CLE Carlisle Companies Inc

PEMBROKE PINES, Fla., Dec. 13 /PRNewswire-FirstCall/ -- Claire's Stores, Inc., a leading specialty retailer offering value-priced jewelry and accessories, today reported its financial results for the third quarter of Fiscal 2008, which ended November 3, 2007. Third Quarter Results The Company reported net sales of $357.4 million for the quarter, a 2.8% increase over the third quarter of Fiscal 2007, which ended October 28, 2006. The increase was primarily attributable to the growth in our new store base, particularly in Europe, and foreign currency translation gains, offset by a slight decrease in same store sales. A 0.5% increase in our average sale per transaction was insufficient to offset a 3.5% decline in the average number of transactions per store. Third quarter consolidated same store sales declined 0.7%. In North America, same store sales decreased 1.0% versus last year's third fiscal quarter. European same store sales were essentially flat with last year's third fiscal quarter, at negative 0.1%. Please note that we compute same store sales on a local currency basis, and as such they are not impacted by changes in foreign exchange. Commenting on third quarter results, Chief Executive Officer Gene Kahn said, "This quarter concludes my first full quarter as Claire's CEO. Our third quarter results are reflective of a softening retail environment. In response to consumer demand, we began to shift our product mix from jewelry to accessory classifications in order to capitalize on the strength of handbags, fashion accessories and cosmetics as we completed Back to School and transitioned into Fall. Jewelry sales are currently challenging, except among our younger customers. Our repositioning of Icing is still in its early stages as we work to refine and improve the concept and content. Our merchandise margins improved and through disciplined buying and markdown activity, inventory levels remained low and fresh." Gross margin, which represents merchandise margin less occupancy and buying expense, declined 170 basis points to 50.7%. A 60 basis point improvement in merchandise margin was more than offset by a loss of operating leverage in rent and rent related items that resulted in a 190 basis point decline, and by higher buying expenses resulting in a 40 basis point decrease. Selling, general and administrative expenses increased 7.5% to $127.8 million in the third quarter of Fiscal 2008 compared to $118.8 million in last year's comparable fiscal quarter. On a constant currency basis, SG&A expenses increased by only 4.3%, due largely to a 2.1% growth in company operated stores. For the quarter, Adjusted EBITDA was $60.5 million compared to $68.5 million in the third quarter of Fiscal 2007. The Company defines Adjusted EBITDA as earnings before interest, income taxes, depreciation and amortization, excluding the impact of transaction related costs incurred in connection with the acquisition and other non-recurring or non-cash expenses, and normalizing occupancy costs for certain rent-related adjustments. At November 3, 2007, our $200 million revolving credit facility was undrawn aside from a $4.5 million letter of credit. Cash and cash equivalents were $78.0 million. During the third quarter of Fiscal 2008, cash provided by operating activities was approximately $24.4 million, compared with cash provided by operating activities of $56.6 million during the third quarter of Fiscal 2007. The change in cash provided by operating activities was impacted by the interest expense associated with debt incurred to fund the acquisition. Capital expenditures during the third quarter of Fiscal 2008 were $23.8 million, of which $19.0 million related to store openings and remodeling projects, with the remainder relating primarily to the enhanced POS rollout. Capital expenditures during the third quarter of Fiscal 2007 were $30.1 million. Year to Date Results Net sales for the first nine months of Fiscal 2008 grew 5.4% to $1,063.5 million from $1,008.7 million. Consolidated same store sales decreased 0.4%. For the first nine months of Fiscal 2008, Adjusted EBITDA was $185.5 million compared to $196.6 million in the first nine months of Fiscal 2007. Store Count: End of Third Quarter: November 3, 2007 October 28, 2006 Claire's North America 2,151 2,145 Claire's Europe 900 842 Claire's Nippon 202 192 Total 3,253 3,179 Conference Call Information The Company will host its third quarter conference call on December 14, 2007, at 10:00 a.m. (EST). The call in number is 630-395-0260 and the password is "Claires." A replay will be available through December 20, 2007. The replay number is 203-369-0434 and the password is 25247. The conference call