U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Date of Report (Date of earliest event
reported):
May 20, 2002
Toys "R" Us, Inc.
(Exact name of registrant as specified in its Charter)
Delaware 1-11609 22-3260693
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
461 From Road, Paramus, New Jersey 07652
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 262-7800
Item 5. Other Matters
This report relates to certain announcements made by the Registrant in the
following Press Release, dated May 20, 2002:
FROM: Ursula H. Moran (201) 802-5444 Louis Lipschitz (201) 802-5548
Investor Relations Chief Financial Officer
Rebecca Caruso (201) 599-8090
Media Relations
FOR: Toys "R" Us, Inc.
(NYSE: TOY) FOR IMMEDIATE RELEASE
TOYS "R" US REPORTS FIRST QUARTER FISCAL 2002 RESULTS
PARAMUS, NEW JERSEY, MAY 20, 2002 - Toys "R" Us, Inc. announced today
results for the first quarter ended May 4, 2002. Total sales for the first
quarter of 2002 increased 2%, to $2.1 billion from the first quarter of
2001.
The company reported a first quarter 2002 net loss of $(4) million, or
$(0.02) per share, compared with a net loss of $(18) million, or $(0.09) per
share, reported for the first quarter of 2001.
John Eyler, Chairman and Chief Executive Officer, stated, "As we indicated
in our guidance on May 13, sales at our U.S. toy stores were somewhat soft
primarily due to weakness in our outdoor seasonal categories, and a
pronounced slowdown in the video business in April as some consumers
anticipated video hardware price cuts which were announced last week.
However, we are encouraged by the continued strengthening of our core toy
sales in our U.S. toy stores, which achieved a 5% comparable store sales
increase during the quarter. Our renovated Mission Possible stores
maintained a positive sales gap over our un-renovated stores, with the 2001
Mission Possible stores achieving a 7% comparable store sales gap in the
first quarter.
We are now in the third year of our three-year plan to reposition our U.S.
toy stores, and we are pleased with the progress to date. During the first
quarter of 2002, we renovated an additional 30 toy stores in the U.S. to
our Mission Possible format, and we are on track to have the entire U.S.
chain operating in this format for the 2002 holiday season.
Our U.S. toy store inventories, as well as total company inventories, were
down 5% compared to the end of the 2001 first quarter.
We believe that the improvements being made to our business will enhance the
financial performance of Toys "R" Us for the full year, and we are
comfortable with the current Wall Street consensus estimate of $1.14 for the
year.
In addition, we expect to complete our previously announced offerings of
equity and equity-linked securities before the end of this month."
Business Segment Performance
The company's U.S. toy store division reported a comparable store sales
decrease of 2% for the first quarter of 2002, but reported an operating
earnings improvement of 56% for the same period due to improved margin and
expense control disciplines. In conjunction with the previously announced
plan to remodel the remainder of its toy stores, or approximately 250
stores, to the Mission Possible format during fiscal 2002 the company will
continue to have a number of stores under construction at any point in time
through the end of the third quarter. During the first quarter a total of
115 stores were under construction.
Comparable toy store sales increased 10% in local currencies in the
International division. Many of the initiatives underway in the company's
U.S. toy stores are also being implemented in the international stores,
including improvements in merchandise content and presentation as well as
customer service programs.
The Babies "R" Us business posted a 12% increase in total sales, a 3%
increase in comparable store sales, and a 22% increase in operating
earnings, in comparison with the year-ago period. The company plans to
continue to expand this division, and it remains on track with plans to add
approximately 20 new Babies "R" Us stores, 6 of which opened in the first
quarter, to the division this year.
The Kids "R" Us business reported a 12% comparable store sales decrease
versus the first quarter of last year. The company is pleased with the
performance of its 11 recently converted prototype stores. The company
expects to remodel an additional 30 stores to the new prototype before the
back to school season, and to convert approximately 100 existing toy stores
to Toys "R" Us/ Kids "R" Us combo stores during 2002.
At Toysrus.com, sales increased 57%, to $46 million from $29 million in the
first quarter of last year, and operating losses decreased to $(14) million.
The sales increase was driven by increased sales at Babiesrus.com and
improved sales in the core toy and Imaginarium businesses which were offset
somewhat by slower growth in video. Babiesrus.com sales grew over 85% in the
first quarter, benefiting from better merchandise selection coupled with
operating on the Amazon.com platform during 2002. Expenses were reduced by
the elimination of the duplicative costs of operating the Babiesrus.com
website and distribution facility during the first quarter of 2001 as well
as the continued effort of the Toysrus.com team to reduce overhead expenses
as a step towards profitability.
Toys "R" Us, one of the world's leading retailers of toys, children's
apparel and baby products, currently sells merchandise through 1,607 stores
worldwide: 700 toy stores in the United States; 511 international toy
stores, including franchise stores; 183 Kids "R" Us children's clothing
stores, 170 Babies "R" Us stores and 43 Imaginarium stores, and through its
Internet sites at www.toysrus.com, www.babiesrus.com and
www.imaginarium.com.
