BBQZ Barbeques Galore Limited ADS (MM)

Barbeques Galore Limited (NASDAQ:BBQZ) today reported financial results for its fiscal year ended January 31, 2005, along with results for its first fiscal quarter ended April 30, 2005. Results for fiscal year and fourth quarter ended January 31, 2005 and 2004: -0- *T Three Months Ended Twelve Months Ended In US$ thousands except per January 31, January 31, share data ------------------ ------------------- 2005 2004(a) 2005 2004(a) --------- -------- --------- --------- Net Sales Australia 36,347 37,879 96,848 91,112 U.S. 22,873 25,076 114,071 106,934 --------- -------- --------- --------- Total net sales 59,220 82,955 210,919 198,046 Operating income 1,881 4,693 1,922 1,187 Net income 845 3,203 186 218 Earnings per share - diluted 0.19 0.76 0.04 0.05 US$/A$ conversion rate 0.7671 0.7412 0.7347 0.6736 Comparable Store Sales Australia (in Australian $'s) -9.9% -2.8% U.S. (in US $'s) -8.2% +6.3% (a) As restated *T Results for first fiscal quarter ended April 30, 2005 and 2004: -0- *T Three Months Ended In US$ thousands except per share data April 30, --------------------- 2005 2004(a) ---------- ---------- Net Sales Australia 18,976 18,346 U.S. 27,567 25,432 ---------- ---------- Total net sales 46,543 43,778 Operating (loss) (3,967) (1,621) Net (loss) (2,723) (1,238) Earnings per share - diluted -0.64 -0.30 US$/A$ conversion rate 0.7798 0.7571 Comparable Store Sales Australia (in Australian $'s) -4.5% U.S. (in US $'s) +4.8% (a) As restated *T The company said reporting of results for fiscal year 2005 and the first fiscal quarter of 2006 was delayed due to an exhaustive review it undertook in consultation with its independent auditors, KPMG, related to the treatment of leases and other matters. The review was similar to that undertaken by numerous other retail companies following clarification by the U.S. Securities and Exchange Commission on lease accounting. It resulted in the restatement of the way the company accounts for leases, specifically in regard to operating leases with scheduled rent increases and tenant allowances, and the recording of out-of-period adjustments. The restatement had no impact on previously reported cash flows, cash balances, sales or comparable sales. There was also no impact on the timing or amount of any actual lease payment or tax liability; compliance with any financial covenant under its credit facilities; or the current economic value of the company's leaseholds or freehold. The company said the primary effect of the restatement was a decrease in total shareholders' equity of A$1,241,000 as originally stated at January 31, 2004. Barbeques Galore recently filed its Annual Report on Form 20-F for fiscal 2005 which contains full details. Sam Linz, Executive Chairman, said operating results for the year and first quarter in Australia were affected by generally weak consumer spending, along with heightened competition which placed pressure on margins. Linz said unusually harsh weather conditions in the United States, including record rainfall in the company's largest geographic market, California, also impacted results. Subsequent to the close of the first quarter, the company closed underperforming stores in Coral Springs, FL, Cupertino, CA and Stafford (Houston), TX. "Proceeding into fiscal 2006, the retail environment in Australia remains difficult, and we plan to roll out a new marketing strategy for Australia's summer season," Linz said. "We also are proceeding with selective expansion in the U.S." During the first quarter, Barbeques Galore opened a new store in Norwalk, CT, its first in the tri-state region of the eastern U.S., and plans its second opening in the area by September of this year in Scarsdale, NY. Recently, new stores were opened in Alpharetta, GA, near Atlanta, and Temecula, CA, near San Diego. In Australia, the Mile End SA store was relocated, the licensed store at Tweed Heads, NSW was purchased, and the Bowral store was sold to a licensee. The company last month opened a new store at Capalaba, Qld, and