EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACT: ALAN MINKER
Sr. Vice President/Chief Financial Officer
(248) 712-7007
FRANK'S NURSERY & CRAFTS, INC. REPORTS FIRST QUARTER EARNINGS
TROY, MICHIGAN, June 18, 2003 - Frank's Nursery & Crafts, Inc. (OTC: FNCN) today
reported results for the first quarter ended May 18, 2003. Income was $1.0
million versus a prior year loss of $25.6 million before reorganization items.
Comparable store sales, or sales in stores open at least a year, were up 5.1%
compared to the first quarter of 2002. Net sales for the first quarter were
$116.7 million versus $111.0 million in 2002.
Selling, general and administrative expenses as a percentage of sales were 27.0%
in the first quarter of 2003 versus 28.4% in the first quarter of 2002.
"This quarter was a positive step in the right direction, but there is still
much work to do and great opportunities for improvement," stated Bruce Dale,
Frank's Nursery & Crafts Chief Executive Officer. "We thank our associates for
their diligent work through our very important first quarter. Their hard work
and dedication can be seen in our increase in sales and reduction in expenses
compared to last year."
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.
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FRANK'S NURSERY & CRAFTS, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
SIXTEEN WEEKS ENDED MAY 18, 2003 AND MAY 19, 2002
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Sixteen Weeks Sixteen Weeks
Ended Ended
May 18, May 19,
2003 2002
--------- ---------
(Successor) (Predecessor)
(Restated) (1)
NET SALES $ 116,652 $ 110,992
OPERATING COSTS AND EXPENSES:
Cost of goods sold, including buying and occupancy 81,288 80,756
Selling general and administrative 31,480 31,490
Restructuring and other related charges - 21,839
Other (income) expense (119) (118)
--------- ---------
Total operating costs and expenses 112,649 133,967
--------- ---------
INCOME (LOSS) FROM OPERATIONS 4,003 (22,975)
INTEREST EXPENSE (CONTRACTUAL INTEREST OF $6,210 FOR THE
SIXTEEN WEEKS ENDED MAY 19, 2002) 2,967 2,583
--------- ---------
INCOME (LOSS) BEFORE REORGANIZATION ITEMS AND INCOME TAXES 1,036 (25,558)
--------- ---------
REORGANIZATION ITEMS:
Gain on cancellation of pre-petition liabilities - 184,954
Fresh start adjustments - 324
Extinguishment of debt - (1,439)
--------- ---------
Total reorganization items - 183,839
--------- ---------
INCOME TAX EXPENSE - -
--------- ---------
NET INCOME (LOSS) $ 1,036 $ 158,281
========= =========
INCOME PER SHARE - BASIC AND DILUTED $ 0.05
=========
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED 20,000
=========
(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.
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FRANK'S NURSERY & CRAFTS, INC.
BALANCE SHEETS
(Dollars in thousands, except for par value)
May 18, May 19, January 26,
2003 2002 2003
------------ ------------- -----------
(Successor) (Predecessor) (Successor)
ASSETS (Un audited) (Un audited)
Restated (1)
Current assets:
Cash and cash equivalents $ 14,107 $ 10,499 $ 3,068
Marketable securities 1,042 1,001 1,030
Accounts receivable, net 948 1,920 1,218
Merchandise inventory 76,593 61,625 39,050
Assets to be disposed of 0 6,497 200
Prepaid expenses and other current assets 4,226 5,653 4,076
--------- --------- ---------
Total current assets 96,916 87,195 48,642
Property, plant and equipment, net 54,612 90,836 55,126
Other assets and deferred charges 4,335 6,650 3,713
--------- --------- ---------
Total assets $ 155,863 $ 184,681 $ 107,481
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 57,761 $ 42,864 $ 16,781
Accounts payable pre-petition 32,539
Accrued expenses 27,008 32,834 17,630
Accrued expense payables pre-petition 1,701 27,408 1,902
Liability for lease rejections 15,450
Notes payable to banks 12,214 13,647
Notes payable 15,250
Current portion of long term-debt 1,474 1,685
Pre-petition long-term debt (including
subordinated debt of $115,000) 137,909
--------- --------- ---------
Total current liabilities 100,158 302,651 53,248
--------- --------- ---------
Long-term debt:
Senior debt, less current portion 24,409 3,528 24,730
Term Loan, net of unamortized discount 16,811 16,323
--------- --------- ---------
Total long-term debt 41,220 3,528 41,053
Other liabilities 3,603 3,494 3,334
Shareholders' equity (deficit):
Predecessor common stock $1.00 par value, 1
1,000 shares authorized, 1,000 shares issued
and outstanding
Successor preferred stock $.001 par value,
10,000,000 shares authorized, none issued
Successor common stock $.001 par value, 20 20
50,000,000 shares authorized, 13,691,197 shares
issued and outstanding and 6,308,803 shares
to be issued
Additional paid-in-capital 27,457 165,999 27,457
Net parent investment 16,117
Retained earnings (deficit) (16,595) (307,109) (17,631)
--------- --------- ---------
Total shareholder's equity (deficit) 10,882 (124,992) 9,846
--------- --------- ---------
Total liabilities and shareholders' equity (deficit) $ 155,863 $ 184,681 $ 107,481
========= ========= =========
(1) The balances at May 19, 2002 have been restated to reflect a reorganization
item for extinguishment of debt of $1,439 belonging to the Predecessor.
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