FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
( X )Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period EndedOctober 30, 1999
OR
( )Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission file number 1-8899
CLAIRE'S STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware 59-0940416
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 S.W. 129th Avenue Pembroke Pines, Florida 33027
(Address of principal executive offices) (Zip Code)
(954) 433-3900
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No .
The number of shares of the registrant's Common Stock and Class A Common
Stock outstanding as of November 30, 1999 was 48,343,636 and 2,870,845,
respectively, excluding treasury shares.
<PAGE>
CLAIRE'S STORES, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at October 30, 1999 and
January 30, 1999. 3
Condensed Consolidated Statements of Income and Comprehensive
Income for the Three and Nine Months Ended October 30, 1999
and October 31, 1998. 4
Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended October 30, 1999 and October 31, 1998. 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Conditions and Results of
Operations 7-9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
Oct. 30, Jan 30,
1999 1999
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $101,547 $117,546
Short-term investments 16,547 35,758
Inventories 101,303 63,334
Prepaid expenses and other current assets 29,571 22,980
Total current assets 248,968 239,618
Property and equipment:
Land and building 17,275 15,969
Furniture, fixtures and equipment 141,654 123,390
Leasehold improvements 103,485 94,421
262,414 233,780
Less accumulated depreciation and amortization (132,106) (118,272)
130,308 115,508
Goodwill,net 26,294 9,000
Other assets 31,922 30,146
58,216 39,146
$437,492 $394,272
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loan payable to bank $822 $893
Trade accounts payable 37,521 23,165
Income taxes payable 2,099 16,803
Accrued expenses 24,539 26,199
Dividends payable 2,043 2,031
Total current liabilities 67,024 69,091
Deferred credits 13,027 10,963
Stockholders' equity:
Preferred stock par value $1.00 per share;
authorized 1,000,000 shares, issued and
outstanding 0 shares - -
Class A common stock par value $.05 per share;
authorized 20,000,000 shares, issued 2,871,801
shares and 2,891,074 shares 144 145
Common stock par value $.05 per share; authorized
150,000 shares issued 48,342,680 shares and
48,024,707 shares 2,417 2,401
Additional paid-in capital 27,936 25,398
Accumulated other comprehensive income (1,131) (895)
Retained earnings 328,527 287,621
357,893 314,670
Treasury stock, at cost, (109,882 shares) (452) (452)
357,441 314,218
Commitments and contingencies
$437,492 $394,272
</TABLE>
<PAGE>
<TABLE>
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED
OCTOBER 30, 1999 AND OCTOBER 31, 1998
(Unaudited)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
Oct. 30, Oct. 31, Oct. 30, Oct. 31,
1999 1998(1) 1999 1998(1)
(In thousands except per share amounts)
<S> <C> <C> <C> <C>
Net sales $182,750 $157,089 $539,503 $437,063
Cost of sales, occupancy and
buying expenses 92,658 79,720 269,254 218,910
Gross profit 90,092 77,369 270,249 218,153
Other expenses:
Selling, general and
administrative 64,819 53,289 185,215 147,171
Depreciation and amortization 6,872 5,485 19,595 15,783
Interest income, net (1,574) (1,623) (4,566) (4,780)
Gain on investments - - (3,929) -
70,117 57,151 196,315 158,174
Income from continuing
operations before
income taxes 19,975 20,218 73,934 59,979
Income taxes 7,249 7,502 27,088 22,200
Income from continuing
operations 12,726 12,716 46,846 37,779
Discontinued operations:
Loss from discontinued
operations (less
applicable income taxes) - 2,023 - 4,414
Net loss from discontinued
operations - 2,023 - 4,414
Net income 12,726 10,693 46,846 33,365
Other comprehensive income:
Foreign currency translation
adjustments 1,276 86 (236) (257)
Unrealized gain on securities - (1,601) - (1,351)
Comprehensive income $14,002 $ 9,178 $46,610 $31,757
Net income (loss) per share:
Basic:
From continuing operations $ 0.25 $ 0.25 $ 0.92 $ 0.75
From discontinued operations - (0.04) - (0.09)
Net income $ 0.25 $ 0.21 $ 0.92 $ 0.66
Diluted:
From continuing operations $ 0.25 $ 0.25 $ 0.91 $ 0.74
From discontinued operations - (0.04) - (0.09)
Net income $ 0.25 $ 0.21 $ 0.91 $ 0.65
Average common shares
outstanding - Basic 51,043 50,677 50,943 50,604
Average common shares
outstanding - Diluted 51,271 51,047 51,341 51,086
(1) Restated to reflect Just Nikki, Inc. as a discontinued operation.
