– Fourth Quarter GAAP EPS Loss of $1.98;
Adjusted EPS Earnings of $0.06 –
– Fourth Quarter Combined Comparable Sales
Down 2% –
– Fiscal 2016 Full Year EPS Guidance Range
$0.75– $0.80 Inclusive of ANN –
ascena retail group, inc. (NASDAQ:ASNA) (the “Company”)
today reported financial results for its fiscal fourth quarter and
full year ended July 25, 2015.
For the fourth quarter of Fiscal 2015, the Company reported a
loss from continuing operations of $1.98 per diluted share compared
to earnings from continuing operations of $0.10 per diluted share
in the same period of Fiscal 2014. The Fiscal 2015 loss primarily
reflects a $306 million impairment of goodwill and an intangible
asset at Lane Bryant and an approximately $50 million
accrual for costs related to the Justice pricing lawsuits.
Adjusted earnings from continuing operations for the fourth quarter
of Fiscal 2015 were $0.06 per diluted share, compared to $0.13 per
diluted share for the fourth quarter of Fiscal 2014. Reference
should be made to Note 1 in the accompanying unaudited condensed
consolidated financial information for a discussion of the "Use of
Non-GAAP Financial Measures.”
For the full year Fiscal 2015, the Company reported a loss from
continuing operations of $1.46 per diluted share as a result of the
charges discussed above compared to earnings from continuing
operations of $0.84 per diluted share in the same period of Fiscal
2014. Adjusted earnings from continuing operations for the full
year Fiscal 2015 were $0.59 per diluted share, compared to $1.00
per diluted share in the prior year.
David Jaffe, President and Chief Executive Officer of ascena
retail group, inc., commented, "Results for the quarter were
challenged by two large, non-operating expense hits related to a
goodwill and trade name impairment at Lane Bryant and
litigation activity at Justice. On the operating front,
Justice had a difficult quarter as expected, and
dressbarn missed expectations due to assortment challenges.
With all that said, we were pleased with fourth quarter performance
at maurices, Lane Bryant, and Catherines. As
we move into Fall, we are excited about the new Justice
selling model, where back-to-school performance exceeded our
expectations. And the team at dressbarn has been hard at
work on merchandise refinement and Fall marketing to improve
performance."
Jaffe further commented, “We are executing against controllable
factors, mindful that traffic continues to be challenging. Our
brands remain focused on strong merchandising execution, and
disciplined inventory and expense management. We are making good
progress toward the multi-year development of our enterprise
omni-channel platform, which is a key element of our long-term
growth plan. And with the acquisition of ANN INC., our shared
services group is aggressively working to capture the $150 million
of identified deal synergies. We feel very good about the unique
and scalable model we are creating, and believe we are positioned
well for the long term."
About ascena retail group,
inc.
ascena retail group, inc. (NASDAQ:ASNA) is a leading
specialty retailer offering clothing, shoes, and accessories for
missy and plus-size women under the Ann Taylor, LOFT, Lou
& Grey, Lane Bryant, Cacique, maurices,
dressbarn, and Catherines brands, and for
tween girls under the Justice brand. ascena retail
group, inc. operates through its subsidiaries approximately 4,900
stores throughout the United
States, Canada and Puerto Rico.
For more information about ascena retail group, visit
ascenaretail.com, AnnTaylor.com, LOFT.com, louandgrey.com,
lanebryant.com, cacique.com, maurices.com, dressbarn.com,
catherines.com, and shopjustice.com.
Fiscal Fourth Quarter
Results
Net sales for the fourth quarter of Fiscal 2015 decreased 1.1%
to $1.170 billion, compared to $1.182 billion for the fourth
quarter of last year, as new store growth at maurices and
positive combined comparable sales at Lane Bryant,
maurices, and Catherines was offset by negative
combined comparable sales at Justice and
dressbarn.