is also being webcast and archived until December 20th on the Company's corporate website at http://www.clairestores.com/, where it can be accessed by clicking on the "Conference Calls" link located under "Financial Information" for a replay or download as an MP3 file. Company Overview Claire's Stores, Inc. is a leading specialty retailer of value-priced jewelry and accessories for girls and young women through its two store concepts: Claire's and Icing. While the latter operates only in North America, Claire's operates internationally. As of December 1, 2007, Claire's Stores, Inc. operated 3,061 stores in the United States, Canada, Puerto Rico, the Virgin Islands, the United Kingdom, Ireland, France, Switzerland, Austria, Germany, Spain, Portugal, Belgium, and the Netherlands. Claire's Stores, Inc. operates through its subsidiary, Claire's Nippon, Co., Ltd., 202 stores in Japan as a 50:50 joint venture with AEON, Co., Ltd. The Company also franchises 162 stores in the Middle East, Turkey, Russia, Poland, and South Africa. Forward-looking Statements This press release contains "forward-looking statements" which represent the Company's expectations or beliefs with respect to future events. Statements that are not historical are considered forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. Those factors include, without limitation: changes in consumer preferences and consumer spending; competition; general economic conditions such as inflation and increased energy costs; general political and social conditions such as war, political unrest and terrorism; natural disasters or severe weather events; currency fluctuations and exchange rate adjustments; uncertainties generally associated with the specialty retailing business; disruptions in our supply of inventory; inability to increase same store sales at historical rates; significant increases in our merchandise markdowns; inability to design and implement new information systems; delays in anticipated store openings or renovations; uncertainty that definitive financial results may differ from preliminary financial results due to, among other things, final GAAP adjustments; changes in applicable laws, rules and regulations, including changes in federal, state or local regulations governing the sale of our products, particularly regulations relating to the metal content in jewelry, and employment laws relating to overtime pay, tax laws and import laws; loss of key members of management; increases in the cost of labor; labor disputes; increases in the cost of borrowings; unavailability of additional debt or equity capital; and the impact of our substantial indebtedness on our operating income and our ability to grow. These and other applicable risks, cautionary statements and factors that could cause actual results to differ from the Company's forward-looking statements are included in the Company's filings with the SEC, specifically as described in the Company's Annual Report on Form 10-K for the fiscal year ended February 3, 2007 and Form 10-Q Equivalent for the quarterly period ended May 5, 2007. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. The historical results contained in this press release are not necessarily indicative of the future performance of the Company. Additional Information: Note: Other Claire's Stores, Inc. press releases, a corporate profile and the most recent Annual Report on Form 10-K and Form 10-Q Equivalent are available on Claire's business website at: http://www.clairestores.com/. THIRD FISCAL QUARTER CLAIRE'S STORES, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands) Three Months Ended Three Months Ended November 3, 2007 October 28, 2006 Successor Entity Predecessor Entity Net sales $357,366 100.0% $347,593 100.0% Cost of sales, occupancy and buying expenses 176,215 49.3 165,487 47.6 Gross profit 181,151 50.7 182,106 52.4 Other expenses (income): Selling, general and administrative 127,772 35.8 118,843 34.2 Depreciation and amortization 26,428 7.4 14,249 4.1 Transaction-related costs 1,200 0.3 - 0.0 Other income (1,310) (0.4) (754) (0.2) 154,090 43.1 132,338 38.1 Operating income 27,061 7.6 49,768 14.3 Interest expense (income), net 56,322 15.8 (3,162) (0.9) Income (loss) before income taxes (29,261) (8.2) 52,930 15.2 Income taxes (15,449) (4.3) 16,303 4.7 Net income (loss) $(13,812) (3.9%) $36,627 10.5% YEAR TO DATE CLAIRE'S STORES, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands) Predecessor Entity Successor Entity February 4, Nine May 29, 2007 2007 Months through through Ended November 3, May 28, October 28, 2007 2007 2006 Net sales $638,556 $424,899 $1,008,680 Cost of sales, occupancy and buying expenses 314,490 206,438 480,540 Gross profit 