EXHIBIT 99.1
FRANK'S NURSERY & CRAFTS, INC. ANNOUNCES 2002 YEAR END RESULTS
TROY, MICHIGAN, April 28, 2003 -- Frank's Nursery & Crafts, Inc. (OTC: FNCN)
today reported financial results for fiscal year 2002 which ended January 26,
2003. Net sales for the 2002 fiscal year were $315.1 million versus $371.4
million in 2001, a decrease of 15.2%. Fiscal year 2002 comparable store sales,
or sales in stores open at least a year, were down 5.3% compared to 2001. In
2001, the company recorded sales of $39 million in 49 stores closed during the
year. Sales for 2002 were impacted by unfavorable weather patterns during the
spring lawn and garden season and weak general economic conditions.
Since Frank's emergence from Chapter 11 Bankruptcy in May 2002, the Company had
a net loss of $17.6 million or $0.88 per share. For the fourth quarter 2002,
Frank's had a net loss of $4.5 million or $0.22 per share compared to a net loss
of $33.3 million in the fourth quarter of 2001.
"While we are disappointed by the fiscal year 2002 results, it was a year of
transition in which we exited from bankruptcy," stated David Samber, Chairman of
the Board. "Shortly after the end of the year, we were fortunate to be able to
bring on board someone of Bruce Dale's caliber and character as our CEO. With
the disruptive effects of bankruptcy behind us, and Bruce leading the charge,
our associates are focused and energized to return Frank's to profitability in
the future."
Frank's Nursery and Crafts, Inc. is the nation's largest lawn and garden
specialty retailer and operates 170 stores in 14 states. Frank's is also a
leading retailer of Christmas trim-a-tree merchandise, artificial flowers and
arrangements, garden decor and home decor products.
This press release contains forward-looking statements, which reflect
management's current views of future events and financial performance. These
forward-looking statements are based on many assumptions and factors detailed in
the Company's filings with the Securities and Exchange Commission, including the
effects of currency fluctuations, customer demand, fashion trends, competitive
market forces, uncertainties related to the effect of competitive products and
pricing, customer acceptance of the Company's merchandise mix and retail
locations, unseasonable weather, risks associated with foreign global sourcing,
including political instability and changes in import regulations, economic
conditions worldwide, and the ability of the Company to execute its business
plans effectively. Any changes in such assumptions or factors could produce
significantly different results. The Company undertakes no obligations to update
forward-looking statements, whether as a result of new information, future
events, or otherwise.
FRANK'S NURSERY & CRAFTS, INC.
STATEMENTS OF OPERATIONS
TWELVE WEEKS ENDED JANUARY 26, 2003 AND JANUARY 27, 2002;
THIRTY-SIX WEEKS ENDED JANUARY 26, 2003;
SIXTEEN WEEKS ENDED MAY 19, 2002; AND FISCAL YEAR 2001 ENDED JANUARY 27, 2002
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
Twelve Twelve Thirty-six
Weeks Weeks Weeks Sixteen Fiscal Year
Ended Ended Ended Weeks 2001 Ended
January 26, January 27, January 26, Ended January 27,
2003 2002 2003 May 19, 2002 2002
----------- ------------ ----------- ------------- -------------
(Successor) (Predecessor) (Successor) (Predecessor) (Predecessor)
(2) (2) (2) (2) (2)
(Restated)(1)
NET SALES $ 75,474 $ 85,874 $ 204,156 $ 110,992 $ 371,417
OPERATING COSTS AND EXPENSES:
Cost of sales, including buying and occupancy 54,732 64,707 153,953 80,756 297,850
Selling, general and administrative 23,858 24,215 61,873 31,490 109,404
Restructuring and other related charges (270) 28,794 1,127 21,839 40,887
Early extinguishment of debt 4,230
Amortization of goodwill 368 1,631
Other income (20) (810) (200) (118) (1,221)
-------- -------- --------- --------- ---------
