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As Of Filer Filing For·On·As Docs:Size 3/09/16 Toys R US Inc 8-K:2,9 3/09/16 2:541K |
Document/Exhibit Description Pages Size 1: 8-K Current Report HTML 16K 2: EX-99.1 Earnings Release HTML 194K
Exhibit |
• | Consolidated same store sales grew by 2.3% for the quarter and 0.9% for the full year |
• | Fiscal 2015 SG&A expense reduction of $322 million resulted in the lowest full year SG&A since 2006 |
• | Full
year consolidated Adjusted EBITDA1 of $800 million, a 25% improvement over the prior year |
• | Consolidated Net Leverage2 for fiscal 2015 of 5.0x, a reduction of 1.3x |
• | Consolidated same store sales were up 2.3%. International had growth of 3.9% mainly attributable to an increase in the
learning category, partially offset by a decline in the entertainment category (which includes electronics, video game hardware and software). Domestic had growth of 1.2% over the prior year period primarily due to an increase in the core toy and learning categories, partially offset by a decline in the entertainment and baby categories. |
• | Consolidated net sales were $4,853 million, a decrease of $130 million compared to the prior year period. Excluding a $169 million negative impact from foreign currency translation, net sales increased $39 million, mainly attributable to same store sales growth in both the International and Domestic segments, partially offset by Domestic store closures. |
• | Gross
margin dollars were $1,657 million, compared to $1,688 million for the prior year period, a decrease of $31 million. Excluding a $60 million negative impact from foreign currency translation, gross margin dollars increased by $29 million. Gross margin rate was 34.1%, an increase of 0.2 percentage points versus the prior year period. Domestic gross margin rate increased by 0.3 percentage points primarily due to a shift in sales mix away from lower margin entertainment products, partially offset by an increase in shipping costs due to higher e-commerce sales volume. International gross margin rate increased by 0.3 percentage points as a result of margin improvements associated with the learning and entertainment categories, partially offset by increased cost of U.S. dollar denominated merchandise purchases. |
• | SG&A
decreased by $46 million to $1,143 million, compared to $1,189 million in the prior year. Excluding a $35 million favorable impact from foreign currency translation, SG&A decreased by $11 million, primarily due to a $21 million decrease in payroll expenses, partially offset by a favorable legal settlement of $12 million in the prior year. |
• | Operating earnings were $447 million, compared to $417 million in the prior year period. Domestic segment operating earnings improved by $31 million, primarily as a result of SG&A savings compared to the prior year period. Excluding a $21 million negative impact from foreign currency translation, International
segment operating earnings improved by $35 million mainly as a result of an increase in gross margin dollars due to higher net sales compared to the prior year period. Corporate overhead increased by $15 million. |
• | Adjusted EBITDA1 improved by $45 million to $574 million, compared to $529 million in the prior year period. |
• | Net
earnings were $276 million, compared to $265 million in the prior year period, an improvement of $11 million. |
