EDEN PRAIRIE, Minn.--(BUSINESS WIRE)--Bluestem Group Inc. ("Bluestem Group" or the "Company")(OTCMKTS: BGRP) today reported unaudited consolidated financial results that include its wholly-owned subsidiary, Bluestem Brands, Inc. and its subsidiaries (“Bluestem”), for the 13-weeks ended May 5, 2017 and April 29, 2016. We refer to the 13-week periods in this release as the "first quarter". Bluestem is a multi-brand, online retailer of a broad selection of name-brand and private label general merchandise serving the boomer and senior demographic, generally considered age 50 and over, and low- to middle-income consumers across all age demographics.
“Bluestem produced stable year-over-year results in the first quarter of 2017. Topline revenue was flat to last year and adjusted EBITDA improved slightly. We continue to make good progress on our turnaround plan and identified an incremental $5 million of in-year 2017 savings, bringing the total 2017 savings to $50 million. The credit portfolio remains a key focus, although we are still seeing the effects of increased sub-prime credit supply on portfolio performance and higher losses persisted in the quarter. We believe we are taking the appropriate steps to improve the portfolio performance and are beginning to see lower delinquency rates in our new vintages,” said Steve Nave, Bluestem Group’s President and Chief Executive Officer.
First Quarter Fiscal 2017 Bluestem Group Consolidated Highlights
- Net loss for the first quarter of fiscal 2017 was $43.0 million compared to net loss of $33.8 million for the first quarter of fiscal 2016. Basic and diluted loss per share was $0.33 for the first quarter of fiscal 2017 compared to basic and diluted loss per share of $0.25 for the first quarter of fiscal 2016. Restructuring costs of $17.0 million were incurred during the first quarter of fiscal 2017.
- Adjusted EBITDA for the first quarter of fiscal 2017 was $6.3 million compared to adjusted EBITDA of $1.6 million for the first quarter of fiscal 2016.
- Capmark Portfolio asset proceeds for the first quarter of fiscal 2017 were $10.3 million. At the end of the first quarter of fiscal 2017, the Company had $14.0 million in net Capmark Portfolio assets remaining versus $23.0 million at the end of the fourth quarter of fiscal 2016.
- Cash and cash equivalents were $115.8 million as of May 5, 2017. A special dividend of $80.0 million was paid during the first quarter of fiscal 2017.
First Quarter Fiscal 2017 Bluestem Brands Stand-Alone Highlights
- Net sales for the first quarter of fiscal 2017 were $427.6 million compared to net sales of $428.5 million for the first quarter of fiscal 2016.
- Net loss for the first quarter of fiscal 2017 was $30.5 million compared to net loss of $19.2 million for the first quarter of fiscal 2016.
- Bluestem’s adjusted EBITDA for the first quarter of fiscal 2017 was $5.8 million compared to adjusted EBITDA of $3.7 million for the first quarter of fiscal 2016.
- Northstar Portfolio net sales for the first quarter of fiscal 2017 were $187.0 million, an increase of 2.1% compared to $183.2 million for the first quarter of fiscal 2016.
- Orchard Portfolio’s net sales for the first quarter of fiscal 2017 were $245.8 million, a decrease of 1.4% compared to $249.3 million for the first quarter of fiscal 2016.
- Northstar Portfolio active accounts were 1.6 million as of the end of the first quarter of fiscal 2017, a decrease of 6.1% compared to 1.7 million as of the end of the first quarter of fiscal 2016.
- Orchard Portfolio’s gross active customers were 7.8 million as of the end of the first quarter of fiscal 2017 and 2016.
- 30+ day delinquent balances on the Northstar Portfolio revolving portfolio were 16.9% at the end of the first quarter of fiscal 2017 compared to 15.9% for the first quarter of fiscal 2016.
- Net principal charge-off rate on the revolving portfolio was 19.6% for the first quarter of fiscal 2017 compared to 17.5% for the first quarter of fiscal 2016.
All financial information included in this release is unaudited. Information for Bluestem Group is presented on a consolidated basis. Consolidated information for Bluestem Group’s wholly-owned subsidiary, Bluestem Brands, Inc., is also presented on a stand-alone basis.
Adjusted EBITDA is defined in the accompanying financial information of Bluestem Group and Bluestem Brands. Please see “Bluestem Group Inc. and Bluestem Brands, Inc. Financial Information-Overview and Basis of Presentation” below and accompanying disclosures for a more detailed explanation of the foregoing matters, reconciliations to results reported under GAAP and other important information for investors to consider.
Earnings Teleconference Information
The Company will host a
conference call at 8:00 AM ET on June 21, 2017. The conference call can
be accessed at (888) 516-2447 or (719) 325-2314 (International),
conference ID #8256912 and will be broadcast simultaneously at http://www.bluestem.com/investor-relations.
Following completion of the call, a recorded replay of the webcast will
be available on Bluestem’s website. To listen to the telephone replay,
call toll-free (844) 512-2921 or (412) 317-6671 (International), replay
pin #8256912. The telephone replay will be available at 11:00AM ET
June 21, 2017. Additional investor information can be accessed at http://www.bluestem.com/investor-relations.
About Bluestem Group
Bluestem Group Inc. is a holding
company whose businesses include Bluestem Brands, a national,
multi-brand, online retailer of a broad selection of name-brand and
private label general merchandise serving the boomer and senior
demographic, generally considered age 50 and over, and low- to
middle-income consumers over all age demographics through 14 retail
brands that include: Appleseed’s, Bedford Fair, Blair, Draper’s &
Damon’s, Fingerhut, Gettington, Gold Violin, Haband, LinenSource
(currently in the process of exiting), Norm Thompson, Old Pueblo
Traders, Sahalie, Tog Shop and Wintersilks. Complementing each brand is
a large selection of merchandise with payment options that provide
customers with the flexibility of paying over time. Bluestem Group is
headquartered in Eden Prairie, MN. For additional information visit the
Bluestem Group website at www.bluestem.com.
