Exhibit 99.2
99 CENTS ONLY STORES(R) REPORTS EARNINGS PER SHARE OF $0.21 FOR THE FOURTH
QUARTER ENDED DECEMBER 31, 2003.
CITY OF COMMERCE, CA - March 11, 2004 - 99 Cents Only Stores(R) (NYSE:NDN)
reported fourth quarter net income per share of $0.21 on net income of $15.0
million compared to earnings per share in the fourth quarter of 2002 of $0.28 on
net income of $19.7 million. Earnings per share for the year 2003 were $0.78
compared to $0.83 in 2002.
Eric Schiffer, President of the Company said, "Earnings per share for the
quarter were impacted by several factors including $0.06 by an actuarial
adjustment increasing our California workers' compensation reserve, $0.02 from
our Texas operation and $0.01 from non-Texas transportation costs.
During 2004 we plan to grow our square footage by 25% by opening 48 new 99
Cents Only Stores with approximately 14 in Houston, Texas, 12 in Dallas, Texas,
15 in California, 6 in Arizona and 1 in Nevada. The Company plans to open at
least 9 stores in the first quarter, 14 in the second and third quarters and 11
in the fourth quarter. As of today, the Company has opened six stores and closed
one and expects to open 3 to 4 more stores in the first quarter. One of these
new stores, located in Northern California, achieved record sales for its first
week of business.
On January 29, 2004 we opened our first store in Dallas. Sales performance
from this store to date is comparable to our non-Texas stores. Sales for our
Houston stores to date remain less than our average non-Texas stores. The
Houston stores are currently at an annual run rate of approximately $3.0
million, versus our average new store that does about $4 million. However, the
Houston stores are profitable and over time we believe as these stores gain
higher consumer awareness and customer acceptance, they will have significantly
higher sales volumes.
The opening of the Houston distribution center and the retail store growth
into Houston burdened the Company's results of operations in 2003. This along
with the adverse development of California workers' compensation costs,
negatively impacted earnings per share for the year by approximately $0.12.
Our merchandise mix continues to improve with exciting new items added in
several categories including fresh food and beverage, DVD's, cell phone and PDA
accessories and possibly the best deal in the country on phone cards, 99 minutes
for only 99 cents. The Company still plans to grow earnings per share by 20% in
2004. The majority of this earnings growth will be back-weighted."
Retail sales for the fourth quarter increased 18.9% to $236.0 million.
Total fourth quarter sales including wholesale were $247.5 million, up 17.4%
over 2002.
Fourth quarter 2003 total gross margin was 40.7%, compared to 40.8% in
2002. Retail gross margin for the fourth quarter was 41.7%, versus 42.1% in
2002. This change primarily results from category mix shifts with continued
focus on consumables.
Operating expenses for the fourth quarter were 31.3%, compared to 26.8% in
2002. Total operating expenses for the quarter increased $21.0 million.
California workers' compensation reserve increases accounted for $7.9 million of
the increase over 2002. Net income in the fourth quarter of 2003 decreased 23.9%
to $15.0 million on total sales of $247.5 million, compared to net income of
$19.7 million on total sales of $210.7 million in 2002.
Retail sales for the 2003 year increased 22.9% to $816.3 million. Total
2003 sales including wholesale were $862.5 million, up 20.8% over 2002. Sales
per sellable square foot were $308 in 2003, versus $309 in 2002. Average sales
per store open for the entire 2003 year increased $4.9 million from $4.8 million
in 2002.
Retail gross margin for the year was 41.2% compared to 41.7% in 2002. This
was primarily due to higher growth grocery sales volume throughout the year.
Total 2003 gross margin was 40.1%, same as 2002.
Operating expenses for 2003 were 29.9% of sales versus 27.4%, primarily
because of additional costs incurred in our California workers' compensation
reserve and our Texas operation. The company has begun to take significant steps
to address these two issues.
GUIDANCE FOR 2004
- -----------------
Total sales for the full year 2004, including wholesale sales, are
projected in the range of $1.02 billion to $1.06 billion. Comparable store sales
for the year are projected at 1% to 2%. The company plans to grow its square
footage 25% by opening 48 stores. The tax rate for 2004 as well as each quarter
is estimated at 39.5%. Fully diluted share count is projected at 74.0 million.
EPS for 2004 is projected to be in the range of $0.90 to $0.96. Total
depreciation for the 2004 is estimated in the range of $34 million to $36
million. Capital expenditures for 2004 are estimated to be in the range of $70
to $80 million.
