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Tumi Holdings Announces Financial Results For The First Quarter Of 2012

Forward-Looking Statements

This release contains forward-looking statements within the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect Tumi’s current views with respect to, among other things, future events and performance. These statements may discuss net sales, gross margin, operating expenses, operating income, net income, cash flow, financial condition, impairments, expenditures, growth, strategies, plans, achievements, dividends, capital structure, organizational structure, future store openings, market opportunities, and general market and industry conditions. Tumi generally identifies forward-looking statements by words such as “anticipate,” “estimate,” “expect,” “intend,” “project,” “plan,” “predict,” “believe,” “seek,” “continue,” “outlook,” “may,” “might,” “will,” “should,” “can have,” “likely” or the negative version of these words or comparable words. Forward-looking statements are based on beliefs and assumptions made by management using currently available information. These statements are only predictions and are not guarantees of future performance, actions or events. Forward-looking statements are subject to risks and uncertainties. If one or more of these risks or uncertainties materialize, or if management’s underlying beliefs and assumptions prove to be incorrect, actual results may differ materially from those contemplated by a forward-looking statement. These risks and uncertainties include those set forth under “Risk Factors” in Tumi’s filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made. Tumi expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Consolidated Statements of Operations
(In thousands, except share and per share data)
    Three Months Ended

March 25,


March 27,

Net sales $ 80,021 $ 65,917
Cost of sales   34,616     28,779  
Gross margin 45,405 37,138
Operating expenses
Selling 4,988 4,322
Marketing 2,740 2,973
Retail operations 17,149 14,454
General and administrative   7,252     6,006  
Total operating expenses   32,129     27,755  
Operating income   13,276     9,383  
Other (expenses) income
Interest expense (517 ) (781 )
Dividend expense on mandatorily redeemable preferred stock and preferred equity interests (6,286 ) (5,714 )
Earnings from joint venture investment 264 27
Foreign exchange (losses) gains (11 ) 366
Other non-operating income   172     14  
Total other expenses   (6,378 )   (6,088 )
Income before income taxes 6,898 3,295
Provision for income taxes   4,001     3,378  
Net income (loss) $ 2,897   $ (83 )
Weighted average common shares outstanding:

Basic and diluted
  52,536,224     52,536,224  
Basic and diluted earnings (loss) per common share $ 0.06   $ (0.00 )
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)

March 25,


December 31,

Cash and cash equivalents $ 30,544 $ 32,735
Accounts receivable, less allowance for doubtful accounts of approximately $473 and $462 at March 25, 2012 and December 31, 2011, respectively 22,224 22,833
Other receivables 1,841 1,724
Inventories 63,061 60,456
Prepaid expenses and other current assets 3,744 3,056
Deferred offering costs 3,422 1,996
Deferred tax assets, current   2,218     2,218  
Total current assets   127,054     125,018  
Property, plant and equipment, net 36,799 36,500
Deferred tax asset, noncurrent 2,046 2,046
Joint venture investment 2,386 2,122
Goodwill 142,773 142,773
Intangible assets, net 131,151 131,219
Deferred financing costs, net of accumulated amortization of $2,633 and $2,539 at March 25, 2012 and December 31, 2011, respectively 826 920
Other assets   5,290     5,743  
Total assets $ 448,325   $ 446,341  
Accounts payable $ 23,982 $ 27,308
Accrued expenses 23,464 26,683
Current portion of long-term debt 16,000 12,000
Income taxes payable   2,800     4,324  
Total current liabilities   66,246     70,315  
Long-term debt 48,000 52,000
Other long-term liabilities 6,582 6,257
Mandatorily redeemable preferred stock and preferred equity interests 257,715 251,429
Deferred tax liabilities   47,623     47,623  
Total liabilities   426,166     427,624  
Common stock - $0.01 par value; 52,536,252 shares authorized and issued; 52,536,224 shares outstanding 525 525
Additional paid-in capital 48,968 48,968
Treasury stock, at cost (174 ) (174 )
Accumulated deficit (26,720 ) (29,617 )
Accumulated other comprehensive loss   (440 )   (985 )
Total stockholders' equity   22,159     18,717  
Total liabilities and stockholders' equity $ 448,325   $ 446,341  
Segment Results
(In thousands)
Three Months Ended

March 25,


March 27,

Net sales
Direct-to-Consumer North America $ 34,388 $ 26,126
Direct-to-Consumer International 3,229 3,383
Indirect-to-Consumer North America 17,056 16,733
Indirect-to-Consumer International   25,348     19,675  
Total $ 80,021   $ 65,917  
Operating income
Direct-to-Consumer North America $ 9,255 $ 6,445
Direct-to-Consumer International (290 ) 120
Indirect-to-Consumer North America 6,492 6,051
Indirect-to-Consumer International 8,094 5,943
Non-allocated corporate expenses   (10,275 )   (9,176 )
Total $ 13,276   $ 9,383  
Reconciliation of Net Income to Net Income (Loss) Before Preferred Dividend Expense (Non-Cash)
(In millions)
    Q1 2012       Q1 2011
Net income (loss) 1 2.9 (0.1)
Dividend expense on mandatorily redeemable preferred stock and preferred equity interests     6.3       5.7
Net income (loss) before preferred dividend expense (non-cash) 1     9.2       5.6
1 Tax of 30% on pretax income before dividend expense; 58% on pretax income after dividend expense

Non-GAAP Financial Measure

Net income before preferred dividend expense (non-cash) is a non-GAAP financial measure and is defined as net income plus dividend expense on mandatorily redeemable preferred stock and preferred equity interests. Net income before preferred dividend expense (non-cash) is an important supplemental measure for Tumi’s internal reporting, including for its board of directors and management, and is a key measure used to evaluate profitability and operating performance. Net income before preferred dividend expense (non-cash) provides investors and other users of Tumi’s financial information, when viewed in conjunction with its condensed consolidated financial statements, consistency and comparability with Tumi’s past financial performance, facilitates period-to-period comparisons of operating performance and facilitates comparisons with other companies. Tumi uses this metric in conjunction with GAAP operating performance measures as part of its overall assessment of its performance. Undue reliance should not be placed on this measure as Tumi’s only measure of operating performance. Net income before preferred dividend expense (non-cash) should not be viewed as a substitute for net income.

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