The Company’s comparable sales data for the fiscal fourth
quarter is summarized below:
ascena store comparable sales
(4 )%
ascena ecommerce comparable sales 12 %
Combined comparable sales (2 )%
Net Sales (millions)
Combined
Comparable
Sales
Fourth Quarter Ended July 25, 2015
July 26, 2014 Justice (17 )% $ 242.1 $
286.1
Lane Bryant 3
%
292.0 284.3
maurices 8
%
254.0 227.1
dressbarn (3 )% 289.3 293.8
Catherines 3
%
92.4 91.1
Gross margin was $637.6 million, or 54.5% of sales for the
fourth quarter of Fiscal 2015, compared to $647.2 million, or 54.7%
of fourth quarter sales last year. The slight decrease in the
Fiscal 2015 rate was related to transitional merchandise issues at
Justice and assortment mix issues at dressbarn,
mostly offset by very strong gross margin rate improvement at
Lane Bryant and maurices.
Buying, distribution and occupancy (“BD&O”) expenses for the
fourth quarter of Fiscal 2015 were $211.9 million, or 18.1% of
sales, compared to $206.5 million, or 17.5% of fourth quarter sales
last year. The increase in BD&O expenses, both in dollars and
as a percentage of net sales, was primarily due to higher store
occupancy costs
at maurices and dressbarn. The
Company's distribution expense rate dropped from 1.3% in the year
ago period to 1.1% reflecting ongoing realization of supply chain
synergies.
Selling, general and administrative (“SG&A”) expenses for
the fourth quarter of Fiscal 2015 were $399.7 million, or 34.2% of
sales, compared to $343.5 million, or 29.1% of fourth quarter sales
last year. The increase versus last year primarily reflects an
accrual of approximately $50.0 million related to the Justice
pricing litigation, increased support for our direct sales channel,
and a unit driven increase in store expenses at maurices. On
an adjusted basis, SG&A expenses for the fourth quarter of
Fiscal 2015 were $348.9 million, or 29.8% of sales. The increase to
last year was primarily related to support for our direct sales
channel, and unit driven growth in store expenses at
maurices.
The Company realized an operating loss for the fourth quarter of
Fiscal 2015 of $352.0 million, due to the Lane Bryant and
Justice charges discussed earlier, compared to operating
income of $22.5 million, or 1.9% of fourth quarter sales last year.
On an adjusted basis, operating income for the fourth quarter of
Fiscal 2015 was $21.1 million, or 1.8% of sales compared to $32.5
million, or 2.7% of fourth quarter sales last year.
The effective tax rate decreased to 8.4% for the fourth quarter
of Fiscal 2015 from 25.0% for the fourth quarter of Fiscal 2014,
with the decrease from last year mainly due to the non-deductible
goodwill impairment charge of $261.7 million. On an adjusted basis,
the effective tax rate for the fourth quarter of Fiscal 2015 was
50.9% with the increase above statutory rate resulting from an
adjustment to the provision for permanently invested international
earnings of approximately $2 million.
The Company realized a loss from continuing operations for the
fourth quarter of Fiscal 2015 of $323.4 million compared to income
from continuing operations of $15.9 million last year. On an
adjusted basis, income from continuing operations for the fourth
quarter of Fiscal 2015 was $9.8 million, as compared to $22.1
million last year.
The Company reported a loss for the fourth quarter of Fiscal
2015 of $1.98 per diluted share compared to earnings of $0.10 per
diluted share last year. On an adjusted basis, fourth quarter
earnings per diluted share were $0.06 versus $0.13 last year.
Fiscal Fourth Quarter Balance Sheet
Highlights
The Company ended the fourth quarter of Fiscal 2015 with cash
and cash equivalents of $240.6 million and total debt of $116.0
million, compared to $156.9 million of cash and cash equivalents
and $172.0 million of total debt at the end of the fourth quarter
of Fiscal 2014.
Fiscal Year 2016
Guidance
The Company's guidance for adjusted earnings per diluted share
from continuing operations for the fiscal year ending July 2016 is
in the range of $0.75 to $0.80. This guidance includes the impact
of the acquisition of ANN INC. on a pro forma basis for the entire
fiscal year, and the impact of the incremental shares issued as a
result of the acquisition, but excludes any acquisition and
integration expenses that may be incurred during the fiscal year.
