Exhibit 99.1
Linens 'n Things Reports Fourth Quarter and Full Year 2004 Results;
Fourth Quarter Comparable Net Sales Increase 2.7%;
Fourth Quarter EPS Exceeds Consensus Estimate
CLIFTON, N.J.--(BUSINESS WIRE)--Feb. 2, 2005--Linens 'n Things,
Inc. (NYSE: LIN), one of the leading national large format retailers
of home textiles, housewares and home accessories, today announced net
sales increased 11.1% to $875.7 million for the fourth quarter ended
January 1, 2005, up from $788.3 million for the same period last year.
Comparable net sales for the fourth quarter of 2004 increased 2.7%.
Net income for the fourth quarter ended January 1, 2005 was $45.0
million or $0.99 per share on a fully diluted basis. Results include
the implementation of EITF 02-16, "Accounting by a Customer (Including
a Reseller) for Certain Consideration Received from a Vendor" (EITF
02-16), which impacted the Company's fourth quarter 2004 results by
$2.0 million, net of tax, or $0.04 per fully diluted share. For the
same period last year, which was not impacted by EITF 02-16, the
Company had net income of $46.1 million or $1.02 per fully diluted
share. EITF 02-16 had no impact on the Company's cash flows.
Norman Axelrod, Chairman and Chief Executive Officer, commented,
"Overall, we were pleased with our fourth quarter results. Our fourth
quarter performance was the result of our coordinated efforts across
our organization. From an operational perspective, we continue to make
improvements to our in-stocks and the flow of inventory to our stores.
From a merchandise perspective, we added more freshness in our
assortment through expanded categories and intensified our key item
focus. Additionally, we had a strong guest response to our gift-giving
and holiday assortments. Looking ahead to fiscal 2005, we are
committed to driving continuous improvement and building on the
initiatives that support our long-term growth."
Net sales increased 11.1% to $2,661.5 million for the fifty-two
week period ended January 1, 2005, up from $2,395.3 million for the
same period last year. Comparable net sales for the fifty-two week
period ended January 1, 2005 increased 1.8%.
Net income for the fifty-two week period ended January 1, 2005 was
$63.1 million or $1.38 per share on a fully diluted basis. Results
include the implementation of EITF 02-16, which impacted the Company's
results by $13.3 million, net of tax, or $0.29 per fully diluted share
for the fifty-two week period ended January 1, 2005. For the same
period last year, which was not impacted by EITF 02-16, the Company
had net earnings of $74.8 million or $1.67 per fully diluted share.
During the fourth quarter, the Company opened 13 new stores, as
compared with opening five stores during the same period last year.
Year to date, the Company opened fifty-four stores and closed two
stores increasing its total square footage to 16.7 million, as
compared with opening fifty-eight stores and closing nine stores
during the same period last year. The Company currently expects to
open approximately 50 new stores in the U.S. and Canada in fiscal
2005, further expanding its presence as a leading retailer of home
furnishings.
2005 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 and assumes no obligation to update such forward-looking
information based on actual results during the period or changes in
assumptions or estimates or other changes in the period.
The current estimates for the full year of 2005 are as follows:
Sales are targeted to grow by approximately 8% to 10% with square
footage increasing between approximately 7% to 9%. Diluted earnings
per share, excluding the impact of the expensing of stock options, are
currently targeted to be in the range of $1.80 to $1.86. These plans
assume comparable net sales to be in the low single digits. Capital
expenditures are expected to be approximately $95 million.
The Company will be required to begin expensing stock options as
compensation cost in the second half of the year. Currently, the
Company discloses the effect on net income and earnings per share
related to the expensing of options as a note to its financial
statements. The Company will provide an estimated impact of this
change in accounting treatment on earnings per share guidance later in
the year.
For the first quarter of 2005, sales are targeted to grow between
6% and 9% and comparable net sales are targeted to be flat to slightly
negative. Diluted earnings per share are currently targeted to be in
the range of $0.06 to $0.09.
Linens 'n Things, with 2004 sales of $2.7 billion, is one of the
leading, national large format retailers of home textiles, housewares
and home accessories. As of January 1, 2005 the Company was operating
492 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, the
results and success of our holiday selling season, acceptance of
product offerings and fashions and our ability to anticipate and
successfully respond to changing consumer tastes and preferences, our
ability to anticipate and control our operating and selling expenses,
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 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 substantial
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, even if such results or
changes make it clear that any projected results will not be realized.
Our outlook and other forward-looking statements are as of the
date of this release only.
