OFFICE DEPOT
NEWS RELEASE
--------------------------------------------------------------------------------
Contact: Office Depot, Delray Beach
Eileen H. Dunn, VP, Investor & Public Relations
561/438-4930
[email protected]
OFFICE DEPOT ANNOUNCES THIRD QUARTER 2000 RESULTS
DELRAY BEACH, Fla.--(BUSINESS WIRE)--Oct. 12, 2000--
o Continued Strength in Internet, International and Business Services
o Softness in North American Retail Store Performance and Foreign
Currency Exchange Negatively Impacted Results
o Business Review to Be Completed By Year-End
OFFICE DEPOT, INC. (NYSE:ODP - NEWS), the world's largest seller of office
products, today announced third quarter results for the period ended September
23, 2000.
The Company reported that total sales for the third quarter of 2000 rose 9% to
$2.8 billion as compared to $2.6 billion for the same period in 1999. Sales for
the first nine months of 2000 grew 13% to $8.5 billion as compared to $7.5
billion for the same period last year. Comparable worldwide sales in the 805
stores and 43 delivery centers that have been open for more than one year
increased 7% for the third quarter and 9% for the first nine months of 2000.
Third quarter earnings per share including merger and restructuring costs and
other non-recurring charges and credits were $0.16 as compared to $0.00 for the
same period last year. These figures include the net credit of $8.3 million
after taxes, or $0.03 per share, for 2000 and the net charge of $73.3 million
after tax benefits, or $0.18 per share, for 1999 related to merger and
restructuring costs and other non-recurring charges and credits.
Earnings per share for the third quarter of 2000 excluding these one time
credits and charges were $0.14, as compared to $0.19 for the same period in
1999.
Earnings per share for the first nine months of 2000 including merger and
restructuring costs and other non-recurring charges and credits were $0.67 as
compared to $0.45 for the same period last year. These figures include the net
credit of $14.3 million after taxes, or $0.04 per share, for 2000 and the net
charge of $83.0 million after tax benefits, or $0.20 per share, for 1999 related
to merger and restructuring costs and non-recurring charges or credits.
<PAGE>
Earnings per share for the first nine months of 2000 excluding these one-time
credits and charges were $0.62 per share, as compared to $0.65 per share for the
same period in 1999.
Included in non-recurring charges or credits for the third quarter was an after
tax gain on sales of investments of $24.6 million and $1.1 million after tax
credit related to merger and restructuring. Also included in non-recurring
charges or credits for the third quarter of 2000 were one-time costs of $17.4
million, after tax benefits, primarily related to severance costs associated
with changes in the Company's senior executive management. Third quarter 1999
included non-recurring charges of $29.3 million, after tax benefits, for store
relocations and closures; $35.3 million, after tax benefits, related to a
provision for slow moving and obsolete inventories and $8.7 million of merger
and restructuring charges after tax benefits.
Included in non-recurring charges or credits for the first nine months of 2000
were after tax gains on sales of investments of $36.5 million. Also included in
non-recurring charges or credits for the first nine months of 2000 were one-time
costs of $20.5 million, after tax benefits, primarily related to severance costs
associated with changes in the Company's senior executive management and merger
and restructuring charges of $1.7 million, after tax benefits. Results for the
first nine months of 1999 included non-recurring charges of $29.3 million, after
tax benefits, for store relocations and closures; $35.3 million, after tax
benefits, related to a provision for slow moving and obsolete inventories and
$18.4 million, after tax benefits, of merger and restructuring charges.
Bruce Nelson, Office Depot's recently appointed CEO, commented, "Throughout the
quarter we saw strong sales performance and market share growth in our Business
Services Group, our Internet sales in particular, and our International
Division. These results were overshadowed, however, by weak North American
Retail store sales, and our overall quarterly results were negatively impacted
by:
o Previously announced price reductions in selected inkjet, toner and
paper SKU's to compete with warehouse clubs,
o Higher North American warehouse operating costs,
o Continued under performance of the class of 1998, 1999, and 2000
retail stores and
o Unfavorable foreign currency exchange rates.
