EX-99.1 3 dex991.htm PRESS RELEASE PRESS RELEASE

Exhibit 99.1

 

BJ’s Wholesale Club, Inc                    One Mercer Road                     P.O. Box 9601                     Natick, MA 01760

 

FOR IMMEDIATE RELEASE

  

Contact: Cathy Maloney

   

VP, Investor Relations

   

(508) 651-6650

   

cmaloney@bjs.com

 

 

BJ’S WHOLESALE CLUB REPORTS FIRST QUARTER RESULTS

 

May 20, 2003, Natick, MA—BJ’s Wholesale Club, Inc. (BJ: NYSE) today reported income from continuing operations before the cumulative effect of accounting changes of $12.7 million, or $.18 per diluted share, for its first quarter ended May 3, 2003. These amounts included a post-tax gain of $0.7 million, or $.01 per diluted share, as a result of reducing the Company’s reserves for House2Home lease obligations. (See notes to attached financial statements.) In last year’s first quarter, the Company reported income from continuing operations of $23.4 million, or $.32 per diluted share.

 

Net income of $11.3 million, or $0.16 per diluted share, for this year’s first quarter included a charge of $1.3 million, or $.02 per diluted share, for the cumulative effect of adopting Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations.” Net income for last year’s first quarter was $23.1 million, or $.32 per diluted share.

 

Net sales for the quarter increased by 15.7% to $1.4 billion and comparable club sales increased by 5.7%. Gasoline sales contributed 4.7% to the 5.7% comparable club sales increase.

 

Commenting on first quarter earnings, president and CEO Mike Wedge said, “BJ’s results for the first quarter reflect the substantial investments we are making in our business to reinvigorate sales. On a comparable club basis, food sales increased by 3.2% for the quarter. The improved trend in food sales indicates to us that our investments in quality and pricing are beginning to yield positive results. General merchandise sales decreased by 2.5%, due in part to a weaker economic climate as well as cooler weather in the northeast.”

 

First Quarter Results/Conference Call

As previously announced BJ’s management will hold a conference call to discuss the first quarter financial results and the outlook for 2003 today at 8:30 a.m. Eastern Time. To access the webcast (including financial and other statistical information being presented, as well as reconciliation information with respect to any non-GAAP financial measures being presented, if any), visit www.bjsinvestor.com/medialist.cfn to hear the call live, or to listen to an archive of the call, which will be available for approximately one quarter following the call.

 

BJ’s introduced the wholesale club concept to New England in 1984, and has since expanded to become a leading warehouse chain in the eastern United States. The Company currently operates 143 clubs and 71 gas stations compared with 134 clubs and 57 gas stations one year ago. BJ’s press releases and filings with the SEC are available on the Internet at www.bjs.com.

 

-See Financial Tables-

 

BJ's Wholesale Club, Inc. and Consolidated Subsidiaries

 

STATEMENTS OF INCOME (Unaudited)

(Dollars in Thousands Except Per Share Amounts)

 

    

Thirteen Weeks Ended

  
    

May 3, 2003

     

May 4, 2002

  

Net sales

   

$

1,441,671

 

   

$

1,246,369

 

Membership fees and other

   

 

33,572

 

   

 

31,342

 

    
  

Total revenues

   

 

1,475,243

 

   

 

1,277,711

 

    
  

Cost of sales, including buying and occupancy costs

   

 

1,337,545

 

   

 

1,140,475

 

Selling, general and administrative expenses

   

 

113,916

 

   

 

94,879

 

Preopening expenses

   

 

3,989

 

   

 

3,298

 

    
  

Operating income

   

 

19,793

 

   

 

39,059

 

Interest income (expense), net

   

 

(68

)

   

 

298

 

Gain (loss) on contingent lease obligations

   

 

814

 

   

 

(1,417

)

    
  

Income from continuing operations before income taxes and cumulative effect of accounting principle changes

   

 

20,539

 

   

 

37,940

 

Provision for income taxes

   

 

7,870

 

   

 

14,507

 

    
  

Income from continuing operations before cumulative effect of accounting principle changes

   

 

12,669

 

   

 

23,433

 

Loss from discontinued operations, net of income tax benefit

   

 

(149

)

   

 

(379

)

    
  