Forward Looking Statements
This release contains statements
that are “forward-looking statements”. Forward-looking statements relate
to expectations, beliefs, projections, future plans and strategies,
anticipated events or trends and similar expressions concerning matters
that are not historical facts. All statements contained herein that are
not clearly historical in nature are forward-looking. In some cases, you
can identify these statements by use of forward-looking words such as
“may,” “will,” “should,” “anticipate,” “estimate,” “expect,” “plan,”
“believe,” “predict,” “potential,” “project,” “intend,” “could” or
similar expressions. In particular, statements regarding Bluestem
Group’s plans, strategies, prospects and expectations regarding its
business are forward-looking statements. You should be aware that these
statements and any other forward-looking statements in this document
only reflect Bluestem Group’s beliefs, assumptions and expectations and
are not guarantees of performance. These statements involve risks,
uncertainties and assumptions. Many of these risks, uncertainties and
assumptions are beyond Bluestem Group’s control and may cause actual
results and performance to differ materially from Bluestem Group’s
expectations. Forward-looking statements are based on Bluestem Group’s
beliefs, assumptions and expectations of its future performance and
actions, taking into account all information currently available to
Bluestem Group. These beliefs, assumptions and expectations can change
as a result of many possible events or factors, not all of which are
known to Bluestem Group or are within its control. If a change occurs,
Bluestem Group’s plans, business, financial condition, and liquidity may
vary materially from those expressed in its forward-looking statements.
Important factors that could cause the actual results to be materially
different from Bluestem Group’s expectations include the risks and
uncertainties set forth in “Risk Factors” in Bluestem Group’s Report as
of and for the fiscal years ended February 3, 2017 and January 29, 2016.
Accordingly, you should not place undue reliance on the forward-looking statements contained in this release. These forward-looking statements are made only as of the date of this release. Bluestem Group undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
BLUESTEM GROUP INC.
BLUESTEM BRANDS, INC.
FINANCIAL
INFORMATION
13-weeks ended May 5, 2017 and April 29, 2016
Overview and Basis of Presentation
As used in this release:
- “Bluestem Group,” “we,” “us,” “our,” or “the Company” refers to Bluestem Group Inc. with its consolidated subsidiaries
- “BGI Holding Company” refers to the Bluestem Group Inc. legal entity, excluding its subsidiaries
- “Bluestem” refers to Bluestem Brands, Inc., an indirect subsidiary of Bluestem Group Inc., which consists of the Northstar Portfolio of retail brands, the Orchard Portfolio of retail brands and PayCheck Direct (which was exited in the first quarter of fiscal 2017 and currently is winding down)
- "Northstar Portfolio” refers to the consolidated Fingerhut and Gettington retail brands
- “Orchard Portfolio” refers to the consolidated Appleseed’s, Bedford Fair, Blair, Draper’s & Damon’s, Gold Violin, Haband, LinenSource (currently in the process of exiting), Norm Thompson, Old Pueblo Traders, Sahalie, Solutions (which was exited in the fourth quarter of fiscal 2016), Tog Shop, and WinterSilks retail brands
- “Capmark Portfolio” refers to the commercial real estate finance operations of Bluestem Group Inc.
The accompanying financial information for Bluestem Group Inc. is presented on a consolidated basis, including Bluestem Brands, Inc. and its consolidated subsidiaries. The accompanying financial information for Bluestem Group’s wholly-owned subsidiary, Bluestem, is also presented on a stand-alone basis. All financial information included in this release is unaudited.
The Company reviews and presents the consolidated business results based on the organizational structure management uses to evaluate performance and make decisions on allocating resources and assessing performance. Beginning in fiscal 2017, the consolidated business results are presented in three categories: Northstar Portfolio, Orchard Portfolio, and Corporate and other.
Financial Information
To supplement
the historical financial data derived from Bluestem Group’s and
Bluestem’s consolidated financial statements, which are prepared in
accordance with U.S. Generally Accepted Accounting Principles ("GAAP"),
this release uses adjusted EBITDA as a non-GAAP performance measure. In
addition, Bluestem’s stand-alone consolidated financial statements
includes contribution margin, adjusted general and administrative
expenses, free cash flow, program agreement adjusted EBITDA, lender
adjusted EBITDA, leverage ratio debt, program agreement leverage ratio,
lender leverage ratio, working capital, adjusted working capital,
program agreement net liquidity and lender net liquidity as non-GAAP
performance measures. These measures are not in accordance with, or an
alternative to, measures prepared in accordance with GAAP. Please see
the accompanying report on Bluestem Group’s and Bluestem’s results for
further important information concerning these measures.
Bluestem Group Inc.
Results for the 13-Weeks Ended May 5,
2017
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BLUESTEM GROUP INC. |
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|
Condensed Consolidated Statements of Comprehensive Income |
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(unaudited - in thousands, except shares and per share amounts) |
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| 13-Weeks Ended | |||||||||||
| May 5, 2017 | April 29, 2016 | ||||||||||
| Net sales and revenue | |||||||||||
| Net sales | $ | 427,622 | $ | 428,516 | |||||||
| Commercial real estate revenue | 1,704 | 538 | |||||||||
| Total net sales and revenue | 429,326 | 429,054 | |||||||||
| Costs and expenses | |||||||||||
| Cost of goods sold | 223,819 | 214,717 | |||||||||
| Sales and marketing expenses | 123,045 | 132,999 | |||||||||
| Net credit expense | 29,936 | 17,177 | |||||||||
| General and administrative expenses | 66,334 | 66,948 | |||||||||
| Amortization and depreciation not included in cost of goods sold | 15,413 | 16,234 | |||||||||
| Loss on impairment | 230 | — | |||||||||
| Gain on derivatives in our own equity | — | (548 | ) | ||||||||
| Total costs and expenses | 458,777 | 447,527 | |||||||||
| Operating loss | (29,451 | ) | (18,473 | ) | |||||||
| Interest expense, net | 12,865 | 13,523 | |||||||||
| Loss before income taxes | (42,316 | ) | (31,996 | ) | |||||||
| Income tax expense | 707 | 1,760 | |||||||||
| Net loss | $ | (43,023 | ) | $ | (33,756 | ) | |||||
| Other comprehensive loss | |||||||||||
