UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 8, 2008
West Marine, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-22512 77-0355502
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
500 Westridge Drive
Watsonville, California 95076
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(Address of Principal Executive Offices, Including Zip Code)
(831) 728-2700
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(Registrant's Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On January 9, 2008, West Marine, Inc. announced its net sales for the 13-week
period (fourth quarter) ended December 29, 2007 and for the 52-week period
ended December 29, 2007, as well as preliminary earnings for 2007. A copy of
this press release is attached hereto as Exhibit 99.1.
The information required to be furnished pursuant to Item 2.02 and Exhibit 99.1
of this report shall not be deemed to be "filed" for purposes of Section 18 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
otherwise subject to the liability of that section, except if West Marine
specifically incorporates it by reference into a filing under the Securities
Act of 1933, as amended, or the Exchange Act.
Item 2.06. Material Impairments.
On January 8, 2008, West Marine concluded that goodwill carried on the
balance sheet was impaired. Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets," requires West Marine to
annually test goodwill for impairment, or more frequently if evidence of
possible impairment arises. As part of this testing, management compares fair
value to the underlying carrying value of West Marine's net assets, including
goodwill. In light of fourth quarter changes in cash flow expectations, market
values of guideline companies and other factors used for impairment testing,
West Marine re-tested goodwill and determined that the carrying amount of its
net assets exceeded fair value. Accordingly, management expects that a
non-cash impairment charge of approximately $56.9 million will be reflected
in West Marine's fourth quarter and fiscal year 2007 results, recognizing
that the actual charge is subject to further review and refinement by
management, finalizing the valuation of the company's net assets with a
third-party appraisal firm and the audit being conducted by West Marine's
independent registered accounting firm. West Marine does not expect the
reduction in goodwill to result in any future cash expenditures.
Item 9.01. Financial Statements and Exhibits.
(a) Not Applicable.
(b) Not Applicable.
(c) Not Applicable.
(d) Exhibit:
99.1 Press Release dated January 9, 2008 (furnished
pursuant to Item 2.02).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WEST MARINE, INC.
Date: January 9, 2008 By: /s/ Thomas R. Moran
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Thomas R. Moran
Senior Vice President and
Chief Financial Officer
Exhibit 99.1
WEST MARINE REPORTS FOURTH QUARTER 2007 SALES AND
EXPECTED IMPACT OF CERTAIN EVENTS
WATSONVILLE, CA, January 9, 2008 - West Marine, Inc. (Nasdaq: WMAR) today
reported net sales for the thirteen weeks ended December 29, 2007 of $117.8
million, a decrease of $6.0 million, or 4.9%, from net sales of $123.8 million
a year ago, primarily due to a $4.2 million decrease in sales attributable to
closed stores and a $2.9 million decrease in comparable store sales. Comparable
store sales for the fourth quarter decreased 3.0%.
Net sales for the fifty-two weeks ended December 29, 2007 were $679.1 million,
a decrease of $37.5 million, or 5.2%, from net sales of $716.6 million a year
ago, primarily due to a $28.6 million sales decrease attributable to closed
stores and a $11.4 million decrease in comparable store sales. Comparable
store sales for fiscal year 2007 do not include net sales of $6.1 million from
new stores and $6.8 million from stores remodeled or expanded during the year.
Comparable store sales for 2007 decreased 1.9%.
Net sales in the Stores segment for fiscal year 2007 were $593.8 million, a
decrease of $36.1 million, or 5.7%, compared to fiscal year 2006. The sales
decrease primarily was due to a $23.1 million decrease attributable to closed
stores and a $11.4 million decrease in comparable store sales. Port Supply
(wholesale) segment sales through the distribution centers for 2007 were $41.6
million, a decrease of $2.0 million, or 4.5%, compared to 2006. Port Supply
sales to wholesale customers through store locations are included in the Stores
segment. Net sales in the Direct Sales segment for 2007 were $43.8 million, an
increase of $0.6 million, or 1.3%, compared to 2006.
Geoff Eisenberg, Chief Executive Officer of West Marine, said, "Overall sales
levels in the fourth quarter were modestly below our expectations. In
particular, the southeast has remained soft, continuing the trends we have seen
for most of the year. Weakness in several core merchandise categories was
partly offset by strength in electronics, which reflected increased promotional
activity as we responded to marketplace conditions."
