DENVER, March 13 /PRNewswire-FirstCall/ --
Ultimate Electronics, Inc. (Nasdaq: ULTE) announced today its operating
results for the fourth quarter and the fiscal year ended January 31, 2003.
For the fourth quarter ended January 31, 2003, the Company reported net
income of $2,469,000, or $.17 per share on a diluted basis, compared to net
income of $6,777,000, or $.59 per share on a diluted basis for the same
quarter of the prior year. Sales for the quarter were $242,454,000, a 13%
increase from sales of $214,681,000 for the same period of the prior year.
Comparable store sales were down 8% for the fourth quarter. Gross profit for
the quarter was 29.0% compared to 29.7% for the fourth quarter of the prior
year. Gross profit for the quarter was impacted by approximately 40 basis
points due to the fixed-cost components of cost of goods sold relative to the
shortfall in anticipated revenue in the fourth quarter. Gross profit was also
impacted by reduced amortization of warranties sold prior to February 1, 2000
(approximately 20 basis points). In addition, the shift in mix of sales by
category accounted for approximately 10 basis points of the decrease in gross
profit. Selling, general and administrative expenses for the quarter
increased as a percentage of sales to 27.3% from 24.6% for the same quarter of
the prior year. Fixed expenses such as rent, salaries and insurance costs
increased by 190 basis points as a percentage of sales over the fourth quarter
of the prior year due to lower than anticipated sales for the quarter. Sales
payroll also increased approximately 50 basis points, as the Company was
staffed for a higher level of sales than were realized during the quarter.
Finally, net advertising increased approximately 30 basis points, as the
Company received less cooperative advertising from vendors due to lower than
anticipated purchases in the fourth quarter.
For the year ended January 31, 2003, the Company reported net income of
$6,724,000, or $.48 per share on a diluted basis, compared to net income of
$11,953,000, or $1.04 per share on a diluted basis for the prior year. Sales
for the year were $704,427,000, a 21% increase from sales of $580,223,000 for
the previous year. Comparable store sales were down 2% for the year ended
January 31, 2003. Gross profit for the year decreased to 30.7% compared to
31.0% for the prior year. The decrease in gross profit for the year was
primarily due to the reduced amortization of warranties sold prior to
February 1, 2000 (approximately 30 basis points). Selling, general and
administrative expenses for the year increased as a percentage of sales to
29.1% from 27.6% for the prior year. Selling, general and administrative
expenses as a percentage of sales were impacted by the decrease in comparable
store sales as well as the expenses associated with 12 new stores opened
during the year. For the year, rent increased approximately 40 basis points,
fees from interest-free promotions increased approximately 30 basis points,
and payroll increased by approximately 30 basis points. Other expenses, such
as insurance costs, preopening expenses and other fixed expenses, represented
the remaining approximately 50 basis points of the increase in selling,
general and administrative expenses as a percentage of sales.
Fourth quarter and annual sales by category were as follows:
Fourth Quarter Ended Fiscal Year Ended
Category 1/31/2003 1/31/2002 1/31/2003 1/31/2002
Television/DBS 43% 39% 41% 38%
Audio 19% 21% 19% 20%
Video/DVD 17% 18% 15% 17%
Mobile 6% 6% 9% 9%
Home Office 3% 4% 3% 4%
Other 12% 12% 13% 12%
Ed McEntire, Chief Executive Officer, stated, "Despite a difficult year
for Ultimate Electronics and our industry, we strengthened our balance sheet,
successfully opened the Dallas/Ft. Worth market with 10 new stores, expanded
our installation and builder business, enhanced our training initiatives and
further refined our customer relationship marketing programs. In addition, we
strengthened our management team with the addition of three retail veterans to
manage the critical functions of operations, human resources and repair
services."
Mr. McEntire added, "We have adjusted our growth plan for 2003 to be more
conservative because of the current environment. Our present expansion plans
for this year include seven new stores and one store relocation. The eighth
store scheduled for this year is now anticipated to open in March of 2004 due
to delays in county road construction. In February, we successfully completed
the relocation of our Rochester, Minnesota store. We are currently
implementing a number of initiatives designed to increase margins and reduce
our selling, general and administrative expenses. In summary, we believe we
have strengthened our long term competitive position in an exciting industry
and are well situated to capitalize on future growth opportunities."
Alan Kessock, Senior Vice President of Finance and Chief Financial
Officer, stated, "February comparable store sales rebounded from the fourth
quarter and finished down 2%. For fiscal 2004, we plan for comparable store
sales to be down in the low single digits for the first half of the year
followed by positive low single digit comparable store sales in the third
quarter and mid-single digit comparable store sales in the fourth quarter. We
estimate sales volume for the year to be between $815 million and
$830 million, a 16% to 18% increase over fiscal 2003, given the effect of
anticipated comparable store sales and the impact of new stores expected to
open in 2003. Based upon our plan, we expect a loss per share of between
$.01 and $.04 for the first quarter, breakeven results in the second quarter,
earnings per share of $.05 to $.10 for the third quarter and earnings per
share of $.45 to $.60 for the fourth quarter."
