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TwitterDALLAS, July 25, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Tuesday Morning Corporation (Nasdaq: TUES) today reported net income for the second quarter ended June 30, 2006 of $2.9 million or $0.07 per diluted share, compared to $10.5 million or $0.25 per diluted share for the second quarter of 2005, a decrease of $7.6 million or $0.18 per diluted share. For the six-months ended June 30, 2006, net income was $9.4 million or $0.23 per diluted share, compared to $17.2 million or $0.41 per share in the same prior-year period, a decrease of $7.8 million or $0.18 per diluted share. Year-to-date, for the period ended June 30, 2005, net income and diluted earnings per share for the prior-year six- month period, excluding the after-tax lease adjustment recorded in the first quarter of 2005 were $19.6 million and $0.47 per diluted share. On a pro- forma basis, adjusting for recognition of stock compensation expense, diluted earnings per share for the second quarter and six-month period ended June 30, 2006 were $0.08 and $0.25, respectively. Please see the attached table for reconciliation.
As previously reported, net sales for the second quarter of 2006 were $207.7 million, a decrease of 5.1% from $218.8 million for the second quarter last year. Comparable store sales for the second quarter of 2006 decreased 10.8%. For the six-month period ended June 30, 2006, sales were $395.4 million, down 2.2%, with a comparable store sales decrease of 7.9%, compared to $404.4 million for the same prior-year period.
"Our average ticket increased year-over-year, however, lower traffic in our stores as a result of well documented economic conditions impacted our comparables. Challenges remain in the near term, but we believe our product offerings are well positioned for the last six-months of the year," said Kathleen Mason, President and Chief Executive Officer.
Our full year 2006 guidance estimates annual sales of approximately $945 million, mid-single digit negative comparable stores sales and diluted earnings per share of approximately $1.05 inclusive of an estimated $0.04 - $0.05 per diluted share of stock compensation expense.
Tuesday Morning management will review second quarter financial results in a teleconference call on July 25, 2006 at 10:00 a.m. Eastern Time.
About Tuesday Morning
Tuesday Morning is the leading closeout retailer of upscale, decorative home accessories and famous-maker gifts in the United States. The Company opened its first store in 1974 and currently operates 762 stores in 46 states during periodic "sale events." Tuesday Morning is nationally known for bringing its more than 8.0 million loyal customers a treasure hunt of high- end, first quality, brand name merchandise at prices 50% to 80% below department and specialty stores and catalogues.
This press release contains forward-looking statements, within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995, which are based on management's current expectations, estimates and projections. Words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected or implied in the forward- looking statements. Such risks and uncertainties include: the success of new store openings, competitive factors, access to merchandise and unanticipated changes in consumer demand and economic trends, as well as other risks detailed in the company's filings with the Securities and Exchange Commission, including Forms 8-K, 10-Q and 10-K. The Company undertakes no obligation to revise the forward-looking statements contained therein to reflect events or circumstances after the date hereof as a result of new information, future events or otherwise.
Tuesday Morning Corporation
Consolidated Statement of Income
(In thousands, except per share data)
Three Months Ended Six-Months Ended
June 30, June 30,
2006 2005 2006 2005
unaudited unaudited
Net Sales $ 207,669 $ 218,756 $ 395,428 $ 404,350
Cost of sales 133,396 137,338 247,564 250,374
Gross profit 74,273 81,418 147,864 153,976
Selling, general
and administrative
expenses 69,227 64,672 132,390 126,794
Operating income 5,046 16,746 15,474 27,182
Other income (expense):
Interest expense (567) (164) (753) (370)
Interest income 2 64 101 98
Other income
(expense), net 253 239 386 432
Other income
(expense) (312) 139 (266) 160
Income before income
taxes 4,734 16,885 15,208 27,342
Income tax expense 1,835 6,355 5,769 10,146
Net income $ 2,899 $ 10,530 $ 9,439 $ 17,196
Earnings Per Share:
Net income per common
share:
Basic $ 0.07 $ 0.26 $ 0.23 $ 0.42
Diluted $ 0.07 $ 0.25 $ 0.23 $ 0.41
Weighted average number
of common shares:
Basic 41,384 41,204 41,380 41,167
Diluted 41,626 41,743 41,647 41,714
Reconciliation of
Reported Amounts to
Non-GAAP Items
(See Note)
Net income, as
reported $ 2,899 $ 10,530 $ 9,439 $ 17,196
Add: GAAP rent, net
of tax --- --- --- 2,438
Adjusted net income,
ex GAAP rent 2,899 10,530 9,439 19,634
Plus: Stock option
expense, net of tax 558 --- 1,138 ---
Adjusted pro-forma net
income $ 3,457 $ 10,530 $ 10,577 $ 19,634
Net income per share,
diluted, as reported $ 0.07 $ 0.25 $ 0.23 $ 0.41
Add: GAAP rent, net
of tax --- --- --- 0.06
Adjusted net income per
share, diluted 0.07 0.25 0.23 0.47
Add: Stock option
expense, net of tax 0.01 --- 0.02 ---
Adjusted pro-forma net
income per share,
diluted $ 0.08 $ 0.25 $ 0.25 $ 0.47
Note:
The above schedule reconciles non-GAAP financial measures included in this
press release to the most comparable GAAP financial measures. Pro-forma
net income per share should not be considered as an alternative to net
income per share or other GAAP financial measurements as an indicator of
our operating performance.