LINENS 'N THINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Thirteen Weeks Ended
---------------------------------
January 1, EITF 02-16 January 3,
2005 Impact * 2004
As reported*
----------- ----------- ---------
Net sales $875,724 $-- $788,313
Cost of sales, including buying and
warehousing costs 527,590 1,845 471,950
------------ ---------- ---------
Gross profit 348,134 (1,845) 316,363
Selling, general and administrative
expenses 275,254 (5,002) 241,552
------------ ---------- ---------
Operating profit 72,880 3,157 74,811
Interest expense, net 59 -- 276
------------ ---------- ---------
Income before provision for income
taxes 72,821 3,157 74,535
Provision for income taxes 27,818 1,206 28,472
------------ ---------- ---------
Net income $45,003 $1,951 $46,063
============ ========== =========
Per share of common stock:
Basic
- -----
Net income per share $1.00 $0.04 $1.03
Weighted average shares outstanding 45,179 45,179 44,520
Fully Diluted
- -------------
Net income per share $0.99 $0.04 $1.02
Weighted average shares outstanding 45,523 45,523 45,336
* The "As Reported" amounts include the impact of EITF 02-16
"Accounting by a Customer (Including a Reseller) for Certain
Consideration Received from a Vendor" (EITF 02-16). The Company
commenced implementation of 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 EITF 02-16 pre-tax
adjustment of $3.2 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. 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. 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.
LINENS 'N THINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Fifty-Two Weeks Ended
-----------------------------------
January 1, EITF 02-16 January 3,
2005 Impact * 2004
As reported*
------------ ---------- -----------
Net sales $2,661,469 $-- $2,395,272
Cost of sales, including buying and
warehousing costs 1,592,377 5,927 1,430,422
------------ ---------- -----------
Gross profit 1,069,092 (5,927) 964,850
Selling, general and administrative
expenses 966,660 (27,395) 842,897
------------ ---------- -----------
Operating profit 102,432 21,468 121,953
Interest expense, net 261 -- 876
------------ ---------- -----------
Income before provision for income
taxes 102,171 21,468 121,077
Provision for income taxes 39,029 8,201 46,252
------------ ---------- -----------
Net income $63,142 $13,267 $74,825
============ ========== ===========
Per share of common stock:
Basic:
- ------
Net income per share $1.40 $0.29 $1.69
Weighted average shares outstanding 45,079 45,079 44,247
Fully Diluted
- -------------
Net income per share $1.38 $0.29 $1.67
Weighted average shares outstanding 45,828 45,828 44,869
* The "As Reported" amounts include the impact of EITF 02-16
"Accounting by a Customer (Including a Reseller) for Certain
Consideration Received from a Vendor" (EITF 02-16). The Company
commenced implementation of 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 EITF 02-16 pre-tax
adjustment of $21.5 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. 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. 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.
LINENS 'N THINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
January 1, January 3,
2005 2004
----------- -------------
Assets
Current assets:
Cash and cash equivalents $204,009 $136,129
Inventories 717,130 701,928
Accounts Receivable 25,766 29,531
Prepaid expenses and other 39,680 33,982
Current deferred taxes 685 1,295
----------- -------------
Total current assets 987,270 902,865
Property and equipment, net 402,991 377,244
Other non-current assets, net 33,066 28,909
----------- -------------
Total assets $1,423,327 $1,309,018
=========== =============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $245,635 $250,142
Accrued expenses and other current
liabilities 210,857 174,002
Current deferred taxes 2,983 15,759
----------- -------------
Total current liabilities 459,475 439,903
Other long-term liabilities 127,670 107,396
----------- -------------
Total liabilities 587,145 547,299
Shareholders' equity 836,182 761,719
----------- -------------
Total liabilities and
shareholders' equity $1,423,327 $1,309,018
=========== =============
LINENS 'N THINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
Fifty-Two Weeks Ended
-----------------------
January 1, January 3,
2005 2004
----------- ----------
Cash Flows From Operating Activities
Net income $63,142 $74,825
Depreciation and amortization 61,442 54,404
Change in working capital 21,834 (10,427)
----------- ----------
Net cash provided by operating activities 146,418 118,802
----------- ----------
Cash Flows From Investing Activities
Additions to property and equipment (87,995) (81,494)
----------- ----------
Cash Flows From Financing Activities
Proceeds from common stock issued under
stock incentive plans 8,649 13,624
Decrease in short-term borrowings -- (2,119)
(Purchase) Issuance of treasury stock (56) 158
----------- ----------
Net cash provided by financing activities 8,593 11,663
----------- ----------
Effect of exchange rate changes on cash and
cash equivalents 864 553
Net increase in cash and cash equivalents 67,880 49,524
Cash and cash equivalents at beginning of
period 136,129 86,605
----------- ----------
Cash and cash equivalents at end of period $204,009 $136,129
=========== ==========
CONTACT: Linens 'n Things, Inc.
William T. Giles, 973-815-2929
or
website: www.lnt.com