Income before cumulative effect of accounting principle changes

   

 

12,520

 

   

 

23,054

 

Cumulative effect of accounting principle changes

   

 

(1,253

)

   

 

—  

 

    
  

Net income

   

$

11,267

 

   

$

23,054

 

    
  

Income per common share:

                  

Basic earnings per share:

                  

Income from continuing operations before cumulative effect of accounting principle changes

   

$

0.18

 

   

$

0.33

 

Loss from discontinued operations

   

 

—  

 

   

 

(0.01

)

Cumulative effect of accounting principle changes

   

 

(0.02

)

   

 

—  

 

    
  

Net income

   

$

0.16

 

   

$

0.32

 

    
  

Diluted earnings per share:

                  

Income from continuing operations before cumulative effect of accounting principle changes

   

$

0.18

 

   

$

0.32

 

Loss from discontinued operations

   

 

—  

 

   

 

—  

 

Cumulative effect of accounting principle changes

   

 

(0.02

)

   

 

—  

 

    
  

Net income

   

$

0.16

 

   

$

0.32

 

    
  

Number of common shares for earnings per share computations:

                  

Basic

   

 

69,288,640

 

   

 

71,347,192

 

Diluted

   

 

69,396,765

 

   

 

72,525,150

 

Pro forma amounts assuming accounting principle changes are applied retroactively:

                  

Net income

   

$

12,520

 

   

$

22,927

 

    
  

Basic and diluted earnings per common share

   

$

0.18

 

   

$

0.32

 

    
  

Clubs in operation—end of period

   

 

143

 

   

 

134

 

 

BJ's Wholesale Club, Inc. and Consolidated Subsidiaries

 

CONDENSED BALANCE SHEETS (Unaudited)

(Dollars in Thousands)

 

    

May 3,
2003

   

May 4,
2002

ASSETS

              

Current assets:

              

Cash and cash equivalents

   

$

42,100

   

$

40,132

Accounts receivable

   

 

57,100

   

 

48,969

Merchandise inventories

   

 

659,046

   

 

607,601

Current deferred income taxes

   

 

19,280

   

 

28,239

Prepaid expenses

   

 

17,253

   

 

16,607

    
  

Total current assets

   

 

794,779

   

 

741,548

Property, net of depreciation

   

 

720,700

   

 

649,149

Property under capital leases, net of amortization

   

 

—  

   

 

830

Deferred income taxes

   

 

—  

   

 

9,593

Other assets

   

 

23,292

   

 

21,402

    
  

TOTAL ASSETS

   

$

1,538,771

   

$

1,422,522

    
  

LIABILITIES AND STOCKHOLDERS' EQUITY

              

Current liabilities:

              

Short-term debt

   

$

40,000

   

$

—  

Accounts payable

   

 

442,179

   

 

395,998

Contingent lease obligations

   

 

17,412

   

 

45,400

Accrued expenses and other current liabilities

   

 

194,471

   

 

181,099

    
  

Total current liabilities

   

 

694,062

   

 

622,497

Long-term obligations under capital leases

   

 

—  

   

 

1,485

Noncurrent contingent lease obligations

   

 

8,586

   

 

57,445

Other noncurrent liabilities

   

 

65,971

   

 

49,202

Deferred income taxes

   

 

18,008

   

 

—  

Stockholders' equity

   

 

752,144

   

 

691,893

    
  

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

   

$

1,538,771

   

$

1,422,522

    
  

 

BJ's Wholesale Club, Inc. and Consolidated Subsidiaries

 

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in Thousands)

 

    

Thirteen Weeks Ended

  
    

May 3, 2003

     

May 4, 2002

  

CASH FLOWS FROM OPERATING ACTIVITIES

                  

Net income

   

$

11,267

 

   

$

23,054

 

Gain (loss) on contingent lease obligations

   

 

(814

)

   

 

1,417

 

Provision for store closing costs

   

 

248

 

   

 

—  

 

Cumulative effect of accounting principle changes

   

 

1,253

 

   

 

—  

 

Depreciation and amortization

   

 

20,256

 

   

 

17,253

 

Deferred income taxes

   

 

6,803

 

   

 

1,965

 

Increase in merchandise inventories, net of accounts payable

   

 