The company noted that its guidance is based on the following key
assumptions:
- Top-line sales in the range of $7.3 to
$7.4 billion
- Gross margin rate in the range of 55.0%
to 55.5%
- EBITDA in the range of $670 to $700
million
- Depreciation expense in the range of
$330 to $335 million
- Interest expense in the range of $100
to $105 million, inclusive of deal fee amortization and term loan
interest expense
- An effective tax rate of 39%,
approximating statutory rates
- A weighted average diluted share count
of approximately 199 million
- A flat to modest store count
decline
- Capital expenditures in the range of
$375 to $400 million, inclusive of a one-time $40 million
investment to capture identified distribution, fulfillment, and
logistics synergies related to the ANN deal
The Company’s guidance reflects a contribution of $0.05 to $0.10
from the ANN INC. acquisition, inclusive of the impact of debt
financing.
Excluding the contribution from the ANN INC. acquisition, the
Company’s guidance reflects the following contribution from the
legacy ascena brands:
- Top-line sales in the range of $4.78 to
$4.84 billion
- Combined comp performance flat to up
low-single digits, with modest negative combined comps in the Fall
accelerating into Spring
- Gross margin rate improvement in the
range of 200 to 250 basis points
- Mid-teen EBITDA growth
- Depreciation expense in the range of
$225 to $230 million
- Capital expenditures in the range of
$250 to $275 million on a flat to modest decline in store
count
In addition to the $10 million in deal synergies included in its
fiscal 2016 guidance, the Company continues to expect full run rate
realization of $150 million in ANN-related synergies three years
post deal close. The Company also continues to expect EPS accretion
from the acquisition to accelerate to greater than 20% in fiscal
2017 and beyond as synergy capture progresses.
Conference Call
Information
The Company will conduct a conference call today, September 16,
2015, at 8:00 AM Eastern Time to review its fourth quarter Fiscal
2015 results, followed by a question and answer session. Parties
interested in participating in this call should dial in at (877)
930-8316 prior to the start time, the conference ID is 32212247.
The call will also be simultaneously broadcast at www.ascenaretail.com. A recording of the call will
be available shortly after its conclusion and until September 23,
2015 by dialing (855) 859-2056, the conference ID is 32212247, and
until October 16, 2015 via the Company’s website at www.ascenaretail.com.
Non-GAAP Financial
Results
The Company's financial results for its fiscal fourth quarters
ended July 25, 2015 and July 26, 2014 reflect certain acquisition
and integration expenses related to the integration of Lane
Bryant and Catherines, impairment of goodwill and an
intangible asset related to Lane Bryant in Fiscal 2015, an
accrual for costs related to the Justice pricing lawsuit,
accelerated depreciation of fixed assets related to its integration
initiatives and certain costs related to the closure of
Brothers.
Management believes that all such expenses are not indicative of
the Company’s underlying operating performance. As such, adjusted
results for Fiscal 2015 and Fiscal 2014, which exclude the effect
of such expenses, have been presented to supplement the reported
results. Reference should be made to Note 1 of the unaudited
condensed consolidated financial information included herein for a
reconciliation of adjusted, non-GAAP financial measures to the most
directly comparable GAAP financial measures.
Forward-Looking
Statements
Certain statements made within this press release may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to certain risks and uncertainties that
could cause actual results to differ materially. The Company does
not undertake to publicly update or review its forward-looking
statements even if experience or future changes make it clear that
our projected results expressed or implied will not be achieved.
Detailed information concerning a number of factors that could
cause actual results to differ materially from the information
contained herein is readily available in the Company’s most recent
Annual Report on Form 10-K.
ascena retail group, inc.