As previously announced, we are conducting a comprehensive review and analysis
focused on all aspects of our business, with particular emphasis on the
under-performance of North American retail stores and the cost structure of our
U.S. warehouses. We expect to complete the review before year-end, and as a
result we are not yet in a position to provide meaningful and specific guidance
to our shareholders and analysts until this review is completed."
<PAGE>
"While we face a number of critical issues and it will take time to resolve all
of them, we are working hard to recapture our capital market leadership position
in an industry that still has significant growth opportunities. We are well
positioned to take advantage of our industry leadership positions in the
Internet, our highly profitable International business, and in our delivery and
direct marketing businesses. We also have one of the leading positions in North
American retail sales and profitability; and in spite of our recent performance,
we still see significant sales and profit opportunities in all aspects of our
business, including North American retail stores."
SEGMENT RESULTS
---------------
The following discussion of segment results excludes non-recurring charges in
1999 related to the provision for slow moving and obsolete inventories as
discussed above. The provision for slow moving and obsolete inventories totaled
$39.2 million in the North American Retail division, $15.5 million in the
Business Services Group division, and $1.4 million in the International
Division. The remainder of non-recurring charges and credits included in the
2000 and 1999 periods did not impact the Company's segment results.
NORTH AMERICAN RETAIL
Third quarter sales in the North American Retail Division rose 7% to $1.6
billion and 10% in the first nine months of 2000 to $4.8 billion, as compared
with $1.5 billion and $4.3 billion during the same periods in 1999. Comparable
store sales in the 776 stores throughout the U.S. and Canada that have been open
for more than one year decreased 1% for the third quarter, but increased 1% for
the first nine months of 2000. Sales were impacted by softness in technology
related products. Office Depot did not have a competitive ISP offering in the
Company's stores during most of the quarter. As a result, computer sales and the
related "market basket" of higher margin computer-related hardware products were
negatively impacted during the quarter.
North American Retail Division operating profit was $85.8 million in the third
quarter, as compared with $125.6 million in the third quarter of 1999. For the
first nine months of 2000 store operating profit was $345.7 million as compared
to $400.9 million last year. Operating performance was impacted by soft
comparable sales and previously announced selected price reductions in the
paper, ink and toner categories, as well as the continued under-performance of
the Company's 1998, 1999 and early 2000 class of new stores.
During the third quarter, Office Depot continued to expand its store base by
opening 13 new stores, relocating one store and closing five under-performing
stores. At the end of the quarter, Office Depot operated a total of 863 office
product superstores throughout the United States and Canada.
BUSINESS SERVICES GROUP
Third quarter sales in the Business Services Group rose 16% to $898 million and
18% in the first nine months of 2000 to $2.7 billion, as compared to $776
million during the third quarter and $2.3 billion in the first nine months of
1999. The Company has continued to gain market share and has benefited from
overall industry growth in the Internet, contract and direct mail businesses.
<PAGE>
Warehouse operating profit was $55.3 million in the third quarter of 2000, a
decrease of 14% compared to $64.0 million in the third quarter of 1999. For the
first nine months of 2000, warehouse operating profit decreased 1% to $186.0
million as compared to $187.5 million for the same period in 1999. Operating
results were impacted by previously announced selected price reductions in
paper, ink and toner, as well as the continued impact of higher warehouse costs
as compared with 1999.
Office Depot's domestic Internet business continued its explosive growth during
the period. Third quarter sales increased 121% to $219.0 million in the third
quarter of 2000, as compared with $98.9 million during the same period in 1999.
Sales for the first nine months were up 162% to $574.0 million, as compared to
$219.4 million for the same period last year. These sales reflect all domestic
online sales, including those from its domestic public Web sites --
WWW.OFFICEDEPOT.COM and WWW.VIKINGOP.COM -- and Office Depot's contract
business-to-business sites.