West Marine also reported certain significant events expected to impact fourth
quarter and fiscal year 2007 results, as follows:
o An updated assessment of goodwill in the fourth quarter, as required
by Statement of Financial Accounting Standards No. 142, is expected to
result in a non-cash impairment charge in the fourth quarter of
approximately $56.9 million pre-tax, or $2.31 per share after-tax. The
after-tax, per share equivalent of this impairment charge reflects the
non-deductibility for tax purposes of certain goodwill components;
o Continued cooperation with the previously-announced SEC informal
inquiry is expected to result in expenditures that exceed our previous
fourth quarter estimate by approximately $1.7 million pre-tax, or
$0.05 per share after-tax;
o The departure of our former Chief Executive Officer is expected to
result in related severance costs in the fourth quarter of
approximately $1.3 million pre-tax, or $0.04 per share after-tax; and
o Management's on-going evaluation of individual store performance is
expected to result in a non-cash asset impairment charge in the fourth
quarter of approximately $0.9 million pre-tax, or $0.03 per share
after-tax.
In addition to these significant events, lower sales during the fourth quarter
are expected to result in operating earnings modestly lower than our previous
expectations for 2007.
WEBCAST AND CONFERENCE CALL
West Marine will hold a conference call on Thursday, January 10, 2008 at
8:30 AM Pacific Time to discuss fourth quarter 2007 sales results and
significant events. The live call will be webcast and available in real time
on the Internet at www.westmarine.com in the "Investor Relations" section.
The sales release will also be posted on the Internet at www.westmarine.com in
the "Press Releases" section on the Investor Relations page. Please allow
extra time prior to the call to visit the site and download the streaming
media software required to listen to the Internet broadcast.
Interested parties can also connect to the conference call by dialing (888)
756-1546 in the U.S. and Canada and (706) 634-1083 for international calls.
Please be prepared to give the conference ID number 30260469. The call leader
is Geoff Eisenberg, West Marine's President and Chief Executive Officer.
An audio replay of the call will be available January 10, 2008 at 10:30 AM
Pacific Time through January 17, 2008 at 8:59 PM Pacific Time. The replay
number is (800) 642-1687 in the U.S. and Canada and (706) 645-9291 for
international calls. The access code is 30260469.
ABOUT WEST MARINE
West Marine, the country's largest specialty retailer of boating supplies and
accessories, has 372 stores located in 38 states, Puerto Rico and Canada. Our
catalog and Internet channels offer customers approximately 50,000 products and
the convenience of exchanging catalog and Internet purchases at our store
locations. Our Port Supply division is one of the country's largest wholesale
distributors of marine equipment serving boat manufacturers, marine services,
commercial vessel operators and government agencies. For more information on
West Marine's products and store locations, or to start shopping, visit
westmarine.com or call 1-800-BOATING (1-800-262-8464).
Special Note Regarding Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934 including forward-looking
statements concerning earnings expectations and statements that are predictive
or express expectations that depend on future events or conditions that involve
risks and uncertainties. These forward-looking statements include, among other
things, statements that relate to West Marine's earnings expectations, as well
as facts and assumptions underlying these expectations. Actual results may
differ materially from the preliminary expectations expressed or implied in
these forward-looking statements due to various risks, uncertainties or other
factors, including management's further review and refinement of fourth quarter
and fiscal year 2007 results and finalizing the valuation of the company's
assets with our third-party appraisal firm, as well as the audit being
conducted by West Marine's independent registered public accounting firm. Risk
factors that may affect our earnings in the future include those set forth in
West Marine's Form 10-K for the fiscal year ended December 30, 2006 as updated
in its Form 10-Q for the fiscal quarter ended September 29, 2007. Except as
required by applicable law, West Marine assumes no responsibility to update any
forward-looking statements as a result of new information, future events or
otherwise.
CONTACT: West Marine, Inc.
Tom Moran, 831-761-4229
Senior Vice President and Chief Financial Officer
Deborah Ajeska, 831-761-4229
Assistant Vice President of Financial Planning & Analysis
SOURCE: West Marine, Inc.