Condensed Consolidated Statements of
Operations (unaudited)
(millions, except per share
data)
Three Months Ended
July 25,
2015
% of Net
Sales
July 26,
2014
% of Net
Sales
Net sales $ 1,169.8 100.0 % $ 1,182.4 100.0 % Cost of goods
sold (532.2 ) (45.5 )% (535.2 ) (45.3 )%
Gross margin 637.6
54.5 % 647.2 54.7 %
Other costs and expenses: Buying,
distribution and occupancy expenses (211.9 ) (18.1 )% (206.5 )
(17.5 )% Selling, general and administrative expenses (399.7 )
(34.2 )% (343.5 ) (29.1 )% Acquisition and integration expenses
(12.8 ) (1.1 )% (9.1 ) (0.8 )% Impairment of goodwill (261.7 )
(22.4 )% — — % Impairment of intangible assets (44.7 ) (3.8 )%
(13.0 ) (1.1 )% Depreciation and amortization expense (58.8 ) (5.0
)% (52.6 ) (4.4 )%
Operating (loss) income (352.0 ) (30.1 )%
22.5 1.9 % Interest expense (1.2 ) (0.1 )% (1.7 ) (0.1 )% Interest
income and other income, net 0.1 — % 0.4 — %
(Loss) income from continuing operations before provision for
income taxes (353.1 ) (30.2 )% 21.2 1.8 % Benefit (provision)
for income taxes from continuing operations 29.7 2.5 % (5.3
) (0.4 )%
(Loss) income from continuing operations (323.4 )
(27.6 )% 15.9 1.3 % Loss from discontinued operations, net of taxes
— — % (0.2 ) — %
Net (loss) income $ (323.4 ) (27.6
)% $ 15.7 1.3 %
Net (loss) income per common share
- basic: Continuing operations $ (1.98 ) $ 0.10 Discontinued
operations — —
Total net (loss) income per basic
common share $ (1.98 ) $ 0.10
Net (loss)
income per common share – diluted: Continuing operations $
(1.98 ) $ 0.10 Discontinued operations — —
Total
net (loss) income per diluted common share $ (1.98 ) $ 0.10
Weighted average common shares outstanding:
Basic 163.1 161.6 Diluted 163.1 164.8
See accompanying notes.
ascena retail group, inc.
Condensed Consolidated Statements of
Operations (unaudited)
(millions, except per share
data)
Twelve Months Ended
July 25,
2015
% of Net
Sales
July 26,
2014
% of Net
Sales
Net sales $ 4,802.9 100.0 % $ 4,790.6 100.0 % Cost of goods
sold (2,133.7 ) (44.4 )% (2,130.6 ) (44.5 )%
Gross margin
2,669.2 55.6 % 2,660.0 55.5 %
Other costs and expenses:
Buying, distribution and occupancy expenses (856.9 ) (17.8 )%
(832.3 ) (17.4 )% Selling, general and administrative expenses
(1,490.9 ) (31.0 )% (1,376.3 ) (28.7 )% Acquisition and integration
expenses (31.7 ) (0.7 )% (34.0 ) (0.7 )% Impairment of goodwill
(261.7 ) (5.4 )% — — % Impairment of intangible assets (44.7 ) (0.9
)% (13.0 ) (0.3 )% Depreciation and amortization expense (218.2 )
(4.5 )% (193.6 ) (4.0 )%
Operating (loss) income (234.9 )
(4.9 )% 210.8 4.4 % Interest expense (6.0 ) (0.1 )% (6.5 ) (0.1 )%
Interest income and other income (expense), net 0.3 — % (0.8
) — %
(Loss) income from continuing operations before provision
for income taxes (240.6 ) (5.0 )% 203.5 4.2 % Benefit
(provision) for income taxes from continuing operations 3.8
0.1 % (65.3 ) (1.4 )%
(Loss) income from continuing
operations (236.8 ) (4.9 )% 138.2 2.9 % Loss from discontinued
operations, net of taxes — — % (4.8 ) (0.1 )%
Net (loss)
income $ (236.8 ) (4.9 )% $ 133.4 2.8 %
Net
(loss) income per common share - basic: Continuing operations $
(1.46 ) $ 0.86 Discontinued operations — (0.03 )
Total
net (loss) income per basic common share $ (1.46 ) $ 0.83
Net (loss) income per common share – diluted:
Continuing operations $ (1.46 ) $ 0.84 Discontinued operations —
(0.03 )
Total net (loss) income per diluted common
share $ (1.46 ) $ 0.81
Weighted average common
shares outstanding: Basic 162.6 160.6 Diluted
162.6 165.1
See accompanying notes.
