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EXHIBIT 99.1
For more information, contact:
Kristen Lark
214.220.2484
[email protected]
GOOD GUYS ANNOUNCES FINANCIAL RESULTS
SAN FRANCISCO -- December 7, 2000 -- Good Guys, Inc. (Nasdaq: GGUY),
one of the nation's largest specialty retailers of consumer entertainment
electronics, today announced financial results for the fourth quarter and fiscal
year ended September 30, 2000, and restated results of operations for fiscal
1998 and 1999.
Good Guys reported a loss from operations of $1.3 million for fiscal
2000, which includes a one-time gain of $10.8 million associated with property
transactions in the first and fourth quarters, compared to a restated operating
loss of $35.2 million for fiscal 1999. Including interest expense and a tax
charge of $9.6 million ($7.5 million non-cash), or $.47 per share, primarily to
adjust the valuation allowance related to deferred tax assets associated with
tax loss carry-forwards, Good Guys reported a net loss of $17.3 million, or $.84
per share, for fiscal 2000 compared to a restated net loss of $39.9 million, or
$2.58 per share, for fiscal 1999.
Good Guys now has $74 million and $44 million of federal and state
operating loss carry-forwards, respectively, which can be used to offset future
taxable income and expire on various dates from 2003 to 2020.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the year were positive, increasing to $13.4 million from a negative
$21.0 million in fiscal 1999. Cash flow provided by operating activities was
also positive, improving to $11.3 million from negative $58.3 million in the
year prior. Both EBITDA and cash flow include the one-time gain associated with
the property transactions. In addition, gross profit dollars increased to $246.5
million in fiscal 2000 from $222.9 million in fiscal 1999 with gross profit
margin rising to 28.6 percent for the year from 24.3 percent in the year prior.
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"Fiscal 2000 was a year full of tremendous changes as well as
tremendous progress. Over the past 12 months, we repositioned the company as a
premier provider of fully featured, higher-end consumer entertainment
electronics, reorganized our in-store structure, launched a new advertising
campaign, dramatically reduced costs, significantly reduced our operating loss
and substantially strengthened our management team," said Ronald A. Unkefer,
founder, chairman and chief executive officer of Good Guys. "With all of these
initiatives well under way, we expect to continue seeing sizeable improvements
in both our sales and overall financial performance."
Sales for continuing categories and comparable store sales for
continuing categories both grew 5 percent for the year, increasing to $860.5
million in fiscal 2000 from $820.4 million in fiscal 1999. Net sales for the
fiscal year were $860.5 million compared to $915.6 million in fiscal 1999,
reflecting the elimination of low-margin computers and home office products and
the de-emphasis of entry-level offerings. Comparable store sales steadily
increased in the last half of the year and culminated in 16.5 percent growth in
the fourth quarter.
FOURTH-QUARTER PERFORMANCE
For the fourth quarter of fiscal 2000, Good Guys reported income from
operations of $2.0 million, which includes a one-time lease termination gain of
$9.8 million associated with the consolidation and relocation of its corporate
headquarters, compared to a loss from operations of $23.3 million in the fourth
quarter of fiscal 1999. Including interest expense and the tax charge of $9.6
million that was recorded in the quarter, Good Guys posted a net loss of $9.7
million, or $.45 per share, compared to a restated net loss of $25.5 million, or
$1.42 per share, for the fourth quarter of 1999.
EBITDA for the quarter was positive, improving to $5.7 million from a
negative $19.7 million in the same period of the prior year. Gross profit margin
rose 3.5 percentage points to 26.9 percent from 23.4 percent over the fourth
quarter of fiscal 1999, but was lower than immediately preceding quarters as a
result of a more promotional advertising and sales effort that helped fuel
double-digit sales growth.
Comparable store sales for continuing categories climbed 16.5 percent
for the quarter and net sales rose 10.4 percent. Net sales and sales for
continuing categories for the fourth quarter were $212.0 million compared to net
sales of $192.0 million and sales for continuing categories of $182.0 million
for the fourth quarter of fiscal 1999.
