EX-99.1 3 doc2.txt 99 CENTS ONLY STORES(R) REPORTS EARNINGS PER SHARE OF $0.21 FOR THE SECOND QUARTER ENDED JUNE 30, 2003. CITY OF COMMERCE, CA -- July 22, 2003 -- 99 Cents Only Stores(R) (NYSE:NDN) reported net income of $14.8 million for the quarter ended June 30, 2003 compared to $13.5 million in the second quarter of 2002. Earnings per share was $0.21 in the second quarter of 2003, compared with earnings per share of $0.19 in the second quarter of 2002, with an additional 1.1 million shares outstanding. Eric Schiffer, President of the Company said, "We are pleased to report year to date earnings per share of $0.41, in line with the First Call consensus estimate from the outset of the year, and announce continued strong retail sales and same-store-sales in the second quarter of 2003. This is especially gratifying in light of our initial entry in Texas, which was a significant milestone for the Company. The new Houston, Texas stores have received strong initial customer support. We are also pleased to announce our new Texas distribution center is operational and servicing our Texas stores effectively." Total sales in the second quarter 2003 increased 23.3% to $207.0 million, compared to $167.9 million in the second quarter of 2002. Retail sales for the second quarter were $195.1 million, up $39.6 million or 25.5% from sales of $155.4 million in 2002. Ten stores opened during the latter part of the quarter, including four in Texas. Same-store-sales increased 9.8% in the second quarter of 2003. Same-store-sales in the second quarter were benefited by this year's shift in the Easter selling season from the first quarter in 2002 to the second quarter in 2003. Same-store-sales for the first six months of 2003 increased 7.4%. Total gross margin for the second quarter of 2003 was 40.0% versus 40.2% in the second quarter of 2002. Retail gross margin for the quarter was 41.2% versus 41.8% in 2002. The difference is primarily due to a lower margin for close-out merchandise and to a lesser extent due to a 35% sales growth for food related products. Year to date retail gross margin is 41.5%, same as last year. Eric Schiffer, President said "The gross margin for close-out merchandise will vary over time depending upon market conditions. The shift to a higher percent of food related items in our sales mix, while resulting in a slightly lower gross margin, significantly helped the Company to generate higher retail sales and same-store-sales. The Company will continue to respond to our customers' preferences by providing quality products they need at a great value." SG&A was 28.9% of sales in the quarter versus 27.7% last year. Higher than planned SG&A was due to several factors. The impact from the acceleration of the opening of the first six Texas stores (two each on 6/19, 6/26 and 7/3), versus the original plan of one store and pre-opening costs in Texas exceeded typical pre-opening costs because of higher costs for management recruiting, training, relocation, travel and advertising was about 35 basis points. SG&A was also affected by about 10 basis points from back-weighted store openings, with 8 stores opening in the last 12 days of the second quarter, and the acceleration of 3 stores originally scheduled for the third quarter, into late June. Additionally, freight and distribution costs to initially stock the Texas stores along with the Texas distribution center (DC) and extra labor in the main California DC to service the opening inventory needs for the Texas stores and DC had an impact of about 30 basis points. Non-capital maintenance, repairs, supplies and systems expenses for the Texas DC accounted for about 10 basis points. California workers compensation and related employee benefits cost increases accounted for about 25 basis points. The Company's tax rate has been adjusted to reflect an overall revised effective rate for the year and year to date of 38.7% giving benefit for tax credits, non-taxable interest, effective state tax rates and revision of earlier estimates. GUIDANCE FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2003 ------------------------------------------------------- Total sales for the third quarter, including