MERRIMACK, N.H., Feb. 22, 2006 (PRIMEZONE) -- Innovative product development company and specialty lifestyle retailer Brookstone, Inc. today announced financial results for the fourth quarter and fiscal year ended December 31, 2005. Results in this release relating to the Company's Gardeners Eden brand are reflected as discontinued operations.
For the thirteen-week period ended December 31, 2005, Brookstone reported total net sales of $226.1 million, a 2.6 percent decrease as compared to the thirteen-week period ending January 1, 2005. Same-store sales for the thirteen-week period ending December 31, 2005 decreased 7.6 percent compared to the thirteen-week period ending January 1, 2005.
For the forty-eight week period ended December 31, 2005, Brookstone reported total net sales of $440.6 million, a 4.4 percent decrease as compared to the forty-eight week period ending January 1, 2005. Same-store sales for the forty-eight week period ending December 31, 2005 decreased 8.0 percent compared to the forty-eight week period ending January 1, 2005.
Michael Anthony, Brookstone President and Chief Executive Officer, said:
"We are encouraged by our results for the month of December, when same-store sales decreased by 5.5% and total sales decreased by only 0.1% compared with December 2004. We believe we are well positioned for 2006. We ended the year with a healthy cash position of $76.3 million as of December 31, 2005 and no cash borrowings under our $100 million asset-backed credit facility. We have a number of new product launches planned, some of which will be our exclusive launch of certain OSIM healthy lifestyle products."
In November of 2005, the Company changed its fiscal year end from the Saturday closest to the end of January to the Saturday closest to the end of December. As a result of this change, Fiscal 2005 results are for the eleven-month period commencing on January 30, 2005 through December 31, 2005, as compared to the Fiscal 2004 twelve-month period from February 1, 2004 to January 29, 2005. In addition, due to the change in the fiscal year end, the Company's fiscal fourth quarter now ends in December, as compared to January under our previous year end. Our presentations through the fourth quarter of 2006 will compare the new quarter end results with the historical results from the old quarter ends. We believe these period-to-period comparisons will be informative given the fact that the fiscal fourth-quarter periods of 2004 and 2005 will both encompass the Holiday selling season and year end accounting adjustments.
On October 4, 2005, Brookstone, Inc. was acquired through a merger transaction with Brookstone Acquisition Corp., a Delaware corporation formed by OSIM International Ltd and affiliates of J.W. Childs Equity Partners III, L.P. and Temasek (Private) Capital Limited. As a result of the acquisition, Brookstone, Inc. became a privately held, wholly owned subsidiary of OSIM Brookstone Holdings, L.P., the general partner of which is OSIM Brookstone Holdings, Inc. and the majority shareholder of which is OSIM International Ltd.
On June 29, 2005, the Company announced its plans to sell its Gardeners Eden business, which currently consists of one Gardeners Eden store. As a result, commencing with the second quarter of Fiscal 2005, the Company began reflecting the results of operations from the Gardeners Eden business as a discontinued operation.
Brookstone, Inc. is an innovative product development and specialty lifestyle retail Company that operates 305 Brookstone Brand stores nationwide and in Puerto Rico. Typically located in high-traffic regional shopping malls and airports, the stores feature unique and innovative consumer products. The Company also operates one store under the Gardeners Eden Brand, and a Direct Marketing business that includes the Brookstone and Hard to Find Tools catalogs and an e-commerce website at http://www.brookstone.com.
Statements in this release which are not historical facts, including statements about the Company's confidence or expectations, earnings, anticipated operations of its e-commerce sites and those of third-party service providers, and other statements about the Company's operational outlook are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 ("Reform Act") and are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in such forward-looking statements. Such risks and uncertainties include, without limitation, risks of changing market conditions in the overall economy and the retail industry, consumer demand, the effectiveness of e-commerce technology and marketing efforts, availability of products, availability of adequate transportation of such products, and other factors detailed from time to time in the Company's annual and other reports filed with the Securities and Exchange Commission. Words such as "estimate", "project", "plan", "believe", "feel", "anticipate", "assume", "may", "will", "should" and similar words and phrases may identify forward-looking statements. Statements about a possible sale or divestiture of its Gardeners Eden business constitute forward-looking statements. The Company may not be able to complete a divestiture on acceptable terms because of a number of factors, including failure to reach agreement with a purchaser. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. The Company undertakes no obligations to publicly release any revisions to these forward-looking statements or reflect events or circumstances after the date hereof.
