Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FRANK'S NURSERY & CRAFTS, INC.
Date: June 30, 2004 By: /s/ Alan Minker
---------------------------
Alan Minker
Interim Chief Operating Officer,
Senior Vice President, Chief Financial
Officer and Treasurer
FRANK'S NURSERY & CRAFTS, INC. REPORTS FIRST QUARTER RESULTS
TROY, MICHIGAN, June 30, 2004 - Frank's Nursery & Crafts, Inc. (OTC: FNCN)
today reported results for the first quarter ended May 16, 2004.
Net sales for the first quarter of 2004 were $111.1 million versus $116.7
million in 2003. Comparable store sales for the first quarter of 2004 were down
4.2% compared to the first quarter of 2003. Frank's first quarter sales in the
East region were up 0.1% versus the same period last year, while sales in the
Midwest region were down 8.7% versus last year. The Midwest regional sales were
severely impacted by unusually wet weather as both Chicago and Detroit reported
record rain amounts for the month of May.
As a result, the Company had a net loss of $1.9 million for the first quarter of
2004 versus a net income of $1.0 million for the first quarter of 2003.
Frank's customers continue to show strong demand for our high-quality outdoor
live goods. Outdoor live goods, including annuals and perennials, sales were up
3.1% versus the 2003 quarter. The new patio furniture, barbecue grills and silk,
life-like floral businesses continue to improve.
Franks is also pleased to announce it has completed an amendment to the
revolving credit facility with Kimco Capital Corp. This amendment provides
Franks with an additional $15 million of borrowing capacity, under certain
circumstances.
Subsequent to the end of the first quarter of 2004, Franks completed a sale and
leaseback transaction of its Huntington, New York property. The Company will
realize a gain of approximately $6 million on this transaction in the second
quarter of 2004.
Franks Nursery is the nation's largest lawn and garden specialty retailer and
operates 169 stores in 14 states. Franks Nursery is also a leading retailer of
indoor garden products and accessories, including silk floral arrangements, as
well as Christmas decor merchandise. Franks was recently named "Michigan's Best
Nursery/Garden Center" in 2004 by the Detroit News readers.
This press release contains forward-looking statements, which reflect
management's current views of future events and financial performance. These
forward-looking statements are based on many assumptions and factors detailed in
the Company's filings with the Securities and Exchange Commission, including the
effects of currency fluctuations, customer demand, fashion trends, competitive
market forces, uncertainties related to the effect of competitive products and
pricing, customer acceptance of the Company's merchandise mix and retail
locations, unseasonable weather, risks associated with foreign global sourcing,
including political instability and changes in import regulations, economic
conditions worldwide, and the ability of the Company to execute its business
plans effectively. Any changes in such assumptions or factors could produce
significantly different results. The Company undertakes no obligations to update
forward-looking statements, whether as a result of new information, future
events, or otherwise.
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FRANK'S NURSERY & CRAFTS, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Sixteen Weeks Sixteen Weeks
Ended Ended
May 16, May 18,
2004 2003
------------- -------------
NET SALES $ 111,108 $ 116,652
OPERATING COSTS AND EXPENSES:
Cost of goods sold, including buying and occupancy 75,431 81,300
Selling, general, and administrative 32,460 31,480
Restructuring charges 459 --
----------- -----------
Total operating costs and expenses 108,350 112,780
----------- -----------
INCOME FROM OPERATIONS 2,758 3,872
OTHER (EXPENSE)INCOME:
Interest expense and amortization of debt costs (3,772) (2,967)
Sundry (expense) income (864) 106
----------- -----------
Total other expense (4,636) (2,861)
----------- -----------
----------- -----------
NET (LOSS) INCOME $ (1,878) $ 1,011
=========== ===========
(LOSS) INCOME PER SHARE - BASIC $ (0.09) $ 0.05
=========== ===========
(LOSS) INCOME PER SHARE - DILUTED $ (0.09) $ 0.05
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 20,000 20,000
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 20,000 20,000
=========== ===========
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FRANK'S NURSERY & CRAFTS, INC.
BALANCE SHEETS
(in thousands, except for par value)
May 16, May 18, January 25,
2004 2003 2004
--------- --------- ---------
ASSETS (Unaudited) (Unaudited)
Current assets:
Cash and cash equivalents $ 13,909 $ 14,107 $ 1,026
Accounts receivable, net 493 948 2,258
Merchandise inventory 71,343 76,593 42,283
Prepaid expenses and other current assets 3,674 4,275 3,758
--------- --------- ---------
Total current assets 89,419 95,923 49,325
Property, plant and equipment, net 56,081 55,575 54,934
Other assets and deferred charges 4,805 4,286 4,262
--------- --------- ---------
Total assets $ 150,305 $ 155,784 $ 108,521
========= ========= =========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable $ 48,964 $ 59,432 $ 19,978
Accrued expenses 23,895 25,337 19,157
Accrued expense payables pre-petition 204 1,701 217
Revolving credit facility 30,379 12,214 7,738
Revolving credit facility - related party 14,500 -- 28,000
Current portion of long term debt 1,461 1,474 1,255
--------- --------- ---------
Total current liabilities 119,403 100,158 76,345
Long-term debt:
Senior debt, less current portion 23,413 24,409 23,460
Term Loan - related party, net of 18,397 16,811 17,909
unamortized discount --------- --------- ---------
Total long-term debt 41,810 41,220 41,369
Other liabilities 4,923 3,603 4,773
Shareholders' (deficit) equity:
Common stock $.001 par value, 20 20 20
50,000,000 shares authorized, 17,798,428 shares
issued and outstanding and 2,201,572 shares
to be issued
Additional paid-in-capital 27,509 27,457 27,496
Accumulated deficit (43,360) (16,674) (41,482)
--------- --------- ---------
Total shareholders' (deficit) equity (15,831) 10,803 (13,966)
--------- --------- ---------
Total liabilities and shareholders' $ 150,305 $ 155,784 $ 108,521
(deficit) equity ========= ========= =========
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