INTERNATIONAL DIVISION
Sales and operating profit in the Company's International Division were
significantly impacted by the deterioration of the euro and the pound sterling
in relation to the US dollar during the third quarter and first nine months of
2000 as compared to the same periods in 1999.
Sales in the International Division increased 7% to $337 million for the third
quarter, and 13% in the first nine months of 2000 to $1.1 billion, as compared
with the $313 million in the third quarter and $945 million in the first nine
months of 1999. In local currencies, sales rose 19% for the third quarter and
23% for the first nine months of 2000. In the majority of the countries in which
the Company operates sales performance in local currencies grew by more than
22%. However, unfavorable exchange rates impacted reported sales results by
approximately $36.2 million in the third quarter and $89.9 million in the first
nine months of the year.
Third quarter 2000 store and warehouse operating profit in the International
Division was $45.0 million, an increase of 30% from the $34.6 million in the
same period in 1999. Store and warehouse operating profit rose 17% in the first
nine months of 2000 to $138.0 million as compared with $118.1 million in the
same period last year. Operating profit in local currencies grew 51% in the
third quarter and 32% in the nine-month period. Unfavorable exchange rates as
compared with last year impacted operating results by approximately $5.7 million
in the third quarter and $14.2 million in the first nine months of the year.
Operating performance on a local currency basis continued to benefit from
increases in productivity and lower operating costs.
International Internet expansion has continued with the launch of four more Web
sites outside of the U.S., including Viking Australia, Viking Japan, ODP Japan
and Viking France. The Company now has a total of eight unique websites outside
of the United States, seven of which have been launched this year.
During the third quarter the Company also announced the launch of its European
Business Services Division in the United Kingdom. Office Depot's European
Business Services Division will now be able to better service medium to
large-sized corporate
<PAGE>
accounts in Europe though specialized sales forces, individualized pricing for
key corporate accounts, and overnight order fulfillment. The Company sees
enormous opportunity to grow its international business through this new sales
channel under the Office Depot brand, in addition to its existing Office Depot
retail store operations and Viking brand catalog businesses.
Also during the quarter, the Company opened four new international stores under
the Office Depot name - two in Mexico and one each in France and Poland. As of
September 23, 2000, Office Depot operated in 17 countries outside of the United
States and Canada. In addition, through a combination of wholly-owned
operations, joint ventures and international licensing agreements, there were
126 Office Depot stores at the end of the quarter in 8 countries outside of the
United States and Canada, with 46 stores in Mexico, 28 stores in France, 22 in
Israel, 16 in Poland, 7 in Japan, 3 in Hungary, and 2 each in Colombia and
Thailand. Along with its international stores, the Company also has delivery and
catalog operations in 14 countries outside of the United States and Canada.
STOCK REPURCHASE PROGRAM
------------------------
During the third quarter, the Company repurchased an additional 12 million
Office Depot common shares under the current authorized buyback program. To
date, a total of 79 million Office Depot common shares have been repurchased for
$780 million plus commissions.
CONFERENCE CALL INFORMATION
Office Depot will hold a conference call for investors and analysts at 8:00 a.m.
(Eastern Time) on today's date. The conference call will be available to all
investors via Webcast at WWW.OFFICEDEPOT.COM/CORPINFO/CONFERENCECALL.ASP.
Interested parties may contact Investor Relations at 561-438-1680 for further
information on the conference call.