later this year will relocate its stores in Castle Hill, NSW and Camperdown, NSW to larger locations. In a separate news release today, the company announced it has signed an agreement for a proposed transaction with Ironbridge Capital, a leading Australian private equity firm, to acquire all the outstanding stock and options in the company in a cash transaction valued at approximately US$45 million. Ironbridge will offer A$13.00 per share in cash, equal to US$9.91, based on present currency exchange rates. The agreement is subject to the grant of the appropriate approvals and fulfilment of certain financial and other conditions. Barbeques Galore is the leading chain of specialty retail stores devoted to sales of barbecues, backyard accents, fireside products and related accessories. The company now owns and operates 68 stores in the U.S. and 44 stores in Australia. In addition, it has seven franchised stores in the U.S. and 48 licensed stores in Australia. Through its U.S. e-commerce Web site, www.bbqgalore.com, the company sells an extensive line of barbecue and fireside products and related accessories. This press release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to the company's ability to successfully execute its expansion plans in existing as well as new geographic markets, its ability to successfully open planned and negotiated stores, the success of its new marketing strategy in Australia and consummation of the acquisition transaction. Forward looking statements are based on management's current expectations and beliefs, and are subject to risks and uncertainties. Accordingly, actual results may differ materially from the forward-looking statements contained herein. Risks that relate to these forward looking statements include the risk that the transaction will not receive the required shareholder and government approvals and the risk that the transaction will otherwise not be completed. Further detailed information about risk factors that may impact the company's business is set forth in the company's periodic filings with the U.S. Securities and Exchange Commission. Barbeques Galore expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. -0- *T BARBEQUES GALORE LIMITED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) In US$ thousands, except share and per share data Fourth Quarter ended Year ended January 31 January 31 --------------- ----------------- 2005 2004 2005 2004 ------- ------- -------- -------- Net Sales Australia 36,347 37,879 96,848 91,112 U.S. 22,873 25,076 114,071 106,934 ------- ------- -------- -------- Total net sales 59,220 62,955 210,919 198,046 ------- ------- -------- -------- Cost of goods sold, warehouse, distribution & occupancy costs 40,293 42,260 145,822 139,355 ------- ------- -------- -------- Gross profit 18,927 20,695 65,097 58,691 ------- ------- -------- -------- Selling, general & administration expenses 17,046 15,919 63,840 57,489 Store pre opening costs (11) 0 145 9 Relocation and closure costs (gains) 8 28 (125) 2,031 Other expense (income) 3 55 (685) (2,025) ------- ------- -------- -------- Operating income 1,881 4,693 1,922 1,187 ------- ------- -------- -------- Equity in (loss) of affiliates 0 (329) 0 (189) Interest expense 430 374 1,539 1,366 ------- ------- -------- -------- Income (loss) before income tax 1,451 3,990 383 (368) ------- ------- -------- -------- Income tax expense (benefit) 606 787 197 (586) ------- ------- -------- -------- Net income (loss) 845 3,203 186 218 ======= ======= ======== ======== Basic earnings (loss) per share 0.20 0.78 0.04 0.05 ======= ======= ======== ======== Diluted earnings (loss) per share 0.19 0.76 0.04 0.05 ======= ======= ======== ======== Weighted average shares outstanding outstanding - Basic 4,245 4,117 4,182 4,117 ======= ======= ======== ======== - Diluted 4,412 4,207 4,385 4,117 ======= ======= ======== ======== US$/A$ conversion rate 0.7671 0.7412 0.7347 0.6736 *T -0- *T BARBEQUES GALORE LIMITED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS In Australian $ thousands, except