| Unrealized loss on interest rate swap, net of tax | (235 | ) | (336 | ) | |||||||
| Net change in unrealized gains/losses on investments securities, net of tax | — | (231 | ) | ||||||||
| Comprehensive loss | $ | (43,258 | ) | $ | (34,323 | ) | |||||
| Basic and diluted loss per share - common stockholders | |||||||||||
| Basic and diluted loss per share | $ | (0.33 | ) | $ | (0.25 | ) | |||||
| Basic and diluted weighted average shares outstanding | 132,036,278 | 135,522,684 | |||||||||
|
BLUESTEM GROUP INC. |
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|
Condensed Consolidated Balance Sheets |
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(unaudited - in thousands) |
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| May 5, 2017 | February 3, 2017 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 115,774 | $ | 212,942 | |||||||
| Restricted cash | 16,037 | 15,797 | |||||||||
| Customer accounts receivable, net of allowance of $18,440 and $17,041 | 40,101 | 50,053 | |||||||||
| Merchandise inventories | 217,964 | 229,970 | |||||||||
| Promotional material inventories | 60,966 | 49,730 | |||||||||
| Other current assets | 29,511 | 39,135 | |||||||||
| Total current assets | 480,353 | 597,627 | |||||||||
| Property and equipment, net | 121,133 | 130,065 | |||||||||
| Intangibles, net | 204,278 | 208,563 | |||||||||
| Goodwill | 202,556 | 202,556 | |||||||||
| Other assets | 15,339 | 41,926 | |||||||||
| Total Assets | $ | 1,023,659 | $ | 1,180,737 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 177,169 | $ | 221,539 | |||||||
| Accrued costs and other liabilities | 95,581 | 154,095 | |||||||||
| Short-term debt | 63,342 | 47,500 | |||||||||
| Total current liabilities | 336,092 | 423,134 | |||||||||
| Long-term debt | 439,526 | 468,924 | |||||||||
| Deferred income taxes | 37,635 | 37,474 | |||||||||
| Other long-term liabilities | 38,696 | 37,470 | |||||||||
| Total liabilities | 851,949 | 967,002 | |||||||||
| Stockholders' Equity: | |||||||||||
| Series A participating convertible preferred stock | 5,000 | 5,000 | |||||||||
| Common stock | 1,323 | 1,323 | |||||||||
| Treasury stock | (131 | ) | (131 | ) | |||||||
| Additional paid-in capital | 291,169 | 289,789 | |||||||||
| Retained earnings | (126,037 | ) | (82,867 | ) | |||||||
| Accumulated other comprehensive income, net of tax | 386 | 621 | |||||||||
| Total stockholders’ equity | 171,710 | 213,735 | |||||||||
| Total Liabilities and Stockholders' Equity | $ | 1,023,659 | $ | 1,180,737 | |||||||
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BLUESTEM GROUP INC. |
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|
Condensed Consolidated Statements of Cash Flows |
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(unaudited - in thousands) |
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| 13-Weeks Ended | |||||||||||
| May 5, 2017 | April 29, 2016 | ||||||||||
| Operating Activities | |||||||||||
| Net loss | $ | (43,023 | ) | $ | (33,756 | ) | |||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Amortization and depreciation expense | 16,801 | 17,427 | |||||||||
| Loss on impairment | 230 | — | |||||||||
| Provision for doubtful accounts | 18,152 | 6,079 | |||||||||
| Provision for deferred income taxes | 161 | 909 | |||||||||
| Loss on servicing right | 1,250 | — | |||||||||
| Net gains on loans held for sale, investment securities and other | (1,404 | ) | (168 | ) | |||||||
| Stock-based compensation expense | 1,346 | 1,200 | |||||||||
| Other, net | 1,310 | 991 | |||||||||
| Net change in assets and liabilities: | |||||||||||
| Customer account receivables | 3,762 | (642 | ) | ||||||||
| Merchandise inventories | 12,006 | (12,008 | ) | ||||||||
| Promotional material inventories | (11,236 | ) | (19,534 | ) | |||||||
| Other assets | 10,062 | (4,208 | ) | ||||||||
| Accounts payable and other liabilities | (23,185 | ) | (5,195 | ) | |||||||
| Payments from loans held for sale | — | 43 | |||||||||
| Net cash used in operating activities | (13,768 | ) | (48,862 | ) | |||||||
| Investing Activities | |||||||||||
| Purchases of customer accounts receivable | (193,394 | ) | (193,775 | ) | |||||||
| Proceeds from sale of customer accounts receivable | 181,432 | 193,806 | |||||||||
| Net purchases of property and equipment | (3,788 | ) | (15,287 | ) | |||||||
| Distributions from equity investments | 4,430 | 3,815 | |||||||||
| Net decrease (increase) in restricted cash | (240 | ) | 2,963 | ||||||||
| Other | (13 | ) | — | ||||||||
| Net cash used in investing activities | (11,573 | ) | (8,478 | ) | |||||||
| Financing Activities | |||||||||||
| Repayments of debt | (7,200 | ) | (7,554 | ) | |||||||
| Borrowings on asset backed line of credit | 130,999 | 278,427 | |||||||||
| Repayments on asset backed line of credit | (115,598 | ) | (207,545 | ) | |||||||
| Payments for the repurchase of common stock | — | (12,553 | ) | ||||||||
| Payment of dividends | (80,023 | ) | — | ||||||||
| Net cash (used in) provided by financing activities | (71,822 | ) | 50,775 | ||||||||
| Effect of Foreign Exchange Rates on Cash | (5 | ) | 53 | ||||||||
| Net Increase (Decrease) in Cash and Cash Equivalents | (97,168 | ) | (6,512 | ) | |||||||
| Cash and Cash Equivalents, Beginning of Period | 212,942 | 185,944 | |||||||||
| Cash and Cash Equivalents, End of Period | $ | 115,774 | $ | 179,432 | |||||||
BLUESTEM GROUP INC.
Non-GAAP Financial Measure
(unaudited
- in thousands)
To supplement the consolidated financial statements of Bluestem Group Inc. and its subsidiaries, which are presented in accordance with GAAP, we use the following measure that is not in accordance with, or an alternative to, measures prepared in accordance with GAAP ("non-GAAP measure"):
Adjusted EBITDA, as presented, represents net loss attributable to Bluestem Group Inc. before income tax expense, interest expense, net, amortization and depreciation expense, loss on impairment, loss on servicing right, stock-based compensation expense, gain on derivatives in our own equity, integration costs, restructuring costs and other.
We provide this measure because we believe it is useful to investors in evaluating our operating performance compared to other companies in our industry. As a non-GAAP measure, it has limitations in that it does not reflect all of the amounts associated with Bluestem Group Inc.'s results of operations as determined in accordance with GAAP and is not based on any comprehensive set of accounting rules or principles. This non-GAAP measure should be considered along with the GAAP financial presentation and should not be considered in isolation or as a substitute for results reported in accordance with GAAP. In addition, our calculation of Adjusted EBITDA may not be comparable to the calculation of such measure by other companies.
