-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BFAl/WyhxguJdl1JLcYwLiiOGf/Tg9enJKJWaqzcv6dW2pv8YMHGzPJR8syAkCiL TjN7S3+XxueVwvpICejWOQ== 0001157523-04-006558.txt : 20040721 0001157523-04-006558.hdr.sgml : 20040721 20040721080130 ACCESSION NUMBER: 0001157523-04-006558 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040721 ITEM INFORMATION: FILED AS OF DATE: 20040721 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LINENS N THINGS INC CENTRAL INDEX KEY: 0001023052 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES [5700] IRS NUMBER: 223463939 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12381 FILM NUMBER: 04923074 BUSINESS ADDRESS: STREET 1: 6 BRIGHTON RD CITY: CLIFTON STATE: NJ ZIP: 07015 BUSINESS PHONE: 9737781300 MAIL ADDRESS: STREET 1: 6 BRIGHTON RD CITY: CLIFTON STATE: NJ ZIP: 07015 8-K 1 a4684284.txt LINENS N THINGS SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) July 21, 2004 ------------- LINENS 'N THINGS, INC. - ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 1-12381 22-3463939 - ------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 6 Brighton Road, Clifton, New Jersey 07015 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (973) 778-1300 -------------- INFORMATION TO BE INCLUDED IN THE REPORT ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION Attached and being furnished hereby as Exhibit 99.1 is a copy of a press release of Linens 'n Things, Inc. (the "Company") dated July 21, 2004, reporting the Company's sales and earnings results for the second quarter of 2004. The discussion of the Company's 2004 second quarter results and its commentary regarding expected future results include and, where indicated, exclude 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. 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 Company's EITF 02-16 pre-tax adjustment 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 impact of EITF 02-16 is detailed in, and reconciled to generally accepted accounting principles (GAAP) as part of, the Company's discussion of its 2004 second quarter results. In the Company's view, in discussing its historical and expected future results and financial condition, in order to better measure and to assist the analysis of the Company's period to period operating performance it is important for management and investors to be provided operating performance measures which identify the impact of the EITF 02-16 accounting change on operating results and financial condition. In addition, management feels that is important for investors to understand the manner in which management evaluates the Company's period to period operating performance, thus the inclusion of these non-GAAP measures is intended to provide an additional metric for reviewing performance that management internally uses to evaluate performance on a comparative period-to-period basis in terms of absolute performance and trend performance. Such information is supplemental to information presented in accordance with GAAP, is not intended to represent a presentation in accordance with GAAP, and should not be considered as a substitute for, or superior to, measures of financial performance prepared and presented in accordance with GAAP. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. LINENS 'N THINGS, INC. Dated: July 21, 2004 By: --------------------------------------------- Name: William T. Giles Title: Executive Vice President, Chief Financial Officer EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Press Release of Linens 'n Things, Inc., dated July 21, 2004. EX-99.1 2 a4684284-ex991.txt NEWS RELEASE Exhibit 99.1 Linens 'N Things Announces Second Quarter 2004 Results CLIFTON, N.J.--(BUSINESS WIRE)--July 21, 2004--Linens 'n Things, Inc. (NYSE: LIN), one of the leading, national large format retailers of home textiles, housewares and home accessories, today announced total net sales increased approximately 10.5% to $578.7 million for the second quarter ended July 3, 2004, up from $523.7 million for the same period last year. Comparable net sales for the second quarter of 2004 increased 0.2%. Net income for the second quarter ended July 3, 2004 was approximately $879,000 or $0.02 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 second quarter 2004 results by approximately $4.1 million, net of tax, or $0.09 per fully diluted share. For the same period last year, which was not impacted by EITF 02-16, the Company had net income of $5.7 million or $0.13 per fully diluted share. EITF 02-16 had no impact on the Company's cash flows. Norman Axelrod, Chairman and Chief Executive Officer, commented, "Although we experienced a slowdown in guest traffic during the quarter, we remain committed to improving the guest shopping experience. We are adding new businesses, emphasizing key value items, and improving our in-store execution to drive our performance for the second half of the year." Net sales increased 12.7% to $1,131.5 million for the twenty-six week period ended July 3, 2004, up from $1,004.1 million for the same period last year. Comparable net sales for the twenty-six week period ended July 3, 2004 increased approximately 2.3%. Net income for the twenty-six week period ended July 3, 2004 was approximately $909,000 or $0.02 per share on a fully diluted basis. Results include the implementation of EITF 02-16, which impacted the Company's results by approximately $9.0 million, net of tax, or $0.19 per fully diluted share for the twenty-six week period ended July 3, 2004. For the same period last year, which was not impacted by EITF 02-16, the Company had net earnings of $7.8 million or $0.17 per fully diluted share. During the second quarter of fiscal 2004, the Company opened 12 new stores as compared with opening 16 stores and closing one store during the same period last year. Year to date, the Company opened 33 stores increasing its total square footage by approximately 12% to 16.1 million square feet, as compared with opening 32 stores and closing eight stores during the same period last year. The Company currently expects to open approximately a total of 50 new stores in 2004, further expanding its presence as a leading retailer of home furnishings. For 2004, capital expenditures are expected to be approximately $80 to $85 million. 