-----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, PketmDVF+CAHvMc2i0/anqP5n3y7MiZXuuxo3Z1tv2o5laDVBr8LWzeiEZDiAeOn M0m+/aH/huMlMVbaPqd/Dg== 0000799288-99-000005.txt : 19990409 0000799288-99-000005.hdr.sgml : 19990409 ACCESSION NUMBER: 0000799288-99-000005 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990129 ITEM INFORMATION: FILED AS OF DATE: 19990408 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANDS END INC CENTRAL INDEX KEY: 0000799288 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 362512786 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09769 FILM NUMBER: 99589669 BUSINESS ADDRESS: STREET 1: ONE LANDS END LN CITY: DODGEVILLE STATE: WI ZIP: 53595 BUSINESS PHONE: 6089359341 MAIL ADDRESS: STREET 1: ONE LANDS END LANE STREET 2: ONE LANDS END LANE CITY: DODGEVILLE STATE: WI ZIP: 53595 8-K 1 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) March 11, 1999 LANDS' END, INC. (exact name of registrant as specified in its charter) DELAWARE 1-9769 36-2512786 (State or other (Commission (I.R.S. Employer jurisdiction File Number) Identification Number) of incorporation) Lands' End Lane, Dodgeville, Wisconsin 53595 (Address of principal executive offices) (Zip Code) Registrant's telephone number 608-935-9341 including area code INFORMATION INCLUDED IN THIS REPORT Item 5. Other Events. Attached as Exhibit 99.3 to this report is a news release issued by Lands' End, Inc., discussing its reported results for its fourth quarter and fiscal year ended January 29, 1999, including its statements about goals for Internet sales, anticipated cost savings, and possible circulation reductions and their anticipated effects on sales or profits. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, its duly authorized officer and chief financial officer. LANDS' END, INC. Date April 8, 1999 By: /s/ STEPHEN A. ORUM Stephen A. Orum Executive Vice President & Chief Financial Officer EXHIBIT 99.3 FOR IMMEDIATE RELEASE LANDS' END REPORTS FISCAL 1999 YEAR-END AND FOURTH QUARTER RESULTS DODGEVILLE, WIS ... March 11, 1999 ...Lands' End, Inc. (LE), today reported results for its fourth quarter and fiscal year ended January 29, 1999. Net sales for the 52-week year just ended totaled $1.371 billion, compared with $1.264 billion in the prior year, an increase of 8.5 percent. The increase in sales was primarily due to additional catalogs and pages mailed to customers. The growth in sales came primarily from the company's specialty businesses. Sales from foreign-based operations were up slightly for the year, while sales from the core business, represented by the monthly and prospecting catalogs, were down from the prior year. Net income for the year just ended was $31.2 million, down 51 percent from the $64.2 million the company earned in fiscal 1998. Diluted earnings per share for the year just ended were $1.01, compared with $2.00 per share for the prior year. The diluted weighted average number of common shares outstanding was 30.8 million for fiscal 1999 and 32.1 million for fiscal 1998. As previously reported, in the third and fourth quarters of fiscal 1999, the company had after-tax non-recurring charges of $0.9 million and $7.0 million, respectively, or $0.26 per share for the entire fiscal year. In the first quarter of fiscal 1998 the company had an after-tax gain of $4.9 million, or $0.15 per share, from the sale of its majority interest in The Territory Ahead. Before the effect of these adjustments, net income for fiscal 1999 was $39.1 million, or $1.27 per share, compared with $59.2 million, or $1.85 per share in fiscal 1998. Net sales in the fourth quarter of fiscal 1999 were $541 million, up 12.6 percent from the fourth quarter of the prior year, when net sales were $480 million. Net income for the quarter just ended was $25.7 million, down 37.7 percent from $41.3 million in the similar period a year ago. Including the effect of the non- recurring charge discussed above, diluted earnings per share for the quarter just ended were $0.84. Excluding that effect, diluted earnings per share for the quarter just ended were $1.07, compared with $1.32 in fiscal 1998. In commenting on the results, company president and chief executive officer David F. Dyer said, "We've made much progress in this past quarter, especially in getting our inventory more closely aligned with sales, restructuring our organization into functional operating units and putting people in key leadership roles. Going forward, I believe our strengths as a premier direct merchant will enable us to position Lands' End as a major e-commerce player, in addition to a being a leading catalog company. "One of the bright spots for us this year has been the Internet growth. Internet sales were $61 million in fiscal 1999, more than triple the $18 million of the prior year. From an expense perspective, it is less costly to advertise