First Quarter Ended: 5/4/02 5/5/01
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Net sales $ 2,095,000,000 $ 2,061,000,000
Operating earnings $ 22,000,000 $ 2,000,000
Loss before income taxes $ (6,000,000) $ (28,000,000)
Net loss $ (4,000,000) $ (18,000,000)
Basic loss per share $ (0.02) $ (0.09)
Diluted loss per share $ (0.02) $ (0.09)
Average basic shares outstanding 197,000,000 197,600,000
Average diluted shares outstanding 200,700,000 207,800,000
This press release contains certain "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which are
intended to be covered by the safe harbors created thereby. Such statements
should be considered as subject to risks and uncertainties that exist in the
company's operations and business environment that could render actual
outcomes and results materially different than predicted. Factors that could
constitute risks are set forth in documents filed by the company with the
Securities and Exchange Commission.
*****
Registration statements relating to the common stock and equity security
units have been filed with the Securities and Exchange Commission but have
not yet become effective. These securities may not be sold nor may offers to
buy be accepted prior to the time the registration statements become
effective. This press release shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such state.
2
TOYS "R" US, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share information)
(unaudited)
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QUARTER ENDED
May 4, 2002 May 5, 2001
Net sales $ 2,095 $ 2,061
Cost of sales 1,413 1,396
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Gross margin 682 665
Selling, general and administrative expenses 581 590
Depreciation & amortization 79 73
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Total operating expenses 660 663
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Operating earnings 22 2
Interest expense - net (28) (30)
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LOSS BEFORE INCOME TAXES (6) (28)
Income taxes (2) (10)
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NET LOSS (4) (18)
Diluted loss per share $ (0.02) $ (0.09)
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Average basic shares outstanding 197.0 197.6
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Average diluted shares outstanding 200.7 207.8
================= ================
Common shares outstanding 197.4 198.1
================ ================
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The Company adopted SFAS No. 142 "Goodwill and Other Intangible Assets", which
was effective for fiscal years beginning after December 15, 2001, on February
3rd 2002.
Accordingly, application of the non-amortization provisions resulted in a
decrease in net loss of $2 million for the quarter ended May 4th 2002.
3
TOYS "R" US, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(In Millions)
(unaudited)
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QUARTER ENDED
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May 4, 2002 May 5, 2001
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Net Sales
Toys "R" Us - U.S. $ 1,202 $ 1,227
Toys "R" Us - International 307 285
Babies "R" Us 413 370
Toysrus.com 46 29
Kids "R" Us 127 150
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Total $ 2,095 $ 2,061
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Operating earnings/(loss)
Toys "R" Us - U.S. $ 25 $ 16
Toys "R" Us - International (14) (12)
Babies "R" Us 49 40
Toysrus.com, net of minority interest (14) (24)
Other (24) (18)
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Operating earnings 22 2
Interest expense, net (28) (30)
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Loss before income taxes (6) (28)
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Included in the category classified as "Other" are the operating results of the
Kids "R" Us division and equity in the net earnings of Toys - Japan, as well as
other corporate related items.
4
TOYS "R" US, INC. AND SUBSIDIARIES
Summary Consolidated Balance Sheets
(in Millions)
(unaudited)
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May 4, 2002 May 5, 2001 February 2, 2002
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ASSETS
------
Cash and cash equivalents $ 452 $ 291 $ 283
Merchandise inventories 2,241 2,353 2,041
Other current assets 293 255 307
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Total current assets 2,986 2,899 2,631
Property and equipment, net 4,577 4,252 4,544
Goodwill, net and Other assets 884 857 901
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Total Assets 8,447 8,008 8,076
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LIABILITIES and STOCKHOLDERS' EQUITY
Short-term borrowings $ 517 $ 641 $ -
Accounts payable 931 958 878
Other current liabilities 816 791 1,122
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Total Current Liabilities 2,264 2,390 2,000
Long-term debt 1,872 1,566 1,816
Other non-current liabilities 797 591 793
Minority Interest in Toysrus.com 50 66 53
Total stockholders' equity 3,464 3,395 3,414
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Total Liabilities and
Stockholders' Equity $ 8,447 $ 8,008 $ 8,076
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5
TOYS "R" US, INC. AND SUBSIDIARIES
Summary Statements of Consolidated Cash Flows
(in Millions)
(unaudited)
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QUARTER ENDED
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May 4, 2002 May 5, 2001
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Cash Flows from Operating Activities
Net earnings / (loss) $ (4) $ (18)
Depreciation and amortization 79 73
Minority Interest in Toysrus.com (3) (4)
Other 0 (5)
Changes in operating assets and liabilities (394) (483)
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Net Cash From Operating Activities (322) (437)
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Cash Flows from Investing Activities
Capital expenditiures, net (57) (97)
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Net Cash from Investing Activities (57) (97)
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Cash Flows from Financing Activities
Short-term borrowings, net 517 54
Long-term borrowings, net 25 466
Other - 10
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Net Cash From Financing Activities 542 530
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Effect of exchange rate changes on cash and
cash equivalents 6 20
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Cash and Cash Equivalents:
Increase / (decrease) during period 169 16
Beginning of period 283 275
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End of period $ 452 $ 291
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6
SIGNATURES
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.
Date: May 20, 2002
By: /s/ Louis Lipschitz
Name: Louis Lipschitz
Title: Executive Vice President and
Chief Financial Officer