As of September 23, 2000, the Company operated 863 office supply superstores in
the United States and Canada, in addition to a national business-to-business
delivery network supported by 29 delivery centers, more than 60 local sales
offices and seven regional call centers. Furthermore, the Company owned and
operated 28 office supply stores in France and seven stores in Japan; had mail
order and delivery operations in 14 countries outside of the United States and
Canada; and under joint venture and licensing agreements, had 91 additional
stores operating under the Office Depot name in six other foreign countries. The
Company also operates an award-winning U.S. Office Depot brand Internet Web site
at www.officedepot.com where customers can access Office Depot's low competitive
prices seven days a week, twenty-four hours a day, and it operates
WWW.OFFICEDEPOT.CO.JP in Japan as well as Viking brand Web sites at
www.vikingop.com in the United States, WWW.VIKING-DIRECT.CO.UK in the United
Kingdom, WWW.VIKING.DE in Germany, WWW.VIKINGDIRECT.NL in The Netherlands,
WWW.VIKINGOP.IT in Italy, WWW.VIKINGOP.COM.AU in Australia, WWW.VIKINGOP.CO.JP
in Japan and WWW.VIKINGDIRECT.FR in France. Office Depot's common stock is
traded on the New York Stock Exchange under the symbol ODP and is included in
the S&P 500 Index.
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS: Except for historical
information, the matters discussed in this press release are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, as amended. Forward-looking statements, including projections and
anticipated levels of performance, involve risks and uncertainties which may
cause actual results to differ materially from those discussed herein. These
risks and uncertainties are detailed from time to time by Office Depot in its
filings with the United States Securities and Exchange Commission, including
without limitation its most recent filing on Form 10-K, filed in March, 2000 and
subsequent 10-Q filings. You are strongly urged to review such filings for a
more detailed discussion of such risks and uncertainties. The Company's SEC
filings are readily obtainable at no charge at www.sec.gov, WWW.10KWIZARD.COM
and at WWW.FREEEDGAR.COM as well as on a number of other commercial Web sites.
###
OFFICE DEPOT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)
13 Weeks 13 Weeks 39 Weeks 39 Weeks
Ended Ended Ended Ended
Sept. 23, Sept. 25, Sept. 23, Sept. 25,
2000 1999 2000 1999
----------- ---------- ----------- ------------
Sales $2,820,735 $2,578,500 $8,514,836 $ 7,544,387
Cost of goods
sold and
occupancy costs 2,087,769 1,928,508 6,197,117 5,487,312
----------- ----------- ----------- ------------
Gross profit 732,966 649,992 2,317,719 2,057,075
Store and warehouse
operating and
selling expenses 546,944 481,954 1,648,278 1,406,833
Pre-opening expenses 2,823 5,007 8,630 16,709
General and
administrative
expenses 137,243 106,129 358,645 285,559
Merger and
restructuring
costs (3,177) 8,955 1,204 24,434
Store closure costs - 46,438 - 46,438
----------- ----------- ----------- ------------
683,833 648,483 2,016,757 1,779,973
Operating profit 49,133 1,509 300,962 277,102
Other income
(expense):
Interest income 2,666 8,654 9,551 27,076
Interest expense (9,318) (6,505) (23,584) (19,556)
Miscellaneous
income (expense),
net 39,310 (461) 59,899 (4,106)
----------- ----------- ----------- ------------
Earnings before
income taxes 81,791 3,197 346,828 280,516
Income taxes 31,169 4,270 129,233 106,897
----------- ----------- ----------- ------------
Net earnings $ 50,622 $ (1,073) $ 217,595 $ 173,619
=========== =========== =========== ============
Earnings per common
share:
Basic $ 0.17 $ 0.00 $ 0.69 $ 0.47
Diluted 0.16 0.00 0.67 0.45
Weighted average number of common shares outstanding:
Basic 304,111 368,878 313,804 371,989
Diluted 330,215 374,673(a) 340,709 405,859
(a) Weighted average shares exclude 24,743 shares in the quarter ended September
25, 1999 attributable to convertible debt, as the assumed conversion of
these shares has an anti-dilutive effect on earnings per share.