The following table reconciles Adjusted EBITDA from the nearest GAAP performance measure, which is net loss:
| 13-Weeks Ended | |||||||||||
| May 5, 2017 | April 29, 2016 | ||||||||||
| Adjusted EBITDA: | |||||||||||
| Net loss | $ | (43,023 | ) | $ | (33,756 | ) | |||||
| Income tax expense | 707 | 1,760 | |||||||||
| Interest expense, net | 12,865 | 13,523 | |||||||||
| Amortization and depreciation expense | 16,801 | 17,318 | |||||||||
| Loss on impairment | 230 | — | |||||||||
| Loss on servicing right | 1,250 | — | |||||||||
| Stock-based compensation expense | 1,346 | 1,200 | |||||||||
| Gain on derivatives in our own equity | — | (548 | ) | ||||||||
| Integration costs | — | 2,069 | |||||||||
| Restructuring costs | 14,142 | — | |||||||||
| Other | 1,977 | — | |||||||||
| Adjusted EBITDA | $ | 6,295 | $ | 1,566 | |||||||
Bluestem Brands, Inc.
Results for the 13-Weeks Ended May
5, 2017
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BLUESTEM BRANDS, INC. |
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Condensed Consolidated Statements of Comprehensive Income and Selected Operating Data |
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(unaudited - in thousands) |
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| 13-Weeks Ended | ||||||||||||||||
| May 5, 2017 | April 29, 2016 | Change (a) | ||||||||||||||
| Net sales | $ | 427,622 | $ | 428,516 | (0.2 | )% | ||||||||||
| Cost of goods sold | 223,819 | 214,717 | 4.2 | % | ||||||||||||
| Gross profit | 203,803 | 213,799 | (4.7 | )% | ||||||||||||
| Sales and marketing expenses | 123,045 | 132,999 | (7.5 | )% | ||||||||||||
| Net credit expense | 33,702 | 17,177 | 96.2 | % | ||||||||||||
| General and administrative expenses | 65,035 | 64,960 | 0.1 | % | ||||||||||||
| Amortization and depreciation not included in cost of goods sold (b) | 15,413 | 16,234 | (5.1 | )% | ||||||||||||
| Loss on impairment | 230 | — | n/m | |||||||||||||
| Interest expense, net (c) | 12,865 | 13,523 | (4.9 | )% | ||||||||||||
| Loss before income taxes | (46,487 | ) | (31,094 | ) | 49.5 | % | ||||||||||
| Income tax benefit | (16,034 | ) | (11,923 | ) | 34.5 | % | ||||||||||
| Net loss | $ | (30,453 | ) | $ | (19,171 | ) | 58.8 | % | ||||||||
| Margins and Expenses as a Percentage of Net Sales: | ||||||||||||||||
| Gross profit | 47.7 | % | 49.9 | % | (220 | ) | bps | |||||||||
| Sales and marketing expenses | 28.8 | % | 31.0 | % | (220 | ) | bps | |||||||||
| Net credit expense | 7.9 | % | 4.0 | % | 390 | bps | ||||||||||
| Contribution margin (d) | $ | 47,056 | $ | 63,623 | (26.0 | )% | ||||||||||
| As a percentage of net sales | 11.0 | % | 14.8 | % | (380 | ) | bps | |||||||||
| Adjusted general and administrative expenses (d) | $ | 49,664 | $ | 61,168 | (18.8 | )% | ||||||||||
| As a percentage of net sales | 11.6 | % | 14.3 | % | (270 | ) | bps | |||||||||
| Adjusted EBITDA (d) | $ | 5,779 | $ | 3,666 | 57.6 | % | ||||||||||
| As a percentage of net sales | 1.4 | % | 0.9 | % | 50 | bps | ||||||||||
| Selected Financial Data: | ||||||||||||||||
| Lender net liquidity (d) | $ | 86,247 | $ | 66,120 | 30.4 | % | ||||||||||
| Availability on inventory line of credit | $ | 81,605 | $ | 63,357 | 28.8 | % | ||||||||||
| Free cash flow (d) | $ | 4,702 | $ | (1,261 | ) | (472.9 | )% | |||||||||
| Lender leverage ratio (d) | 3.54 | 4.16 | (14.9 | )% | ||||||||||||
| Lender leverage ratio requirement | 4.50 | 4.75 | ||||||||||||||
| Program agreement leverage ratio (d) | 3.89 | 4.16 | (6.5 | )% | ||||||||||||
| Program agreement leverage ratio requirement | 5.00 | 5.00 | ||||||||||||||
| Selected Operating Data: | ||||||||||||||||
| Northstar Portfolio revolving new customer credit accounts (e) | 90 | 120 | (25.0 | )% | ||||||||||||
| Fingerhut FreshStart new customer credit accounts (e) | 54 | 51 | 5.9 | % | ||||||||||||
| Orchard Portfolio new gross customers (f) | 652 | 701 | (7.0 | )% | ||||||||||||
| Northstar Portfolio active accounts (g) | 1,577 | 1,680 | (6.1 | )% | ||||||||||||
| Orchard Portfolio gross active customers (h) | 7,807 | 7,799 | 0.1 | % | ||||||||||||
(a) Changes in rates are presented as the basis point ("bps") increase
(decrease) from the prior period.
(b) Consists of amortization
expense of customer relationship finite-lived intangible assets.
Depreciation expense related to software, owned fulfillment facilities
and equipment in Bluestem's fulfillment facilities are included in cost
of goods sold.
(c) Interest expense is net of interest income.
(d)
Please refer to the "Bluestem Brands, Inc. - Non-GAAP Financial
Measures" within this release for a reconciliation of non-GAAP financial
measures to GAAP and why Bluestem believes these are important measures
of its performance.
(e) Customers that have made their initial
order on account during the fiscal period presented. Revolving new
customer credit accounts excludes FreshStart graduates initially
included in FreshStart new customer credit accounts when their initial
order was made.
(f) Individual customers who have made a first time
purchase from a particular brand within the Orchard Portfolio during the
period presented. Unique new customers, representing unique individuals
who have made a first time purchase from the Orchard Portfolio during
the 13-weeks ended May 5, 2017 and April 29, 2016, were 219 thousand and
234 thousand, respectively.
(g) Revolving credit customers that
have made at least one purchase on account within the previous twelve
fiscal months and at least one payment on account since origination.
(h)
Individual customers that have made at least one purchase from a
particular brand within the previous twelve fiscal months. Unique active
customers, representing unique individuals who have made at least one
purchase from the Orchard Portfolio during the twelve fiscal months
ended May 5, 2017 and April 29, 2016, were 4.7 million and 5.0 million,
respectively.