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RESTATEMENT OF RESULTS FROM OPERATIONS FOR FISCAL 1998 AND 1999
During the process of finalizing operating results for fiscal 2000,
the new management team determined that certain costs associated with relocating
several stores in prior years should have been recorded in prior periods. As a
result, the company is restating financial results for fiscal 1998 and 1999,
primarily to reflect additional costs associated with the exiting and relocating
of stores during that time, which include lease termination payments and
amortization of leasehold improvements. The effect of the restatement was to
increase the net loss in fiscal 1998 from $8.9 million, or $.64 per share, to
$11.8 million, or $.84 per share, and to increase the net loss in fiscal 1999
from $39.3 million, or $2.54 per share, to $39.9 million, or $2.58 per share.
The effect of the restatement on fiscal years prior to 1998 resulted in an
increase to 1998 beginning retained earnings of $528,000. The restatement has no
effect on the company's cash flow. The effect of the restatement on fiscal 2000
was not significant and is included in operating results for the fourth quarter.
The restated financial statements will be included in the company's annual
report on Form 10-K, which it expects to file by December 29.
CHANGE IN REPORTING
As reported in its Form 8-K filing with the Securities and Exchange
Commission on November 15, Good Guys has changed its fiscal year end from
September 30 to the last day of February for fiscal years ending after September
30, 2000. The change was made to align Good Guys' financial reporting with that
of other consumer electronics retailers and to allow the investment and vendor
communities to draw more realistic comparisons between the company and its major
competitors. The company will report sales and financial results for the
three-month period ending December 31, 2000, and the total five-month
transitional period ending February 28, 2001.
FINANCIAL OUTLOOK
Based on quarter-to-date performance, Good Guys expects to post a
sales increase in the mid-single digits for the three-month period ending
December 31. The company expects continued progress towards profitability during
the five-month transitional period ending February 28 and to be profitable in
the fiscal years that follow.
"Over the past 12 months we have put the fundamentals in place and
have assembled both the people and the products necessary to further bolster our
sales and achieve sustainable, long-term profitability," said Unkefer. "By
continuing to focus our efforts on improving our in-
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store execution, reducing costs and further differentiating Good Guys' sales
staff and product selection from the national chains, I am confident that we
will continue to see dramatic improvements in our financial performance while
strengthening our value proposition to customers, vendors and investors."
CONFERENCE CALL
Good Guys will hold a conference call today to discuss Fiscal 2000
financial results at 1:30 p.m. Pacific Daylight Time. Interested parties are
invited to listen to the call via a webcast that can be found in the "About Good
Guys" section located at www.goodguys.com. The conference identification number
is 792805. The conference call will be archived online for 30 days.
Good Guys is a leading specialty retailer of consumer entertainment
electronics, offering a distinctive selection of fully featured digital and
high-tech products from more than 100 of the world's most respected
manufacturers. Founded in 1973, Good Guys currently operates 79 stores in
California, Nevada, Oregon and Washington. 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
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, and
economic conditions.