The GAAP rent adjustment represents a one-time, non-cash cumulative
adjustment to record GAAP rent in the first quarter of 2005 to properly
reflect pre-opening or build-out periods of our stores prior to
January 1, 2005. This correction of accounting practices was made in
light of the views of the Office of the Chief Accountant of the
expressed in a letter of February 7, 2005 to the American Institute of
Certified Public Accountants regarding the application of generally
accepted accounting principles to operating lease accounting matters.
The Company adopted FAS 123(R), Shared Based Payment, in the first quarter
of fiscal 2006. This accounting standard requires all share-based
payments to employees, including grants of employee stock options, to be
recognized in the financial statements based on their fair value over
the requisite service period. The Company has applied the provisions of
the modified prospective transition method in the first quarter of 2006.
The Company did not record any stock-based compensation expense in
2005.
Management believes that comparative analysis of operating trends is
enhanced by adjusting for these items in order to provide investors with
a view of the Company's operating performance in a manner similar to the
method used by management to track performance from period-to-period and
improve the investor's ability to understand underlying trends in the
Company's operations. Because the GAAP rent adjustment is a one-time
adjustment, it is not indicative of operating performance for the
applicable period, nor should it be used in developing trend analysis
for future periods. Because stock compensation expense was not recorded
in 2005, excluding the impact of stock compensation expense in the
current year provides enhanced comparability to the prior year.
Consolidated Balance Sheets
(in thousands) June 30, Dec 31,
2006 2005 2005
Assets unaudited
Current assets:
Cash and cash equivalents $ 5,766 $ 5,486 $ 43,547
Inventories 241,660 207,742 230,639
Prepaid expenses and other
assets 7,413 5,932 7,258
Deferred income taxes 5,071 5,991 5,071
Total current assets 259,910 225,151 286,515
Property and Equipment, net 86,868 87,940 87,786
Other long-term assets:
Deferred financing costs 599 770 685
Other assets 4,930 3,948 4,941
Total Assets $ 352,307 $ 317,809 $ 379,927
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable $ 72,302 $ 69,419 $ 74,975
Accrued liabilities 29,444 33,361 42,372
Income taxes payable 4,736 8,583 16,520
Total current liabilities 106,482 111,363 133,867
Revolving credit facility, excl.
current portion 21,000 3,500 ---
Deferred rent 4,553 4,304 4,431
Deferred income taxes 6,267 9,051 6,267
Total Liabilities 138,302 128,218 144,565
Stockholders' equity 214,005 189,591 235,362
Total Liabilities and
Stockholders' Equity $ 352,307 $ 317,809 $ 379,927
Consolidated Statement of Cash Flows
(in thousands) Six-Months Ended June 30,
2006 2005
unaudited
Net cash flows from operating
activities:
Net income $ 9,439 $ 17,196
Adjustments to reconcile net
income to net cash (used in)
operating activities:
Depreciation and amortization 8,102 6,978
Amortization of financing fees 86 86
Stock compensation expense 1,618 ---
Cumulative effect of lease
accounting adj. --- 3,898
Other non-cash charges 53 (62)
Net change in operating assets and
liabilities (37,778) (37,898)
Net cash used in operating activities (18,480) (9,802)
Net cash flows from investing
activities:
Capital expenditures (7,184) (8,586)
Other --- ---
Net cash used in investing activities (7,184) (8,586)
Net cash flows from financing
activities:
Net borrowings-revolving credit
facility 21,000 3,500
Payment of cash dividend (33,102) (26,854)
Other (15) 2,161
Net cash provided by (used in)
financing act. (12,117) (21,193)
Net decrease in cash and cash
equivalents (37,781) (39,581)
Cash and cash equivalents, beginning
of period 43,547 45,067
Cash and cash equivalents, end of
period $ 5,766 $ 5,486
SOURCE Tuesday Morning Corporation
Elizabeth Schroeder, Chief Financial Officer of Tuesday Morning Corporation, +1-972-934-7299; or Laurey Peat of Laurey Peat + Associates, +1-214-871-8787, for Tuesday Morning Corporation
http://www.prnewswire.com
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| "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Tuesday Morning Corporation's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year. |