EX-99.2 10 f93367exv99w2.txt EXHIBIT 99.2 EXHIBIT 99.2 For more information, contact: Jennifer Doidge 415-318-4107 doidgej@fleishman.com GOOD GUYS ANNOUNCES SECOND QUARTER FINANCIAL RESULTS SAN FRANCISCO - September 29, 2003 - Good Guys (NASDAQ: GGUY) today announced financial results for the second fiscal quarter ended August 31. For the second quarter, Good Guys reported a net loss of $6.9 million, or $0.25 per share, compared to a net loss of $1.8 million, or $0.07 per share, in the same period last year. Gross profit margin for the quarter decreased to 26.8 percent from 28.6 percent in the same period last year, reflecting continued promotional expenses and higher sell-through of discontinued products. As previously reported, net sales for the second quarter were $152.2 million compared to $177.5 million in the same period last year and comparable store sales decreased 13 percent. Good Guys expects negative comparable store sales to continue through the third quarter. "Good Guys continues to be impacted by the challenging economic environment as evidenced in the lower sales volume and decline in store traffic during the first half of the year," said Kenneth Weller, chairman and chief executive officer, Good Guys. "Despite these challenges, Good Guys has taken decisive actions to prepare for the holiday selling season and we believe our performance in the second half of the year will reflect the results of company-wide efforts to bring more qualified customers to our stores, differentiate the customer experience and better align our sales, marketing and merchandising functions." During the quarter, Good Guys continued to manage its merchandise inventory levels to reflect current sales volume, and to better position its inventory by improving gross margin return on investment (GMROI) through SKU rationalization and more effective supply chain management. At the close of the second quarter, $12.8 million was available to borrow under the company's credit facility, compared to $14.1 million at the close of the prior year period. In addition, as part of its $100 million revolving credit facility, the company has the ability to increase its borrowing from October 1 through December 20 of each year to meet seasonal needs. Good Guys Announces Second-Quarter Financial Results, Page 2 For the six months, Good Guys reported a net loss of $15.3 million, or $0.57 per share, compared to a net loss of $6.4 million, or $0.24 per share, in the same period last year. The company reduced SG&A expenses for the six months by more than $10 million, a decline of nearly 11 percent, over the same period last year. Gross profit margin for the six months was 27.2 percent compared to 28.7 percent in the same period last year. For the six months, net sales were $295.5 million compared to $348.5 million in the same period last year. Comparable store sales for the six months declined 13 percent. Good Guys separately announced today that it has entered into a definitive merger agreement with CompUSA. Under the terms of the agreement, each outstanding share of Good Guys common stock will be converted into $2.05 in cash. In connection with the transaction, CompUSA has also invested $5,000,000 in Good Guys in the form of a two-year unsecured subordinated convertible promissory note, convertible into Good Guys common stock at a rate of $2.05 per share. Good Guys will hold a conference call today at 1:30 p.m. Pacific Daylight Time to discuss its second quarter financial results. Interested parties are invited to listen to the call via a live webcast that can be found in the "About Good Guys" section located at www.goodguys.com. The conference call will be archived online for 30 days. With fiscal 2003 sales of $750 million, Good Guys is one of the largest specialty retailers of higher-end entertainment electronics in the nation. With its differentiated product selection and knowledgeable team of product specialists, Good Guys is dedicated to providing entertainment solutions to the West Coast's early adopters and tech-savvy consumers. Founded in 1973, Good Guys operates 71 stores in California, Nevada, Washington and Oregon. For more information, visit www.goodguys.com. To the extent this news release contains forward-looking statements, such statements are subject to risks and uncertainties, including, but not limited to, the successful implementation of the Company's current restructuring and store closing program, increases in promotional activities of competitors, changes in consumer buying attitudes, the presence or absence of new products or product features in the Company's merchandise categories, changes in vendor support for advertising and promotional programs, changes in the Company's merchandise sales mix, the success of the Company's modified advertising strategy, the outcome of the Company's lease renegotiation efforts, and economic conditions. --tables attached-- Good Guys Announces Second-Quarter Financial Results, Page 3 GOOD GUYS SELECTED FINANCIAL DATA (UNAUDITED)