2004 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 changes in other factors. For the third quarter of 2004, comparable net sales are currently targeted to be in the low to mid single digit range. Fully diluted earnings per share including the impact of EITF 02-16 are currently targeted to be in the range of $0.44 to $0.50. Based on the Company's current evaluations, the estimated impact from the implementation of EITF 02-16 is expected to reduce fully diluted earnings per share on a non-cash basis by approximately $0.05 for the third quarter of fiscal 2004. For the full year 2004, sales are currently being targeted to grow by approximately 11% to 14%. Comparable net sales are targeted to be in the low to mid single digit range. Fully diluted earnings per share including the impact of EITF 02-16 are currently targeted to be in the range of $1.56 to $1.66. Based on the Company's current evaluations, the estimated impact from the implementation of EITF 02-16 is expected to reduce fully diluted earnings per share on a non-cash basis by approximately $0.27 to $0.28 for the full year of fiscal 2004. Linens 'n Things, with 2003 sales of $2.4 billion, is one of the leading, national large format retailers of home textiles, housewares and home accessories. As of July 3, 2004 the Company was operating 473 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, EITF 02-16 impact, 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, acceptance of product offerings and fashions and our ability to anticipate and successfully respond to changing consumer tastes and preferences, 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, timing and actual amount of vendor allowances and the actual impact in fiscal 2004 of EITF 02-16 and our ability to successfully implement and to achieve the expected productivity from our strategic and other store 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 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. LINENS 'N THINGS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Thirteen Weeks Ended ------------------------------ July 3, July 5, 2004, EITF 2003, As 02-16 As reported(a) Impact(a) reported -------------------- --------- Net sales $578,749 $-- $523,672 Cost of sales, including buying and warehousing costs 346,250 (3,411) 309,974 ---------- --------- --------- Gross profit 232,499 3,411 213,698 Selling, general and administrative expenses 230,889 (3,183) 204,180 ---------- --------- --------- Operating profit 1,610 6,594 9,518 Interest expense, net 188 -- 288 ---------- --------- --------- Income before provision for income taxes 1,422 6,594 9,230 Provision for income taxes 543 2,519 3,526 ---------- --------- --------- Net income $879 $4,075 $5,704 ========== ========= ========= Per share of common stock: Basic - ---------------------------------------- Net income per share $0.02 $0.09 $0.13 Weighted average shares outstanding 45,108 44,118 Fully Diluted - ---------------------------------------- Net income per share $0.02 $0.09 $0.13 Weighted average shares outstanding 46,090 44,545 (a) The Company commenced implementation of EITF 02-16 "Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor" (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 $6.6 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. The "As Reported" amounts include the impact of EITF 02-16. LINENS 'N THINGS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Twenty-Six Weeks Ended --------------------------------- July 3, July 5, 2004, EITF 2003, As 02-16 As reported(a) Impact(a) reported --------------------- ----------- Net sales $1,131,549 $-- $1,004,143 Cost of sales, including buying and warehousing costs 678,596 (3,552) 597,604 --------------------- ----------- Gross profit 452,953 3,552 406,539 Selling, general and administrative expenses 451,279 (10,963) 393,581 --------------------- ----------- Operating profit 1,674 14,515 12,958 Interest expense, net 204 -- 364 --------------------- ----------- Income before provision for income taxes 1,470 14,515 12,594 Provision for income taxes 561 5,544 4,812 --------------------- ----------- Net income $909 $8,971 $7,782 ===================== =========== Per share of common stock: Basic - ------------------------------------- Net income per share $0.02 $0.20 $0.18 Weighted average shares outstanding 45,014 44,108 Fully Diluted - ------------------------------------- Net income per share $0.02 $0.19 $0.17 Weighted average shares outstanding 46,110 44,534 (a) The Company commenced implementation of EITF 02-16 "Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor" (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 $6.6 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. The "As Reported" amounts include the impact of EITF 02-16. LINENS 'N THINGS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) July 3, July 5, 2004 2003(a) ----------- ----------- Assets (unaudited) Current assets: Cash and cash equivalents $18,990 $9,446 Inventories 765,667 715,644 Accounts receivable 27,490 28,013 Prepaid expenses and other 33,734 29,940 Current deferred taxes 404 -- ----------- ----------- Total current assets 846,285 783,043 Property and equipment, net 390,892 376,006 Other non-current assets, net 30,534 28,891 ----------- ----------- Total assets $1,267,711 $1,187,940 =========== =========== Liabilities and Shareholders' Equity Current liabilities: Accounts payable $238,142 $268,593 Accrued expenses and other current liabilities 121,017 125,303 Short-term borrowings 6,045 16,874 Current deferred taxes 11,282 8,676 ----------- ----------- Total current liabilities 376,486 419,446 Other long-term liabilities 120,897 89,144 ----------- ----------- Total liabilities 497,383 508,590 Shareholders' equity 770,328 679,350 ----------- ----------- Total liabilities and shareholders' equity $1,267,711 $1,187,940 =========== =========== (a) Certain prior year vendor accounts receivable balances have been reclassified and netted against accounts payable to conform with the current year presentation. LINENS 'N THINGS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) Twenty-Six Weeks Ended ------------------ July 3, July 5, 2004 2003 --------- -------- (unaudited) Cash Flows From Operating Activities Net income $909 $7,782 Depreciation and amortization 29,526 26,346 Change in working capital (116,158) (75,816) --------- -------- Net cash used in operating activities (85,723) (41,688) --------- -------- Cash Flows From Investing Activities Additions to property and equipment (43,985) (51,965) --------- -------- Cash Flows From Financing Activities Proceeds from common stock issued under stock incentive plans 6,762 1,305 Increase in short-term borrowings 6,011 14,690 (Purchase) issuance of treasury stock (39) 255 --------- -------- Net cash provided by financing activities 12,734 16,250 --------- -------- Effect of exchange rate changes on cash and cash equivalents (165) 244 Net decrease in cash and cash equivalents (117,139) (77,159) Cash and cash equivalents at beginning of period 136,129 86,605 --------- -------- Cash and cash equivalents at end of period $18,990 $9,446 ========= ======== CONTACT: Linens 'n Things, Inc. William T. Giles, 973-815-2929 www.lnt.com -----END PRIVACY-ENHANCED MESSAGE-----