324,066 218,461 528,140 Other expenses (income): Selling, general and administrative 220,513 154,482 348,569 Depreciation and amortization 39,598 19,652 41,319 Transaction-related costs 3,261 72,672 - Other income (1,706) (1,476) (1,914) 261,666 245,330 387,974 Operating income (loss) 62,400 (26,869) 140,166 Interest expense (income), net 92,250 (4,876) (11,191) Income (loss) before income taxes (29,850) (21,993) 151,357 Income taxes (15,231) 21,779 49,067 Net income (loss) $(14,619) $(43,772) $102,290 CLAIRE'S STORES, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS Successor Predecessor Entity Entity November 3, February 3, 2007 2007 (In thousands, except share and per share amounts) ASSETS Current assets: Cash and cash equivalents $78,038 $340,877 Inventories 156,538 121,119 Prepaid expenses 41,275 35,565 Other current assets 25,498 41,081 Total current assets 301,349 538,642 Property and equipment: Land and building 22,288 17,350 Furniture, fixtures and equipment 118,730 283,556 Leasehold improvements 214,223 288,499 355,241 589,405 Less accumulated depreciation and amortization (36,532) (324,080) 318,709 265,325 Intangible assets, net 816,212 51,582 Deferred debt issuance costs, net of accumulated amortization of $4,421 73,140 - Other assets 71,949 34,775 Goodwill 1,807,052 200,942 2,768,353 287,299 Total assets $3,388,411 $1,091,266 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $83,960 $56,323 Current portion of long-term debt 14,500 - Income taxes payable 7,941 35,102 Accrued interest payable 49,321 - Accrued expenses and other liabilities 105,379 104,026 Total current liabilities 261,101 195,451 Long-term debt 2,366,875 - Deferred tax liability 142,254 19,424 Deferred rent expense 8,623 26,125 Other liabilities 12,683 2,604 2,530,435 48,153 Stockholders' equity: Preferred stock par value $1.00 per share; authorized 1,000,000 shares, issued and outstanding 0 shares (predecessor entity) - - Class A common stock par value $0.05 per share; authorized 40,000,000 shares, issued and outstanding 4,869,041 shares (predecessor entity) - 243 Common stock par value $0.05 per share; authorized 300,000,000 shares, issued and outstanding 88,202,733 shares (predecessor entity); par value $0.001 per share; authorized 1,000 shares; issued and outstanding 100 shares (successor entity) - 4,410 Additional paid-in capital 598,507 75,486 Accumulated other comprehensive income, net of tax 12,987 33,956 Retained earnings (accumulated deficit) (14,619) 733,567 596,875 847,662 Total liabilities and stockholders' equity $3,388,411 $1,091,266 Net income (loss) reconciliation to EBITDA and Adjusted EBITDA EBITDA represents net income (loss) before provision for income taxes, interest income and expense, and depreciation and amortization. Adjusted EBITDA represents EBITDA further adjusted to exclude non-cash and unusual items. Management uses Adjusted EBITDA as an important tool to assess our operating performance. Management considers Adjusted EBITDA to be a useful measure in highlighting trends in our business and in analyzing the profitability of similar enterprises. Management believes that Adjusted EBITDA is effective, when used in conjunction with net income (loss), in evaluating asset performance, and differentiating efficient operators in the industry. Furthermore, management believes that Adjusted EBITDA provides useful information to potential investors and analysts because it provides insight into management's evaluation of our results of operations. In addition, our calculation of Adjusted EBITDA is consistent with the equivalent measurement in the covenants for the indentures governing the senior notes. EBITDA and Adjusted EBITDA are not measures of financial performance under GAAP, are not intended to represent cash flow from operations under GAAP and should not be used as an alternative to net income (loss) as an indicator of operating performance or to cash flow from operating, investing or financing activities as a measure of liquidity. Management compensates for the limitations of using EBITDA and Adjusted EBITDA by using it only to supplement our GAAP results to provide a more complete understanding of the factors and trends affecting our business. Each of EBITDA and Adjusted EBITDA has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of the limitations of EBITDA and Adjusted EBITDA are: -- EBITDA and Adjusted EBITDA do not reflect our cash used for capital expenditures; -- Although depreciation and amortization are non-cash charges, the assets being depreciated or amortized often will have to be replaced and EBITDA and Adjusted EBITDA do not reflect the cash requirements for such replacements; -- EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital