Ames Reports Third-Quarter Net Income of $3.5 Million
Net Income Improves $7.1 Million Y-T-D
ROCKY HILL, Conn., Nov. 6 /PRNewswire/ -- Ames Department Stores, Inc. (Nasdaq:AMES) today reported
third-quarter net income of $3.5 million, or $0.15 per share, for the period ended October 25, 1997, compared with last
year's third-quarter net income of $421 thousand, or $0.02 per share.
The net income for the 39 weeks ended October 25, 1997, was $5.0 million, or $0.21 per share, compared with a net loss of
$2.1 million, or $0.10 loss per share, last year. The year-to-date net income before other gains was $7.5 million, compared
with a loss before other gains of $3.3 million last year.
Net sales for the third quarter were $527.6 million, compared with $516.9 million in the prior year's third quarter, an increase
of 2.1 percent. Net sales for the year to date were $1.464 billion, compared with $1.455 billion last year. Comparable-store
sales for the quarter increased 1.7 percent while comparable-store sales for the year to date increased 0.7 percent.
Joseph R. Ettore, President and Chief Executive Officer, said, ''Our third- quarter net income of $3.5 million was a significant
improvement over the net income of $871 thousand projected in the business plan and last year's results. The company's
improvement during the quarter resulted from better- than-planned sales, gross margin rate and net interest expense.
''Ames is well-prepared to meet the demands of the competitive fourth- quarter holiday selling period. Our special holiday
circulars offer the sharp price-value equation sought by our customers. Ames' 298 stores have the quality merchandise that will
keep shoppers coming back for more this season. Our goal is clear -- to Exceed Customers' Expectations.''
Ames opened two stores in October in Mercerville, N.J. and Manchester, N.H., bringing the total of new stores opened
during 1997 to nine. Ames, which operates 298 stores in 14 Northeastern states and the District of Columbia, is the nation's
sixth-largest discount retailer with annual total sales of $2.2 billion.
NOTE: For fax copies of Ames' most recent news releases, dial 1-800-758- 5804, Ext. 036787. To find the location of the
Ames store nearest you, dial 1-800-SHOP-AMES
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
For the Thirteen For the Thirty-nine
Weeks Ended Weeks Ended
Oct. 25, Oct. 26, Oct. 25, Oct. 26,
1997 1996 1997 1996
TOTAL SALES $550,235 $540,607 $1,528,869 $1,521,501
Less: Leased
department sales 22,662 23,731 65,128 66,851
NET SALES 527,573 516,876 1,463,741 1,454,650
COSTS, EXPENSES AND (INCOME):
Cost of merchandise
sold 379,342 375,652 1,050,796 1,056,299
Selling, general and
administrative
expenses 143,510 141,163 409,877 403,574
Leased department and
other operating income(6,750) (7,466) (19,309) (20,461)
Depreciation and
amortization expense 3,915 2,646 10,102 7,915
Amortization of the excess
of revalued net assets
over equity under
fresh-start reporting (1,538) (1,538) (4,615) (4,615)
Interest and debt
expense, net 3,758 5,821 9,359 15,266
INCOME (LOSS) BEFORE
OTHER GAINS 5,336 598 7,531 (3,328)
Gain on disposition
of properties --- --- --- 395
INCOME (LOSS) BEFORE
INCOME TAXES 5,336 598 7,531 (2,933)
Income tax (provision)
benefit (1,817) (177) (2,564) 870
NET INCOME (LOSS) $3,519 $421 $4,967 ($2,063)
NET INCOME (LOSS)
PER COMMON SHARE
Net income (loss) $0.15 $0.02 $0.21 ($0.10)
Weighted average
common and common
equivalent shares 23,898 21,974 23,549 20,465
Results of Operations as a
Percent of Net Sales:
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of merchandise sold 71.9 72.7 71.8 72.6
Gross margin 28.1 27.3 28.2 27.4
Selling, general and
administrative expenses 27.2 27.3 28.0 27.7
Leased department and
other operating income (1.3) (1.4) (1.3) (1.4)
Depreciation and
amortization expense 0.8 0.5 0.7 0.5
Amortization of the excess
of revalued net assets
over equity under
fresh-start reporting (0.3) (0.3) (0.3) (0.3)
Interest and debt
expense, net 0.7 1.1 0.6 1.0
Income (loss) before
other gains 1.0 0.1 0.5 (0.2)
Gain on disposition
of properties --- --- --- ---
Income (loss) before
income taxes 1.0 0.1 0.5 (0.2)
Income tax (provision)
benefit (0.3) --- (0.2) 0.1
Net income (loss) 0.7% 0.1% 0.3% (0.1)%
(Please see the accompanying condensed notes to these consolidated condensed financial statements.)