Total sales, including wholesale, for the first quarter of 2004 are
projected to be in the range of $228 million to $235 million. Same store sales
for the first quarter are projected to range from 1% to 2%. The Company plans to
open at least 9 stores in the first quarter including two stores in Dallas,
Houston and Tucson, Arizona. Total gross margin for the first quarter is
projected in the range of 40.3% to 40.5%. Total SG&A expenses including
depreciation are projected at 30.1% to 30.6%. Fully diluted share count is
projected at 72.8 million shares and EPS for the first quarter is projected in
the range of $0.20 to $0.21 per share.
Total sales for the second quarter, including wholesale, are projected in
the range of $247 to $256 million. Comparable store sales are projected at -1%
to 1%. The company plans to open 14 stores in the second quarter. Total
gross margin for the second quarter is projected in the range of 40.0% to 40.2%.
Total SG&A expenses including depreciation are projected at 29.5% to 29.7%.
Fully diluted share count is projected at 73.6 million and EPS for the second
quarter is projected in the range of $0.21 to $0.22.
Total sales for the third quarter, including wholesale, are projected in
the range of $255 to $262 million. Comparable store sales are projected at 1% to
2%. The company plans to open 14 stores in the third quarter. Total gross
margin for the third quarter is projected in the range of 39.6% to 39.8%. Total
SG&A expenses including depreciation are projected at 30.6% to 30.8%. Fully
diluted share count is projected at 74.5 million and EPS for the third quarter
is projected in the range of $0.21 to $0.23.
Total sales for the fourth quarter, including wholesale, are projected in
the range of $293 to $306 million. Comparable store sales are projected at 1% to
3%. The company plans to open 11 stores in the fourth quarter. Total gross
margin for the fourth quarter is projected in the range of 41.1% to 41.3%. Total
SG&A expenses including depreciation are projected at 29.1% to 29.5%. Fully
diluted share count is projected at 74.5 million and EPS for the fourth quarter
is projected in the range of $0.28 to $0.30.
A conference call to discuss this earnings release is scheduled for Thursday,
March 11, 2004, at 2:30 PM Pacific Time. If you would like to participate in
this conference call, please phone the Link conference call operator at
1-206-902-3250 (entry code 45779 followed by #) about nine minutes before the
call is scheduled to begin. A recorded version of the call will be made
available four hours after completion of the call and will remain on-line for 7
days until March 17, 2004. To access the recorded version, dial 1-913-383-5767
PASSCODE: 4071.
99 Cents Only Stores, the nation's oldest existing one-price retailer,
operates 194 retail stores in California, Texas, Arizona and Nevada and a
wholesale division called Bargain Wholesale. 99 Cents Only Stores emphasizes
name-brand consumables, priced at an excellent value, in attractively
merchandised stores.
This press release contains forward-looking statements, as referenced in
the Private Securities Litigation Reform Act of 1995 (the "Act").
Forward-looking statements are inherently unreliable and actual results may
differ. Factors which could cause actual results to differ materially from these
forward-looking statements include, changes in the competitive market place,
general economic conditions, factors affecting the retail industry in general,
the timing of new store openings, the ability of the Company to identify and
obtain leases for new stores, the ability of the Company to acquire inventory
at favorable costs, and other factors discussed in the Company's filings with
the Securities and Exchange Commission. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
99 CENTS ONLY STORES
STATEMENTS OF INCOME
(Amounts in thousands except per share amounts)
Three Months Ended December 31 Twelve Months Ended December 31
2003 2002 2003 2002
------------------- ------------------- --------------------- ------------------
Net sales:
99 Cents Only Stores $ 236,016 95.4% $198,476 94.2% $ 816,348 94.7% $663,983 93.0%
Bargain Wholesale 11,452 4.6% 12,237 5.8% 46,112 5.3% 49,959 7.0%
--------- -------- -------- --------- ---------- --------- -------- --------
247,468 100.0% 210,713 100.0% 862,460 100.0% 713,942 100.0%
Cost of sales 146,773 59.3% 124,688 59.2% 516,686 59.9% 427,356 59.9%
--------- -------- -------- --------- ---------- --------- -------- --------
Gross profit 100,695 40.7% 86,025 40.8% 345,774 40.1% 286,586 40.1%
Selling, general and
Administrative expenses 70,588 28.5% 51,534 24.5% 234,626 27.2% 178,374 24.9%
Depreciation 6,829 2.8% 4,941 2.3% 23,763 2.7% 17,711 2.5%