<PAGE>
OFFICE DEPOT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
As of As of
September 23, December 25,
2000 1999
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 225,683 $ 218,784
Receivables, net 852,094 849,478
Merchandise inventories, net 1,390,245 1,436,879
Deferred income taxes and
other assets 128,963 125,911
------------ ------------
Total current assets 2,596,985 2,631,052
Fixed assets:
Property and equipment, at cost 1,854,349 1,723,013
Less accumulated depreciation
and amortization 672,652 577,385
------------ ------------
Net fixed assets 1,181,697 1,145,628
Goodwill, net 232,933 240,166
Other assets 183,716 259,337
------------ ------------
$ 4,195,331 $ 4,276,183
============ ============
LIABILITIES
Current liabilities:
Accounts payable $ 1,242,767 $ 1,239,301
Accrued expenses and other liabilities 444,902 414,690
Income taxes payable 44,199 39,588
Current maturities of long-term debt 258,576 250,466
------------ ------------
Total current liabilities 1,990,444 1,944,045
Deferred income taxes and other credits 87,981 103,319
Long-term debt, net of current maturities 344,821 321,099
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock - authorized 800,000,000
shares of $.01 par value; issued
378,021,775 in 2000 and 376,212,439
in 1999 3,780 3,762
Additional paid-in capital 939,993 926,295
Unamortized value of long-term
incentive stock grant (2,813) (4,065)
Accumulated other comprehensive income (72,090) 15,730
Retained earnings 1,684,954 1,467,359
Treasury stock, at cost - 79,125,319
shares in 2000 and 46,770,272
shares in 1999 (781,739) (501,361)
------------ ------------
1,772,085 1,907,720
------------ ------------
$ 4,195,331 $ 4,276,183
============ ============
<PAGE>
OFFICE DEPOT, INC. AND SUBSIDIARIES
STATEMENTS OF STORE AND WAREHOUSE OPERATING PROFIT BY SEGMENT
(In thousands)
(Unaudited)
NAR(1) BSG(2) International
3rd Quarter 2000
----------------
Sales $1,587,053 $ 897,854 $ 336,669
Cost of goods
sold and occupancy
costs 1,257,300 627,382 203,557
---------- ---------- ----------
Gross profit 329,753 270,472 133,112
Store and warehouse
operating and
selling expenses 243,946 215,151 88,130
---------- ---------- ----------
Store and warehouse
operating profit $ 85,807 $ 55,321 $ 44,982
========== ========== ==========
Year-to-date September 2000
---------------------------
Sales $4,798,703 $2,650,331 $1,068,601
Cost of goods
sold and occupancy
costs 3,729,318 1,823,543 645,951
---------- ---------- ----------
Gross profit 1,069,385 826,788 422,650
Store and warehouse
operating and
selling expenses 723,725 640,807 284,679
---------- ---------- ----------
Store and warehouse
operating profit $ 345,660 $ 185,981 $ 137,971
========== ========== ==========
3rd Quarter 1999(3)
-------------------
Sales $1,489,992 $ 775,908 $ 313,489
Cost of goods
sold and occupancy
costs 1,186,542 550,628 191,860
---------- ---------- ----------
Gross profit 303,450 225,280 121,629
Store and warehouse
operating and
selling expenses 217,056 176,764 88,416
---------- ---------- ----------
Store and warehouse
operating profit $ 86,394 $ 48,516 $ 33,213
========== ========== ==========
Year-to-date September 1999(3)
------------------------------
Sales $4,348,140 $2,254,387 $ 944,926
Cost of goods
sold and occupancy
costs 3,366,995 1,557,502 564,650
---------- ---------- ----------
Gross profit 981,145 696,885 380,276
Store and warehouse
operating and
selling expenses 619,474 524,837 263,574
---------- ---------- ----------
Store and warehouse
operating profit $ 361,671 $ 172,048 $ 116,702