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BLUESTEM BRANDS, INC. |
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|
Condensed Consolidated Balance Sheets |
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|
(unaudited - in thousands) |
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| May 5, 2017 | February 3, 2017 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 14,173 | $ | 7,916 | |||||||
| Restricted cash | 15,953 | 15,713 | |||||||||
| Customer accounts receivable, net of allowance of $8,887 and $17,041 | 7,699 | 50,053 | |||||||||
| Merchandise inventories | 217,964 | 229,970 | |||||||||
| Promotional material inventories | 60,966 | 49,730 | |||||||||
| Prepaid expenses and other assets | 24,545 | 27,896 | |||||||||
| Total current assets | 341,300 | 381,278 | |||||||||
| Property and equipment, net | 121,133 | 130,065 | |||||||||
| Intangible assets, net | 204,278 | 208,563 | |||||||||
| Goodwill | 202,556 | 202,556 | |||||||||
| Other assets | 3,075 | 3,514 | |||||||||
| Total Assets | $ | 872,342 | $ | 925,976 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 177,169 | $ | 221,539 | |||||||
| Current income taxes payable | 26,818 | 34,059 | |||||||||
| Accrued costs and other liabilities | 109,711 | 83,055 | |||||||||
| Short-term debt | 63,342 | 47,500 | |||||||||
| Total current liabilities | 377,040 | 386,153 | |||||||||
| Long-term debt | 439,309 | 445,736 | |||||||||
| Deferred income taxes | 48,356 | 56,758 | |||||||||
| Other long-term liabilities | 31,013 | 29,870 | |||||||||
| Total liabilities | 895,718 | 918,517 | |||||||||
| Stockholders' equity: | |||||||||||
| Common stock | — | — | |||||||||
| Additional paid-in capital | 369,602 | 369,602 | |||||||||
| Retained earnings | (393,364 | ) | (362,764 | ) | |||||||
| Accumulated other comprehensive loss, net of tax | 386 | 621 | |||||||||
| Total stockholders' equity | (23,376 | ) | 7,459 | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | 872,342 | $ | 925,976 | |||||||
|
BLUESTEM BRANDS, INC. |
|||||||||||
|
Condensed Consolidated Statements of Cash Flows |
|||||||||||
|
(unaudited - in thousands) |
|||||||||||
| 13-Weeks Ended | |||||||||||
| May 5, 2017 | April 29, 2016 | ||||||||||
| Operating Activities | |||||||||||
| Net loss | $ | (30,453 | ) | $ | (19,171 | ) | |||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
| Amortization and depreciation expense | 16,801 | 17,427 | |||||||||
| Loss on impairment | 230 | — | |||||||||
| Provision for doubtful accounts | 21,919 | 6,079 | |||||||||
| Provision for deferred income taxes | (8,402 | ) | (2,674 | ) | |||||||
| Loss on servicing right | 1,250 | — | |||||||||
| Stock-based compensation expense | 1,234 | 1,082 | |||||||||
| Other, net | 1,175 | 1,377 | |||||||||
| Net change in assets and liabilities: | |||||||||||
| Customer accounts receivable | 2,905 | (642 | ) | ||||||||
| Merchandise inventories | 12,006 | (12,008 | ) | ||||||||
| Promotional material inventories | (11,236 | ) | (19,534 | ) | |||||||
| Prepaid expenses and other assets | 3,654 | (2,540 | ) | ||||||||
| Current income taxes payable | (7,241 | ) | (9,586 | ) | |||||||
| Accounts payable and other liabilities | (19,288 | ) | (8,208 | ) | |||||||
| Net cash used in operating activities | (15,446 | ) | (48,398 | ) | |||||||
| Investing Activities | |||||||||||
| Purchase of customer accounts receivable | (193,394 | ) | (193,775 | ) | |||||||
| Proceeds from sale of customer accounts receivable | 210,924 | 193,806 | |||||||||
| Net purchase of property and equipment | (3,788 | ) | (15,287 | ) | |||||||
| Net decrease (increase) in restricted cash | (240 | ) | 2,963 | ||||||||
| Net cash provided by (used in) investing activities | 13,502 | (12,293 | ) | ||||||||
| Financing Activities | |||||||||||
| Repayments of debt | (7,200 | ) | (7,511 | ) | |||||||
| Borrowings on asset backed line of credit | 130,999 | 278,427 | |||||||||
| Repayments on asset backed line of credit | (115,598 | ) | (207,545 | ) | |||||||
| Net cash provided by financing activities | 8,201 | 63,371 | |||||||||
| Net Decrease in Cash and Cash Equivalents | 6,257 | 2,680 | |||||||||
| Cash and Cash Equivalents, Beginning of Period | 7,916 | 11,870 | |||||||||
| Cash and Cash Equivalents, End of Period | $ | 14,173 | $ | 14,550 | |||||||
|
BLUESTEM BRANDS, INC. |
||||||||||||||||||||||||
|
Supplemental Financial Information - Segment Net Sales |
||||||||||||||||||||||||
|
(unaudited - in thousands, except average order size) |
||||||||||||||||||||||||
| 13-Weeks Ended | ||||||||||||||||||||||||
| May 5, 2017 | April 29, 2016 | Change | ||||||||||||||||||||||
| $ | % of Sales | $ | % of Sales | % | ||||||||||||||||||||
| Total sales by merchandise category: | ||||||||||||||||||||||||
| Home | $ | 106,529 | 23.1 | % | $ | 114,278 | 24.4 | % | (6.8 | )% | ||||||||||||||
| Entertainment | 73,110 | 15.8 | % | 70,330 | 15.0 | % | 4.0 | % | ||||||||||||||||
| Fashion | 281,897 | 61.1 | % | 283,611 | 60.6 | % | (0.6 | )% | ||||||||||||||||
| Total merchandise sales(a) | 461,536 | 100.0 | % | 468,219 | 100.0 | % | (1.4 | )% | ||||||||||||||||
| Corporate and other(b) | (5,226 | ) | (3,938 | ) | ||||||||||||||||||||
| Returns and allowances | (47,689 | ) | (53,138 | ) | (10.3 | )% | ||||||||||||||||||
| Commissions and other revenues | 19,001 | 17,373 | 9.4 | % | ||||||||||||||||||||
| Net sales | $ | 427,622 | $ | 428,516 | (0.2 | )% | ||||||||||||||||||
| Gross profit rate | 47.7 | % | 49.9 | % | (220 | ) | bps | |||||||||||||||||
| Sales and marketing expense | 28.8 | % | 31.0 | % | (220 | ) | bps | |||||||||||||||||
| Contribution margin rate(c) | 11.0 | % | 14.8 | % | (380 | ) | bps | |||||||||||||||||