--tables attached--
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SELECTED FINANCIAL DATA
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, 2000
-------------------------------
Quarter Ended Year ended
------------- ----------
(Amounts in thousands, except per share amounts)
<S> <C> <C>
Net sales $ 212,031 $ 860,543
Gross profit $ 56,941 $ 246,537
Income (loss) from operations $ 2,040 $ (1,325)
Net loss $ (9,744) $ (17,328)
Net loss per share $ (0.45) $ (0.84)
Weighted average shares 21,680 20,560
</TABLE>
<TABLE>
<CAPTION>
September 30, 1999
(as restated)
-------------------------------
Quarter Ended Year ended
------------- ----------
(Amounts in thousands, except per share amounts)
<S> <C> <C>
Net sales $ 191,994 $ 915,642
Gross profit $ 44,864 $ 222,897
Income (loss) from operations $ (23,264) $ (35,150)
Net loss $ (25,542) $ (39,887)
Net loss per share $ (1.42) $ (2.58)
Weighted average shares 18,048 15,484
</TABLE>
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GOOD GUYS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
------------------------------------------ --------------------------------------------
September 30, 2000 September 30, 1999 September 30, 2000 September 30, 1999
----------------- ------------------ ------------------ -------------------
(as (as
restated) restated)
% of % of % of % of
Amount Sales Amount Sales Amount Sales Amount Sales
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 212,031 100.0% $ 191,994 100.0% 860,543 100.0% $ 915,642 100.0%
Cost of sales 155,090 73.1% 147,130 76.6% 614,006 71.4% 692,745 75.7%
--------- ----- --------- -----
Gross profit 56,941 26.9% 44,864 23.4% 246,537 28.6% 222,897 24.3%
Selling, general and
administrative expenses (1) 64,651 30.5% 68,128 35.5% 258,637 30.1% 257,993 28.2%
Gains (loss) from
Property transactions 9,750 4.6% 0.0% 10,775 1.3% (54) 0.0%
--------- --------- --------- ---------
Income (loss) from operations 2,040 1.0% (23,264) -12.1% (1,325) -0.2% (35,150) -3.8%
Interest expense, net 2,207 1.0% 2,278 1.2% 6,426 0.7% 4,737 0.5%
--------- --------- --------- ---------
Loss before income taxes (167) -0.1% (25,542) -13.3% (7,751) -0.9% (39,887) -4.4%
Income tax expense 9,577 4.5% 0.0% 9,577 1.1% 0.0%
--------- --------- --------- ---------
Net loss $ (9,744) -4.6% $ (25,542) -13.3% $ (17,328) -2.0% $ (39,887) -4.4%
========= ========= ========= =========
Net loss per common share $ (0.45) $ (1.42) $ (0.84) $ (2.58)
Weighted average shares 21,680 18,048 20,560 15,484
(1) Includes non-cash
amortization and depreciation $ 3,657 $ 3,597 $ 14,718 $ 14,123
</TABLE>
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GOOD GUYS, INC.
CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
September 30,
---------------------------
(Dollars in thousands, except share and per share data) 2000 1999
(as restated)
--------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,231 $ 2,556
Accounts receivable 15,593 19,021
Merchandise inventories 121,458 110,276
Prepaid expenses 11,161 6,710
--------- ---------
Total current assets 155,443 138,563
PROPERTY AND EQUIPMENT:
Land 0 2,306
Leasehold improvements 73,629 73,298
Furniture, fixtures, and equipment 76,181 72,686
Construction in progress 1,269 3,785
--------- ---------
Total property and equipment 151,079 152,075
Less accumulated depreciation and amortization 86,224 72,121
--------- ---------
Property and equipment - net 64,855 79,954
--------- ---------
Other assets 471 7,646
--------- ---------
Total Assets $ 220,769 $ 226,163
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 57,395 $ 36,571
Accrued expenses and other liabilities:
Payroll 9,710 9,615
Sales taxes 5,751 4,936
Other 23,036 25,583
--------- ---------
Total current liabilities 95,892 76,705
Revolving credit debt 34,358 56,504
SHAREHOLDERS' EQUITY:
Preferred stock, $.001 par value
Authorized, 2,000,000 shares - None issued
Common stock, $.001 par value:
Authorized, 40,000,000 shares
Issued and outstanding 22,763,194 and
19,636,022 shares respectively 23 20
Additional paid-in capital 103,222 88,332
Retained earnings (deficit) (12,726) 4,602
--------- ---------
Total shareholders' equity 90,519 92,954
--------- ---------
Total Liabilities and Shareholders' Equity $ 220,769 $ 226,163
========= =========
</TABLE>
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