• | Consolidated same store sales increased by 0.9% due to International same store sales growth of 3.2%, which was driven by improvement in the learning and baby categories, partially offset by a decline in entertainment. Domestic same store sales decreased by 0.6% due to a decline in the entertainment
and baby categories, partially offset by increases in core toy and learning categories. |
• | Consolidated net sales were $11,802 million, a decrease of $559 million compared to the prior year. Excluding a $571 million negative impact of foreign currency translation, net sales were up predominantly due to increases in same store sales in the International segment, partially offset by a decline in same store sales in the Domestic segment. Net sales also benefited from new stores Internationally, offset by Domestic store closures. |
• | Gross
margin dollars were $4,226 million, compared to $4,430 million for the prior year, a decrease of $204 million. Excluding a $215 million negative impact from foreign currency translation, gross margin dollars increased by $11 million. Gross margin rate remained consistent at 35.8%. |
• | SG&A decreased by $322 million to $3,593 million, compared to $3,915 million in the prior year. Excluding
a $174 million favorable impact from foreign currency translation, SG&A decreased by $148 million, primarily due to an $81 million decrease in payroll expenses, a $40 million decline in advertising and promotional expenses and a $16 million decrease in occupancy costs, predominantly as a result of Domestic store closures. |
• | Operating earnings were $378 million, compared to $191 million in the prior year. Domestic segment operating earnings improved by $152 million, primarily as a result of SG&A savings compared to the prior year period. Excluding a $22 million
negative impact from foreign currency translation, International segment operating earnings improved by $64 million primarily as a result of an increase in gross margin dollars due to higher net sales compared to the prior year. Corporate overhead increased by $7 million. |
• | Adjusted EBITDA1 was $800 million, compared to $642 million in prior year, an improvement of $158 million. |
• | Net
loss was $130 million, compared to a net loss of $292 million in the prior year period, an improvement of $162 million. |
• | For
the full year, capital spending was $219 million, compared to $207 million in the prior year, an increase of $12 million. |
• | Depreciation expense was $343 million, a decrease of $34 million, which included a $14 million benefit from foreign currency translation. |
13
Weeks Ended | Fiscal Years Ended | |||||||||||||||
(In millions) | ||||||||||||||||
Net sales | $ | 4,853 | $ | 4,983 | $ | 11,802 | $ | 12,361 | ||||||||
Cost
of sales | 3,196 | 3,295 | 7,576 | 7,931 | ||||||||||||
Gross margin | 1,657 | 1,688 | 4,226 | 4,430 | ||||||||||||
Selling,
general and administrative expenses | 1,143 | 1,189 | 3,593 | 3,915 | ||||||||||||
Depreciation
and amortization | 90 | 92 | 343 | 377 | ||||||||||||
Other income, net | (23 | ) | (10 | ) | (88 | ) | (53 | ) | ||||||||
Total
operating expenses | 1,210 | 1,271 | 3,848 | 4,239 | ||||||||||||
Operating earnings | 447 | 417 | 378 | 191 | ||||||||||||
Interest
expense | (96 | ) | (112 | ) | (429 | ) | (451 | ) | ||||||||
Interest income | 1 | 1 | 3 | 4 | ||||||||||||
Earnings
(loss) before income taxes | 352 | 306 | (48 | ) | (256 | ) | ||||||||||
Income tax expense | 74 | 39 | 76 | 32 | ||||||||||||
Net
earnings (loss) | 278 | 267 | (124 | ) | (288 | ) | ||||||||||
Less: Net earnings attributable to noncontrolling
interest | 2 | 2 | 6 | 4 | ||||||||||||
