MATTHEWS, N.C., March 27 /PRNewswire/ -- PCA International, Inc.,
(Nasdaq: PCAI) today reported its 1996 fiscal year and fourth quarter results.
PCA sales for the fiscal year-ended February 2, 1997, increased 7.9
percent to $156.1 million from $144.7 million in the prior year. Operating
income for the year, before a charge for closing studios, was $11.3 million
compared with $13.3 million in fiscal 1995. The Company previously disclosed
it was recording a $6.0 million pretax charge ($3.6 million after tax) in the
fourth quarter for the closing of 415 studios which were not meeting the
Company's profitability objectives. Including the charge of $3.6 million, the
Company reported net income of $3.0 million for the year versus $7.6 million
in 1995. On a per share basis, earnings for the year were $0.37, reflecting
the $0.44 charge, compared with $0.94 per share in 1995. Excluding the charge
for closing studios, 1996 net income was $6.6 million or $0.81 per share.
For the fourth quarter, sales increased 11.2 percent to $51.8 million, up
from $46.6 million in 1995's corresponding quarter. Operating income, before
the fourth quarter charge for planned studio closings, was $7.8 million
compared with $8.2 million the prior year. Fourth quarter fiscal 1996 net
income, inclusive of the $3.6 million charge, was $1.0 million, or $0.12 per
share, versus $4.9 million, or $0.62 for the fiscal 1995 period. Without the
charge, net income was $4.6 million or $0.56 per share.
"Our achievements in 1996 solidified our strategic direction," stated John
Grosso, PCA President and Chief Executive Officer. "We diversified our retail
partnerships and expanded our distribution channels through Wal-Mart and
PETsMART. Investment spending to support these strategic initiatives, while
resulting in lower fourth quarter and full-year earnings compared to fiscal
1995 levels, laid the
foundation for our successful acquisition of American Studios, Inc. With the
acquisition of American Studios, PCA now operates the largest number of retail
chain portrait studios of any company in North America with combined 1996
sales of approximately $263 million."
On January 23, 1997, PCA acquired American Studios, the primary provider
of portrait services to Wal-Mart Stores, Inc. (NYSE: WMT). The financial
results for PCA's 1996 fourth quarter and fiscal year do not include operating
results from American Studios as the acquisition was accounted for as a
purchase business combination at year-end.
The Company previously announced that in 1997 it will close 415
underperforming studios, convert approximately 600 Wal-Mart studios previously
operated by American Studios to PCA's digital imaging technology, upgrade 250
American Studios' digital studios to be compatible with PCA's systems, and
train over 1,000 studio associates. Upon completion, PCA will operate
permanent digital portrait studios in approximately 950 U.S. Kmart stores and
will serve over 2,200 Wal-Mart stores through 940 permanent studios and
traveling promotions in North and South America. The Company also operates
114 pet portrait studios in PETsMART as part of its new business
diversification program. PCA's Institutional Division provides portrait
services to church congregations through traveling promotions.
PCA INTERNATIONAL, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
February 2, January 28,
ASSETS: 1997 1996
Current Assets:
Cash and cash equivalents $1,536,234 $3,914,513
Other current assets 25,464,269 13,189,367
Total Current Assets 27,000,503 17,103,880
Net Property and Equipment 58,264,560 42,752,368
Intangible Assets 60,256,854 --
Other Assets 1,139,305 28,228
TOTAL ASSETS $146,661,222 $59,884,476
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Short-term borrowings $8,395,000 $ --
Current position of long-term debt 50,284,770 --
Accounts payable-trade 19,799,067 9,178,213
Other current liabilities 29,672,985 11,803,489
Total Current Liabilities 108,151,822 20,981,702
Deferred Income Taxes -- 4,562,570
Other Liabilities 4,868,660 3,105,595
Shareholders' Equity 33,640,740 31,234,609
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $146,661,222 $59,884,476
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended For the Fiscal Years Ended
February 2, January 28, February 2, January 28,
1997 1996 1997 1996
SALES $ 51,801,203 $ 46,585,446 $ 156,099,050 $ 144,714,535
COSTS AND EXPENSES:
Advertising and promotional
costs 4,298,982 3,657,262 16,163,273 14,784,803
Costs of photographic
sales 16,301,732 14,171,569 52,558,425 47,635,178
Store commissions and
selling costs 15,949,870 13,976,448 50,384,753 45,190,783
General and administrative
expenses 13,456,946 6,546,220 31,676,471 23,781,509
Total Costs and
Expenses 50,007,530 38,351,499 150,782,922 131,392,273
OPERATING INCOME FROM CONTINUING
OPERATIONS 1,793,673 8,233,947 5,316,128 13,322,262
Interest expense
net 95,736 15,190 179,221 458,923
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 1,697,937 8,218,757 5,136,907 12,863,339
INCOME TAXES 716,270 3,328,560 2,143,053 5,246,170
NET INCOME $ 981,667 $ 4,890,197 $ 2,993,854 $ 7,617,169
WEIGHTED AVERAGE NUMBER OF COMMON SHARES:
Primary 8,114,046 7,827,977 8,044,563 8,069,538
Fully Diluted 8,156,357 7,827,981 8,154,129 8,110,453
PRIMARY AND FULLY DILUTED EARNINGS PER COMMON SHARE:
Income from continuing
operations $ 0.12 $ 0.62 $ 0.37 $ 0.94
Discontinued
operations $ -- $ -- $ --
Net income $ 0.12 $ 0.62 $ 0.37 $ 0.94
CASH DIVIDENDS PER
COMMON SHARE $ -- $ 0.07 $ 0.21 $ 0.28
SOURCE PCA International, Inc.
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CONTACT:
Jean Veatch, Director Investor Relations and
Corporate Communications, PCA International, Inc., 704-847-8011
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