Exhibit 99.1
Linens 'n Things Announces First Quarter 2004 Results; First Quarter EPS Exceeds
Consensus Estimate
CLIFTON, N.J.--(BUSINESS WIRE)--April 20, 2004--Linens 'n Things, Inc.
(NYSE:LIN), one of the leading, national large format retailers of home
textiles, housewares and home accessories, today announced total net sales
increased approximately 15.0% to $552.8 million for the first quarter ended
April 3, 2004, up from $480.5 million for the same period last year. Comparable
store net sales for the first quarter of 2004 increased 4.7%. Net income for the
first quarter ended April 3, 2004 was approximately $30,000 or zero cents per
share on a fully diluted basis. Results for the first quarter ended April 3,
2004 include the impact of the provisions of EITF 02-16 "Accounting by a
Customer (Including a Reseller) for Certain Consideration Received from a
Vendor" (EITF 02-16). The provisions of EITF 02-16 impacted the Company's first
quarter 2004 results by approximately $4.9 million, net of tax, or $0.11 per
share. Excluding the impact of EITF 02-16, net income for the first quarter of
fiscal 2004 would have been $4.9 million and earnings per share on a fully
diluted basis would have been $0.11, compared to net income of $2.1 million or
$0.05 per share for the same period last year. EITF 02-16 had no impact on the
Company's cash flows.
"Overall, we are encouraged by our current performance and by the increased
traffic coming into our stores, which we believe stem from the steady progress
we are making on our initiatives," commented Norman Axelrod, Chairman and Chief
Executive Officer.
During the first quarter, the Company opened twenty-one new stores,
increasing its total square footage to 15.8 million as compared with opening
sixteen stores during the same period last year. The Company currently expects
to open approximately 45 to 50 new stores in the United States and Canada in
2004, further expanding its presence as a leading retailer of home furnishings.
2004 Business Outlook
This outlook is based on current expectations 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 will prove correct.
For the second quarter of fiscal 2004, the Company is comfortable with the
estimate for fully diluted earnings per share of $0.08 to $0.09. This estimate
includes the impact of EITF 02-16, which is expected to reduce diluted earnings
per share by approximately $0.07 for the second quarter of fiscal 2004.
Therefore, excluding the impact of EITF 02-16, fully diluted earnings per share
for the second quarter of fiscal 2004 is targeted to be $0.15 to $0.16.
For the full year 2004, sales are currently being targeted to grow by
approximately 11% to 14%. Diluted earnings per share including the impact of
EITF 02-16 are currently targeted to be in the range of $1.67 to $1.72. Based on
the Company's current evaluations, 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 $0.24 for fiscal 2004. Therefore, excluding the impact of
EITF 02-16, diluted earnings per share are targeted in the range of $1.91 to
$1.96. Capital expenditures are expected to be approximately $80 million.
The above outlook assumes comparable net sales to be in the low to mid
single digits for both the second quarter and the full year of fiscal 2004.
Linens 'n Things, with 2003 sales of $2.4 billion is one of the leading,
national large format retailers of home textiles, housewares and home
accessories. As of April 3, 2004, the Company was operating 461 stores in 45
states and five provinces across the United States and Canada. More information
about Linens 'n Things can be found online at www.lnt.com.
This press release 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 condition,
impact, results and 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, substantial 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, the actual impact in fiscal 2004 of
EITF 02-16 as discussed in this release, and our ability to successfully
implement our strategic initiatives. If these or other risks or uncertainties
materialize, or if our estimates or underlying assumptions prove inaccurate,
actual results could differ materially from any future results, express or
implied by our 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 are contained in our reports filed with the Securities and
Exchange Commission, including our Annual Report on Form 10-K and our Quarterly
Reports on Form 10-Q. 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)
(unaudited)
First Quarter Ended
-------------------------------------------
April 3,
2004
Excluding
April 3, impact April 5,
2004 of 2003
As EITF 02-16 EITF 02- As
reported* Adjustment* 16* reported
-------------------------------- ----------
Net sales $552,800 $-- $552,800 $480,471
Cost of sales, including
buying and warehousing
costs 332,346 (141) 332,205 287,630
-------------------------------- ----------
Gross profit 220,454 141 220,595 192,841
Selling, general and
administrative expenses 220,390 (7,780) 212,610 189,401
-------------------------------- ----------
Operating profit 64 7,921 7,985 3,440
Interest expense, net 16 -- 16 76
-------------------------------- ----------
Income before provision for
income taxes 48 7,921 7,969 3,364
Provision for income taxes 18 3,026 3,044 1,286
-------------------------------- ----------
Net income $30 $4,895 $4,925 $2,078
================================ ==========
Per share of common stock:
Basic
- -----
Net income per share $0.00 $0.11 $0.11 $0.05
Weighted average shares
outstanding 44,920 44,920 44,098
Diluted
- -------
Net income per share $0.00 $0.11 $0.11 $0.05
Weighted average shares
outstanding 46,131 46,131 44,524
* The Company commenced implementation of EITF 02-16 "Accounting by a
Customer (Including a Reseller) for Certain Consideration Received
from a Vendor" (EITF 02-16) during the first quarter of fiscal 2004.