share and per share data Fourth Quarter ended Year ended January 31 January 31 ------------------ ----------------- 2005 2004 2005 2004 --------- ------- -------- -------- Unaudited Restated Audited Restated Net Sales Australia 47,382 51,105 130,920 133,340 U.S. 29,818 33,832 156,172 160,689 --------- ------- -------- -------- Total net sales 77,200 84,937 287,092 294,029 --------- ------- -------- -------- Cost of goods sold, warehouse, distribution & occupancy costs 52,526 57,015 198,480 207,451 --------- ------- -------- -------- Gross profit 24,674 27,922 88,612 86,578 --------- ------- -------- -------- Selling, general & administration expenses 22,221 21,477 86,882 85,923 Store pre opening costs (14) 0 200 14 Relocation and closure costs (gains) 11 38 (170) 3,427 Other expense (income) 4 74 (959) (3,004) --------- ------- -------- -------- Operating income 2,452 6,333 2,659 218 --------- ------- -------- -------- Equity in (loss) of affiliates 0 (444) 0 (218) Interest expense 560 504 2,091 2,044 --------- ------- -------- -------- Income (loss) before income tax 1,892 5,385 568 (2,044) --------- ------- -------- -------- Income tax expense (benefit) 790 1,062 280 (1,267) --------- ------- -------- -------- Net income (loss) 1,102 4,323 288 (777) ========= ======= ======== ======== Basic earnings (loss) per share 0.26 1.05 0.07 (0.19) ========= ======= ======== ======== Diluted earnings (loss) per share 0.25 1.03 0.07 (0.19) ========= ======= ======== ======== Weighted average shares outstanding outstanding - Basic 4,245 4,117 4,182 4,117 ========= ======= ======== ======== - Diluted 4,412 4,207 4,385 4,117 ========= ======= ======== ======== *T -0- *T BARBEQUES GALORE LIMITED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS In US $ thousands January 31, 2005 January 31, 2004 ----------------- ------------------- Restated Assets Current assets: Cash and cash equivalents $ 848 $ 2,691 Accounts receivable, net 5,937 6,854 Other receivables 4,685 3,956 Receivables from affiliates - 1,437 Inventories 45,226 42,381 Deferred income taxes 2,382 1,919 Prepaid expenses and other current assets 1,450 760 -------------- ------------------- Total current assets 60,528 $ 59,998 Non-current assets: Receivables from affiliates - 956 Property, plant and equipment, net 16,554 17,750 Goodwill 1,079 838 Deferred income taxes 2,709 3,082 Other non-current assets 653 194 -------------- ------------------- Total assets $ 81,523 $ 82,818 ============== =================== Liabilities and shareholders' equity Current liabilities: Accounts payable and accrued liabilities $ 22,787 $ 22,742 Payables to related parties 3 69 Short-term bank borrowings 15,648 - Current portion of obligations under capital leases 979 1,362 Income tax payable 2 220 -------------- ------------------- Total current liabilities 39,419 24,393 Non-current liabilities: Long-term debt - 16,788 Obligations under capital leases, excluding current portion 1,807 1,644 Other long-term liabilities 2,888 2,842 -------------- ------------------- Total liabilities $ 44,114 $ 45,667 -------------- ------------------- Shareholders' equity: Ordinary shares, no par value; authorized 27,437,853 shares; 4,670,291 shares issued; 4,245,291 shares outstanding 32,267 31,136 Accumulated other comprehensive (loss) (3,937) (3,724) Retained earnings 10,780 11,418 -------------- ------------------- 39,110 38,830 Less: Treasury Stock at cost - 425,000 ordinary shares (1,701) (1,679) -------------- ------------------- Total shareholders' equity 37,409 37,151 -------------- ------------------- Total liabilities and shareholders' equity $ 81,523 $ 82,818 ============== =================== *T -0- *T BARBEQUES GALORE LIMITED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS In Australian $ thousands Restated January 31, 2005 January 31, 2004 ----------------- ---------------- Audited Audited Assets Current assets: Cash and cash equivalents $ 1,095 $ 3,521 Accounts receivable, net 7,666 8,966 Other receivables 6,050 5,175 Receivables from affiliates - 1,880 