Exhibit 99.1
Linens 'n Things Reports 14.8% Increase in Net Income for the
Third Quarter 2003
CLIFTON, N.J.--(BUSINESS WIRE)--Oct. 21, 2003--Linens 'n Things,
Inc. (NYSE:LIN), one of the leading national large format retailers of
home textiles, housewares and home accessories today announced net
income for the third quarter ended October 4, 2003 increased
approximately 14.8% to $21.0 million or $0.47 per share on a fully
diluted basis, compared with $18.3 million or $0.41 per share for the
same period last year. Net sales increased approximately 11.1% to
$602.8 million for the third quarter ended October 4, 2003, up from
$542.6 million for the same period last year. Comparable store net
sales for the third quarter increased 1.8% compared with 1.8% for the
same period last year.
"We are encouraged by our results and believe the progress we have
made on our initiatives positions us well for the fourth quarter",
said Norman Axelrod, Chairman and Chief Executive Officer.
Net income for the thirty-nine week period ended October 4, 2003
was $28.8 million, or $0.64 per share on a fully diluted basis,
compared with $29.0 million, or $0.68 per share for the same period
last year. Net sales increased approximately 10.0% to $1,607.0 million
for the thirty-nine week period ended October 4, 2003, up from
$1,461.4 million for the same period last year. Comparable store net
sales for the thirty-nine week period ended October 4, 2003 declined
0.3%.
During the third quarter, the Company opened twenty-one new
stores, and closed one store, as compared with opening fourteen stores
and closing one store during the same period last year. Year to date,
the Company opened fifty-three stores and closed nine stores
increasing its total square footage to 14.9 million, as compared with
opening forty-two stores and closing five stores during the same
period last year. The Company currently expects to open approximately
fifty-eight stores in 2003, further expanding its presence as a
leading retailer of home furnishings. For 2003, capital expenditures
are expected to be approximately $80 to $85 million.
2003 Business Outlook
Fiscal 2003 is a 52-week year with the fourth quarter being a
13-week period versus a 14-week period last year. For the fourth
quarter of 2003, the Company is targeting sales to grow between 8% and
10% while comp sales are targeted to be in the low to mid single
digits. Based on the Company achieving this sales plan, the Company is
comfortable with the current range of analysts' estimates for diluted
earnings per share of approximately $0.99 to $1.04 for the fourth
quarter of 2003.
Implementation of EITF 02-16
In January 2003, the Emerging Issues Task Force ("EITF") issued
EITF 02-16, "Accounting by a Customer (Including a Reseller) for
Certain Consideration Received from a Vendor," which states that cash
consideration received from a vendor is presumed to be a reduction of
the prices of the vendor's products or services and should, therefore,
be characterized as a reduction of cost of merchandise sold. Under
EITF 02-16, the presumption may be overcome when the consideration is
either a reimbursement of specific, incremental and identifiable costs
incurred to sell the vendor's products, or a payment for assets or
services delivered to the vendor. EITF 02-16 is effective for
contracts entered into or modified after December 31, 2002. Since the
Company has entered into substantially all of its current vendor
contracts prior to December 31, 2002 this issue will not have a
material impact on the Company's fiscal 2003 consolidated financial
statements.
As vendor agreements are initiated or modified for fiscal 2004,
the Company will apply the method of accounting for vendor allowances
pursuant to EITF 02-16. In connection with the implementation of EITF
02-16, the Company expects to treat certain funds received from
vendors as a reduction in the cost of inventory and as a result, these
funds will be recognized as a reduction to cost of merchandise sold
when the inventory is sold. Accordingly, certain funds received from
vendors, which were historically reflected as a reduction of
advertising expense in SG&A will be treated as a reduction of cost of
inventory. Based on the Company's current evaluation, the estimated
impact from the implementation of EITF 02-16 is expected to reduce
diluted earnings per share on a non-cash basis by approximately $0.25
for fiscal 2004, which covers the period January 4, 2004 to January 1,
2005. The majority of this non-cash reduction in earnings per share
will occur in the first two quarters of fiscal 2004. The Company
expects SG&A on an annualized basis to increase by approximately 1.1%
as a percent of sales as a result of this accounting change.
This accounting change will have no impact on the Company's cash
flows or the expected amount of funds to be received from vendors. In
addition, following implementation of EITF 02-16, there will be no
earnings impact in subsequent fiscal years other than for future net
changes in such vendor allowances.
The above outlook information is based on current expectations and
assumptions and includes "forward looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act. The Company can give no assurances that such
expectations and assumptions will prove correct. The Company does not
intend to update such outlook other than in connection with regularly
scheduled earnings releases.
Linens 'n Things, with 2002 sales of $2,184.7 million, is one of
the leading, national large format retailers of home textiles,
housewares and home accessories. As of October 4, 2003 the Company was
operating 435 stores in 45 states and in 4 provinces across Canada.
More information about Linens 'n Things can be found online at
www.lnt.com.