Net earnings (loss) attributable to Toys “R” Us,
Inc. | $ | 276 | $ | 265 | $ | (130 | ) | $ | (292 | ) |
(In millions) | ||||||||
ASSETS | ||||||||
Current
Assets: | ||||||||
Cash and cash equivalents | $ | 680 | $ | 698 | ||||
Accounts
and other receivables | 225 | 225 | ||||||
Merchandise inventories | 2,270 | 2,064 | ||||||
Current
deferred tax assets | — | 45 | ||||||
Prepaid expenses and other current assets | 113 | 122 | ||||||
Total
current assets | 3,288 | 3,154 | ||||||
Property and equipment, net | 3,163 | 3,335 | ||||||
Goodwill | 64 | 64 | ||||||
Deferred
tax assets | 96 | 133 | ||||||
Restricted cash | 52 | 53 | ||||||
Other
assets | 305 | 376 | ||||||
Total Assets | $ | 6,968 | $ | 7,115 | ||||
LIABILITIES,
TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 1,699 | $ | 1,571 | ||||
Accrued
expenses and other current liabilities | 994 | 1,032 | ||||||
Income taxes payable | 32 | 20 | ||||||
Current
portion of long-term debt | 73 | 176 | ||||||
Total current liabilities | 2,798 | 2,799 | ||||||
Long-term
debt | 4,670 | 4,612 | ||||||
Deferred tax liabilities | 64 | 112 | ||||||
Deferred
rent liabilities | 345 | 347 | ||||||
Other non-current liabilities | 245 | 255 | ||||||
Temporary
Equity | 111 | 85 | ||||||
Total Stockholders’ Deficit | (1,265 | ) | (1,095 | ) | ||||
Total
Liabilities, Temporary Equity and Stockholders’ Deficit | $ | 6,968 | $ | 7,115 |
Fiscal
Years Ended | ||||||||
(In millions) | ||||||||
Cash Flows from Operating Activities: | ||||||||
Net
loss | $ | (124 | ) | $ | (288 | ) | ||
Adjustments to reconcile Net loss to Net cash provided by operating activities: | ||||||||
Depreciation
and amortization | 343 | 377 | ||||||
Amortization and write-off of debt issuance costs and debt discount | 28 | 59 | ||||||
Net
gains on sales of properties | (20 | ) | (5 | ) | ||||
Deferred income taxes | 17 | (1 | ) | |||||
Non-cash
portion of asset impairments and other charges | 20 | 20 | ||||||
Proceeds from settlement of derivatives | — | 9 | ||||||
Unrealized
losses on foreign exchange | 10 | 15 | ||||||
Other | (1 | ) | 23 | |||||
Changes
in operating assets and liabilities: | ||||||||
Accounts and other receivables | (2 | ) | (6 | ) | ||||
Merchandise inventories | (256 | ) | (16 | ) | ||||
Prepaid
expenses and other operating assets | 18 | 14 | ||||||
Accounts payable, Accrued expenses and other liabilities | 190 | 283 | ||||||
Income
taxes payable, net | 15 | (8 | ) | |||||
Net cash provided by operating activities | 238 | 476 | ||||||
Cash
Flows from Investing Activities: | ||||||||
Capital expenditures | (219 | ) | (207 | ) | ||||
Increase in restricted cash | (2 | ) | (5 | ) | ||||
Proceeds
from sales of fixed assets | 13 | 18 | ||||||
Acquisitions | (2 | ) | (1 | ) | ||||
Property
insurance recovery | — | 2 | ||||||
Net cash used in investing activities | (210 | ) | (193 | ) | ||||
Cash
Flows from Financing Activities: | ||||||||
Long-term debt borrowings | 1,451 | 2,866 | ||||||
Long-term debt repayments | (1,472 | ) | (3,010 | ) | ||||
Short-term
debt borrowings, net | — | (12 | ) | |||||
Capitalized debt issuance costs | (6 | ) | (35 | ) | ||||
Net
cash used in financing activities | (27 | ) | (191 | ) | ||||
Effect of exchange rate changes on Cash and cash equivalents | (19 | ) | (38 | ) | ||||
Cash
and cash equivalents: | ||||||||
Net (decrease) increase during period | (18 | ) | 54 | |||||
Cash and cash equivalents at beginning of period | 698 | 644 | ||||||
Cash
and cash equivalents at end of period | $ | 680 | $ | 698 |
13
Weeks Ended | Fiscal Years Ended | ||||||||||||