As previously announced, EITF 02-16 is effective for vendor contracts
initiated or modified in fiscal 2004 or thereafter. Following the
initial implementation impact, subsequent fiscal years will reflect
vendor allowances on a consistent basis other than for any net changes
in such vendor allowances. The Company provides this information in
order to allow investors to have better insight into the Company's
comparative period-to-period operating performance, and it is intended
to supplement, not replace GAAP presentation. The EITF 02-16 pre-tax
adjustment of $7.9 million represents those allowances reflected as a
reduction of the cost of inventory, which historically would have been
treated as a reduction of cost of sales or selling, general and
administrative expenses ("SG&A"). Beginning in fiscal 2004, due to the
Company's changes to its vendor agreements and the requirements of
EITF 02-16 the Company no longer records advertising allowances as a
reduction to SG&A. For purposes of the above non-GAAP disclosure, the
Company has allocated the EITF 02-16 pre-tax adjustment to SG&A based
on the previous year ratio of vendor advertising allowances recorded
within SG&A to sales. The remaining portion of the total EITF 02-16
pre-tax adjustment was allocated to cost of sales.
LINENS 'N THINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
April 03, April 5,
2004 2003*
----------- -----------
Assets (unaudited)
Current assets:
Cash and cash equivalents $67,754 $58,445
Accounts receivable 20,818 24,299
Inventories 762,021 685,911
Prepaid expenses and other current assets 34,768 28,782
Current deferred taxes 292 --
----------- -----------
Total current assets 885,653 797,437
Property and equipment, net 386,502 362,332
Other non-current assets, net 30,234 28,821
----------- -----------
Total assets $1,302,389 $1,188,590
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $284,013 $295,139
Accrued expenses and other current
liabilities 120,837 128,525
Short-term borrowings 3,544 2,244
Current deferred taxes 11,073 6,850
----------- -----------
Total current liabilities 419,467 432,758
Other long-term liabilities 114,787 84,237
----------- -----------
Total liabilities 534,254 516,995
Shareholders' equity 768,135 671,595
----------- -----------
Total liabilities and shareholders'
equity $1,302,389 $1,188,590
=========== ===========
* Certain prior year vendor accounts receivable balances have been
reclassified and netted against accounts payable to conform with the
current year presentation.
LINENS 'N THINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
First Quarter
Ended
-----------------
April 3, April 5,
2004 2003
-------- --------
(unaudited)
Cash Flows From Operating Activities
Net income $30 $2,078
Depreciation and amortization 14,343 12,842
Change in working capital (68,007) (18,135)
-------- --------
Net cash used in operating activities (53,634) (3,215)
-------- --------
Cash Flows From Investing Activities
Additions to property and equipment (23,713) (25,666)
-------- --------
Cash Flows From Financing Activities
Proceeds from common stock issued under stock
incentive plans 5,542 282
Increase in short-term borrowings 3,546 303
Purchase of treasury stock -- (16)
-------- --------
Net cash provided by financing activities 9,088 569
-------- --------
Effect of exchange rate changes on cash and
cash equivalents (116) 152
Net decrease in cash and cash equivalents (68,375) (28,160)
Cash and cash equivalents at beginning of period 136,129 86,605
-------- --------
Cash and cash equivalents at end of period $67,754 $58,445
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CONTACT: Linens 'n Things, Inc.
William T. Giles, 973-815-2929
www.lnt.com