The forecasted first quarter non-GAAP loss from continuing operations per share guidance range is based on the following assumptions:
- Comparable store sales of negative 3% to plus 1%;
- Revenue from $160 million to $167 million;
- Gross margin rate, including buying, distribution and occupancy, of 21% to 24%;
- SG&A expenses in the range of $54 million to $56 million;
- A normalized annual income tax rate of approximately 37%; and
- Ending the period with approximately 638 stores.
The Company's first fiscal quarter of 2013 guidance range excludes the quarterly impact of the change in the fair value of the derivative liability due to the inherently variable nature of this financial instrument.
In accordance with applicable accounting literature and consistent with the Company's financial statement presentation in its fiscal 2011 annual report, the Company has reclassified the results of operations of its closed stores as discontinued operations for all periods presented, as applicable.
In fiscal 2011, as a result of the issuance of the Series B Preferred in connection with the Company's $60 million senior secured term loan financing with an affiliate of Golden Gate Capital, the Company recorded a derivative liability equal to approximately $15.0 million, which represents the fair value of the Series B Preferred upon issuance. In accordance with applicable U.S. GAAP, the Company has marked this derivative liability to fair value through earnings and will continue to do so on a quarterly basis until the shares of Series B Preferred are either converted into shares of the Company's common stock or until the conversion rights expire (December 2021). The Company's first fiscal quarter of 2013 earnings guidance excludes the quarterly impact of the change in the fair value of the derivative liability due to the inherently variable nature of this financial instrument.