Domestic Segment: | |||||||||||||
Operating Data | |||||||||||||
Gross
margin as a percentage of net sales | 32.7 | % | 32.4 | % | 34.3 | % | 34.1 | % | |||||
Same
store sales | 1.2 | % | (4.5 | )% | (0.6 | )% | (1.0 | )% | |||||
Change in number of transactions | (0.9 | )% | (5.4 | )% | (2.5 | )% | (1.0 | )% | |||||
Change
in average basket size | 2.1 | % | 0.9 | % | 1.9 | % | — | % | |||||
Net Sales by Product Category | |||||||||||||
Baby | 21.6 | % | 22.7 | % | 36.9 | % | 37.9 | % | |||||
Core
Toy | 24.4 | % | 22.6 | % | 18.4 | % | 17.2 | % | |||||
Entertainment | 12.5 | % | 14.7 | % | 9.0 | % | 10.2 | % | |||||
Learning | 30.2 | % | 29.2 | % | 23.5 | % | 22.6 | % | |||||
Seasonal | 10.5 | % | 9.8 | % | 11.4 | % | 11.2 | % | |||||
Other
(1) | 0.8 | % | 1.0 | % | 0.8 | % | 0.9 | % | |||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||
International
Segment: | |||||||||||||
Operating Data | |||||||||||||
Gross
margin as a percentage of net sales | 36.6 | % | 36.3 | % | 38.3 | % | 38.6 | % | |||||
Same
store sales (2) | 3.9 | % | 2.2 | % | 3.2 | % | 1.8 | % | |||||
Change in number of transactions | (2.0 | )% | 5.4 | % | (1.8 | )% | 4.4 | % | |||||
Change
in average basket size (2) | 5.9 | % | (3.2 | )% | 5.0 | % | (2.6 | )% | |||||
Net Sales by Product Category | |||||||||||||
Baby | 12.9 | % | 12.1 | % | 20.5 | % | 20.2 | % | |||||
Core
Toy | 26.5 | % | 27.6 | % | 23.2 | % | 23.5 | % | |||||
Entertainment | 8.4 | % | 10.3 | % | 7.1 | % | 8.5 | % | |||||
Learning | 39.0 | % | 37.2 | % | 32.8 | % | 31.1 | % | |||||
Seasonal | 12.6 | % | 12.2 | % | 15.7 | % | 15.9 | % | |||||
Other
(3) | 0.6 | % | 0.6 | % | 0.7 | % | 0.8 | % | |||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||
Consolidated: | |||||||||||||
Operating
Data | |||||||||||||
Gross margin as a percentage of net sales | 34.1 | % | 33.9 | % | 35.8 | % | 35.8 | % | |||||
Same
store sales (2) | 2.3 | % | (1.9 | )% | 0.9 | % | 0.0 | % | |||||
Change in number of transactions | (1.4 | )% | (0.7 | )% | (2.2 | )% | 1.4 | % | |||||
Change
in average basket size (2) | 3.7 | % | (1.2 | )% | 3.1 | % | (1.4 | )% |
(1) | Consists
primarily of non-product related revenues. |
(2) | Excludes the impact of foreign currency translation. |
(3) | Consists primarily of non-product related revenues, including licensing revenue from unaffiliated third parties. |
(In
millions) | |||||||||||||||||||||||||||||
Initiatives | Domestic | International | Consolidated | ||||||||||||||||||||||||||
Actual | Estimated
Remaining | Total Target | Actual | Estimated Remaining | Total Target | Total Target | |||||||||||||||||||||||
Margin | Marketing
Effectiveness | $ | 85 | $ | — | $ | 85 | $ | — | $ | — | $ | — | $ | 85 | ||||||||||||||
End-to-End | 30 | — | 30 | 3 | — | 3 | 33 | ||||||||||||||||||||||
Private
Label | 6 | 12 | 18 | 1 | 3 | 4 | 22 | ||||||||||||||||||||||
Sub-total
Margin | $ | 121 | $ | 12 | $ | 133 | $ | 4 | $ | 3 | $ | 7 | $ | 140 | |||||||||||||||
SG&A | In-Store
Operations | 53 | — | 53 | 16 | — | 16 | 69 | |||||||||||||||||||||
Supply
Chain | 3 | — | 3 | 4 | — | 4 | 7 | ||||||||||||||||||||||
Organizational
Effectiveness | 24 | — | 24 | 8 | 3 | 11 | 35 | ||||||||||||||||||||||
Procurement
& Other | 57 | — | 57 | 17 | — | 17 | 74 | ||||||||||||||||||||||
Sub-total
SG&A | $ | 137 | $ | — | $ | 137 | $ | 45 | $ | 3 | $ | 48 | $ | 185 | |||||||||||||||
Fit
For Growth Total | $ | 258 | $ | 12 | $ | 270 | $ | 49 | $ | 6 | $ | 55 | $ | 325 | |||||||||||||||
13
Weeks Ended | Fiscal Years Ended | |||||||||||||||