The foregoing contains forward-looking statements within the
meaning of The Private Securities Litigation Reform Act of 1995. The
statements are made a number of times and may be identified by such
forward-looking terminology as "expect," "believe," "may," "intend,"
"plan," "target", "outlook", "comfortable with" and similar terms or
variations of such terms. All of our information and statements
regarding our outlook for the future including future revenues,
comparable sales performance, earnings and other future financial and
stores' performance, constitutes forward-looking statements. All our
forward-looking statements are based on our current expectations,
assumptions, estimates and projections about our Company and involve
certain significant risks and uncertainties, including levels of
sales, store traffic, acceptance of product offerings and fashions and
our ability to anticipate and successfully respond to changing
consumer tastes and preferences, the success of our new business
concepts, seasonal concepts, and new brands, the performance of our
new stores, competitive pressures from other home furnishings
retailers, the success of the Canadian expansion, availability of
suitable future store locations, schedule of store expansion and of
planned closings, the impact of the bankruptcies and consolidations in
our industry, unusual weather patterns, the impact on consumer
spending as a result of the slower consumer economy, a highly
promotional retail environment, any significant variations between
actual amounts and the amounts estimated for those matters identified
as our critical accounting estimates as well as other significant
accounting estimates made in the preparation of our financial
statements and our ability to successfully implement our strategic
initiatives. Actual results may differ materially from such
forward-looking statements. These and other important risk factors are
included in the "Risk Factors" section of the Company's Registration
Statement on Form S-3 as filed with the Securities and Exchange
Commission on June 18, 2002, and in our most recent Annual Report on
Form 10-K and subsequent reports filed with the Securities and
Exchange Commission. You are urged to consider all such factors. In
light of the uncertainty inherent in such forward-looking statements,
you should not consider their inclusion to be a representation that
such forward-looking matters will be achieved. The Company assumes no
obligation for updating any such forward-looking statements to reflect
actual results, changes in assumptions or changes in other factors
affecting such forward-looking statements.
LINENS 'N THINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
--------------------- -----------------------
October September October September
4, 2003 28, 2002 4, 2003 28, 2002
---------- ---------- ----------- -----------
(unaudited) (unaudited)
Net sales $602,816 $542,565 $1,606,959 $1,461,394
Cost of sales, including
buying and warehousing
costs 354,863 319,874 942,643 864,638
---------- ---------- ----------- -----------
Gross profit 247,953 222,691 664,316 596,756
Selling, general and
administrative expenses 213,769 192,710 617,174 547,990
---------- ---------- ----------- -----------
Operating profit 34,184 29,981 47,142 48,766
Interest expense, net 236 414 600 1,842
---------- ---------- ----------- -----------
Income before provision
for income taxes 33,948 29,567 46,542 46,924
Provision for income
taxes 12,968 11,287 17,780 17,918
---------- ---------- ----------- -----------
Net income $20,980 $18,280 $28,762 $29,006
========== ========== =========== ===========
Per share of common
stock:
Basic
- -----
Net income per share $0.47 $0.42 $0.65 $0.69
Weighted average shares
outstanding 44,208 44,047 44,141 41,877
Diluted
- -------
Net income per share $0.47 $0.41 $0.64 $0.68
Weighted average shares
outstanding 45,027 44,691 44,699 42,904
LINENS 'N THINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
October 4, September 28,
2003 2002
-------------- -------------
Assets (unaudited)
Current assets:
Cash and cash equivalents $22,731 $22,580
Inventories 746,310 679,056
Accounts Receivable 46,522 33,703
Prepaid expenses and other 33,236 15,095
Current deferred taxes -- 22,118
-------------- -------------
Total current assets 848,799 772,552
Property and equipment, net 380,415 345,429
Other non-current assets, net 28,836 29,706
-------------- -------------
Total assets $1,258,050 $1,147,687
============== =============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $320,018 $297,283
Accrued expenses and other current
liabilities 130,053 132,533
Current deferred taxes 7,152 --
Short-term borrowings 3,221 16,080
-------------- -------------
Total current liabilities 460,444 445,896
Other long-term liabilities 95,484 74,066
-------------- -------------
Total liabilities 555,928 519,962
Shareholders' equity 702,122 627,725
-------------- -------------
Total liabilities and
shareholders' equity $1,258,050 $1,147,687
============== =============
LINENS 'N THINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
Thirty-Nine Weeks Ended
---------------------------
October 4, September 28,
2003 2002
------------- -------------
(unaudited)
Cash Flows From Operating Activities
Net income $28,762 $29,006
Depreciation and amortization 40,421 32,967
Change in working capital (66,980) (75,203)
------------- -------------
Net cash provided by (used in)
operating activities 2,203 (13,230)
------------- -------------
Cash Flows From Investing Activities
Additions to property and equipment (70,306) (65,830)
------------- -------------
Cash Flows From Financing Activities
Net proceeds from common stock issuance -- 95,833
Proceeds from common stock issued under
stock incentive plans 2,651 3,970
Increase (decrease) in short-term
borrowings 1,070 (13,840)
Issuance of treasury stock 255 248
------------- -------------
Net cash provided by financing
activities 3,976 86,211
------------- -------------
Effect of exchange rate changes on cash and
cash equivalents 253 (8)
Net (decrease) increase in cash and cash
equivalents (63,874) 7,143
Cash and cash equivalents at beginning of
period 86,605 15,437
------------- -------------
Cash and cash equivalents at end of period $22,731 $22,580
============= =============
Visit our Web Site at www.lnt.com for a webcast of our Third
Quarter Sales and Earnings Conference Call scheduled for October 22,
2003 at 9AM (ET).
CONTACT: Linens 'n Things, Inc.
William T. Giles
Chief Financial Officer
973-815-2929