</TABLE>
<PAGE>
<TABLE>
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
OCTOBER 30, 1999 AND OCTOBER 31, 1998
(Unaudited)
<CAPTION>
Nine Months Ended
Oct. 30, Oct. 31,
1999 1998(1)
(In thousands)
Cash flows from operating activities:
<S> <C> <C>
Net income $46,846 $33,365
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss from discontinued operations, net of tax benefit - 4,443
Depreciation and amortization 19,595 15,783
Tax benefit from options - 450
Gain on investments (3,929) -
Loss on retirement of property and equipment 944 960
Changes in assets and liabilities:
(Increase) decrease in -
Inventories (36,675) (32,253)
Prepaid expenses and other assets (7,433) (7,072)
Increase (decrease) in -
Trade accounts payable 13,303 9,391
Income taxes payable (14,705) (5,308)
Accrued expenses (2,096) 904
Deferred credits 2,064 1,916
Net cash provided by continuing operations 17,914 22,579
Net cash used by discontinued operations - (8,837)
Net cash provided by operating activities 17,914 13,742
Cash flows from investing activities:
Acquisition of property and equipment (34,879) (32,882)
Sale (purchase) of short-term investments, net 23,140 (5,781)
Capital expenditures of discontinued operations - (166)
Acquisition of minority interest in a foreign subsidiary(18,000) -
Net cash (used in) provided by investing activities (29,739) (38,829)
Cash flows from financing activities:
Principal borrowings (payments) on debt (485) (1,600)
Proceeds from stock options exercised 2,554 280
Dividends paid (5,939) (5,806)
Net cash (used in) provided by financing activities (3,870) (7,126)
Effect of foreign currency exchange rate changes on cash
and cash equivalents (304) (408)
Net decrease in cash and cash equivalents (15,999) (32,621)
Cash and cash equivalents at beginning of period 117,546 122,491
Cash and cash equivalents at end of period $101,547 $89,870
(1) Restated to reflect Just Nikki, Inc. as a discontinued operation.
</TABLE>
<PAGE>
CLAIRE'S STORES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed consolidated financial statements
reflect all adjustments (consisting only of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair statement of
the interim periods' results. These financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore
do not include all of the information or footnotes necessary for a complete
presentation. They should be read in conjunction with the Company's
audited financial statements included as part of the Annual Report on
Form 10-K for the year ended January 30, 1999 filed with the Securities
and Exchange Commission. Due to the seasonal nature of the Company's
business, the results of operations for the first nine months of the year
are not indicative of the results of operations on an annualized basis.
2. Basic net income per share is based on the weighted average number of shares
of Class A Common Stock and Common Stock outstanding during the period
(51,043,000 and 50,934,000 shares for the three months and nine months
ended October 30, 1999, respectively and 50,677,000 and 50,604,000 shares
for the three months and nine months ended October 31,1998, respectively).
Diluted net income per share includes the dilutive effect of stock options
(228,000 and 407,000 shares for the three months and nine months ended
October 30, 1999, respectively and 370,000 and 482,000 shares for the
three months and nine months ended October 31, 1998, respectively).
Options to purchase 885,000 and 592,500 shares of common stock, at prices
ranging from $5.11 to $30.25 per share and prices ranging from $17.92 to
$22.88 per share, respectively, were outstanding for the quarters ended
October 30, 1999 and October 31, 1998, respectively, but were not included
in the computation of diluted earnings per share because the options'
exercise prices were greater than the average market price of the
common shares for the respective fiscal quarter.
3. Certain items in the prior period financial statements have been
reclassified to conform with the current period presentation.
4. On December 1, 1999, the Company completed the acquisition of
substantially all of the assets of the AfterThoughts division of the
Venator Group, Inc., ("AfterThoughts") for approximately
$250 million in cash. The transaction was accounted for under the
purchase method of accounting.
