2014

99 Cent Only Stores® Provides Updated Financial Information

CITY OF COMMERCE, Calif., March 20, 2012 /PRNewswire/ -- 99 Cent Only Stores® (the "Company") is currently contemplating a potential re-pricing of its $525 million senior secured term loan facility (the "Credit Facility").   In connection therewith, the Company is providing the following preliminary financial information to its lenders.

The Company's net sales increased $29.7 million, or 14%, to $242.1 million for the eight week period ended February 25, 2012 compared to $212.5 million for the eight week period ended February 19, 2011. The Company's same-store sales increased 8.4% for the eight week period ended February 25, 2012 over the eight week period ended February 19, 2011 compared to 0.7% for the eight week period ended February 19, 2011 over the prior year period.

Based on preliminary, partial period financial results, the Company's Adjusted EBITDA increased $4.8 million, or 28.4%, to $21.6 million for the eight week period ended February 25, 2012 compared to $16.8 million for the eight week period ended February 19, 2011, and the Company's Adjusted EBITDA margin increased from 7.9% to 8.9% over the same period. In addition, the Company currently expects to achieve Adjusted EBITDA of approximately $154 million for the fiscal year ended March 31, 2012 (or approximately $152 million on a pro forma basis for certain additional adjustments related to the Transactions described below). Due to an additional week in the 14-week fourth quarter of fiscal year ended April 2, 2011, compared to the standard 13-week fourth quarter of fiscal year ended March 31, 2012, the Company currently expects its Adjusted EBITDA for the five week period ended March 31, 2012 to be lower than the comparable six week period in 2011.

The foregoing estimates are preliminary and remain subject to completion of management's year-end closing process.   Actual financial results for the quarter and year may differ from these estimates. The foregoing estimates are as of the date hereof and the Company does not undertake any obligation to update or revise any of the information provided to potential lenders, whether as a result of new information, future events or otherwise. Our independent registered public accounting firm, BDO USA LLP, has not audited, reviewed, or performed any procedures with respect to the accompanying preliminary financial data. Accordingly, BDO USA LLP does not express an opinion or any other form of assurance with respect thereto.

The Company defines EBITDA as net income before interest expense (income) and other financial costs, provision for income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA for the relevant period as adjusted by the following amounts: out-of-period adjustments, stock-based compensation, fees and expenses related to our recent acquisition by affiliates of Ares Management and Canada Pension Plan Investment Board and the related financing (the "Transactions"), legal settlements, non-ordinary course store closures, and other non-cash items. EBITDA and Adjusted EBITDA, as presented herein, are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. The Company's management uses EBITDA and Adjusted EBITDA to assess its performance and that of its competitors. In addition, Adjusted EBITDA is used to determine the Company's compliance and ability to take certain actions under the covenants contained in the Company's debt instruments. EBITDA and Adjusted EBITDA are not measures of our financial performance under GAAP and should not be considered in isolation or as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows or as measures of liquidity.

The following table reconciles Adjusted EBITDA to EBITDA for the periods indicated:

 

 

Eight Week Period Ended

 

 

February 19, 2011

February 25, 2012

 

 

(Dollars in thousands)

EBITDA

 

 

$16,715

$10,463

Out-of-period adjustments (a)

 

 

(153)

(429)

Stock‑based compensation (b)

 

 

410

968

Transaction expense (c)

 

 

9,469

Payroll tax expenses related to conversion of shares (d)

 

 

1,093

Other (e)

 

 

(134)

57

Adjusted EBITDA

 

 

$16,838

$21,621

Additional Adjustments related to the Transactions

 

 

 

 

Executive compensation (f)

 

 

(123)

(123)

Market value adjustments to leases (g)

 

 

(167)

(167)

Credit Facility administration fee

 

 

(33)

(33)

Pro forma Adjusted EBITDA

 

 

$16,515

$21,298

(a)   Represents out-of-period, non-cash income recognized in connection with adjustments to reserve balances. These adjustments primarily relate to (i) merchandise accruals and (ii) the accrual for vacation and paid time off.

(b)   Represents non-cash stock based compensation expense incurred in connection with various share-based compensation plans in which certain Company employees and non-employee Board of Directors have historically participated.

(c)   Represents professional fees in connection with the Transactions.

(d)   Represents the employer's portion of payroll taxes paid related to employees' stock compensation in connection with the Transactions.

(e)   Represents certain non-recurring miscellaneous non-cash charges and income, including asset impairments, other-than-temporary investment impairments, and various (gains)/losses on the sale or disposition of assets.

(f)   Represents salary adjustments to be implemented in connection with the Transactions for our Chief Executive Officer, President and Chief Operating Officer and Executive Vice President of Special Projects.

(g)   Represents adjustments to market value in connection with the Transactions to rent payable to our affiliates under leases.

This information has not been filed with the Securities and Exchange Commission and does not comply with Regulation G under the Securities Exchange Act of 1934. It is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor will there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

This information contains "forward-looking statements" that involve risks and uncertainties. As a general matter, forward-looking statements are those focused on future or anticipated events or trends, expectations and beliefs including, among other things, (a) trends affecting the financial condition or results of operations of the Company and (b) the business and growth strategies of the Company (including the Company's store opening growth rate) that are not historical in nature. Such statements are identified by using words such as "believe," "expect," "intend," "estimate," "anticipate," "will," "project," "plan" and similar expressions in connection with any discussion of future operating or financial performance. Any forward-looking statements are and will be based upon our then-current expectations, estimates and assumptions regarding future events and are applicable only as of the dates of such statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

CORPORATE HEADQUARTERS
4000 Union Pacific Avenue
City of Commerce, CA 90023
Phone: (323) 980-8145
Fax: (323) 980-8160
www.99only.com

SOURCE 99-Cent Only Stores



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