(7,473

)

   

 

(22,138

)

Decrease in contingent lease obligations

   

 

(14,008

)

   

 

(4,782

)

Other

   

 

5,682

 

   

 

7,735

 

    
  

Net cash provided by operating activities

   

 

23,214

 

   

 

24,504

 

    
  

CASH FLOWS FROM INVESTING ACTIVITIES

                  

Property additions

   

 

(55,636

)

   

 

(42,473

)

Property disposals

   

 

15

 

   

 

53

 

    
  

Net cash used in investing activities

   

 

(55,621

)

   

 

(42,420

)

    
  

CASH FLOWS FROM FINANCING ACTIVITIES

                  

Borrowing of short-term debt

   

 

40,000

 

   

 

—  

 

Repayment of capital lease obligations

   

 

—  

 

   

 

(59

)

Purchase of treasury stock

   

 

—  

 

   

 

(19,560

)

Proceeds from issuance of common stock

   

 

51

 

   

 

969

 

Changes in bank overdrafts

   

 

1,773

 

   

 

(10,460

)

    
  

Net cash provided by (used in) financing activities

   

 

41,824

 

   

 

(29,110

)

    
  

Net increase (decrease) in cash and cash equivalents

   

$

9,417

 

   

$

(47,026

)

    
  

 

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

 

1.   As of May 3, 2003, the Company has settled 32 of the 41 House2Home, Inc. (“House2Home”) leases for which it was contingently liable. Five leases were settled in this year’s first quarter. Based on progress made in settling these leases and an evaluation of its remaining obligations, the Company recorded a $1.2 million pretax credit ($0.7 million after tax, or $.01 per diluted share) in this year’s first quarter to reduce its contingent lease obligations. Including offsetting interest accretion charges, the Company’s gain on contingent lease obligations was $0.8 million pretax ($0.5 million after tax) for the quarter ended May 3, 2003. Interest accretion charges in the quarter ended May 4, 2002 were $1.4 million pretax ($0.9 million after tax).

 

2.   Loss from discontinued operations in the quarter ended May 3, 2003 consisted of interest accretion charges related to lease obligations for three BJ’s clubs which were closed in November 2002. Loss from discontinued operations for last year’s first quarter represented the operating losses of the three clubs in that period.

 

3.   During the quarter ended May 3, 2003, the Company adopted the provisions of Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations” (“SFAS No. 143”). The Company recorded a post-tax charge of $1,253,000, or $.02 per diluted share, to reflect the cumulative effect of adopting this accounting principle change as of the beginning of the fiscal year. The effect of this change on the quarter ended May 3, 2003 was to decrease income before the cumulative effect of accounting principle changes by $164,000 and to decrease net income (including the cumulative effect of the accounting change) by $1,417,000, or $.02 per diluted share.

 

Although last year’s results were not restated, the pro forma amounts shown at the bottom of the statements of income reflect net income and earnings per share as if SFAS No. 143 had been in effect during each period presented.

 

4.   Emerging Issues Task Force Issue No. 02-16, “Accounting by a Customer (Including a Reseller) for Certain Consideration Received by a Vendor” (“EITF 02-16”), addresses how a reseller should account for cash consideration received from a vendor. Under this standard, effective for arrangements entered into or modified after December 31, 2002, cash consideration that reimburses costs incurred by the customer to sell the vendor’s products should be characterized as a reduction of those costs. If the cash consideration exceeds the costs being reimbursed, the excess should be characterized as a reduction of cost of sales. Beginning in this year’s first quarter, the Company is classifying any cash consideration in excess of expenses being reimbursed as a reduction of cost of sales. The adoption of the provisions of EITF 02-16 did not result in any changes in the Company’s reported net income, but certain consideration which had been classified as a reduction of selling, general and administrative expenses in prior years is now being recorded as a reduction of cost of sales. This resulted in an increase in SG&A expenses and an offsetting decrease in cost of sales of $3.9 million in this year’s first quarter and $4.0 million in last year’s first quarter. As permitted by the transition provisions of EITF 02-16, cost of sales and SG&A expenses in last year’s statement of income have been recast to conform with this year’s presentation.

 

5.   Certain amounts in the prior year’s financial statements have been reclassified for comparative purposes.