 67,254 $ 48,779
Accounts receivable, net 254,282 392,765
Retained interest in securitized
receivables 190,970 182,158
Inventories 493,463 542,868
Other current assets 128,605 126,978
------------------ ------------------
Total current assets 1,134,574 1,293,548
------------------ ------------------
Property and equipment, net 400,686 398,151
Other assets 72,632 55,321
Excess costs over net assets acquired, net 344,160 350,493
------------------ ------------------
$ 1,952,052 $ 2,097,513
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 210,000 $ 260,000
Long-term debt due within one year 167,486 22,365
Accounts payable 193,799 203,048
Accrued expenses 182,956 216,738
------------------ ------------------
Total current liabilities 754,241 702,151
------------------ ------------------
Long-term debt 547,344 715,271
Deferred income taxes 45,365 70,937
Total stockholders' equity 605,102 609,154
------------------ ------------------
$ 1,952,052 $ 2,097,513
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