5. In connection with the acquisition of AfterThoughts, the Company entered
into a credit facility (the "Credit Facility") pursuant to which it
financed $200 million of the purchase price. The Credit Facility includes
a $40 million revolving line of credit which matures on December 1, 2004
and a $175 million five year term loan, the first installment of which is
due and payable beginning December 31, 2000 with future installments,
thereafter, payable on a quarterly basis through December 1, 2004. The
Credit Facility is prepayable without penalty and bears interest for an
initial six months at 125 basis points margin over the London Interbank
Borrowing Rate. The margin is then adjusted periodically based on the
Company's performance as it relates to certain financial measurements.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
The analysis below takes into account that prior year's balances have been
restated to reflect the discontinued operations of Just Nikki, Inc.
Net sales for the three months and nine months ended October 30, 1999,
respectively, increased approximately 16% and 23% over the comparable
periods ended October 31, 1998. The increase for the period resulted
primarily from the addition of a net 298 stores offset by same-store sales
(decrease) increase of (2%) and 6% for the quarter and nine months,
respectively. Management believes the decrease in same-store sales was due
to temporary shortages in inventory levels during the three month period and
the same-store sales increase for the nine month period was achieved due to
increased customer traffic, a strong retail economic environment and the
Company's merchandising strategy of utilizing popular motifs in multiple
product categories.
Cost of sales, occupancy and buying expenses increased 16% and 23% for the
three months and nine months ended October 30, 1999, respectively, over the
comparable periods ended October 31, 1998. The principal reason for this
increase was the rise in the number of stores and the volume of merchandise
sold. As a percentage of net sales, these expenses were 50.7% and
49.9% for the three months and nine months ended October 30, 1999,
respectively, and 50.7% and 50.1% for the comparable periods ended October 31,
1998. Due to the same-store sales increase of 6% in the nine months ended
October 30, 1999, rent, rent support and the cost of the merchandising
department, which are relatively fixed in nature, provided additional
leverage which resulted in higher margins for the nine months ended October 30,
1999 as compared to the same period ended October 31, 1998.
Selling, general and administrative expenses, as a percentage of sales for
the three months and nine months ended October 30, 1999 were 35.5% and 34.3%,
respectively, compared to 33.9% and 33.7% for the comparable periods ended
October 31, 1998. This increase is primarily attributable to increased
bonuses for store and field personnel, which is directly related to the
increase in same store sales discussed above and additional investment in our
operating infrastructure.
Depreciation and amortization as a percentage of sales was approximately 3.8%
and 3.6% for the three months and nine months ended October 30, 1999,
respectively, as compared to 3.5% and 3.6% for the three months and nine
months ended October 31, 1998. The increase as a percentage of sales for the
three month period is a result of an increase in amortization of goodwill
on the acquisition of the minority interest in a foreign subsidiary during
the first quarter of this year.
Interest income, net of interest expense, totaled $1,574,000 and $4,566,000
for the three month and nine months ended October 30, 1999, respectively,
compared to $1,623,000 and $4,780,000 for the comparable periods ended
October 31, 1998. This slight decrease was primarily due to the
decrease in the average interest rate earned on cash and cash equivalents and
short-term investments balances during the three months and nine months ended
October 30, 1999.
Gain on investments totaled $3,929,000 and represents the net realized gain
on investments for the period during the nine months ended October 30, 1999.
Inflation has not affected the Company as it has generally been able to pass
along inflationary increases in its costs through increased sales prices.
<PAGE>
Liquidity and Capital Resources
Net cash decreased $15,999,000 for the nine months ended October 30, 1999 due
to net cash provided by operating activities of $17,914,000, proceeds from
stock options exercised of $2,554,000 and the sale of short term investments
of $23,140,000. These cash inflows were offset by net cash used for the
acquisition of property and equipment totaling $34,879,000, the payment
of dividends of $5,939,000 and a payment of $18,000,000 for the acquisition of
a minority interest in a foreign subsidiary.