ascena retail group, inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(millions)
July 25,
2015
July 26,
2014
ASSETS Current assets: Cash and cash equivalents $
240.6 $ 156.9 Inventories 489.3 553.2 Deferred tax assets 88.5 46.7
Prepaid expenses and other current assets 131.5 166.8
Total current assets 949.9 923.6 Property and equipment, net
1,170.0 1,110.6 Goodwill 319.7 581.4 Other intangible assets, net
388.3 435.4 Other assets 87.8 72.8
Total assets $
2,915.7 $ 3,123.8
LIABILITIES AND EQUITY
Current liabilities: Accounts payable $ 238.8 $ 253.2
Accrued expenses and other current liabilities 403.2 308.9 Deferred
income 64.1 63.5 Income taxes payable 11.6 6.3
Total
current liabilities 717.7 631.9 Long-term debt 116.0 172.0
Lease-related liabilities 241.4 248.5 Deferred income taxes 181.8
147.7 Other non-current liabilities 140.7 186.0
Total
liabilities 1,397.6 1,386.1
Equity 1,518.1
1,737.7
Total liabilities and equity $ 2,915.7 $
3,123.8
See accompanying notes.
ascena retail group, inc.
Segment Information (Unaudited)
(millions)
Three Months Ended Twelve
Months Ended July 25, 2015 July 26, 2014
July 25, 2015 July 26, 2014 Net sales:
Justice $ 242.1 $ 286.1 $ 1,276.8 $ 1,384.3
Lane
Bryant 292.0 284.3 1,095.9 1,080.0
maurices 254.0 227.1
1,060.6 971.4
dressbarn 289.3 293.8 1,023.6 1,022.5
Catherines 92.4 91.1 346.0 332.4
Total net sales $ 1,169.8 $ 1,182.4 $ 4,802.9
$ 4,790.6
Three Months Ended Twelve Months
Ended July 25, 2015 July 26, 2014 July 25,
2015 July 26, 2014 Operating (loss) income:
Justice $ (98.7 ) $ (15.0 ) $ (62.8 ) $ 99.3
Lane
Bryant (296.3 ) (2.4 ) (308.0 ) (4.3 )
maurices 22.4 0.8
125.9 86.0
dressbarn 24.1 40.9 10.7 39.4
Catherines
9.3 7.3 31.0 24.4 Unallocated acquisition and integration expenses
(12.8 ) (9.1 ) (31.7 ) (34.0 ) Total operating (loss) income $
(352.0 ) $ 22.5 $ (234.9 ) $ 210.8
Three
Months Ended Twelve Months Ended July 25, 2015
July 26, 2014 July 25, 2015 July 26, 2014
Adjusted EBITDA:
Justice $ (27.6 ) $ 0.5 $ 60.1 $ 160.0
Lane Bryant 22.0 10.3 45.3 41.3
maurices 34.0 11.6
169.2 125.5
dressbarn 37.3 52.3 61.3 79.9
Catherines
11.1 9.5 38.2 31.7 Total Adjusted
EBITDA $ 76.8 $ 84.2 $ 374.1 $ 438.4
See accompanying notes
ascena retail group, inc.
Notes to Unaudited Condensed
Consolidated Financial Information
Note 1. Use of Non-GAAP Financial
Measures
To provide investors information to assist them in assessing
the Company’s ongoing operations on a comparable basis, the Company
has provided financial measures in this press release that reflect
(i) certain acquisition and integration expenses, (ii) impairment
of goodwill and an intangible asset related to Lane Bryant, (iii)
an accrual related to the Justice pricing lawsuits, (iv)
accelerated depreciation of certain assets that were displaced by
the Company’s supply chain and technology integration efforts, and
(v) certain costs related to the closure of Brothers. Management
believes that all such costs are not indicative of the Company’s
underlying operating performance. Throughout this release, the term
“reported” refers to information prepared in accordance with
accounting principles generally accepted in the United States
(GAAP), while the term “adjusted” refers to non-GAAP financial
information adjusted to exclude certain costs. All information in
the tables below are presented for the Company’s continuing
operations. In addition, we present the financial
performance measure of earnings before interest, taxes,
depreciation and amortization, as adjusted ("Adjusted EBITDA") to
exclude non-operating related items such as (i) acquisition and
integration expenses, (ii) impairment of goodwill and an intangible
asset related to Lane Bryant, (iii) an accrual related to the
Justice pricing lawsuits, (iv) certain costs related to the closure
of Brothers and (v) other income and expenses classified outside of
operating income. These measures may not be directly comparable to
similar measures used by other companies and should not be
considered a substitute for performance measures in accordance with
GAAP such as operating income and net income reported herein. The
table below reconciles Adjusted EBITDA to Net income as reflected
in our unaudited condensed consolidated statements of operations.