Inventories 58,401 55,444 Deferred income taxes 3,076 2,510 Prepaid expenses and other current assets 1,873 994 ---------------- ----------------- Total current assets 78,161 78,490 Non-current assets: Receivables from affiliates - 1,250 Property, plant and equipment, net 21,376 23,221 Goodwill 1,393 1,096 Deferred income taxes 3,498 4,032 Other non-current assets 845 255 ---------------- ----------------- Total assets $ 105,273 $ 108,344 ================ ================= Liabilities and shareholders' equity Current liabilities: Accounts payable and accrued liabilities $ 29,425 $ 29,751 Payables to related parties 4 90 Short-term bank borrowings 20,206 - Current portion of obligations under capital leases 1,264 1,782 Income tax payable 3 288 ---------------- ----------------- Total current liabilities 50,902 31,911 Non-current liabilities: Long-term debt - 21,962 Obligations under capital leases, excluding current portion 2,333 2,151 Other long-term liabilities 3,730 3,718 ---------------- ----------------- Total liabilities $ 56,965 $ 59,742 ---------------- ----------------- Shareholders' equity: Ordinary shares, no par value; authorized 27,437,853 shares; 4,670,291 shares issued; 4,245,291 shares outstanding 41,667 40,733 Accumulated other comprehensive (loss) (5,084) (4,872) Retained earnings 13,921 14,937 ---------------- ----------------- 50,504 50,798 Less: Treasury Stock at cost - 425,000 ordinary shares (2,196) (2,196) ---------------- ----------------- Total shareholders' equity 48,308 48,602 ---------------- ----------------- Total liabilities and shareholders' equity $ 105,273 $ 108,344 ================ ================= *T -0- *T BARBEQUES GALORE LIMITED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) In US$ thousands, except share and per share data First Quarter ended ------------------- April 30 ------------------- 2005 2004 ------- ------- Net Sales Australia 18,976 18,346 U.S. 27,567 25,432 ------- ------- Total net sales 46,543 43,778 ------- ------- Cost of goods sold, warehouse, distribution & occupancy costs 34,467 31,037 ------- ------- Gross profit 12,076 12,741 ------- ------- Selling, general & administration expenses 15,963 14,363 Store pre opening costs 80 74 Relocation and closure costs (gains) 0 (75) Other expense (income) 0 0 ------- ------- Operating income (loss) (3,967) (1,621) ------- ------- Equity in income of affiliates 0 0 Interest expense 245 348 ------- ------- Income (loss) before income tax (4,212) (1,969) ------- ------- Income tax expense (benefit) (1,489) (731) ------- ------- Net income (loss) (2,723) (1,238) ======= ======= Basic earnings (loss) per share (0.64) (0.30) ======= ======= Diluted earnings (loss) per share (0.64) (0.30) ======= ======= Weighted average shares outstanding outstanding - Basic 4,245 4,117 ======= ======= - Diluted 4,245 4,117 ======= ======= US$/A$ conversion rate 0.7798 0.7571 *T -0- *T BARBEQUES GALORE LIMITED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) In Australian $ thousands, except share and per share data First Quarter ended ------------------- April 30 ------------------- 2005 2004 ------- ------- Net Sales Australia 24,334 24,232 U.S. 35,351 33,591 ------- ------- Total net sales 59,685 57,823 ------- ------- Cost of goods sold, warehouse, distribution & occupancy costs 44,200 40,995 ------- ------- Gross profit 15,485 16,828 ------- ------- Selling, general & administration expenses 20,471 18,971 Store pre opening costs 103 98 Relocation and closure costs (gains) 0 (99) Other expense (income) 0 0 ------- ------- Operating income (loss) (5,089) (2,142) ------- ------- Equity in income of affiliates 0 0 Interest expense 314 459 ------- ------- Income (loss) before income tax (5,403) (2,601) ------- ------- Income tax expense (benefit) (1,909) (966) ------- ------- Net income (loss) (3,494) (1,635) ======= ======= Basic earnings (loss) per share (0.82) (0.39) ======= ======= Diluted earnings (loss) per share (0.82) (0.39) ======= ======= Weighted average shares outstanding outstanding - Basic 4,245 