Inventory at October 30, 1999 increased 60% compared to the inventory balance
at the end of the Company's January 30, 1999 fiscal year. The increase is
attributable to a net increase of 193 stores in the nine months ended October
30, 1999 and the additional merchandise needed to maintain the current sales
momentum as the Company prepares for the Christmas selling season.
The Company opened 214 stores in the nine months ended October 30, 1999 and
remodeled 86 stores.
At October 30, 1999, the Company had available a $10 million credit line with
a bank to finance the Company's letters of credit and working capital
requirements. On December 1, 1999, this credit line was canceled and
replaced by the Credit Facility described in Note 4 of the financial
statements. The Company's non-U.S. subsidiaries have credit facilities
totaling approximately $2,225,000 with a bank. The facilities are used for
working capital requirements, letters of credit and various guarantees.
These credit facilities have been arranged in accordance with customary
lending practices in their respective countries of operation. The Company
believes that internally generated funds and borrowings available under its
credit facilities will be sufficient to meet its current operating needs and
its presently anticipated capital expenditures.
Year 2000
In prior years, certain computer programs were written using two digits
rather than four to define the applicable year. These programs were written
without considering the impact of the upcoming change in the century and may
experience problems handling dates beyond the year 1999. This could cause
certain computer applications to fail or to create erroneous results unless
corrective measures are taken.
The Company has been executing a plan to identify and address any possible
deficiencies that the Year 2000 issue may have on its computer systems, which
include both proprietary and third party computer systems; related hardware,
software and data and telephone networks and information systems service
providers. This plan addresses the Year 2000 issue in multiple phases
including (i) identification of critical systems, vendors and third party
administrators that may be vulnerable to system failures or processing errors
as a result of Year 2000 issues, (ii) assessment and prioritization of
identified risks associated with the failure to be Year 2000 compliant, (iii)
testing of systems to determine Year 2000 compliance, (iv) remediation and
implementation of systems and equipment, and (v) contingency planning to
assess reasonably likely worst case scenarios. As of December 1999, the
Company has completed phases (i) through (v).
The Company is dependent on basic public infrastructure, such as
telecommunications and utilities, in order to function normally. Significant
long-term interruptions of this infrastructure could have an adverse effect
on the operations of the Company. Additionally, the Company must rely on
assurances from suppliers and vendors that their information systems and key
services will be Year 2000 compliant. The Company has completed its
evaluation of each major supplier, vendor and third party administrator to
assess their Year 2000 readiness and initiatives. Although the
Company attempted to validate representations from these parties, it cannot
be sure that their tests will be adequate, or that, if problems are identified,
they will be addressed in a timely and satisfactory manner. Furthermore,
there may be certain third parties such as utilities, telecommunications
companies, or vendors where alternative arrangements or sources are limited
or unavailable.
<PAGE>
The extent and magnitude of the Year 2000 issue is difficult to predict or
quantify for a number of reasons including the lack of control over third
party systems and complexities associated with testing interconnected systems
networks and applications. The Company expects that the maximum external
cost which could be incurred in conjunction with the testing and remediation
of all hardware and software systems and applications is approximately
$400,000 through completion in 1999, of which, approximately $350,000 has
been incurred to date. Such costs have been and will be funded by the
Company's operating cash flows. This estimate of maximum costs does not
include the costs, if any, that might be incurred as a result of Year
2000-related failures that occur despite the Company's implementation of the
Year 2000 plan.
The cost of the Company's plan to address the Year 2000 issue and the
anticipated date on which the Company plans to complete the necessary Year
2000 conversion efforts are based on management's best estimates, which were
derived from numerous assumptions of future events, including the
availability of resources, vendor remediation plans, and other factors.
Although the Company is not currently aware of any material operational
issues associated with preparing its systems for the Year 2000, or material
issues with respect to the adequacy of major vendors', suppliers' or third
party administrators' systems, there can be no assurance, due to the overall
complexity of the Year 2000 issue, that the Company will not experience
material unanticipated negative consequences and/or material costs caused by
undetected errors or defects in such systems or by the Company's failure to
adequately prepare for the results of such errors or defects, including costs
or related litigation, if any. Such consequences could have a material
adverse effect on the Company's business, financial condition or results of
operations.