requirements; -- EBITDA and Adjusted EBITDA do not reflect the cash necessary to make payments of interest or principal on our indebtedness; and -- EBITDA and Adjusted EBITDA do not reflect non-recurring expenses which qualify as extraordinary items such as one-time write-offs to inventory and reserve accruals. While EBITDA and Adjusted EBITDA are frequently used as a measure of operations and the ability to meet indebtedness service requirements, they are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the method of calculation. While management believes that these measures provide useful information to investors, the SEC may require that EBITDA and Adjusted EBITDA be presented differently or not at all in filings will we make with the SEC. For the three and nine month periods ended November 3, 2007 and October 28, 2006, a reconciliation of net income (loss) to EBITDA, EBITDA after rent related adjustments and Adjusted EBITDA is set forth in the following tables: CLAIRE'S STORES, INC. AND SUBSIDIARIES (UNAUDITED) (IN THOUSANDS) Three Months Ended Three Months Ended November 3, 2007 October 28, 2006 Net income (loss) $(13,812) $36,627 Income tax (15,449) 16,303 Interest expense 57,169 17 Interest income (847) (3,179) Depreciation and amortization 26,428 14,249 Reported EBITDA 53,489 64,017 Book to cash rent adjustment (a) 2,736 552 EBITDA after rent related adjustment 56,225 64,569 Amortization of intangible assets (b) 540 438 Equity income (c) (531) (130) Loss on retirement of property and equipment, net (d) (62) 570 Stock compensation expense (e) 1,944 2,171 Consulting expenses (g) 77 182 Fixture leases (h) 360 406 Cost savings (i) - 337 Management fee (j) 750 - Transaction related costs (k) 1,200 - Adjusted EBITDA $60,503 $68,543 See Page 7 for related footnotes. CLAIRE'S STORES, INC. AND SUBSIDIARIES (UNAUDITED) (IN THOUSANDS) Nine Months Ended Nine Months Ended November 3, 2007 October 28, 2006 Net income (loss) $(58,391) $102,290 Income tax 6,548 49,067 Interest expense 94,095 75 Interest income (6,721) (11,266) Depreciation and amortization 59,250 41,319 Reported EBITDA 94,781 181,485 Book to cash rent adjustment (a) 4,741 1,558 EBITDA after rent related adjustment 99,522 183,043 Amortization of intangible assets (b) 1,410 1,141 Equity income (c) (1,163) (475) Loss on retirement of property and Equipment, net (d) 1,600 1,140 Stock compensation expense (e) 4,108 5,981 Legal settlement & related costs (f) 200 1,250 Consulting expenses (g) 612 700 Fixture leases (h) 1,101 2,075 Cost savings (i) 930 1,731 Management fee (j) 1,250 - Transaction related costs (k) 75,933 - Adjusted EBITDA $185,503 $196,586 The following footnotes relate to the tables on pages 6 and 7. (a) Represents the elimination of non-cash straight-line rent expense, amortization of rent free periods and the inclusion of cash landlord allowances. (b) Represents the elimination of non-cash amortization of lease rights. (c) Represents the elimination of non-cash equity income related to our 50:50 joint venture with AEON Co. Ltd. (d) Represents the elimination of non-cash losses or gains on store related property and equipment primarily associated with remodels, relocations and closures. (e) Represents the elimination of non-cash stock compensation expense. (f) Represents the elimination of a legal settlement and fees in connection with wage and hour class action litigation in California. (g) Represents the elimination of consulting expenses related to our European distribution center. We began to centralize our distribution operations in continental Europe by transitioning to a third party distribution center in the Netherlands. (h) Represents the elimination of non-cash amortization expenses associated with synthetic leases of store fixtures. The Company has not entered into any new synthetic leases after 2001. (i) Reflects the adjustment of executive air travel and other costs to the Company's estimate for such costs on a normalized basis and the estimated savings on directors' and officers' insurance reflective of the Company no longer being a public company. For purposes of estimating these savings, we have assumed an annual air travel budget of $250,000 for our senior executive officers. (j) Represents the management fee paid to Apollo Management. (k) Transaction costs represent legal, financial advisory, compensation, and other Acquisition related expenses. DATASOURCE: Claire's Stores, Inc. CONTACT: Marisa F. Jacobs, Vice President of Corporate Communications and Investor Relations of Claire's Stores, Inc., +1-212-594-3127, +1-212-244-4237 (fax), Web site: http://www.clairestores.com/ Company News On-Call: http://www.prnewswire.com/comp/174913.html

Copyright