wholesale sales, are projected in the range of $207 to $212 million. Comparable store sales are projected at 3% to 4%. The company plans to open 12 stores in the quarter, 3 in July, 2 in August and 7 in September, with the majority in Houston. Gross margin on retail sales is projected in the range of 41.0% to 41.4%, versus 41.3% in 2002. Total SG&A expenses including depreciation are projected at 28.9% to 29.2%, versus 28.0% in 2002. The tax rate is projected at 38.7% of pre-tax income. Fully diluted share count is projected at 73.4 million and EPS for the quarter is projected at a range of $0.20 to $0.21, versus 71.2 million and $0.19 in 2002. GUIDANCE FOR THE YEAR ENDED DECEMBER 31, 2003 --------------------------------------------- Total sales for the year, including wholesale sales, are projected in the range of $869 to $878 million. Comparable store sales for the year are projected at 4% to 5%. The company plans to open 38 stores for the year with at least 15 in Houston. Gross margin on retail sales for the year is projected in the range of 41.6% to 41.8%, versus 41.7% in 2002. Total SG&A expenses including depreciation for the year are projected at 28.2% to 28.6%, versus 27.5% in 2002. The tax rate is projected at 38.7% of pre-tax income. Fully diluted share count is projected at 72.7 million and EPS for the year is projected at $0.92 to $0.96, versus 71.2 million and $0.83 in 2002. 99 Cents Only Stores(R), the nation's oldest existing one-price retailer, operates 166 retail stores in California, Nevada, Arizona and Texas and a wholesale division called Bargain Wholesale. The Company will open its seventeenth store for the year and its first in the Northern California Bay Area on July 31, 2003 in San Leandro. 99 Only Stores(R) emphasizes name-brand quality consumables, priced at an excellent value, in attractively merchandised stores. This press release contains forward-looking statements, as referenced in the Private Securities Litigation Reform Act of 1995 (the "Act"). Forward-looking statements are inherently unreliable and actual results may differ. Factors which could cause actual results to differ materially from these forward-looking statements include, changes in the competitive market place, general economic conditions, factors affecting the retail industry in general, the timing of new store openings, the ability of the Company to identify and obtain leases for new stores, the ability of the Company to acquire inventory at favorable costs and other factors discussed in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
99 CENT ONLY STORES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Amounts in thousands except per share amounts) Three Months Ended June 30 Six Months Ended June 30 2003 2002 2003 2002 -------- -------- -------- -------- Net sales: 99 Cent Only Stores $195,052 94.2% $155,436 92.6% $379,764 94.1% $305,083 92.2% Bargain Wholesale 11,981 5.8% 12,425 7.4% 23,691 5.9% 25,882 7.8% -------- -------- -------- -------- -------- ------ -------- ------ 207,033 100.0% 167,861 100.0% 403,455 100.0% 330,965 100.0% Cost of sales 124,230 60.0% 100,298 59.8% 241,254 59.8% 199,159 60.2% -------- -------- -------- -------- -------- ------ -------- ------ Gross Profit 82,803 40.0% 67,563 40.2% 162,201 40.2% 131,806 39.8% Selling, general and administrative expenses 54,251 26.3% 42,280 25.2% 105,601 26.2% 83,263 25.1% Depreciation & amortization 5,483 2.6% 4,259 2.5% 10,617 2.6% 8,199 2.5% -------- -------- -------- -------- -------- ------ -------- ------ Total operating expenses 59,734 28.9% 46,539 27.7% 116,218 28.8% 91,462 27.6% -------- -------- -------- -------- -------- ------ -------- ------ Operating Income 23,069 11.1% 21,024 12.5% 45,983 11.4% 40,344 12.2% Interest and other income (expense), net 832 0.4% 1,211 0.7% 2,027 0.5% 2,296 0.7% -------- -------- -------- -------- -------- ------ -------- ------ Income before income taxes 23,901 11.5% 22,235 13.2% 48,010 11.9% 42,640 12.9% Provision for income taxes 9,065 4.3% 8,717 5.2% 18,565 4.6% 16,652 5.0% -------- -------- -------- -------- -------- ------ -------- ------ Net income $ 14,836 7.2% $ 13,518 8.0% $ 29,445 7.3% $ 25,988 7.9% ======== ======== ======== ======== ======== ====== ======== ====== Basic earnings per share Net income $ 0.21 $ 0.19 $ 0.42 $ 0.37 ======== ======== ======== ========= Diluted earnings per share Net income $ 0.21 $ 0.19 $ 0.41 $ 0.37 ======== ======== ======== ========= Shares used in computation of net income per share Basic 71,038 69,888 70,754 69,726 Diluted 72,346 71,275 71,942 71,100