For a more detailed discussion on our use of Adjusted EBITDA,
reference is made to our Annual Report on Form 10-K for the Fiscal
Year Ended July 25, 2015, which also has been filed with the US
Securities and Exchange Commission.
ascena retail group, inc.
Notes to Unaudited Condensed
Consolidated Financial Information - (continued)
(millions)
Reconciliation of Reported Basis to Adjusted
Basis Three Months Ended Three Months
Ended July 25, 2015 July 26, 2014
(Loss)
income
before
income
taxes
Benefit
(provision)
for income
taxes
Net
(loss)
income
Diluted net
(loss)
income per
common
share
Income
before
income
taxes
Provision
for
income
taxes
Net
income
Diluted
net
income
per
common
share
Reported basis – continuing operations $ (353.1 ) $ 29.7 $ (323.4 )
$ (1.98 ) $ 21.2 $ (5.3 ) $ 15.9 $ 0.10 Adjustments: Impairment of
Lane Bryant goodwill 261.7 — 261.7 1.60 — — — — Impairment
of
Lane Bryant intangible assets 44.7 (16.7 ) 28.0 0.17 — —
— —
Justice pricing lawsuits 50.8 (18.9 ) 31.9 0.20 — — — —
Acquisition and integration expenses 12.8 (3.1 ) 9.7 0.06 9.1 (3.4
) 5.7 0.03
Accelerated depreciation associated with
the Company’s supply chain
and technological integration efforts and
the closure of Brothers
3.1 (1.2 ) 1.9 0.01 0.9 (0.4 ) 0.5
0.00 Adjusted basis – continuing operations $ 20.0 $
(10.2 ) $ 9.8 $ 0.06 $ 31.2 $ (9.1 ) $ 22.1
$ 0.13
ascena retail group, inc.
Notes to Unaudited Condensed
Consolidated Financial Information - (continued)
(millions)
Note 1. Use of Non-GAAP Financial
Measures - (continued)
Reconciliation of Reported Basis to Adjusted
Basis Twelve Months Ended Twelve Months
Ended July 25, 2015 July 26, 2014
(Loss)
income
before
income
taxes
Benefit
(provision)
for income
taxes
Net
(loss)
income
Diluted net
(loss)
income per
common
share
Income
before
income
taxes
Provision
for
income
taxes
Net
income
Diluted
net
income
per
common
share
Reported basis – continuing operations $ (240.6 ) $ 3.8 $ (236.8 )
$ (1.46 ) $ 203.5 $ (65.3 ) $ 138.2 $ 0.84 Adjustments: Impairment
of
Lane Bryant goodwill 261.7 — 261.7 1.61 — — — —
Impairment of
Lane Bryant intangible assets 44.7 (16.7 )
28.0 0.17 — — — —
Justice pricing lawsuits 50.8 (18.9 ) 31.9
0.20 — — — — Acquisition and integration expenses 31.7 (10.3 ) 21.4
0.13 34.0 (12.7 ) 21.3 0.13
Accelerated depreciation associated with
the Company’s supply chain
and technological integration efforts and
the closure of Brothers
6.5 (2.4 ) 4.1 0.03 8.6 (3.3 ) 5.3 0.03 Certain costs related to
the closure of
Brothers (a) 1.9 (0.7 ) 1.2 0.01 — — — —
Discrete tax item (b) — (13.4 ) (13.4 ) (0.08 ) — — — — Impact of
dilutive shares (c) — — — (0.02 ) — —
— — Adjusted basis – continuing operations $ 156.7
$ (58.6 ) $ 98.1 $ 0.59 $ 246.1 $ (81.3
) $ 164.8 $ 1.00 (a) Costs related to the closure of
Brothers include $1.2 million included in Cost of goods sold and
$0.7 million of other closure related items included in Selling,
general and administrative expenses (b) As previously announced in
October 2014, the President and CEO of its Justice brand retired
effective January 24, 2015. As a result, certain amounts became
