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TwitterDALLAS, Oct 26, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Tuesday Morning Corporation (Nasdaq: TUES) today reported that as previously announced, net sales for the third quarter of 2006 increased 1.1% to $194.4 million compared to $192.3 million for the same prior-year quarter. For the nine-month period ended September 30, 2006, net sales decreased 1.1% to $589.8 million compared to $596.6 million at September 30, 2005. Comparable store sales decreased 4.6% and 6.9% for the third quarter and nine-month period ended September 30, 2006, respectively.
"We are pleased with the traction the Company achieved during the third quarter in terms of improving the age and content of inventory as well as traffic," said Kathleen Mason, President and Chief Executive Officer. "The home furnishings sector continues to be challenging and we are remaining flexible in our decisions and intently focused on the things we can control."
Net income for the third quarter ended September 30, 2006 was $3.2 million or $0.08 per diluted share, compared to $8.2 million or $0.20 per diluted share for the third quarter of 2005, a decrease of $5.0 million or $0.12 per diluted share. For the nine-months ended September 30, 2006, net income was $12.6 million or $0.30 per diluted share, compared to $25.4 million or $0.61 per share in the same prior-year period, a decrease of $12.8 million or $0.31 per diluted share.
Year-to-date, for the period ended September 30, 2005, net income and diluted earnings per share for the prior-year nine-month period, excluding the after-tax lease adjustment recorded in the first quarter of 2005 were $27.8 million and $0.67 per diluted share. On a non-GAAP basis, adjusting for recognition of stock compensation expense, diluted earnings per share for the third quarter and nine-month period ended September 30, 2006 were $0.10 and $0.35, respectively. Please see the attached table for reconciliation.
Our full year 2006 guidance remains unchanged with estimated 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 third quarter financial results in a teleconference call on October 26, 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 772 stores in 47 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 Nine-Months Ended
Sept. 30, Sept. 30,
2006 2005 2006 2005
unaudited unaudited
Net Sales $194,412 $192,276 $589,841 $596,626
Cost of sales 121,348 117,577 368,912 367,951
Gross profit 73,064 74,699 220,929 228,675
Selling, general and
administrative expenses 67,341 61,387 199,732 188,181
Operating income 5,723 13,312 21,197 40,494
Other income (expense):
Interest expense (792) (552) (1,545) (922)
Interest income 5 --- 106 98
Other income (expense), net 174 201 560 633
Other income (expense) (613) (351) (879) (191)
Income before income taxes 5,110 12,961 20,318 40,303
Income tax expense 1,947 4,748 7,716 14,894
Net income $3,163 $8,213 $12,602 $25,409
Earnings Per Share:
Net income per common share:
Basic $0.08 $0.20 $0.30 $0.62
Diluted $0.08 $0.20 $0.30 $0.61
Weighted average number of common
shares:
Basic 41,391 41,352 41,384 41,229
Diluted 41,574 41,913 41,642 41,768
Reconciliation of Reported Amounts
to Non-GAAP Items (See Note)
Net income, as reported $3,163 $8,213 $12,602 $25,409
Add: GAAP rent, net of tax --- --- --- 2,438
Adjusted net income, ex GAAP rent 3,163 8,213 12,602 27,847
Plus: Stock compensation
expense, net of tax 973 --- 2,111 ---
Adjusted non-GAAP net income $4,136 $8,213 $14,713 $27,847
Net income per share, diluted, as
reported $0.08 $0.20 $0.30 $0.61
Add: GAAP rent, net of tax --- --- --- 0.06
Adjusted net income per share,
diluted 0.08 0.20 0.30 0.67
Add: Stock option expense, net
of tax 0.02 --- 0.05 ---
Adjusted non-GAAP net income
per share, diluted $0.10 $0.20 $0.35 $0.67
Note:
The above schedule reconciles non-GAAP financial measures included in this
press release to the most comparable GAAP financial measures. Non-GAAP
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
Securities and Exchange Commission 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.
Tuesday Morning Corporation (continued)
Consolidated Balance Sheets
(in thousands) Sept. 30, Dec 31,
2006 2005 2005
Assets unaudited
Current assets:
Cash and cash equivalents $8,906 $6,146 $43,547
Inventories 302,533 293,358 230,639
Prepaid expenses and other assets 8,887 8,176 7,258
Deferred income taxes 5,071 5,991 5,071
Total current assets 325,397 313,671 286,515
Property and Equipment, net 86,888 88,610 87,786
Other long-term assets:
Deferred financing costs 556 728 685
Other assets 4,781 4,744 4,941
Total Assets $417,622 $407,753 $379,927
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $103,778 $102,939 $74,975
Accrued liabilities 31,119 35,036 42,372
Income taxes payable 6,199 8,286 16,520
Total current liabilities 141,096 146,261 133,867
Revolving credit facility, excl.
current portion 47,000 49,500 ---
Deferred rent 4,571 4,481 4,431
Deferred income taxes 6,267 9,051 6,267
Total Liabilities 198,934 209,293 144,565
Stockholders' equity 218,688 198,460 235,362
Total Liabilities and
Stockholders' Equity $417,622 $407,753 $379,927
Consolidated Statement of Cash Flows
(in thousands) Nine-Months Ended Sept. 30,
2006 2005
unaudited
Net cash flows from operating activities:
Net income $12,602 $25,409
Adjustments to reconcile net income
to net cash (used in) operating activities:
Depreciation and amortization 12,255 10,713
Amortization of financing fees 129 128
Stock compensation expense 2,445 ---
Cumulative effect of lease accounting adj. --- 3,898
Other non-cash charges 49 (4)
Net change in operating assets and
liabilities (64,853) (91,479)
Net cash used in operating activities (37,373) (51,335)
Net cash flows from investing activities:
Capital expenditures (11,357) (12,991)
Net cash used in investing activities (11,357) (12,991)
Net cash flows from financing activities:
Net borrowings-revolving credit facility 47,000 49,500
Payment of cash dividend (33,102) (26,854)
Other 191 2,759
Net cash provided by (used in)
financing act. 14,089 25,405
Net decrease in cash and cash equivalents (34,641) (38,921)
Cash and cash equivalents, beginning
of period 43,547 45,067
Cash and cash equivalents, end of period $8,906 $6,146
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.tuesdaymorning.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. |