AMES DEPARTMENT STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands)
(Unaudited)
October 25, January 25, October 26,
1997 1997 1996
ASSETS
Current Assets:
Cash and short-term
investments $18,748 $46,119 $20,577
Receivables 43,964 19,071 45,055
Merchandise inventories 585,239 391,076 558,727
Prepaid expenses and
other current assets 17,685 12,169 15,620
Total current assets 665,636 468,435 639,979
Fixed Assets 124,123 96,114 91,597
Less - Accumulated depreciation
and amortization (41,778) (32,529) (27,919)
Net fixed assets 82,345 63,585 63,678
Other assets and
deferred charges 6,589 4,773 4,792
$754,570 $536,793 $708,449
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable:
Trade $239,147 $145,737 $218,439
Other 44,112 43,180 40,919
Total accounts payable 283,259 188,917 259,358
Note payable - revolver 137,692 --- 141,507
Current portion of long-term
debt and capital
lease obligations 6,617 15,578 16,260
Self-insurance reserves 33,001 34,177 35,395
Accrued expenses and other
current liabilities 70,616 66,356 55,509
Store closing reserves 11,520 24,438 18,515
Total current liabilities 542,705 329,466 526,544
Long-term debt 9,311 11,134 12,599
Capital lease obligations 25,992 27,086 26,966
Other long-term liabilities 9,422 7,565 5,793
Unfavorable lease liability 15,690 17,029 17,442
Excess of revalued net assets
over equity under
fresh-start reporting 31,712 36,327 37,865
Commitments and contingencies
Stockholders' Equity:
Common stock 223 205 205
Additional paid-in capital 94,908 88,341 80,759
Retained earnings 24,607 19,640 276
Total stockholders' equity 119,738 108,186 81,240
$754,570 $536,793 $708,449
(Please see the accompanying condensed notes to these consolidated condensed financial statements.)
Condensed Notes to News Release Financial Statements
Basis of Presentation: In the opinion of management, the accompanying consolidated financial statements of Ames Department
Stores, Inc., and subsidiaries (collectively, the ''Company'') contain all adjustments necessary for a fair presentation of such
financial statements for the periods presented. Certain prior year items have been reclassified to conform to the current year
presentation. Due to the seasonality of the Company's operations, the results of operations for the interim period ended
October 25, 1997 may not be indicative of total results for the full fiscal year. Certain information normally included in financial
statements prepared in accordance with generally accepted accounting principles has been condensed or omitted. The
accompanying financial statements should be read in conjunction with the financial statements and notes thereto included in the
Company's Form 10-K filed in April, 1997.
Fresh Start Accounting: Upon emergence from bankruptcy in 1992, all of the Company's fixed assets were written off and the
Company's reorganization value was less than the fair value of its remaining net assets. As a consequence, depreciation and
amortization expense is computed only on fixed asset additions since 1992. In addition, pretax income includes the
amortization of the excess of revalued net assets over equity.
Earnings Per Common Share: Earnings per share was determined using the weighted average number of common shares
outstanding. Common stock equivalents were excluded for the thirty-nine weeks ended October 26, 1996, as their inclusion
would have reduced the reported loss per share. Fully diluted earnings per share was equal to primary earnings per share for
all periods presented.
Inventories: Inventories are valued at the lower of cost or market. Cost is determined by the retail last-in, first-out (LIFO) cost
method. No LIFO reserve was necessary at October 25, 1997, January 25, 1997 and October 26, 1996.
Debt: The Company has an agreement with BankAmerica Business Credit, Inc., as agent, and a syndicate consisting of seven
other banks and financial institutions, for a secured revolving credit facility of up to $320 million, with a sublimit of $100 million
for letters of credit (the ''Credit Agreement''). The Credit Agreement is in effect until June 30, 2000, is secured by substantially
all of the assets of the Company, and requires the Company to meet certain quarterly financial covenants. The Company is in
compliance with these financial covenants through the quarter ended October 25, 1997.
Income Taxes: The Company's estimated annual effective income tax rate for each year was applied to the income (loss)
before income taxes for each period to compute a non-cash income tax provision/benefit. The income tax benefit is included in
other current assets in the balance sheet as of October 26, 1996. |