Total operating costs and expenses 78,300 117,274 216,753 133,967 452,781
-------- -------- --------- --------- ---------
LOSS FROM OPERATIONS (2,826) (31,400) (12,597) (22,975) (81,364)
INTEREST EXPENSE (CONTRACTUAL INTEREST OF
$6,210 FOR THE SIXTEEN WEEKS ENDED MAY
19, 2002 AND $21,513 FOR 2001) 1,637 1,931 5,034 2,583 10,632
-------- -------- --------- --------- ---------
LOSS BEFORE REORGANIZATION ITEMS AND
INCOME TAXES (4,463) (33,331) (17,631) (25,558) (91,996)
-------- -------- --------- --------- ---------
REORGANIZATION ITEMS:
Gain on cancellation of pre-petition
liabilities 184,954
Fresh start adjustments 324
Extinguishment of debt (1,439)
-------- -------- --------- --------- ---------
Total reorganization items 0 0 0 183,839 0
-------- -------- --------- --------- ---------
INCOME TAX EXPENSE
-------- -------- --------- --------- ---------
NET (LOSS) INCOME $ (4,463) $(33,331) $ (17,631) $ 158,281 $ (91,996)
======== ======== ========= ========= =========
LOSS PER SHARE - BASIC AND DILUTED $ (0.22) $ (0.88)
======== =========
</Table>
(1) The sixteen weeks ended May 19, 2002 have been restated to reflect a
reorganization item for extinguishment of debt of $1,439 belonging to
the Predecessor.
(2) References to "Predecessor Company" represent Frank's Nursery & Crafts,
Inc. on and prior to May 20, 2002, and references to "Successor
Company" refer to the newly reorganized Frank's Nursery & Crafts, Inc.
on and after May 20, 2002 after giving effect to the implementation of
fresh start reporting. The results of the Predecessor Company should
not be considered indicative of the performance of the Successor
Company. The adoption of fresh start reporting results in a new
reporting entity for financial reporting purposes and as such, the
income statement for the fiscal year 2002 is not comparable to fiscal
year 2001.
FRANK'S NURSERY & CRAFTS, INC.
BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT FOR PAR VALUE)
FY 2002 FY 2001
January 26, 2003 January 27, 2002
---------------- ----------------
ASSETS (Successor) (Predecessor)
Current assets:
Cash and cash equivalents $ 3,068 $ 1,870
Marketable securities 1,030 1,061
Notes receivable 1,231
Accounts receivable 1,218 2,805
Merchandise inventory 39,050 37,629
Assets to be disposed of 200 9,051
Prepaid expenses and other current assets 4,076 7,058
--------- ----------
Total current assets 48,642 60,705
--------- ----------
Property, equipment and leasehold improvements, net 55,126 96,055
Other assets and deferred charges 3,713 8,553
--------- ----------
Total assets $ 107,481 $ 165,313
========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 16,781 $ 8,437
Accounts payable pre-petition 32,487
Accrued expenses 17,630 31,244
Accrued expenses payable pre-petition 1,902 20,783
Notes payable to banks 24,297
Notes payable to financial institutions 15,250
Current portion of long-term debt 1,685
Pre-petition long-term debt (including subordinated debt of $115,000) 139,315
--------- ----------
Total current liabilities 53,248 256,563
--------- ----------
Long-term debt:
Senior debt, less current portion 24,730 3,220
Term Loan, net of unamortized discount 16,323
--------- ----------
Total long-term debt 41,053 3,220
--------- ----------
Other liabilities 3,334 3,525
Shareholders' equity (deficit):
Predecessor common stock $1.00 par value, 1,000 shares authorized, 1,000
shares issued and outstanding 1
Successor preferred stock $.001 par value, 10,000,000 shares authorized,
none issued
Successor common stock $.001 par value, 50,000,000 shares authorized,
13,346,642 shares issued and outstanding and 6,653,358 shares to be issued 20
Additional paid-in-capital 27,457 165,999
Net parent investment 16,117
Retained deficit (17,631) (280,112)
--------- ----------
Total shareholders' equity (deficit) 9,846 (97,995)
--------- ----------
Total liabilities and shareholders' equity (deficit) $ 107,481 $ 165,313
========= ==========