News Releases
Brookstone Announces Third Quarter 2005 Financial Results
MERRIMACK, N.H., Dec. 13 -- Innovative product development company and specialty lifestyle retailer Brookstone, Inc. today announced financial results for the third quarter of 2005. Results in this release relating to the Company's Gardeners Eden brand are reflected as discontinued operations.
For the third quarter ended October 29, 2005, Brookstone reported total net sales of $76.7 million, a 7.3 percent decrease from the Company's total net sales for the third quarter of 2004. Third quarter same-store sales decreased 11.3 percent compared to the same period in 2004. Direct-Marketing sales remained flat at $13.9 million.
For the third quarter ended October 29, 2005, Brookstone reported an $11.7 million loss from continuing operations, as compared to a $6.0 million loss from continuing operations in the third quarter of 2004. After discontinued operations, the Company reported a net loss of $13.4 million as compared to a net loss of $6.7 million last year.
For the 39-week period ended October 29, 2005, Brookstone reported net sales of $241.0 million, a 3.9 percent decrease from the Company's net sales for the comparable period in 2004. Year-to-date same-store sales decreased 8.7 percent, while Direct-Marketing sales rose $1.4 million to $38.0 million.
Brookstone reported a year-to-date net loss from continuing operations of $20.4 million, compared to a net loss from continuing operations of $9.9 million for the same period last year. After discontinued operations, the Company reported a year-to-date net loss of $25.9 million, compared to a net loss from discontinued operations of $11.8 million for the same period in 2004.
Because of the seasonal nature of specialty retailing, Brookstone generally carries a loss over the first three quarters and makes its profit for the year in the fourth quarter.
Michael Anthony, Brookstone President and Chief Executive Officer, said: "In the first nine months of 2005, we introduced a number of new innovative products in a variety of categories. However, these new products were not enough to offset some significant declines in a number of categories that performed extremely well for us last year."
Mr. Anthony added: "Many of our new products introduced in the later part of this year have performed at or above our expectations. We believe these new products will continue their excellent run. In addition, we are very excited by a number of new products slated for introduction beginning in the first quarter of next year, some of which will be our exclusive launch of OSIM healthy lifestyle products."
On October 4, 2005, Brookstone, Inc. was acquired through a merger transaction with Brookstone Acquisition Corp., a Delaware corporation formed by OSIM International Ltd and affiliates of J.W. Childs Equity Partners III, L.P. and Temasek Capital Limited ("Transaction"). The acquisition was accomplished through the merger of Brookstone Acquisition Corp. with and into Brookstone, Inc., with Brookstone, Inc. as the surviving corporation of the merger. As a result of the Transaction, Brookstone, Inc. became a privately held, wholly owned subsidiary of OSIM Brookstone Holdings, L.P., the general partner of which is OSIM Brookstone Holdings, Inc. and the majority shareholder of which is OSIM International Ltd.
On June 29, 2005, the Company announced its plans to sell its Gardeners Eden business, which consisted of five Gardeners Eden stores, one catalog titled Gardeners Eden, and its Internet site at http://www.gardenerseden.com. As a result, in the second quarter of Fiscal 2005, the Company began reflecting the results of operations from the Gardeners Eden business as a discontinued operation.
In the third quarter ended October 29, 2005, Brookstone opened eight new stores and remodeled four stores. For the year, Brookstone has opened 19 new stores and remodeled nine stores.
Brookstone, Inc. is a product development and specialty retail Company that operates 305 Brookstone Brand stores nationwide and in Puerto Rico. Typically located in high-traffic regional shopping malls and airports, the stores feature unique and innovative consumer products. The Company also operates one store under the Gardeners Eden Brand, and a Direct Marketing business that includes the Brookstone and Hard to Find Tools catalogs and e- commerce websites at http://www.brookstone.com/ and http://www.gardenerseden.com.