========== ========== ==========
Other Total
3rd Quarter 2000
----------------
Sales $ (841) $2,820,735
Cost of goods
sold and occupancy
costs (470) 2,087,769
---------- ----------
Gross profit (371) 732,966
Store and warehouse
operating and
selling expenses (283) 546,944
---------- ----------
Store and warehouse
operating profit $ (88) $ 186,022
========== ==========
Year-to-date September 2000
---------------------------
Sales $ (2,799) $8,514,836
Cost of goods
sold and occupancy
costs (1,695) 6,197,117
---------- ----------
Gross profit (1,104) 2,317,719
Store and warehouse
operating and
selling expenses (933) 1,648,278
---------- ----------
Store and warehouse
operating profit $ (171) $ 669,441
========== ==========
3rd Quarter 1999(3)
-------------------
Sales $ (889) $2,578,500
Cost of goods
sold and occupancy
costs (522) 1,928,508
---------- ----------
Gross profit (367) 649,992
Store and warehouse
operating and
selling expenses (282) 481,954
---------- ----------
Store and warehouse
operating profit $ (85) $ 168,038
========== ==========
Year-to-date September 1999(3)
------------------------------
Sales $ (3,066) $7,544,387
Cost of goods
sold and occupancy
costs (1,835) 5,487,312
---------- ----------
Gross profit (1,231) 2,057,075
Store and warehouse
operating and
selling expenses (1,052) 1,406,833
---------- ----------
Store and warehouse
operating profit $ (179) $ 650,242
========== ==========
1 North American Retail Division
2 Business Services Group
3 In the first quarter of 2000, management redefined its operating and
reporting segments. Accordingly, all segment results have been restated from
previously disclosed results.
<PAGE>
OFFICE DEPOT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
39 Weeks 39 Weeks
Ended Ended
Sept. 23, Sept. 25,
2000 1999
--------- ---------
Cash flows from operating activities:
Net earnings $ 217,595 $ 173,619
Adjustments to reconcile
net earnings to net cash provided
by operating activities:
Depreciation and amortization 144,634 123,061
Provision for losses on
inventories and receivables 75,850 118,541
Changes in assets and liabilities 28,731 20,528
Other operating activities, net (31,581) 13,897
--------- ---------
Net cash provided by operating activities 435,229 449,646
--------- ---------
Cash flows from investing activities:
Proceeds from maturities or
sales of investment securities 54,006 42,006
Purchases of investment securities (24,612) (110,161)
Capital expenditures, net
of proceeds from sales (181,203) (292,502)
Other investing activities -- (21,897)
--------- ---------
Net cash used in investing activities (151,809) (382,554)
--------- ---------
Cash flows from financing activities:
Proceeds from exercise of
stock options and sale of stock
under employee stock purchase plans 9,713 52,011
Acquisition of treasury stock (280,378) (329,718)
Other financing activities, net 6,688 12,825
--------- ---------
Net cash used in financing activities (263,977) (264,882)
--------- ---------
Effect of exchange rate changes on cash and
cash equivalents (12,544) (3,411)
--------- ---------
Net increase (decrease) in
cash and cash equivalents 6,899 (201,201)
Cash and cash equivalents
at beginning of period 218,784 704,541
--------- ---------
Cash and cash equivalents
at end of period $ 225,683 $ 503,340
========= =========
<PAGE>
EXHIBIT
-------
The following table summarizes the components of non-recurring charges and
credits included in the Company's quarterly and year-to-date periods, as well as
their presentation in the Company's Statements of Earnings.