Three Months Ended Six Months Ended (Amounts in thousand, except per share data) Aug 31, 2003 Aug 31, 2002 Aug 31, 2003 Aug 31, 2002 Net sales $ 152,172 $ 177,493 $ 295,524 $348,526 Net loss $ (6,910) $ (1,798) $ (15,322) $ (6,385) Net loss per common share Basic $ (0.25) $ (0.07) $ (0.57) $ (0.24) Diluted $ (0.25) $ (0.07) $ (0.57) $ (0.24) Weighted average shares Basic 27,109 26,550 27,041 26,299 Diluted 27,109 26,550 27,041 26,299
Good Guys Announces Second-Quarter Financial Results, Page 4 GOOD GUYS CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (Amounts in thousands, except per share data)
Three Months Ended Six Months Ended Aug 31, 2003 Aug 31, 2002 Aug 31, 2003 Aug 31, 2002 % of % of % of % of Amount Sales Amount Sales Amount Sales Amount Sales ------ ----- ------ ----- ------ ----- ------ ----- Net sales $ 152,172 100.0% $ 177,493 100.0% $ 295,524 100.0% $ 348,526 100.0% Cost of sales (111,390) (73.2%) (126,788) (71.4%) (215,093) (72.8%) (248,575) (71.3%) ---------- ----- --------- ----- --------- ----- --------- ----- Gross profit 40,782 26.8% 50,705 28.6% 80,431 27.2% 99,951 28.7% Selling, general and administrative expenses (44,235) (29.0%) (48,781) (27.5%) (89,148) (30.2%) (99,759) (28.6%) Depreciation and amortization (2,446) (1.6%) (2,982) (1.7%) (4,970) (1.7%) (5,885) (1.7%) Store closure expenses (423) (0.3%) - 0.0% (423) (0.1%) 700 0.2% ---------- ----- --------- ----- --------- ----- --------- ----- Loss from operations (6,322) (4.1%) (1,058) (0.6%) (14,110) (4.8%) (4,993) (1.4%) Interest expense, net (588) (0.4%) (740) (0.4%) (1,212) (0.4%) (1,392) (0.4%) ---------- ----- --------- ----- --------- ----- --------- ----- Net loss $ (6,910) (4.5%) $ (1,798) (1.0%) $ (15,322) (5.2%) $ (6,385) (1.8%) ========== ===== ========= ===== ========= ===== ========= ===== Net loss per common share Basic $ (0.25) $ (0.07) $ (0.57) $ (0.24) Diluted $ (0.25) $ (0.07) $ (0.57) $ (0.24) Weighted average shares Basic 27,109 26,550 27,041 26,299 Diluted 27,109 26,550 27,041 26,299
Good Guys Announces Second-Quarter Financial Results, Page 5 GOOD GUYS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Amounts in thousands, except per share data)
Aug 31, 2003 Aug 31, 2002 Feb 28, 2003 ASSETS CURRENT ASSETS Cash and cash equivalents $ 4,422 $ 3,890 $ 733 Accounts receivable, net 19,436 25,190 16,324 Merchandise inventories 88,688 108,348 100,867 Prepaid expenses 9,350 8,207 9,794 --------- -------- --------- Total current assets 121,896 145,635 127,718 PROPERTY AND EQUIPMENT Leasehold improvements 66,551 66,198 66,179 Furniture, fixtures, and equipment 78,079 75,377 77,034 Construction in progress 920 1,654 942 --------- -------- --------- Total property and equipment, at cost 145,550 143,229 144,155 Less accumulated depreciation and amortization (107,295) (97,143) (102,154) --------- -------- --------- Property and equipment, net 38,255 46,086 42,001 OTHER ASSETS 78 647 686 --------- -------- --------- TOTAL ASSETS $ 160,229 $192,368 $ 170,405 ========= ======== ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 35,469 $ 39,883 $ 25,601 Accrued expenses and other liabilities: Payroll 6,973 10,159 7,418 Sales taxes 3,534 4,323 3,401 Store closure 5,408 9,037 6,297 Extended service plan 2,299 5,727 288 Other 20,263 18,495 16,230 --------- -------- --------- Total current liabilities 73,946 87,624 59,235 REVOLVING CREDIT DEBT 40,000 51,422 50,099 SHAREHOLDERS' EQUITY Common stock, $.001 par value: Issued and outstanding 27 27 27 Additional paid-in capital 111,952 111,104 111,418 Retained deficit (65,696) (57,809) (50,374) --------- -------- --------- Total shareholders' equity 46,283 53,322 61,071 Total Liabilities and Shareholders' Equity $ 160,229 $192,368 $ 170,405 ========= ======== ========= ###