4,117 ======= ======= - Diluted 4,245 4,117 ======= ======= *T -0- *T BARBEQUES GALORE LIMITED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS In US $ thousands April 30, 2005 January 31, 2005 --------------- ------------------ Audited Assets Current assets: Cash and cash equivalents $ 2,952 $ 848 Accounts receivable, net 6,338 5,937 Other receivables 985 4,685 Receivables from affiliates - - Inventories 49,729 45,226 Deferred income taxes 3,141 2,382 Prepaid expenses and other current assets 3,038 1,450 --------------- ------------------ Total current assets $ 66,183 $ 60,528 Non-current assets: Receivables from affiliates - - Property, plant and equipment, net 18,060 16,554 Goodwill, net 1,109 1,079 Deferred income taxes 2,853 2,709 Other non-current assets 656 653 --------------- ------------------ Total assets $ 88,861 $ 81,523 =============== ================== Liabilities and shareholders' equity Current liabilities: Accounts payable and accrued liabilities $ 30,114 $ 22,787 Payables to related parties 4 3 Short-term bank borrowings 17,796 15,648 Current portion of obligations under capital leases 609 979 Income taxes payable 2 2 --------------- ------------------ Total current liabilities 48,525 39,419 Non-current liabilities: Long-term debt - - Obligations under capital leases, excluding current portion 2,532 1,807 Other long-term liabilities 2,890 2,888 --------------- ------------------ Total liabilities $ 53,947 $ 44,114 --------------- ------------------ Shareholders' equity: Ordinary shares, no par value; authorized 27,437,853 shares; 4,670,291 issued shares; 4,245,291 outstanding shares 32,550 32,267 Accumulated other comprehensive income (4,066) (3,937) Retained earnings 8,145 10,780 --------------- ------------------ 36,629 39,110 Less: Treasury Stock at cost - 425,000 ordinary shares (1,715) (1,701) --------------- ------------------ Total shareholders' equity 34,914 37,409 --------------- ------------------ Total liabilities and shareholders' equity $ 88,861 $ 81,523 =============== ================== *T -0- *T BARBEQUES GALORE LIMITED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS In Australian $ thousands April 30, 2005 January 31, 2005 --------------- ----------------- Audited Assets Current assets: Cash and cash equivalents $ 3,779 $ 1,095 Accounts receivable, net 8,114 7,666 Other receivables 1,261 6,050 Receivables from affiliates - - Inventories 63,665 58,401 Deferred income taxes 4,021 3,076 Prepaid expenses and other current assets 3,890 1,873 --------------- ----------------- Total current assets 84,730 78,161 Non-current assets: Receivables from affiliates - - Property, plant and equipment, net 23,121 21,376 Goodwill, net 1,420 1,393 Deferred income taxes 3,652 3,498 Other non-current assets 840 845 --------------- ----------------- Total assets $ 113,763 $ 105,273 =============== ================= Liabilities and shareholders' equity Current liabilities: Accounts payable and accrued liabilities $ 38,553 $ 29,425 Payables to related parties 5 4 Short-term bank borrowings 22,783 20,206 Current portion of obligations under capital leases 780 1,264 Income taxes payable 3 3 --------------- ----------------- Total current liabilities 62,124 50,902 Non-current liabilities: Long-term debt - - Obligations under capital leases, excluding current portion 3,241 2,333 Other long-term liabilities 3,700 3,730 --------------- ----------------- Total liabilities $ 69,065 $ 56,965 --------------- ----------------- Shareholders' equity: Ordinary shares, no par value; authorized 27,437,853 shares; 4,670,291 issued shares; 4,245,291 outstanding shares 41,672 41,667 Accumulated other comprehensive income (5,205) (5,084) Retained earnings 10,427 13,921 --------------- ----------------- 46,894 50,504 Less: Treasury Stock at cost - 425,000 ordinary shares (2,196) (2,196) --------------- ----------------- Total shareholders' equity 44,698 48,308 --------------- ----------------- Total liabilities and shareholders' equity $ 113,763 $ 105,273 =============== ================= *T