Special Note Regarding Forward-Looking Statements
The Company and its representatives may from time to time make oral or
written "forward-looking statements" within the meaning of the Private
Securities Reform Act of 1995 (the "Reform Act"), including any statements
that may be contained in the foregoing "Management's Discussion and
Analysis of Financial Condition and Results of Operations," in this report
and in other filings with the Securities and Exchange Commission and in its
reports to stockholders, which represent the Company's expectations or
beliefs with respect to future events and future financial performance.
These forward-looking statements are subject to certain risks and
uncertainties. Important factors currently known to management that could
cause actual results to differ materially from those in forward-looking
statements are set forth in the safe harbor compliance statement for forward-
looking statements in the Company's Annual Report on Form 10-K for the year
ended January 30, 1999, and that statement is hereby incorporated by reference
in this Form 10-Q. The Company does not undertake to update or revise any
forward-looking statement to reflect changed assumptions, the occurrence of
unanticipated events or changes to operating results over time.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule (for SEC use only)
99.1 Press Release of the Company dated November 11, 1999
(b) Reports on Form 8-K
None
<PAGE>
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 thereunto duly authorized.
CLAIRE'S STORES, INC.
(Registrant)
Date: December 14, 1999 /s/ Ira D. Kaplan
Ira D. Kaplan
Senior Vice President and Chief
Financial Officer
(Mr. Kaplan is the Senior Vice
President and Chief Financial Officer
and has been duly authorized to sign
on behalf of the registrant)
<PAGE>
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 thereunto duly authorized.
CLAIRE'S STORES, INC.
(Registrant)
Date: December 14, 1999
Ira D. Kaplan
Senior Vice President and Chief
Financial Officer
(Mr. Kaplan is the Senior Vice
President and Chief Financial Officer
and has been duly authorized
to sign on behalf of the registrant)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC
Form 10Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> JAN-29-2000 JAN-29-2000
<PERIOD-START> AUG-01-1999 JAN-31-1999
<PERIOD-END> OCT-30-1999 OCT-30-1999
<CASH> 101,547 101,547
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 101,303 101,303
<CURRENT-ASSETS> 248,968 248,968
<PP&E> 262,414 262,414
<DEPRECIATION> 132,106 132,106
<TOTAL-ASSETS> 437,492 437,492
<CURRENT-LIABILITIES> 67,024 67,024
<BONDS> 0 0
0 0
0 0
<COMMON> 2,417 2,417
<OTHER-SE> 355,024 355,024
<TOTAL-LIABILITY-AND-EQUITY> 437,492 437,492
<SALES> 182,750 539,503
<TOTAL-REVENUES> 182,750 539,503
<CGS> 0 0
<TOTAL-COSTS> 92,658 269,254
<OTHER-EXPENSES> 70,117 196,315
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 19,975 73,934
<INCOME-TAX> 7,249 27,088
<INCOME-CONTINUING> 12,726 46,846
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 14,002 46,610
<EPS-BASIC> .25 .92
<EPS-DILUTED> .25 .91
</TABLE>
NEWS BULLETIN RE: Claire's STORES, INC.
3 SW 129th AVENUE PEMBROKE PINES, FLORIDA 33027 (954) 433-3900
CLAIRE'S STORES THIRD QUARTER EARNINGS UP 19%, SALES UP 16%;
FIRST NINE MONTHS EARNINGS UP 42%; SALES UP 23%
PEMBROKE PINES, Florida, November 11, 1999 Claire's Stores, Inc. (NYSE:CLE)
reported today that diluted earnings per share from operations for the third
quarter ended October 30, 1999, increased 19 percent to $0.25, compared to
$0.21 for the comparable period ended October 31, 1998. The third quarter
ended October 31, 1998 includes a $.04 per share loss from discontinued
operations related to the disposition of Just Nikki.
Net sales for the third quarter increased 16 percent to $182,639,000
from $157,089,000 for the third quarter of 1999. Comparable store sales
decreased two percent for the third quarter.
Net sales for the first nine months of Fiscal 2000 increased 23 percent
to $539,392,000 from $437,063,000 for the same period last year. Net income
for the first nine months of Fiscal 200 increased 42 percent to $47,305,000
or $.92 per diluted share, compared with $33,365,000 or $.65 per diluted share
for the first nine months of Fiscal 1999. Comparable store sales increased
six percent for the first nine months.