BROOKSTONE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
December 31, January 29,
2005 2005
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 76,326 $ 86,205
Receivables, net 10,906 9,859
Merchandise inventories 75,716 75,585
Deferred income taxes, net 4,947 3,917
Prepaid expenses 9,117 6,045
------------- -------------
Total current assets 177,012 181,611
Deferred income taxes, net --- 5,256
Property, plant and equipment, net 76,328 74,019
Intangible assets, net 132,271 3,853
Goodwill 192,723 ---
Other assets 19,363 1,741
------------- -------------
Total assets $ 597,697 $ 266,480
============= =============
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable 22,012 17,402
Other current liabilities 54,714 46,500
------------- -------------
Total current liabilities 76,726 63,902
Other long-term liabilities 20,005 22,432
Long-term debt 190,849 8,760
Deferred income taxes 42,619 ---
Commitments and contingencies
Other party interests in
consolidated entities 1,176 1,100
Shareholders' equity:
Total shareholders' equity 266,322 170,286
------------- -------------
Total liabilities and shareholders'
equity $ 597,697 $ 266,480
============= =============
BROOKSTONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
Thirteen-Weeks: Thirteen-Weeks Thirteen-Weeks
---------------------------- --------------
Successor Predecessor
--------------- -----------------------------
Period from Period from Thirteen-
October 4, 2005 October 2, 2005 Weeks
through through Ended
December 31, October 3, January 29,
2005 2005 2005
-------------- -------------- -------------
Net sales $ 224,527 $1,567 $ 232,130
Cost of sales 137,343 1,104 117,310
-------------- -------------- ------------
Gross profit 87,184 463 114,820
Selling, general and
administrative Expenses 49,688 627 60,085
-------------- -------------- ------------
Income (loss) from
continuing operations 37,496 (164) 54,735
Interest expense, net 8,419 62 160
-------------- -------------- ------------
Income (loss) before
taxes, other party
interests in
consolidated entities
and discontinued
operations 29,077 (226) 54,575
Other party interests in
consolidated entities 174 6 208
-------------- -------------- ------------
Income (loss) before
taxes and Discontinued 28,903 (232) 54,367
operations
Income tax (benefit) 11,444 (109) 21,087
Loss on discontinued (425) (38) (130)
operations, net of tax
-------------- -------------- ------------
Net income (loss) $ 17,034 $(161) $33,150
============== ============== ============
BROOKSTONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
---------------------------- -------------
Forty-Eight and Forty-Eight Fifty-Two
Fifty-Two Weeks: Weeks Weeks
--------------- ------------------------------------------
------------- ---------------------------
Successor Predecessor
------------- ---------------------------
Period from Period from Fifty-Two
October 4, January 30, weeks Ended
2005 through 2005 through January 29,
December 31, October 3, 2005
2005 2005
------------- ------------- ------------
Net sales $ 224,527 $ 216,091 $ 482,884
Cost of sales 137,343 152,228 287,690
--------- --------- ---------
Gross profit 87,184 63,863 195,194
Selling, general
and administrative
Expenses 49,688 86,005 154,571
--------- --------- ---------
Income (loss) from
continuing operations 37,496 (22,142) 40,623
Interest expense, net 8,419 25 921
--------- --------- ---------
Income (loss) before taxes,
other party interests in
consolidated entities and
discontinued operations 29,077 (22,167) 39,702
Other party interests in
consolidated entities 174 687 751
--------- --------- ---------
Income (loss) before taxes
and Discontinued operations 28,903 (22,854) 38,951
Income tax (benefit) 11,444 (7,887) 15,485
Loss on discontinued
operations, net of tax (425) (5,634) (2,104)
--------- --------- ---------
Net income (loss) $ 17,034 $ (20,601) $ 21,362
========= ========= =========
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are financial measures used by management of
the Company and which management believes provide useful information to
investors regarding the Company's results of operations because such
measures assist in analyzing the operating performance of the Company and
its ability to service debt. We define EBITDA as net income (loss) plus
interest expense, depreciation, amortization and income taxes. Other
companies may define EBITDA differently, and as a result, our measure of
EBITDA may not be directly comparable to EBITDA of other companies. We
define Adjusted EBITDA as EBITDA adjusted to exclude the items described
in the table below which are not considered by management of the Company
to be indicative of the Company's underlying financial results EBITDA and
Adjusted EBITDA should not be considered alternatives to net income,
operating income or any other measure of performance or liquidity presented
in accordance with GAAP. For the thirteen and forty eight week periods
ended January 31 2005, EBITDA, reconciled to our reported net income for
such periods, and Adjusted EBITDA, reconciled to our EBITDA for such
periods, are as follows:
13 Weeks 13 Weeks
----------------------------- -------------
--------------------------------------------
Thirteen-weeks: Successor Predecessor
--------------------------------------------
Period Period
from from
October 4, October 2, Thirteen
2005 2005 Weeks
through through Ended
December 31, October 3, January 29,
2005 2005 2005
--------------------------- --------------
Net income (loss)
- as reported $17,034 $ (161) $33,150
Add: Income tax
(benefit) 11,438 (109) 20,744
Add: Interest expense 8,560 62 416
Add: Depreciation and
amortization 3,310 -- 3,515
---------- ------------- ------------
EBITDA 40,342 (208) 57,825
Lease accounting
adjustment -- -- 2,326
SERP 12 -- 184
Non-cash Stock
Compensation
Expense -- -- 33
Gardeners Eden Negative
EBITDA 431 38 233
Amortization of purchase
accounting writeup of
Inventory 7,195 -- --
---------- ------------- ------------
Other purchase accounting
adjustments
406 -- --
========== ============= ============
Adjusted EBITDA $48,386 $ (170) $60,601
========== ============= ============
48 Weeks 52 Weeks
------------------------------ ------------
-------------- ----------------------------
Forty-Eight and
Fifty-Two weeks: Successor Predecessor
-------------- ----------------------------
Period from Period from
October 4, January 30, Fifty-Two
2005 2005 Weeks
through through Ended
December 31, October 3, January 29,
2005 2005 2005
-------------- ----------------------------
Net income (loss)
- as reported $ 17,034 $(20,601) $ 21,362
Add: income tax
(benefit) 11,438 (11,136) 14,006
Add: Interest expense 8,560 1,202 1,556
Add: Depreciation and
amortization
3,310 9,269 13,679
------------ ------------- ------------
EBITDA 40,342 (21,266) 50,603
Lease accounting
adjustment -- -- 2,326
SERP 12 418 368
Non-cash Stock
Compensation Expense
-- 979 577
Gardeners Eden
Negative EBITDA
431 8,466 2,744
Amortization of purchase
accounting writeup of
Inventory 7,195 -- --
------------ ------------- ------------
Other purchase accounting
adjustment
406 -- --
============ ============= ============
Adjusted EBITDA $ 48,386 $(11,403) $ 56,618
============ ============= ============