| Average order size(d) | $ | 106 | $ | 107 | ||||||||||||||||||||
| Northstar Portfolio sales by merchandise category: | ||||||||||||||||||||||||
| Home | $ | 88,983 | 45.9 | % | $ | 91,137 | 47.6 | % | (2.4 | )% | ||||||||||||||
| Entertainment | 73,110 | 37.7 | % | 70,330 | 36.7 | % | 4.0 | % | ||||||||||||||||
| Fashion | 31,833 | 16.4 | % | 30,143 | 15.7 | % | 5.6 | % | ||||||||||||||||
| Total merchandise sales(a) | 193,926 | 100.0 | % | 191,610 | 100.0 | % | 1.2 | % | ||||||||||||||||
| Returns and allowances | (11,166 | ) | (12,745 | ) | (12.4 | )% | ||||||||||||||||||
| Commissions and other revenues | 4,286 | 4,312 | (0.6 | )% | ||||||||||||||||||||
| Net sales | $ | 187,046 | $ | 183,177 | 2.1 | % | ||||||||||||||||||
| Gross profit rate | 42.3 | % | 44.4 | % | (210 | ) | bps | |||||||||||||||||
| Sales and marketing expense | 15.3 | % | 20.8 | % | (550 | ) | bps | |||||||||||||||||
| Contribution margin rate(c) | 13.1 | % | 14.9 | % | (180 | ) | bps | |||||||||||||||||
| Average order size(d) | $ | 224 | $ | 230 | ||||||||||||||||||||
| Orchard Portfolio sales by merchandise category: | ||||||||||||||||||||||||
| Home | $ | 17,546 | 6.6 | % | $ | 23,141 | 8.4 | % | (24.2 | )% | ||||||||||||||
| Fashion | 250,064 | 93.4 | % | 253,468 | 91.6 | % | (1.3 | )% | ||||||||||||||||
| Total merchandise sales(a) | 267,610 | 100.0 | % | 276,609 | 100.0 | % | (3.3 | )% | ||||||||||||||||
| Returns and allowances | (36,523 | ) | (40,393 | ) | (9.6 | )% | ||||||||||||||||||
| Commissions and other revenues | 14,715 | 13,061 | 12.7 | % | ||||||||||||||||||||
| Net sales | $ | 245,802 | $ | 249,277 | (1.4 | )% | ||||||||||||||||||
| Gross profit rate | 52.6 | % | 55.1 | % | (250 | ) | bps | |||||||||||||||||
| Sales and marketing expense | 39.4 | % | 38.1 | % | 130 | bps | ||||||||||||||||||
| Contribution margin rate(c) | 13.2 | % | 17.1 | % | (390 | ) | bps | |||||||||||||||||
| Average order size(d) | $ | 75 | $ | 76 | ||||||||||||||||||||
(a) Total merchandise sales includes shipping and handling revenue and
is net of sales discounts.
(b) Corporate and other consist of
adjustments to Bluestem's net sales related to in-transit product sales
from shipping point to estimated time of delivery to the customer, net
sales of PayCheck Direct and the elimination of inter-segment activities.
(c)
Represents contribution margin as a percentage of net sales. Please
refer to the "Bluestem Brands, Inc. - Non-GAAP Financial Measures"
within this release for a reconciliation of non-GAAP financial measures
to GAAP and why Bluestem believes these are important measures of its
performance.
(d) Represents merchandise sales including shipping
and handling revenue divided by the number of merchandise orders
fulfilled during the fiscal period presented.
|
BLUESTEM BRANDS, INC. |
|||||||||||||||
|
Supplemental Financial Information - Credit Portfolio |
|||||||||||||||
|
(unaudited - in thousands, except average balance outstanding) |
|||||||||||||||
| 13-Weeks Ended | |||||||||||||||
| May 5, 2017 | April 29, 2016 | Change | |||||||||||||
| Net credit expense: | |||||||||||||||
| Credit management costs | $ | 18,822 | $ | 19,549 | (3.7 | )% | |||||||||
|
Provision for doubtful accounts - company-owned customer accounts |
5,940 | 3,794 | 56.6 | % | |||||||||||
|
Provision for doubtful accounts - loss on sale of Northstar
customer |
12,212 | 2,285 | 434.4 | % | |||||||||||
|
Provision for doubtful accounts - loss on sale of PayCheck Direct
customer |
3,766 | — | 100.0 | % | |||||||||||
| Provision for doubtful accounts | 21,918 | 6,079 | 260.6 | % | |||||||||||
| Finance charge and fee income | (1,180 | ) | (1,568 | ) | (24.7 | )% | |||||||||
| Servicing fee income and portfolio profit sharing | (7,108 | ) | (6,883 | ) | 3.3 | % | |||||||||
| Loss on servicing right | 1,250 | — | n/m | ||||||||||||
| Net credit expense | $ | 33,702 | $ | 17,177 | 96.2 | % | |||||||||
| Serviced Portfolio Selected Credit Data: | 13-Weeks Ended | ||||||||||||||
| May 5, 2017 | |||||||||||||||
| Revolving(b) | FreshStart(c) | ||||||||||||||
| Balance active accounts | 1,800 | 142 | |||||||||||||
| Average balance outstanding | $ | 776 | $ | 104 | |||||||||||
| Customer accounts receivable | $ | 1,395,741 | $ | 14,863 | |||||||||||
| Balances 30+ days delinquent(d) | $ | 235,428 | $ | 6,141 | |||||||||||
|
Balances 30+ days delinquent as a percentage of total customer
accounts |
16.9 | % | 41.3 | % | |||||||||||
| Average customer accounts receivable | $ | 1,443,936 | $ | 15,761 | |||||||||||
| Finance charge and fee income | $ | 94,145 | $ | 1,167 | |||||||||||
| Finance charge and fee income rate(f) | 26.1 | % | 11.4 | % | |||||||||||
| Net principal charge-offs | $ | 70,869 | $ | 2,751 | |||||||||||
| Net principal charge-off rate(g) | 19.6 | % | 26.7 | % | |||||||||||
| 13-Weeks Ended | |||||||||||||||
| April 29, 2016 | |||||||||||||||
| Revolving(b) | FreshStart(c) | ||||||||||||||
| Balance active accounts | 1,867 | 143 | |||||||||||||
| Average balance outstanding | $ | 730 | $ | 114 | |||||||||||
| Customer accounts receivable | $ | 1,363,342 | $ | 16,393 | |||||||||||
| Balances 30+ days delinquent(d) | $ | 216,535 | $ | 7,426 | |||||||||||
|
Balances 30+ days delinquent as a percentage of total customer
accounts |
15.9 | % | 45.3 | % | |||||||||||
| Average customer accounts receivable | $ | 1,407,855 | $ | 17,381 | |||||||||||
| Finance charge and fee income | $ | 97,541 | $ | 1,502 | |||||||||||
| Finance charge and fee income rate(f) | 27.7 | % | 14.3 | % | |||||||||||
| Net principal charge-offs | $ | 61,606 | $ | 2,960 | |||||||||||
| Net principal charge-off rate(g) | 17.5 | % | 28.2 | % | |||||||||||
(a) Includes $2.0 million additional provision due to the exit of
PayCheck Direct.