payable under his employment agreement within the next twelve
months. In particular, previously accrued deferred compensation of
approximately $35 million, as adjusted through January 24, 2015,
was paid in early Fiscal 2016. This amount, which was previously
treated as a non-deductible permanent item for income tax purposes
in previous periods, became fully deductible in the first quarter
of Fiscal 2015. The related tax benefit of approximately $13
million was treated as a discrete item within the first quarter of
Fiscal 2015 and was a significant factor in reducing the Company's
effective income tax rate. (c) Reflects the impact of using 165.1
million weighted average common shares for adjusted diluted net
income per common share versus 162.6 million on an as reported
basis to reflect the dilutive impact of stock options and other
securities on an adjusted basis. The dilutive effect of stock
options and other securities is excluded from the Fiscal 2015 per
share calculation on an as reported basis because their effect is
anti-dilutive due to the Company's net loss.
ascena retail group, inc.
Notes to Unaudited Condensed
Consolidated Financial Information - (continued)
(millions)
Note 1. Use of Non-GAAP Financial
Measures - (continued)
Three Months Ended Twelve
Months Ended Operating (loss) income: July
25, 2015 July 26, 2014 July
25, 2015 July 26, 2014 Reported
basis $ (352.0 ) $ 22.5 $ (234.9 ) $ 210.8 Adjustments: Impairment
of
Lane Bryant goodwill and intangible assets 306.4 — 306.4
—
Justice Pricing Lawsuits 50.8 — 50.8 — Acquisition and
integration expenses 12.8 9.1 31.7 34.0
Accelerated depreciation associated with
the Company’s supply chain and technological integration
efforts and the closure of Brothers
3.1 0.9 6.5 8.6 Certain costs related to the closure of
Brothers — — 1.9
— Adjusted basis $ 21.1 $ 32.5 $ 162.4
$ 253.4
Reconciliation of Adjusted EBITDA to
Net Income
Three Months Ended Twelve Months Ended
July 25, 2015
July 26, 2014 July 25,
2015 July 26, 2014 Adjusted
EBITDA $ 76.8 $ 84.2 $ 374.1 $ 438.4 Impairment of
Lane
Bryant goodwill and intangible assets (306.4 ) — (306.4 ) —
Acquisition and integration expenses (12.8 ) (9.1 ) (31.7 ) (34.0 )
Justice pricing lawsuits (50.8 ) — (50.8 ) — Certain costs
related to the closure of
Brothers — — (1.9 ) — Depreciation
and amortization expense (58.8 ) (52.6 )
(218.2 ) (193.6 )
Operating (loss) income (352.0 )
22.5 (234.9 ) 210.8 Interest expense (1.2 ) (1.7 ) (6.0 )
(6.5 ) Interest income and other income (expense), net 0.1
0.4 0.3 (0.8 )
(Loss) income from continuing
operations before provision for income
taxes
(353.1 ) 21.2 (240.6 ) 203.5 Benefit (Provision) for income taxes
from continuing operations 29.7 (5.3 )
3.8 (65.3 )
(Loss) income from continuing
operations (323.4 ) 15.9 (236.8 ) 138.2 Loss from discontinued
operations, net of taxes — (0.2 ) —
(4.8 )
Net (loss) income $ (323.4 ) $ 15.7
$ (236.8 ) $ 133.4
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ascena retail group, inc.Investor Relations, 551-777-6895orICR,
Inc.James Palczynski, 203-682-8229Partnerjp@icrinc.com
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