All figures have been restated to reflect the disposition of Just Nikki,
Inc.
Rowland Schaefer, Claire's Chairman and Chief Executive Officer, said,
"We were disappointed with the sales results for the third quarter which were
negatively impacted by inventory shortages caused by merchandising errors, but
<PAGE>
we are pleased that sales remained significantly ahead of the third quarter
last year. Our inventory levels have been corrected and we are well positioned
heading into the holiday season. We look forward to the fourth quarter
returning to positive same store sales comparisons."
Mr. Schaefer also noted that at the end of the third quarter the company
had a total of 2,239 stores in operation. These comprised 1,712 Claire's
Accessories and The Icing Stores in North America, 250 accessories stores in
Claire's U.K., 80 stores in Japan, 56 stores in Europe. Mr. Rags had 139
stores and the company opened two apparel stores as a test concept under the
Velvet Pixies name. The company has opened 230 stores so far this fiscal
year with an additional 62 stores to be opened in the fourth quarter.
Mr. Schaefer added that the Claire's management team is currently meeting
with the Venator and Afterthoughts' management teams to continue working on
the various phases of the integration of the two companies.
Claire's Stores, Inc., specializing in moderately priced fashion
accessories, currently owns and operates more than 2200 stores in 50 states,
the Caribbean, Canada, Japan, the United Kingdom, Switzerland, Austria and
Germany. On November 2, 1999, the company also announced that it had entered
into a definitive agreement to acquire the assets of the Venator Group's
(NYSE:Z)chain of Afterthoughts stores. That transaction, when completed,
will add up to another 768 fashion accessory stores in the United States,
Canada, Puerto Rico and the Virgin Islands.
<PAGE>
This release contains "forward looking statements" that represent the
company's expectations or beliefs with regard to future events. These
"forward looking statements" are subject to certain risks and uncertainties
that could cause actual results to differ materially from those anticipated.
These factors include, without limitation, changes in consumer preferences,
competition and economic conditions.
For additional information:
At Claire's Stores
Glenn Canary
Director of Investor Relations
(954) 433-3900
[email protected]
or
Sonia Rohan
Associate Director of Investor Relations
[email protected]
(212) 594-3127
Note: Other Claire's Stores, Inc. press releases, a corporate profile and
most recent 10-K and 10-Q reports are available through Claire's Internet
home page: http://www.clairestores.com
<PAGE>
<TABLE>
CLAIRE'S STORES, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
Restated to Reflect Just Nikki as a Disc. Op.
(UNAUDITED)
THREE MONTHS ENDING
<CAPTION>
October 30, 1999 October 31,1998
<S> <C> <C> <C> <C>
Net sales $182,639,000 100.0% $157,089,000 100.0%
Cost of sales, occupancy
and buying expenses 92,598,000 50.7% 79,720,000 50.7%
90,041,000 49.3% 77,369,000 49.3%
Expenses:
Selling, general
and administrative 64,826,000 35.5% 53,289,000 33.9%
Depreciation and amorti-
zation 6,891,000 3.8% 5,485,000 3.5%
Interest income, net (1,648,000) -0.9% (1,623,000 -1.0%
Loss (gain) on investment 0 0.0% 0 0.0%
70,069,000 38.4% 57,151,000 36.4%
Income from continuing
ops. before income taxes 19,972,000 10.9% 20,218,000 12.9%
Income taxes 7,281,000 4.0% 7,502,000 4.8%
Income from continuing
operations 12,691,000 6.9% 12,716,000 8.1%
Discontinued operations:
Loss from discontinued
operations (less applicable
income taxes) 0.0% 2,023,000 1.3%
Loss on disposal from
discontinued operations
(less applicable income
taxes)
Net loss from discontinued
operations 0 0.0% 2,023,000 1.3%
Net income $12,691,000 6.9% $10,693,000 6.8%
Net income (loss) per share:
Basic:
From continuing ops $0.25 $0.25
From discontinued ops 0.00 0.04
Net income $0.25 $0.21
Diluted:
From continuing ops $0.25 $0.25
From discontinued ops 0.00 0.04
Net income $0.25 $0.21
Weighted average shares
outstanding:
Basic 51,015,000 50,677,000
Diluted 51,243,000 51,047,000
</TABLE>
<PAGE>
<TABLE>
CLAIRE'S STORES, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
Restated to Include Lux Corp. and Reflect Just Nikki as a Disc. Op.