(b) Revolving serviced portfolio includes
Northstar Portfolio revolving credit accounts.
(c) FreshStart
serviced portfolio is Fingerhut's installment accounts.
(d)
Delinquent balances as of the customers' statement cycle dates prior to
or on fiscal period end.
(e) Delinquent balances as of the
customers' statement cycle dates prior to or on fiscal period end as a
percentage of total customer accounts receivable as of the customers'
statement cycle dates prior to or on fiscal period end.
(f)
Revolving finance charge and fee income rate represents finance charge
and fee income as a percentage of average customer accounts receivable
for the 13-week periods ended May 5, 2017 and April 29, 2016,
respectively, annualized to 52-week periods for comparability.
FreshStart finance charge and fee income rate represents finance charge
and fee income as a percentage of the 13 weeks of FreshStart related
sales five months prior to the 13-week periods ended May 5, 2017 and
April 29, 2016, respectively.
(g) Revolving net principal
charge-off rate represents net principal charge-offs as a percentage of
average customer accounts receivable for the 13-week periods ended
May 5, 2017 and April 29, 2016, respectively, annualized to 52-week
periods for comparability. FreshStart net principal charge-off rate
represents net principal charge-offs as a percentage of the 13 weeks of
FreshStart related sales five months prior to the 13-week periods ended
May 5, 2017 and April 29, 2016, respectively.
BLUESTEM BRANDS, INC.
Non-GAAP Financial Measures
(unaudited
- in thousands)
To supplement the consolidated financial information of Bluestem Brands, Inc. and its subsidiaries for the 13-weeks ended May 5, 2017, which are presented in accordance with GAAP, Bluestem uses the following measures that are not in accordance with, or an alternative to, measures prepared in accordance with GAAP ("non-GAAP measures"):
Contribution margin, as presented, is defined as net sales less cost of goods sold, sales and marketing expenses and net credit expense. Contribution Margin represents the combined performance of merchandising, marketing and credit management activities.
Adjusted general and administrative expenses, as presented, is defined as general and administrative expenses adjusted for stock-based compensation expense, integration costs, restructuring costs and other.
Adjusted EBITDA, as presented, represents net loss before income tax benefit, interest expense, net, amortization and depreciation expense, loss on impairment, loss on servicing right, stock-based compensation expense, integration costs, restructuring costs and other.
Free cash flow, as presented, represents Adjusted EBITDA, as defined above, less maintenance capital expenditures.
Program agreement adjusted EBITDA, as presented, represents Adjusted EBITDA, as defined above, plus adjustments allowed for under Bluestem's Program Agreement including certain transaction-related expected cost savings, Orchard Portfolio adjusted EBITDA prior to Bluestem’s acquisition of the Orchard Portfolio, certain non-cash charges, certain one-time charges and expected cost savings reflecting the projected impact of cost synergies such as savings in print and paper, transportation, credit operations and marketing. Other includes charges such as, but not limited to or necessarily inclusive of, strategic investments, system implementations, executive recruiting and public company cost.
Lender adjusted EBITDA, as presented, represents Program Agreement Adjusted EBITDA, as defined above, less designated unrestricted subsidiaries, which consists of the subsidiary making sales for our PayCheck Direct business, and incremental expected cost savings as allowed for under Bluestem's lender agreements.
Leverage ratio debt, as presented, is defined as short-term debt plus long-term debt plus deferred charges and less cash and cash equivalents.
Program agreement leverage ratio, as presented, represents Leverage Ratio Debt, as defined above, divided by Program Agreement Adjusted EBITDA, as defined above.
Lender leverage ratio, as presented, represents Leverage Ratio Debt, as defined above, divided by Lender Adjusted EBITDA, as defined above.
Working capital, as presented, is defined as total current assets less total current liabilities.
Adjusted working capital, as presented, represents working capital, as defined above, plus current income taxes payable.
Program agreement net liquidity, as presented, is defined as cash and cash equivalents less credit card receivables ("Lender cash and cash equivalents") as defined by the lender plus availability under the asset backed line of credit.
Lender net liquidity, as presented, is defined as program net liquidity, as defined above, less unrestricted subsidiary cash as defined by the lender.
We provide these measures because we believe they are useful to investors in evaluating our operating performance and financial condition compared to other companies in our industry and to evaluate our financial condition and operating performance compared to term loan and program agreement financial covenants. As non-GAAP measures, they have limitations in that they do not reflect all of the amounts associated with Bluestem's results of operations as determined in accordance with GAAP and are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures should be considered along with the GAAP financial presentation and should not be considered in isolation or as a substitute for results reported in accordance with GAAP. In addition, our calculations of contribution margin, adjusted general and administrative expense, adjusted EBITDA, free cash flow, program agreement adjusted EBITDA, lender adjusted EBITDA, lender leverage ratio debt, program agreement leverage ratio, lender leverage ratio, working capital, adjusted working capital, and program and lender net liquidity may not be comparable to the calculations of such measures by other companies.
