Trak Auto Corporation Earnings
3 May 1999
Trak Auto Corporation Earnings LANDOVER, Md., April 30 -- Trak Auto Corporation
("Trak Auto"), announced net income for the fiscal year ended
January 30, 1999 of $1,208,000, or $.20 per share, compared to a net loss of
$17,673,000, or $2.99 per share, for the fiscal year ended January 31, 1998.
The increase in net income for fiscal year 1999 was primarily due to favorable
lease terminations on closed stores in the Pittsburgh, Pennsylvania, market
that had future lease obligations of approximately $6,800,000, and a net of
approximately $4,100,000 of settlements of obligations with vendors and
changes in estimates, partially offset by net operating losses due to reduced
sales and higher net advertising costs. The net loss for fiscal year 1998 was
primarily due to Trak recording a pre-tax loss of approximately $13,900,000
for closed store provision, primarily for the closure of the Pittsburgh market
and the recording of a pre-tax loss of approximately $8,200,000 in connection
with the sale of its California operations.
Sales for fiscal 1999 were $221,584,000 compared to fiscal 1998 sales of
$319,440,000. The decrease was primarily due to the sale of its California
operations (82 stores) in December 1997 and the closure of its stores in the
Pittsburgh, Pennsylvania, market (15 stores) on January 31, 1998. In fiscal
1998, sales in the California and Pittsburgh markets were $93,576,000.
Comparable store sales (stores open more than one year) decreased 2.2% in
fiscal 1999 compared to fiscal 1998. The decrease in comparable store sales
was primarily due to an increase in competition in the markets in which the
Company operates combined with unusually mild weather conditions during the
first quarter of fiscal 1999. Sales for Super Trak and Super Trak Warehouse
stores represented 73.6% of total sales during fiscal 1999 compared to 69.8%
fiscal 1998.
On March 11, 1999, Trak Auto entered into a definitive merger agreement
for HalArt, L.L.C. to acquire all 5.9 million outstanding shares of Trak Auto
common stock at $9.00 per share in cash, without interest, representing an
aggregate value of approximately $53,200,000 and a 29% premium to the closing
price for the Company's common stock on March 11, 1999. Trak Auto's Board of
Directors has unanimously approved the merger and has recommended that
stockholders approve and adopt the merger agreement at a special meeting of
stockholders scheduled for May 27, 1999. Completion of the merger is subject
to customary conditions, including approval by Trak Auto's stockholders and
expiration of the applicable waiting period under the Hart-Scott-Rodino Act.
Trak Auto currently operates 172 stores, including 90 Super Trak stores
and 26 Super Trak Warehouse stores in the Washington, D.C.; Richmond,
Virginia; central Pennsylvania; Chicago, Illinois; and Milwaukee, Wisconsin,
markets compared with 180 stores including 90 Super Trak stores and 26 Super
Trak Warehouse stores in operation one year ago.
Statements that are not historical facts are forward-looking statements
made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve risks
and uncertainties that could cause actual results to differ materially from
anticipated results, including the effects of economic conditions, competitive
environment, the availability of financing, the outcome of contingencies
including litigation, program performance in addition to other factors not
listed. See in this regard, the Company's filing with the Securities and
Exchange Commission. The Company does not undertake any obligation to
publicly release any revisions to forward-looking statements to reflect events
or circumstances or changes in expectations after the date of this press
release or the occurrence of anticipated events.
TRAK AUTO CORPORATION
(in Thousands)
(except Earnings per Share)
Years Ended
Jan. 30, Jan. 31,
1999 1998
Sales $221,584 $319,440
Income (loss) before
income taxes $1,928 $(28,229)
Net income (loss) $1,208 $(17,673)
Income (loss) per share $.20 $(2.99)
Weighted average
shares outstanding 5,909 5,909
