DENVER, Aug. 26 /PRNewswire-FirstCall/ -- Ultimate Electronics, Inc.
(Nasdaq: ULTE) announced today its operating results for the second quarter
and six months ended July 31, 2004.
For the second quarter ended July 31, 2004, the company reported a net
loss of $16.2 million or $1.09 per share on a basic and diluted basis,
compared to a net loss of $1.8 million or $0.12 per share on a basic and
diluted basis for the same quarter of the prior year. Operating loss for the
second quarter was $8.8 million compared to an operating loss of $2.9 million
for the same quarter of the prior year. Sales for the second quarter were
$152.9 million, a 1% decrease from sales of $154.2 million for the same
quarter of the prior year. Comparable store sales were down 9% for the
quarter. Gross profit margin for the second quarter was 32.7% compared to
33.9% for the same quarter of the prior year. Gross profit margin continued
to be impacted by SKU reduction in certain categories, efforts to reduce the
amount of product that becomes discontinued and aggressive promotions.
Selling, general and administrative expenses for the second quarter increased
as a percentage of sales to 38.5% from 35.8% for the same quarter of the prior
year, reflecting the impact of the reduction in comparable store sales
(200 basis points), higher costs associated with the operation of the
company's information systems (90 basis points) and a non-cash impairment
charge for three under-performing stores (60 basis points), partially offset
by cost savings in other areas. Results for the quarter were also negatively
impacted by the non-cash reversal of an income tax benefit of $6.9 million.
The company believes that under the guidance provided by FAS109, the reversal
of the income tax benefit more appropriately represents the company's tax
position. As of July 31, 2004, the availability under our revolving line of
credit was $26.3 million.
For the six months ended July 31, 2004, the company reported a net loss of
$24.6 million or $1.66 per share on a basic and diluted basis, compared to a
net loss of $3.2 million or $0.22 per share on a basic and diluted basis for
the same period of the prior year. Operating loss for the six months ended
July 31, 2004 was $21.7 million compared to $5.1 million for the same period
of the prior year. Sales for the six months ended July 31, 2004 were
$305.3 million, a 2% decrease from sales of $309.9 million for the same period
of the prior year. Comparable store sales were down 10% for the six months
ended July 31, 2004. Gross profit margin for the six months ended July 31,
2004 was 32.1%, compared to 33.3% for the same period in the prior year.
Gross profit margin was impacted by SKU reduction in certain categories, the
efforts to reduce the amount of product that becomes discontinued and
aggressive promotions. Selling, general and administrative expenses for the
six months increased as a percentage of sales to 39.2% from 34.9% for the same
period of the prior year, reflecting the impact of the reduction in comparable
store sales (290 basis points), higher costs associated with the operation of
the company's information systems (100 basis points) and a non-cash impairment
charge for three under-performing stores (30 basis points). Results for the
six months were also negatively impacted by a non-cash reversal of an income
tax benefit of $1.8 million. The company believes that under the guidance
provided by FAS109, the reversal of the income tax benefit more appropriately
represents the company's tax position.
Second quarter and year-to-date sales by category were as follows:
Second Quarter Ended Six Months Ended
Category 7/31/2004 7/31/2003 7/31/2004 7/31/2003
Television/DBS 44% 42% 46% 42%
Audio 18% 18% 18% 18%
Video/DVD 13% 13% 12% 14%
Mobile 9% 11% 9% 10%
Home Office 1% 3% 1% 3%
Other 15% 13% 14% 13%
Commenting on the results, Dave Workman, President and CEO said, "While
our operating results for the second quarter and the first half of the year
ended July 31, 2004 were below our expectations, we have made progress to date
with the implementation of our turnaround strategy, including our initiatives
to capitalize on new sales opportunities in the home builder business; to
reduce stock outages in an effort to optimize our inventory; to improve our
information systems; and to reduce operating costs. We have generated
improvements from the first quarter to the second quarter of this year in
comparable store sales, gross profit margin and operating results. This
progress underlies our belief that we should continue to see improvement in
the second half of the fiscal year.
"When we implemented our turnaround strategy, we anticipated that we could
generate positive sales and achieve break-even results by the end of the year.
Based on our sales performance for the first half of this fiscal year and the
first three weeks of August, we now expect weaker sales and to finish the year
with a net loss. We believe that our turnaround strategy and the initiatives
we have taken to implement that strategy are key to reestablishing our core
business. We believe we have and will continue to yield improved financial
results from these initiatives. We now expect, however, that our strategy and
related initiatives will take longer than originally anticipated to return our
company to profitability.
"Our focus continues to be on implementing and fine-tuning our turnaround
strategy -- enhancing our customer experience, capitalizing on new sales
opportunities, improving execution at every level of our business and reducing
costs. We believe the amendment of our revolving line of credit and the
additional financing we obtained in the form of a term loan in July will
provide us with the necessary financial flexibility we need to effectuate our
turnaround strategy.