Charge (credit)
(In thousands, except per share amounts)
13 Weeks Ended September 23,
2000
--------------------------------------
G&A Merger & Misc. Total
restructuring income
--------------------------------------
Merger and
restructuring costs $(3,177) $(3,177)
Severance and other
costs, primarily
related to executive
management changes $27,544 27,544
Gain on sales of
investments $(38,990) (38,990)
Store relocations and
closures
Obsolete inventories
----------------------------------------
Total non-recurring
charges/credits 27,544 (3,177) (38,990) (14,623)
Income tax effect of
charges/credits (10,191) 2,082 14,426 6,317
----------------------------------------
Total non-recurring
charges/credits, $17,353 $(1,095) $(24,564) $(8,306)
net of taxes
========================================
Impact on earnings
per share $0.05 $0.00 $(0.07) $(0.03) (a)
========================================
13 Weeks Ended September 25,
1999
-----------------------------------------
COGS Merger & Store Total
restructuring closure
------------------------------------------
Merger and
restructuring costs $8,955 $8,955
Severance and other
costs, primarily
related to executive
management changes
Gain on sales of
investments
Store relocations and
closures $46,438 46,438
Obsolete inventories $56,100 56,100
------------------------------------------
Total non-recurring
charges/credits 56,100 8,955 46,438 111,493
Income tax effect of
charges/credits (20,757) (227) (17,182) (38,166)
------------------------------------------
Total non-recurring
charges/credits,
net of taxes $35,343 $8,728 $29,256 $73,327
===========================================
Impact on earnings
per share $0.09 $0.02 $0.07 $0.18
===========================================
39 Weeks Ended September 23,
2000
--------------------------------------------
G&A Merger & Misc. Total
restructuring income
---------------------------------------------
Merger and
restructuring costs $1,204 $1,204
Severance and other
costs, primarily
related to executive
management changes $32,544 32,544
Gain on sales of
investments $(57,950) (57,950)
Store relocations and
closures
Obsolete inventories -
-------------------------------------------
Total non-recurring
charges/credits 32,544 1,204 (57,950) (24,202)
Income tax effect of
charges/credits (12,041) 461 21,441 9,861
-------------------------------------------
Total non-recurring
charges/credits,
net of taxes $20,503 $1,665 $(36,509)$(14,341)
===========================================
Impact on earnings
per share $0.06 $0.01 $(0.11) $(0.04)
===========================================
39 Weeks Ended September 25,
1999
-------------------------------------------
COGS Merger & Store Total
restructuring closure
-------------------------------------------
Merger and
restructuring costs $24,434 $24,434
Severance and other
costs, primarily
related to executive
management changes
Gain on sales of
investments
Store relocations and
closures $46,438 46,438
Obsolete inventories $56,100 56,100
-------------------------------------------
Total non-recurring
charges/credits 56,100 24,434 46,438 126,972
Income tax effect of
charges/credits (20,757) (6,002) (17,182) (43,941)
-------------------------------------------
Total non-recurring
charges/credits,
net of taxes $35,343 $18,432 $29,256 $83,031
===========================================
Impact on earnings
per share $0.09 $0.05 $0.07 $0.20 (a)
===========================================
(a) Due to rounding, amounts do not add across.
EXHIBIT (CONTINUED)
<PAGE>
The following table presents the Company's Statements of Earnings, both
before and after the non-recurring charges and credits described above.