(UNAUDITED)
NINE MONTHS ENDING
<CAPTION>
October 30, 1999 October 31,1998
<S> <C> <C> <C> <C>
Net sales $539,392,000 100.0% $437,063,000 100.0%
Cost of sales, occupancy
and buying expenses 269,191,000 49.9% 218,910,000 50.1%
270,201,000 50.1% 218,153,000 49.9%
Expenses:
Selling, general
and administrative 185,253,000 34.3% 147,171,000 33.7%
Depreciation and amorti-
zation 19,614,000 3.6% 15,783,000 3.6%
Interest income, net (4,640,000) -0.9% (4,780,000) -1.1%
Loss (gain) on investments (3,929,000) -0.7% 0 0.0%
196,298,000 36.4% 158,174,000 36.2%
Income from continuing
ops. before income taxes 73,903,000 13.7% 59,979,000 13.7%
Income taxes 26,598,000 4.9% 22,200,000 5.1%
Income from continuing
operations 47,305,000 8.8% 37,779,000 8.6%
Discontinued operations:
Loss from discontinued
operations (less applicable
income taxes) 0.0% 4,414,000 1.0%
Loss on disposal from
discontinued operations
(less applicable income
taxes)
Net loss from discontinued
operations 0 0.0% 4,414,000 1.0%
Net income $47,305,000 8.8% $33,365,000 7.6%
Net income (loss) per share:
Basic:
From continuing ops $0.93 $0.75
From discontinued ops 0.00 0.09
Net income $0.93 $0.66
Diluted:
From continuing ops $0.92 $0.74
From discontinued ops 0.00 0.09
Net income $0.92 $0.65
Weighted average shares
outstanding:
Basic 50,934,000 50,604,000
Diluted 51,331,000 51,086,000
</TABLE>
<PAGE>
<TABLE>
CLAIRE'S STORES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
CONSOLIDATED
<CAPTION>
October 30, October 31,
1999 1998
(Restated)
Assets
Current Assets:
<S> <C> <C>
Cash and equivalents $109,088,000 $90,815,000
Short-term investments 16,547,000 13,852,000
Inventories 98,674,000 84,393,000
Prepaid expenses and
other current assets 32,725,000 26,595,000
Total current assets 257,034,000 215,655,000
Property and Equipment:
Land and building 17,276,000 13,579,000
Furniture, fixtures and
equipment 141,353,000 116,043,000
Leasehold improvements 102,843,000 88,260,000
261,472,000 217,882,000
Less accumulated
depreciation and
amortization (131,709,000) (109,197,000)
129,763,000 108,685,000
Goodwill, net 26,295,000 566,000
Other Assets 26,455,000 22,795,000
$439,547,000 $347,701,000
</TABLE>
<PAGE>
<TABLE>
CLAIRES STORES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
CONSOLIDATED
<CAPTION>
October 30, October 31,
1999 1998
(Restated)
Liabilities and
Stockholders' Equity
Current Liabilities:
<S> <C> <C>
Current portion of debt $821,000
Trade accounts payable 35,574,000 $29,060,000
Income taxes payable 7,317,000 5,383,000
Dividends payable 2,044,000 55,000
Accrued expenses 23,420,000 18,336,000
Total current liabilities 69,176,000 52,834,000
Long-Term Liabilities:
Long-term debt 0 0
Deferred credits 13,055,000 10,461,000
Total long-term Liabilities 13,055,000 10,461,000
Stockholders' equity:
Common stock- par 2,415,000 2,394,000
Class A stock - par value 144,000 145,000
Additional paid-in capital 27,709,000 22,771,000
Other comprehensive inc. (888,000) (3,111,000)
Retained earnings 328,388,000 262,659,000
357,768,000 284,858,000
Less Treasury stock at
cost, (452,000) (452,000)
357,316,000 284,406,000
$439,547,000 $347,701,000
</TABLE>
<PAGE>