"With the number of initiatives and changes we have implemented, and in
light of the uncertain retail environment, we expect that our sales and
operating results will remain difficult to predict. As a result, we will not
be providing specific sales or earnings guidance for the foreseeable future."
Ultimate Electronics quarterly earnings conference call (August 26, 2004
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 Investor Relations and Webcast-Live icons.
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: effectuating the company's turnaround strategy and related
initiatives; improvement in comparable store sales, gross profit margin and
operating results for the second half of the year; expected weaker sales and
net loss for the year; reestablishing the company's core business; timing of
the company's return to profitability; financial flexibility provided by the
company's amended and restated revolving line of credit and new term loan;
difficulty in predicting the company's sales and operating results; and sales
and earnings guidance. Actual results may differ materially from those
included in the forward-looking statements due to a number of factors,
including, but not limited to: changes in general economic conditions; success
of sales promotions and marketing efforts; shifts in merchandise mix;
activities of competitors; terrorism and acts of war; consumer acceptance of
new technologies; risks associated with the operation of the company's
information systems; and other risk factors identified in the company's Annual
Report on Form 10-K for the fiscal year ended January 31, 2004, 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.
About Ultimate Electronics, Inc. (Nasdaq: ULTE)
Ultimate Electronics is a leading specialty retailer of home entertainment
and consumer electronics products in 14 states. The company operates
65 stores, including 54 stores in Arizona, Idaho, Illinois, Iowa, Kansas,
Minnesota, Missouri, Nevada, New Mexico, Oklahoma, South Dakota, Texas and
Utah under the trade name Ultimate Electronics(R) and 11 stores in Colorado
under the trade name SoundTrack(R). In addition, the company operates Fast
Trak Inc., an independent electronics repair company and a wholly owned
subsidiary of Ultimate Electronics. During the past two years, the company
received numerous industry awards including Audio Video International's 2003
"Top 10 Audio/Video Retailer of the Year."
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.
For further information, please contact David A. Carter, Chief Financial
Officer of Ultimate Electronics, Inc., +1-303-801-4025.
SELECTED FINANCIAL INFORMATION
(amounts in thousands except share and per share data)
Quarter ended Quarter ended
July 31, 2004 July 31, 2003
(unaudited) % of Sales (unaudited) % of Sales
Sales $152,923 $154,219
Cost of goods
sold 102,879 67.3% 101,983 66.1%
Gross profit 50,044 32.7% 52,236 33.9%
Selling,
general &
administrative
expenses 58,801 38.5% 55,128 35.8%
Loss from
operations (8,757) (5.7)% (2,892) (1.9)%
Interest expense,
net 586 0.4% 44 --
Loss before taxes (9,343) (6.1)% (2,936) (1.9)%
Income tax
expense
(benefit) 6,887 4.5% (1,116) (0.7)%
Net loss $(16,230) (10.6)% $(1,820) (1.2)%
Loss per share
-- basic and
diluted $(1.09) $(0.12)
Shares
outstanding
-- basic and
diluted 14,924,467 14,634,482
Six months ended Six months ended
July 31, 2004 July 31, 2003
(unaudited) % of Sales (unaudited) % of Sales
Sales $305,304 $309,904
Cost of goods
sold 207,230 67.9% 206,759 66.7%
Gross profit 98,074 32.1% 103,145 33.3%
Selling, general
& administrative
expenses 119,759 39.2% 108,288 34.9%
Loss from
operations (21,685) (7.1)% (5,143) (1.7)%
Interest expense,
net 1,181 0.4% 89 --
Loss before taxes (22,866) (7.5)% (5,232) (1.7)%
Income tax expense
(benefit) 1,748 0.6% (1,988) (0.6)%
Net loss $(24,614) (8.1)% $(3,244) (1.0)%
Loss per share
-- basic and
diluted $(1.66) $(.22)
Shares
outstanding
-- basic and
diluted 14,866,380 14,608,050
SUMMARY BALANCE SHEETS
(amounts in thousands)
July 31, 2004 January 31, 2004
(unaudited) (audited)
Assets:
Current assets:
Cash and cash equivalents $2,096 $4,413
Accounts receivable, net 40,042 44,306
Income tax receivable -- 7,975
Merchandise inventories, net 105,167 113,875
Prepaids and other assets 4,978 3,800
Total current assets 152,283 174,369
Property and equipment, net 149,970 158,247
Deferred tax asset -- 806
Other assets 2,609 2,805
Total assets $304,862 $336,227
Liabilities and Stockholders'
Equity:
Current liabilities:
Accounts payable $43,489 $35,330
Accrued liabilities 29,287 35,177
Other current liabilities 243 494
Total current liabilities 73,019 71,001
Revolving line of credit 53,999 63,186
Other long term liabilities 2,824 3,105
Stockholders' equity 175,020 198,935
Total liabilities and
stockholders' equity $304,862 $336,227
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:
David A. Carter, Chief Financial Officer of
Ultimate Electronics, Inc., +1-303-801-4025
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