and take orders on the Internet, and over time, we will be able to mail fewer catalogs to those customers who prefer e-commerce shopping. Within three or four years, I would like to see a significant part of our sales coming via the Internet," he said. Gross profit for the year just ended was $617 million, or 45.0 percent of net sales, compared with $588 million, or 46.6 percent of net sales, for the prior year. The decrease in gross profit margin was primarily due to more steep markdowns on higher sales of liquidated merchandise, especially in the fourth quarter when the company aggressively addressed its overstock situation, as well as from lower initial markups. Liquidations were about 10 percent of total net sales in fiscal 1999, compared with 8 percent in the prior year. Year-end inventory was $220 million, down 9 percent from $241 million in fiscal 1998. Inventory throughout the entire year was higher as the company experienced softening sales, especially in the third quarter. To correct this, the company instituted price rollbacks, price reductions and some promotional pricing in the fourth quarter. This helped increase sales, but also had a negative effect on gross profit margin for the year and especially for the fourth quarter. The company's goal is to ship at least 90 percent of all items when the customer places an order. In fiscal 1999, the company achieved a first-time fulfillment rate of 91 percent. Selling, general and administrative expenses rose 11 percent to $544 million in fiscal 1999, compared with $490 million in the prior year. As a percentage of sales, SG&A was 39.7 percent in fiscal 1999 and 38.8 percent in fiscal 1998. The increase in the SG&A ratio was mainly the result of lower productivity in the catalogs due to an increase in pages and catalogs mailed and a weaker response from customers. Additional factors increasing the SG&A ratio were relatively higher salaries and benefits, higher Year 2000 expenses, and increased investment in the Internet site. This was partially offset by lower bonus and profit sharing expense due to lower profitability. The number of full-price catalogs mailed totaled 259 million in fiscal 1999, up 12 percent from the prior year, while the total number of pages mailed was increased by about 10 percent. Over the past two years, catalog circulation has increased 22 percent and page circulation by 38 percent. This level of circulation was due in part from our efforts to clear excess inventory in the fourth quarter. Starting this fall, circulation of catalogs and pages will be reduced to eliminate less profitable mailings. This will have a negative effect on sales growth, but is expected to have a positive impact on profits by increasing catalog productivity, or sales per page. Lands' End is a direct merchant of traditionally styled, classic casualwear for the family, products for bed and bath, shoes, and accessories offered to customers through regular mailings of its monthly and specialty catalogs and the Internet. ******************************************************* Supplemental information FY 1999 FY 1998 Percent (in millions) change Twelve-month buyers 6.1 5.9 + 3.4% Three-year buyers 10.1 9.6 + 5.2% Names on mailing list 29.5 27.2 + 8.5% Capital expenditures $46.8 $47.7 - 1.9% Depreciation & amortization $18.7 $15.1 +23.8% STATEMENT REGARDING FORWARD-LOOKING INFORMATION Statements in this release that are not historical are forward looking, including, without limitation, statements about goals for Internet sales, anticipated cost savings, and possible circulation reductions and their anticipated effects on sales or profits. As such, these statements are inherently subject to a number of risks and uncertainties. Future results may be materially different from those expressed or implied by these statements due to various factors that may occur. Such factors include, but are not limited to the following: general economic or business conditions, both domestic and foreign; continued growth rates for e-commerce shopping; the company's ability to attract customers to the Internet; technology developments and their availability and cost; customer response to product offerings and initiatives; costs associated with printing and mailing catalogs; dependence on consumer seasonal buying patterns; and fluctuations in foreign currency exchange rates. -0- Contact Charlotte LaComb: 608-935-4835 CONSOLIDATED STATEMENTS OF OPERATIONS Lands' End, Inc. & Subsidiaries (Amounts in thousands, except per share data) 13 weeks 13 weeks 52 weeks 52 weeks ended ended ended ended Jan. 29, Jan. 30, Jan. 29, Jan. 30, 1999 1998 1999 1998 Net sales $541,172 $480,418 $1,371,375 $1,263,629 Cost of sales 309,938 253,941 754,661 675,138 Gross profit 231,234 226,477 616,714 588,491 Selling, general and administrative expenses 178,853 161,209 544,446 489,923 Non-recurring