(In thousands, except per share amounts)
13 Weeks Ended September 23, 2000
-----------------------------------------
Excluding
As Non-recurring Non-recurring
Reported Charges/Credits Charges/Credits
-----------------------------------------
Sales $ 2,820,735 $ 2,820,735
Cost of goods sold
and occupancy costs 2,087,769 2,087,769
-----------------------------------------
Gross profit 732,966 732,966
Store and warehouse
operating and
selling expenses 546,944 546,944
Pre-opening expenses 2,823 2,823
General and
administrative expenses 137,243 $(27,544) 109,699
Merger and restructuring
costs (3,177) 3,177 --
Store closure costs --
-----------------------------------------
683,833 (24,367) 659,466
Operating profit 49,133 24,367 73,500
Other income (expense):
Interest income 2,666 2,666
Interest expense (9,318) (9,318)
Miscellaneous income
(expense), net 39,310 (38,990) 320
-----------------------------------------
Earnings before
income taxes 81,791 (14,623) 67,168
Income taxes 31,169 (6,317) 24,852
-----------------------------------------
Net earnings $ 50,622 $ (8,306) $ 42,316
=========================================
Earnings per common
share:
Diluted $0.16 $(0.03) $0.14(a)
13 Weeks Ended September 25, 1999
-----------------------------------------
Excluding
As Non-recurring Non-recurring
Reported Charges/Credits Charges/Credits
-----------------------------------------
Sales $ 2,578,500 $ 2,578,500
Cost of goods sold
and occupancy costs 1,928,508 $(56,100) 1,872,408
-----------------------------------------
Gross profit 649,992 56,100 706,092
Store and warehouse
operating and
selling expenses 481,954 481,954
Pre-opening expenses 5,007 5,007
General and
administrative expenses 106,129 106,129
Merger and restructuring
costs 8,955 (8,955) --
Store closure costs 46,438 (46,438) --
-----------------------------------------
648,483 (55,393) 593,090
Operating profit 1,509 111,493 113,002
Other income (expense):
Interest income 8,654 8,654
Interest expense (6,505) (6,505)
Miscellaneous income
(expense), net (461) (461)
-----------------------------------------
Earnings before
income taxes 3,197 111,493 114,690
Income taxes 4,270 38,166 42,436
-----------------------------------------
Net earnings $ (1,073) $ 73,327 $ 72,254
=========================================
Earnings per common
share:
Diluted $ 0.00 $ 0.18 $ 0.19(a)
39 Weeks Ended September 23, 2000
-----------------------------------------
Excluding
As Non-recurring Non-recurring
Reported Charges/Credits Charges/Credits
-----------------------------------------
Sales $ 8,514,836 $ 8,514,836
Cost of goods sold
and occupancy costs 6,197,117 6,197,117
-----------------------------------------
Gross profit 2,317,719 2,317,719
Store and warehouse
operating and
selling expenses 1,648,278 1,648,278
Pre-opening expenses 8,630 8,630
General and
administrative expenses 358,645 $(32,544) 326,101
Merger and restructuring
costs 1,204 (1,204) --
Store closure costs --
-----------------------------------------
2,016,757 (33,748) 1,983,009
Operating profit 300,962 33,748 334,710
Other income (expense):
Interest income 9,551 9,551
Interest expense (23,584) (23,584)
Miscellaneous income
(expense), net 59,899 (57,950) 1,949
Earnings before
income taxes 346,828 (24,202) 322,626
Income taxes 129,233 (9,861) 119,372
-----------------------------------------
Net earnings $ 217,595 $ (14,341) $ 203,254
=========================================
Earnings per common
share:
Diluted $0.67 $(0.04) $0.62
39 Weeks Ended September 25, 1999
Excluding
As Non-recurring Non-recurring
Reported Charges/Credits Charges/Credits
-----------------------------------------
Sales $ 7,544,387 $ 7,544,387
Cost of goods sold
and occupancy costs 5,487,312 $(56,100) 5,431,212
-----------------------------------------
Gross profit 2,057,075 56,100 2,113,175
Store and warehouse
operating and
selling expenses 1,406,833 1,406,833
Pre-opening expenses 16,709 16,709
General and
administrative expenses 285,559 285,559
Merger and restructuring
costs 24,434 (24,434) --
Store closure costs 46,438 (46,438) --
-----------------------------------------
1,779,973 (70,872) 1,709,101
Operating profit 277,102 126,972 404,074
Other income (expense):
Interest income 27,076 27,076
Interest expense (19,556) (19,556)
Miscellaneous income
(expense), net (4,106) (4,106)
-----------------------------------------
Earnings before
income taxes 280,516 126,972 407,488
Income taxes 106,897 43,941 150,838
-----------------------------------------
Net earnings $ 173,619 $ 83,031 $ 256,650
=========================================
Earnings per common
share:
Diluted $0.45 $0.20 $0.65
(a) Due to rounding, amounts do not add across.