Ultimate Electronics is a leading specialty retailer of home entertainment
and consumer electronics products in 13 states. The Company operates
58 stores, including 40 stores in Arizona, Idaho, Illinois, Iowa, Minnesota,
Missouri, Nevada, New Mexico, Oklahoma, South Dakota, Texas and Utah under the
trade name Ultimate Electronics(R), 11 stores in Colorado under the trade name
SoundTrack(R) and seven stores in Minnesota under the trade name Audio
King(R). In addition, the Company operates Fast Trak, Inc., an independent
electronics repair company based in Minnesota and a wholly owned subsidiary of
Ultimate Electronics. During the past two years, the Company received
numerous industry awards including Audio Video International's 2002
"Top 10 Audio/Video Retailer of the Year."
The statements made in this news release, other than those concerning
historical financial information, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are made based upon management's current
expectations and beliefs concerning future developments and their potential
effects upon the Company. These forward-looking statements include statements
regarding (i) the success of the Company's initiatives to increase margins and
reduce expenses, (ii) anticipated sales, comparable store sales, and earnings
per share for the fiscal year and/or each quarter in the fiscal year ending
January 31, 2004, (iii) the number of new stores expected to open and to be
remodeled in 2003 and (iv) the Company's ability to capitalize on future
growth opportunities. Actual results may differ materially from those
included in the forward-looking statement due to a number of factors,
including, but not limited to: changes in general economic conditions,
customer responsiveness to new products, shifts in merchandise mix, activities
of our competitors, the challenges associated with entering new markets,
terrorism and acts of war, and other risk factors identified in the Company's
Annual Report on Form 10-K for the fiscal year ended January 31, 2002, filed
with the Securities and Exchange Commission. There can be no assurance that
future developments affecting the Company will be those anticipated by
management. The Company disclaims any obligation to update or revise any of
the forward-looking statements that are in this news release.
Ultimate Electronics quarterly earnings conference call (March 13, 2003 at
11:00 a.m. Eastern Time) will be broadcast live on the Internet. Please visit
the Company's Web site at http://www.ultimateelectronics.com and click on the
Street Events icon on the Investor Relations page. Ultimate Electronics news
releases, quarterly sales and operating results can be found on the Internet
on the Company's Web site at http://www.ultimateelectronics.com or accessed
via PR Newswire's Web site at http://www.prnewswire.com .
Contact: Alan E. Kessock, Chief Financial Officer, Ultimate Electronics,
Inc., 303-801-4000 or e-mail alan.kessock@ulte.com
SELECTED FINANCIAL INFORMATION
(amounts in thousands except share and per share data)
Quarter ended Quarter ended
January 31, 2003 % of January 31, 2002 % of
(unaudited) Sales (unaudited) Sales
Sales $242,454 $214,681
Cost of goods sold 172,181 71.0% 150,841 70.3%
Gross profit 70,273 29.0% 63,840 29.7%
Selling, general &
administrative
expenses 66,252 27.3% 52,807 24.6%
Income from operations 4,021 1.7% 11,033 5.1%
Interest expense, net 39 -- 169 --
Income before taxes 3,982 1.7% 10,864 5.1%
Income tax expense 1,513 0.7% 4,087 1.9%
Net income $2,469 1.0% $6,777 3.2%
Earnings per share
- basic $0.17 $0.61
Earnings per share
- diluted $0.17 $0.59
Shares outstanding
- basic 14,565,145 11,150,160
Shares outstanding
- diluted 14,714,729 11,538,575
Year ended % of Year ended % of
January 31, 2003 Sales January 31, 2002 Sales
Sales $704,427 $580,223
Cost of goods sold 488,140 69.3% 400,126 69.0%
Gross profit 216,287 30.7% 180,097 31.0%
Selling, general &
administrative
expenses 205,234 29.1% 160,495 27.6%
Income from
operations 11,053 1.6% 19,602 3.4%
Interest expense, net 208 -- 321 0.1%
Income before taxes 10,845 1.6% 19,281 3.3%
Income tax expense 4,121 0.6% 7,328 1.2%
Net income $6,724 1.0% $11,953 2.1%
Earnings per share
- basic $0.49 $1.08
Earnings per share
- diluted $0.48 $1.04
Shares outstanding
- basic 13,671,171 11,041,376
Shares outstanding
- diluted 13,921,235 11,482,938
SUMMARY BALANCE SHEETS
(amounts in thousands)
January 31, 2003 January 31, 2002
Assets:
Current assets:
Cash and cash equivalents $2,659 $2,694
Accounts receivable, net 36,184 30,158
Merchandise inventories, net 110,010 86,680
Prepaids and other assets 4,489 1,961
Total current assets 153,342 121,493
Property and equipment, net 141,387 106,612
Property under capital leases, net 1,066 1,202
Other assets 1,741 2,164
Total assets $297,536 $231,471
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $36,525 $42,551
Accrued liabilities 33,374 26,122
Deferred revenue 918 1,573
Other current liabilities 446 432
Total current liabilities 71,263 70,678
Revolving line of credit 8,320 35,222
Deferred revenue, less current portion 372 1,290
Other long term liabilities 2,302 2,430
Stockholders' equity 215,279 121,851
Total liabilities and stockholders'
equity $297,536 $231,471
SOURCE Ultimate Electronics, Inc.
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Related links:
http://www.ultimateelectronics.com
Company News On-Call:
http://www.prnewswire.com/comp/877054.html
CONTACT:
Alan E. Kessock, Chief Financial Officer of
Ultimate Electronics, Inc., +1-303-801-4000,
alan.kessock@ulte.com
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