Fourth quarter net sales for the Garden segment decreased 3 percent, or $5.5 million compared with the prior year, to $159.6 million, impacted by lower décor revenues. The Garden segment’s branded product sales decreased $8.3 million, or 6 percent, to $140.2 million. Sales of other manufacturers’ products were $19.4 million, an increase of 17% compared with the fourth quarter of 2011. The Garden segment’s operating margin decreased during the quarter, impacted by higher marketing costs as well as lower profitability in its décor businesses, due primarily to product returns in the seasonal décor business. The Garden segment’s operating loss was $7.7 million compared to an operating loss of $6.9 million in the prior year period.
At September 29, 2012, the Company’s cash and short term investments balance totaled $71.2 million. Net interest expense was $9.5 million for the quarter and $9.8 million in the prior year period. Depreciation and amortization expense was $7.3 million in the fourth quarter of 2012, consistent with the prior year. The Company’s effective tax rate for the fourth quarter of 2012 was 39.9 percent on its operating loss compared to 17.0 percent in the fourth quarter of 2011. The 2011 effective tax rate was lower than historical norms, impacted by the Company’s inability to use tax benefits due to decreased fiscal 2011 income and increased tax valuation allowances.
Total debt at September 29, 2012 was $449.8 million compared to $435.6 million at fiscal year-end 2011. The quarter ending total leverage ratio, as defined in the Company’s credit agreement, was 4.0x.
Fiscal 2012 DetailsFor the year ending September 29, 2012, the Company reported net sales of $1.7 billion, an increase of 4 percent, compared to $1.6 billion in fiscal 2011. The Company benefitted from an extra week in the fiscal year compared to a year ago. Branded products sales were $1.4 billion, up 3 percent over fiscal 2011. Sales of other manufacturers’ products increased 11 percent to $280.0 million. Depreciation and amortization for the fiscal year period was $30.4 million compared with $28.6 million in the prior year. Operating income for the period totaled $74.4 million compared to $85.2 million in the prior year. The Company’s results included transformational costs of $12.1 million that were incurred throughout the year as the Company moves from a portfolio model to an integrated, multi-brand organization. Net income for the year ended September 29, 2012 was $21.2 million compared to $28.3 million in fiscal 2011. Earnings per fully diluted share were $0.44 compared to $0.50 per fully diluted share in the year ago period.