99 CENT ONLY STORES BALANCE SHEETS (Unaudited) (Amounts in thousands) June 30, December 31, June 30, 2003 2002 2002 ---- ---- ---- ASSETS: Cash $ 12,465 $ 7,985 $ 178 Short-term investments 107,524 146,857 117,012 Receivables, net 2,546 2,753 2,977 Due from shareholder 1,470 1,232 - Income tax receivable 9,057 - 4,599 Inventories 94,962 83,176 78,744 Other current assets 3,722 2,869 3,504 --------- ------------- --------- Total current assets 231,746 244,872 207,014 Property and Equipment, net 164,679 127,560 114,087 Long-term investments in marketable securities 57,158 37,223 35,045 Deferred taxes 19,078 19,078 15,688 Other assets 12,336 11,177 10,916 --------- ------------- --------- 31,414 30,255 26,604 --------- ------------- --------- Total assets $ 484,997 $ 439,910 $ 382,750 ========= ============= ========= LIABILITIES AND SHAREHOLDERS' EQUITY: Current portion of capitalized lease $ 40 $ 40 $ 41 Accounts payable 16,313 16,946 7,520 Accrued expenses 8,704 10,157 7,543 Workers Compensation 8,334 7,725 6,052 Income tax payable - 3,518 - - ------------- - Total current liabilities 33,391 38,386 21,156 Deferred rent 2,340 2,210 2,120 Deferred compensation liability 1,563 1,102 950 Capitalized lease obligation 1,575 1,597 1,627 --------- ------------- --------- 5,478 4,909 4,697 Shareholders' equity 446,128 396,615 356,897 --------- ------------- --------- Total liabilities and shareholders' equity $ 484,997 $ 439,910 $ 382,750 ========= ============= =========
99 CENT ONLY STORES STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in thousands) Six months ended June 30, 2003 2002 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,445 $ 25,988 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . 10,617 8,199 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (15) Tax benefit from exercise of non-qualified employee stock options. . . . . . . 5,801 3,122 Changes in assets and liabilities associated with operating activities: Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 546 Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,786) (12,216) Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,637) (405) Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (633) (7,724) Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,453) 1,199 Worker's compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609 518 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,575) (3,215) Deferred rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 60 Due (from) shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . (238) (1,655) Net cash provided by operating activities. . . . . . . . . . . . . . . . . . 18,487 14,402 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment. . . . . . . . . . . . . . . . . . . . . . . (47,736) (18,629) Purchases of marketable securities . . . . . . . . . . . . . . . . . . . . . . . 19,398 (3,958) Investments in partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . 86 - Net cash used in investing activities. . . . . . . . . . . . . . . . . . . . (28,252) (22,587) CASH FLOWS FROM FINANCING ACTIVITIES: Payments of capital lease obligation . . . . . . . . . . . . . . . . . . . . . . (22) (11) Proceeds from exercise of stock options. . . . . . . . . . . . . . . . . . . . . 14,267 8,142 Net cash provided by financing activities. . . . . . . . . . . . . . . . . . 14,245 8,131 NET INCREASE (DECREASE) IN CASH . . . . . . . . . . . . . . . . . . . . . . . . . 4,480 (54) CASH, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,985 232 CASH, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,465 $ 178
NOTE TO EDITORS: 99 CENT ONLY STORES(R) NEWS RELEASES AND INFORMATION AVAILABLE ON THE WORLD WIDE WEB AT HTPP://WWW.99ONLY.COM CONTACT: 99 CENT ONLY STORES(R), CITY OF COMMERCE, CALIFORNIA, ANDY FARINA, CFO, 323/881-9933 --99 CENTS --