(In millions) | ||||||||||||||||
Earnings (loss) before income taxes | $ | 352 | $ | 306 | $ | (48 | ) | $ | (256 | ) | ||||||
Add: | ||||||||||||||||
Interest
expense, net | 95 | 111 | 426 | 447 | ||||||||||||
Depreciation and amortization | 90 | 92 | 343 | 377 | ||||||||||||
EBITDA | 537 | 509 | 721 | 568 | ||||||||||||
Adjustments: | ||||||||||||||||
Impairment
of long-lived assets | 12 | 5 | 16 | 13 | ||||||||||||
Compensation expense (a) | 11 | 7 | 24 | 22 | ||||||||||||
Certain
transaction costs (b) | 11 | (3 | ) | 13 | (2 | ) | ||||||||||
Foreign currency re-measurement (c) | 8 | 15 | 11 | 15 | ||||||||||||
Severance
| 5 | 1 | 24 | 17 | ||||||||||||
Store closure costs (d) | 2 | (1 | ) | 7 | 4 | |||||||||||
Net
gains on sales of properties | (12 | ) | — | (20 | ) | (5 | ) | |||||||||
Property losses, net of insurance recoveries
| — | — | (1 | ) | (9 | ) | ||||||||||
Sponsors’ management and advisory fees (e) | — | 4 | 6 | 18 | ||||||||||||
Litigation
(f) | — | (8 | ) | (1 | ) | (8 | ) | |||||||||
Obsolete inventory clearance (g) | — | — | — | 9 | ||||||||||||
Adjusted
EBITDA (h) | $ | 574 | $ | 529 | $ | 800 | $ | 642 |
13 Weeks Ended | Fiscal
Years Ended | |||||||||||||||
(In millions) | ||||||||||||||||
Earnings
(loss) before income taxes | $ | 250 | $ | 184 | 12 | (219 | ) | |||||||||
Add: | ||||||||||||||||
Interest
expense, net | 30 | 47 | 156 | 197 | ||||||||||||
Depreciation and amortization | 58 | 60 | 225 | 252 | ||||||||||||
EBITDA | 338 | 291 | 393 | 230 | ||||||||||||
Adjustments: | ||||||||||||||||
Impairment
of long-lived assets | — | 1 | 2 | 7 | ||||||||||||
Compensation expense (a) | 1 | 3 | — | 14 | ||||||||||||
Certain
transaction costs (b) | 7 | (3 | ) | 7 | (2 | ) | ||||||||||
Foreign currency re-measurement (c) | 8 | 15 | 11 | 15 | ||||||||||||
Severance
| 3 | — | 14 | 13 | ||||||||||||
Store closure costs (d) | 2 | 10 | 10 | 22 | ||||||||||||
Net
gains on sales of properties | — | — | (1 | ) | (1 | ) | ||||||||||
Property losses, net of insurance recoveries
| — | — | (1 | ) | (9 | ) | ||||||||||
Sponsors’ management and advisory fees (e) | 1 | 4 | 6 | 17 | ||||||||||||
Litigation
(f) | — | (8 | ) | — | (8 | ) | ||||||||||
Obsolete inventory clearance (g) | — | — | — | 9 | ||||||||||||
Adjusted
EBITDA (h) | $ | 360 | $ | 313 | $ | 441 | $ | 307 |
(a) | Represents
the incremental compensation expense related to certain one-time awards and modifications, net of |
(b) | Fiscal 2015 primarily represents expenses associated with the transition of our U.S. e-commerce operations and other transaction costs. |
(c) | Represents the unrealized loss on foreign exchange related to the re-measurement of the portion of the Tranche A-1 loan facility due fiscal 2019 attributed to Toys “R” Us (Canada) Ltd. Toys “R”
Us (Canada) Ltee. |
(d) | Represents store closure costs, net of lease surrender income. |
(e) | Represents the fees expensed to our Sponsors in accordance with the advisory agreement. In June 2015, the advisory agreement was amended in order to reduce the advisory fees payable in fiscal 2015 and thereafter from $17 million to $6 million annually. |
(f) | Represents
certain litigation expenses and settlements recorded for legal matters. |
(g) | Represents an incremental loss on previously identified clearance inventory, as well as, third party fees associated with our clearance efforts. |
This ‘8-K’ Filing | Date | Other Filings | ||
---|---|---|---|---|
Filed on / For Period End: | 3/9/16 | |||
1/30/16 | ||||
1/31/15 | 10-K | |||
List all Filings |