--------- -------- -------- --------- ---------- --------- -------- --------
Total operating expenses 77,417 31.3% 56,475 26.8% 258,389 29.9% 196,085 27.4%
--------- -------- -------- --------- ---------- --------- -------- --------
Operating Income 23,278 9.4% 29,550 14.0% 87,385 10.2% 90,501 12.7%
Interest & other income (expense) net 822 0.3% 1,416 0.7% 4,457 0.5% 4,847 0.7%
Income before income taxes 24,100 9.7% 30,966 14.7% 91,842 10.7% 95,348 13.4%
Provision for income taxes 9,118 3.6% 11,236 5.3% 35,313 4.1% 36,374 5.1%
--------- -------- -------- --------- ---------- --------- -------- --------
Net income $ 14,982 6.1% $ 19,730 9.4% $ 56,529 6.6% $ 58,974 8.3%
========= ======== ======== ========= ========== ========= ======== ========
Basic earnings per share
Net income $ 0.21 $ 0.28 $ 0.79 $ 0.84
========= ======== ========== ========
Diluted earnings per share
Net income $ 0.21 $ 0.28 $ 0.78 $ 0.83
========= ======== ========== ========
Weighted average number of
Common shares outstanding:
Basic 72,044 70,278 71,348 69,938
Diluted 72,779 71,362 72,412 71,181
99 CENTS ONLY STORES
BALANCE SHEETS
(Amounts in thousands)
December 31, December 31,
2003 2002
------------- -------------
ASSETS:
Cash $ 318 $ 7,985
Short-term investments 145,670 146,857
Receivables, net 2,245 2,753
Due from shareholder - 1,232
Income tax receivable 841 -
Deferred income tax 15,927 11,927
Inventories 107,409 83,176
Other current assets 2,717 2,869
------------- -------------
Total current assets 275,127 256,799
Property and Equipment, net 202,565 127,560
Long term investments 52,789 37,223
Other assets 22,757 20,994
------------- -------------
Total assets $ 553,238 $ 442,576
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current portion of capitalized lease $ 40 $ 40
Accounts payable 27,903 16,946
Accrued expenses 12,963 10,157
Workers compensation 16,319 7,725
Income tax payable - 6,184
Total current liabilities 57,225 41,052
Deferred rent 2,460 2,210
Capitalized lease obligation 1,553 1,597
Deferred Compensation 2,114 1,102
------------- -------------
6,127 4,909
Shareholders' equity 489,886 396,615
------------- -------------
Total liabilities and shareholders' equity $ 553,238 $ 442,576
============= =============
99 CENTS ONLY STORES
STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Year Ended
December 31,
2003 2002
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 56,529 $ 58,974
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . 23,643 17,711
Tax benefit from exercise of non qualified employee stock options . . . . . . 11,041 5,053
Benefit for deferred income tax . . . . . . . . . . . . . . . . . . . . . . . (3,900) (6,056)
Changes in assets and liabilities associated with operating activities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507 770
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,233) (16,648)
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (866) (16)
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,956 3,538
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,808 1,977
Due to (from) shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . 1,232 (2,887)
Workers' compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,594 2,191
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,025) 7,567
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 149
---------- ---------
Net cash provided by operating activities . . . . . . . . . . . . . . . . 79,536 72,323
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . (98,648) (41,631)
Purchases of short and long term investments. . . . . . . . . . . . . . . . . . . (14,378) (35,981)
Investments in other long-term assets . . . . . . . . . . . . . . . . . . . . . . 166 137
---------- ---------
Net cash used in investing activities . . . . . . . . . . . . . . . . . . (112,860) (77,475)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of capital lease obligation. . . . . . . . . . . . . . . . . . . . . . . (44) (40)
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . . . . 25,701 12,945
---------- ---------
Net cash provided by financing activities . . . . . . . . . . . . . . . . 25,657 12,905
---------- ---------
NET INCREASE (DECREASE) IN CASH . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,667) 7,753
CASH, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,985 232
---------- ---------
CASH, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 318 $ 7,985
========== =========
<FN>
NOTE TO EDITORS: 99 CENTS ONLY STORES(R) NEWS RELEASES AND INFORMATION AVAILABLE ON THE INTERNET AT WWW.99ONLY.COM
CONTACT: 99 CENTS ONLY STORES(R), CITY OF COMMERCE, CALIFORNIA, ANDY FARINA, CFO, 323/881-9933 -99 CENTS--