The following table reconciles contribution margin from the nearest GAAP performance measure, which is net loss:
| 13-Weeks Ended | |||||||
| May 5, 2017 | April 29, 2016 | ||||||
| Contribution margin: | |||||||
| Net loss | $ | (30,453 | ) | $ | (19,171 | ) | |
| Income tax benefit | (16,034 | ) | (11,923 | ) | |||
| Interest expense, net | 12,865 | 13,523 | |||||
| Loss on impairment | 230 | — | |||||
| Amortization and depreciation not included in cost of sales | 15,413 | 16,234 | |||||
| General and administrative expenses | 65,035 | 64,960 | |||||
| Contribution margin | $ | 47,056 | $ | 63,623 | |||
| Contribution margin % of net sales | 11.0 | % | 14.8 | % | |||
The following table reconciles adjusted general and administrative expenses from the nearest GAAP performance measure, which is general and administrative expenses:
| 13-Weeks Ended | |||||||
| May 5, 2017 | April 29, 2016 | ||||||
| Adjusted general and administrative expenses: | |||||||
| General and administrative expenses | $ | 65,035 | $ | 64,960 | |||
| Less: | |||||||
| Stock-based compensation expense | 1,234 | 1,280 | |||||
| Integration costs | — | 2,069 | |||||
| Restructuring costs | 12,160 | — | |||||
| Other | 1,977 | 443 | |||||
| Adjusted general and administrative expenses | $ | 49,664 | $ | 61,168 | |||
| Adjusted general and administrative expenses % of net sales | 11.6 | % | 14.3 | % | |||
The following table reconciles adjusted EBITDA from the nearest GAAP performance measure, which is net loss:
| 13-Weeks Ended | |||||||
| May 5, 2017 | April 29, 2016 | ||||||
| Adjusted EBITDA: | |||||||
| Net loss | $ | (30,453 | ) | $ | (19,171 | ) | |
| Income tax benefit | (16,034 | ) | (11,923 | ) | |||
| Interest expense, net | 12,865 | 13,523 | |||||
| Amortization and depreciation expense | 16,801 | 17,318 | |||||
| Loss on impairment | 230 | — | |||||
| EBITDA | (16,591 | ) | (253 | ) | |||
| Loss on servicing right | 1,250 | — | |||||
| Stock-based compensation expense | 1,234 | 1,280 | |||||
| Integration costs | — | 2,069 | |||||
| Restructuring costs | 17,909 | — | |||||
| Other | 1,977 | 570 | |||||
| Adjusted EBITDA | $ | 5,779 | $ | 3,666 | |||
| Adjusted EBITDA % of net sales | 1.4 | % | 0.9 | % | |||
The following table reconciles free cash flow from adjusted EBITDA:
| 13-Weeks Ended | |||||||
| May 5, 2017 | April 29, 2016 | ||||||
| Free cash flow: | |||||||
| Adjusted EBITDA | $ | 5,779 | $ | 3,666 | |||
| Less: | |||||||
| Maintenance capital expenditures | 1,077 | 4,927 | |||||
| Free cash flow | $ | 4,702 | $ | (1,261 | ) | ||
| Free cash flow % of net sales | 1.1 | % | (0.3 | )% | |||
The following table presents trailing twelve months lender adjusted EBITDA and leverage ratios:
| Trailing Twelve Fiscal Months | |||||||||||
| May 5, 2017 | April 29, 2016 | ||||||||||
| Adjusted EBITDA | $ | 92,977 | $ | 127,593 | |||||||
| Expected cost savings (a) | 19,070 | — | |||||||||
| Orchard pre-acquisition adjusted EBITDA | — | 12,134 | |||||||||
| Non-cash charges | 629 | 282 | |||||||||
| One-time charges | 858 | — | |||||||||
| Other (b) | 16,895 | 6,899 | |||||||||
| Program agreement adjusted EBITDA | 130,429 | 146,908 | |||||||||
| Unrestricted subsidiary (c) | 10,604 | — | |||||||||
| Incremental expected cost savings (a,d) | 2,121 | — | |||||||||
| Lender adjusted EBITDA | $ | 143,154 | $ | 146,908 | |||||||
| Leverage ratio debt: | |||||||||||
| Short-term debt | |||||||||||
| Current portion of term loan, net of discount | $ | 23,943 | $ | 24,881 | |||||||
| Asset backed line of credit | 37,244 | 92,285 | |||||||||
| Capital lease obligation and other | 2,155 | 2,173 | |||||||||
| Total short-term debt | 63,342 | 119,339 | |||||||||
| Term loan, net of discount | 437,502 | 481,316 | |||||||||
| Capital lease obligation | 1,807 | 1,995 | |||||||||
| Total long-term debt | 439,309 | 483,311 | |||||||||
| Total debt | 502,651 | 602,650 | |||||||||
| Plus: Deferred charges | 8,759 | 11,780 | |||||||||
| Less: Cash and cash equivalents | (4,672 | ) | (2,763 | ) | |||||||
| Leverage ratio debt | $ | 506,738 | $ | 611,667 | |||||||
| Program agreement leverage ratio | 3.89 | 4.16 | |||||||||
| Program agreement leverage ratio requirement | 5.00 | 5.00 | |||||||||
| Lender leverage ratio | 3.54 | 4.16 | |||||||||
|
Lender leverage ratio requirement |
4.50 | 4.75 | |||||||||
(a) Expected cost savings reflects the projected impact of cost
synergies such as, but not limited to or necessarily inclusive of the
implemented headcount reductions, catalog circulation reductions and
anticipated vendor savings.
(b) Other includes charges such as, but
not limited to or necessarily inclusive of, strategic investment
charges, system implementation charges, executive recruiting and pubic
company costs.
(c) Bluestem Enterprises, Inc. ("BEI"), a subsidiary
of Bluestem, was designated as an unrestricted subsidiary under
Bluestem's term loan agreement at the end of fiscal 2016, which requires
BEI's results of operations to be excluded from Bluestem's consolidated
adjusted EBITDA calculation per the term loan agreement.
(d) Due to
the unrestricted subsidiary designation, incremental expected cost
savings above Program Agreement threshold limitations are able to be
included in lender adjusted EBITDA.
The following table presents adjusted working capital and net liquidities:
| May 5, 2017 | April 29, 2016 | |||||||||
| Total current assets | $ | 341,300 | $ | 456,660 | ||||||
| Total current liabilities | 377,040 | 427,463 | ||||||||
| Working capital | $ | (35,740 | ) | $ | 29,197 | |||||
| Plus: Current income taxes payable (e) | 26,818 | 24,997 | ||||||||
| Adjusted working capital | $ | (8,922 | ) | $ | 54,194 | |||||
| Cash & cash equivalents | $ | 14,173 | $ | 14,550 | ||||||
| Less: Third party credit card receivables | 9,501 | 11,787 | ||||||||
| Lender cash & cash equivalents | 4,672 | 2,763 | ||||||||
| Plus: Asset backed line availability | 81,605 | 63,357 | ||||||||
| Program agreement net liquidity | $ | 86,277 | $ | 66,120 | ||||||
| Less: Unrestricted subsidiary cash | (30 | ) | — | |||||||
| Lender net liquidity | $ | 86,247 | $ | 66,120 | ||||||
| Program agreement and lender net liquidity requirement | $ | 40,000 | $ | 40,000 | ||||||
(e) Current income taxes payable are substantially all inter-company liabilities among entities consolidated within Bluestem Group Inc.