BROOKSTONE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
October 29, January 29, October 30,
2005 2005 2004
Assets
Current assets:
Cash and cash equivalents $ 1,547 $86,205 $3,700
Receivables, net 7,215 9,859 8,002
Merchandise inventories 132,730 75,585 98,845
Deferred income taxes, net 10,898 3,917 13,027
Prepaid expenses 8,628 6,045 7,389
Total current assets 161,018 181,611 130,963
Deferred income taxes, net -- 5,256 4,731
Property, plant and
equipment, net 74,351 74,019 74,796
Intangible assets, net 79,060 3,853 3,920
Goodwill 229,664 -- --
Other assets 24,761 1,741 10,263
Total assets $568,854 $ 266,480 $ 224,673
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings $11,150 $ -- $ --
Accounts payable 39,602 17,402 31,092
Other current liabilities 36,097 46,500 29,291
Total current liabilities 86,849 63,902 60,383
Other long-term liabilities 22,731 22,432 17,020
Long-term debt 190,923 8,760 8,986
Deferred income taxes 24,974 -- --
Commitments and contingencies
Other party interests in
consolidated entities 1,028 1,100 1,088
Shareholders' equity:
Total shareholders' equity 242,349 170,286 137,196
Total liabilities and
shareholders' equity $568,854 $ 266,480 $ 224,673
Notes:
(1) The consolidated balance sheet as of 10/29/05 reflects estimated
purchase accounting adjustments resulting from the merger transaction.
(2) The merchandise inventories was written up by approximately $24
million as a result of purchase accounting.
BROOKSTONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
Successor Predecessor
Period from October 4, Period from July Thirteen
2005 through October 30, 2005 through Weeks Ended
29, 2005 October 3, 2005 October 30,
2004
Net sales $24,937 $51,782 $82,755
Cost of sales 20,927 37,428 57,140
Gross profit 4,010 14,354 25,615
Selling, general and
administrative Expenses 12,579 22,671 34,130
Loss from continuing
operations (8,569) (8,317) (8,515)
Interest expense, net 2,208 129 315
Loss before taxes, other
party interests in
consolidated entities and
discontinued operations (10,777) (8,446) (8,830)
Other party interests in
consolidated entities 65 181 219
Loss before taxes and
Discontinued operations (10,842) (8,627) (9,049)
Income tax (benefit) (4,677) (3,121) (3,076)
Loss from continuing
operations (6,165) (5,506) (5,973)
Loss on discontinued
operations, net of tax
(benefit) provision of
$12, $(1,278), and
$(464) (299) (1,392) (706)
Net loss $(6,464) $(6,898) $(6,679)
Notes:
(1) The statement of operations as of 10/29/05 for the successor company
reflects estimated purchase accounting adjustments resulting from the
merger transaction. Approximately $3 million non-cash inventory
adjustment was written off to cost of sales in the period from October
4, 2005 through October 29, 2005.
(2) Although Brookstone, Inc. continued as the same legal entity after the
Transaction, the accompanying consolidated statements of operations
and cash flows are presented for two periods: "predecessor" and
"successor", which relate to the period preceding the Transaction and
the period succeeding the Transaction, respectively.
BROOKSTONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
Successor Predecessor
Period from October 4, Period from Thirty-nine
2005 through October January 30, Weeks Ended
29, 2005 2005 through October 30,
October 3, 2005 2004
Net sales $24,937 $216,090 $250,754
Cost of sales 20,927 152,225 170,379
Gross profit 4,010 63,865 80,375
Selling, general and
administrative
expenses 12,579 86,004 94,482
Loss from continuing
operations (8,569) (22,139) (14,107)
Interest expense, net 2,208 26 760
Loss before taxes,
other party interests
in consolidated
entities and
discontinued
operations (10,777) (22,165) (14,867)
Other party interests
in consolidated
entities 65 687 545
Loss before taxes and
discontinued
operations (10,842) (22,852) (15,412)
Income tax (benefit) (4,677) (8,591) (5,522)
Loss from continuing
operations (6,165) (14,261) (9,890)
Loss on discontinued
operations, net of
tax (benefit)
provision of $12,
$(3,720), and
$(1,216) (299) (5,165) (1,898)
Net loss $(6,464) $(19,426) $(11,788)
Notes:
(1) The statement of operations as of 10/29/05 for the successor company
reflects estimated purchase accounting adjustments resulting from the
merger transaction. Approximately $3 million non-cash inventory
adjustment was written off to cost of sales in the period from October
4, 2005 through October 29, 2005.
(2) Although Brookstone, Inc. continued as the same legal entity after the
Transaction, the accompanying consolidated statements of operations
and cash flows are presented for two periods: "predecessor" and
"successor", which relate to the period preceding the Transaction and
the period succeeding the Transaction, respectively.
Contacts: Philip Roizin EVP of Finance and Administration (603) 880-9500