charge 11,100 - 12,600 - Income from operations 41,281 65,268 59,668 98,568 Other income (expense): Interest expense (1,466) (696) (7,734) (1,995) Interest income 8 214 16 1,725 Other 957 (1,122) (2,450) (4,278) Total other income (expense), net (501) (1,604) (10,168) (4,548) Income before income taxes and non-recurring gain 40,780 63,664 49,500 94,020 Income tax provision 15,089 22,410 18,315 34,787 Net income before non-recurring gain 25,691 41,254 31,185 59,233 Non-recurring gain (net of income taxes) - - - 4,917 Net income $ 25,691 $ 41,254 $ 31,185 $ 64,150 Basic earnings per share before non-recurring gain $ 0.85 $ 1.33 $ 1.02 $ 1.86 Basic earnings per share from non-recurring gain $ - $ - $ - $ 0.15 Basic earnings per share $ 0.85 $ 1.33 $ 1.02 $ 2.01 Diluted earnings per share $ 0.84 $ 1.32 $ 1.01 $ 2.00 Basic weighted average shares outstanding 30,207 31,024 30,471 31,851 Diluted weighted average shares outstanding 30,452 31,359 30,763 32,132 CONSOLIDATED BALANCE SHEETS Lands' End, Inc. & Subsidiaries Jan. 29, Jan. 30, (Dollars in thousands) 1999 1998 Assets Current assets: Cash and cash equivalents $ 6,641 $ 6,338 Receivables, net 21,083 15,443 Inventory 219,686 241,154 Prepaid advertising 21,357 18,513 Other prepaid expenses 7,589 5,085 Deferred income tax benefit 17,947 12,613 Total current assets 294,303 299,146 Property, plant and equipment, at cost: Land and buildings 102,018 81,781 Fixtures and equipment 154,663 118,190 Leasehold improvements 5,475 5,443 Construction in progress - 12,222 Total property, plant and equipment 262,156 217,636 Less - accumulated depreciation and amortization 101,570 84,227 Property, plant and equipment, net 160,586 133,409 Intangibles, net 1,030 917 Total assets $455,919 $433,472 Liabilities and shareholders' investment Current liabilities: Lines of credit $ 38,942 $ 32,437 Accounts payable 87,922 83,743 Reserve for returns 7,193 6,128 Accrued liabilities 54,392 34,942 Accrued profit sharing 2,256 4,286 Income taxes payable 14,578 20,477 Total current liabilities 205,283 182,013 Deferred income taxes 8,133 8,747 Shareholders' investment: Common stock, 40,221 shares issued 402 402 Donated capital 8,400 8,400 Additional paid-in capital 26,994 26,457 Deferred compensation (394) (1,047) Accumulated other comprehensive income 2,003 875 Retained earnings 406,396 375,211 Treasury stock, 10,317 and 9,281 shares at cost, respectively (201,298) (167,586) Total shareholders' investment 242,503 242,712 Total liabilities and shareholders' investment $455,919 $433,472 CONSOLIDATED STATEMENTS OF CASH FLOWS Lands' End, Inc. & Subsidiaries Twelve months ended (In thousands) Jan. 29, Jan. 30, 1999 1998 Cash flows from (used for) operating activities: Net income $ 31,185 $ 64,150 Adjustments to reconcile net income to net cash flows from operating activities- Depreciation and amortization 18,731 15,127 Deferred compensation expense 653 323 Deferred income taxes (5,948) (1,158) Pre-tax gain on sale of subsidiary - (7,805) Loss on disposal of fixed assets 586 1,127 Changes in current assets and liabilities excluding the effects of acquisitions and divestitures: Receivables (5,640) (7,019) Inventory 21,468 (104,545) Prepaid advertising (2,844) (7,447) Other prepaid expenses (2,504) (1,366) Accounts payable 4,179 11,616 Reserve for returns 1,065 944 Accrued liabilities 19,593 8,755 Accrued profit sharing (2,030) 1,349 Income taxes payable (5,899) (1,047) Other 1,665 64 Net cash flows from (used for) operating activities 74,260 (26,932) Cash flows from (used for) investing activities: Cash paid for capital additions (46,750) (47,659) Proceeds from sale of subsidiary - 12,350 Net cash flows used for investing activities (46,750) (35,309) Cash flows from (used for) financing activities: Proceeds from short-term borrowings 6,505 21,242 Purchases of treasury stock (35,557) (45,899) Issuance of treasury stock 1,845 409 Net cash flows used for financing activities (27,207) (24,248) Net increase (decrease) in cash and cash equivalents 303 (86,489) Beginning cash and cash equivalents 6,338 92,827 Ending cash and cash equivalents $ 6,641 $ 6,338 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENTS OF OPERATIONS AND THE CONSOLIDATED BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS 12-MOS JAN-29-1999 JAN-30-1998 JAN-29-1999 JAN-30-1998 6,641 6,338 0 0 21,083 15,443 0 0 219,686 241,154 294,303 299,146 262,156 217,636 101,570 84,227 455,919 433,472 205,283 182,013 0 0 0 0 0 0 402 402 242,101 242,310 455,919 433,472 1,371,375 1,263,629 1,371,375 1,263,629 754,661 675,138 754,661 675,138 2,940 4,906 0 0 7,734 1,995 49,500 101,825 18,315 37,675 31,185 64,150 0 0 0 0 0 0 31,185 64,150 1.02 2.01 1.01 2.00 Expenses included in Other Income and Expenses on the Consolidated Statement of Operations Per SFAS 128 the EPS os Basic
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