GMTN Gander Mountain Company (MM)

ST. PAUL, Minn., Dec. 8 /PRNewswire-FirstCall/ -- Gander Mountain Company (http://www.gandermtn.com/) (NASDAQ:GMTN), the nation's largest retail network of stores for hunting, fishing, boating, camping, marine and outdoor lifestyle products and services, today reported sales of $269.9 million for the quarter ended November 1, 2008, an increase of 4.0 percent over the prior year period. Comparable store sales decreased 6.5 percent in the third quarter. The 2008 period includes $14.4 million in revenue due to the expansion of the company's direct marketing business through Overton's. Net income for the third quarter was $0.77 million, or $0.03 per share, compared to a net loss of $5.1 million, or $0.25 per share, in the third quarter of fiscal 2007. Per share information for the most recent quarter reflects the issuance of an additional 4,067,797 shares of common stock in December 2007, the proceeds of which were used to partially fund the Overton's acquisition. For the 39 weeks ended November 1, 2008, the company reported sales of $730.5 million, an increase of 12.1 percent over the comparable period in 2007. The company reported a net loss for the 39-week period of $28.5 million, or $1.18 per share, compared with a net loss of $37.6 million, or $1.86 per share, for the 39 weeks ended November 3, 2007. Financial highlights for the third quarter: * On retail segment sales of $256 million, a 1.6% decrease, retail segment net income increased to $3.7 million compared to a net loss of $5.1 million for the comparable quarter of fiscal 2007. * Retail segment SG&A costs improved $7.9 million, or 272 basis points as a percentage of sales, in the third quarter of fiscal 2008 due to cost reductions in both store operating and general and administrative expenses. However, included in consolidated SG&A expenses were $8.0 million in expenses related to the direct segment, thus consolidated SG&A expenses were flat year over year. * Current availability under the company's existing credit facility at December 5, 2008 was $59 million as compared with $54 million as of December 7, 2007. "While the current retail environment is as difficult as any in recent memory, our efforts to conserve costs, improve operating margins, reduce capital expenditures and improve operating cash flows have borne results," said David C. Pratt, Chairman and interim Chief Executive Officer. "We are applying a more disciplined approach to our operations, capital, and expense decisions and we remain pleased with the operational progress visible in these results at Gander Mountain." After this earnings release has been furnished to the SEC, a pre-recorded call offering additional comments on the quarter will be available to all investors on the company's website at http://www.gandermtn.com/, both as a webcast and in the form of a transcript. About Gander Mountain Company Gander Mountain Company (NASDAQ:GMTN), headquartered in Saint Paul, Minnesota, is the nation's largest retail network of stores for hunting, fishing, camping, boating, marine, and outdoor lifestyle apparel and footwear, products and services. Since 1960, the Gander Mountain brand has offered an expanding assortment of competitively priced outdoor equipment, technical apparel and footwear, as well as gunsmith, archery, boat, ATV and marine services. The stores feature national, regional and local brands as well as the company's owned brands. Focused on a "We Live Outdoors" culture, Gander Mountain dedicates itself to creating outdoor memories. There are 116 conveniently located Gander Mountain outdoor lifestyle stores in 23 states, and direct sales through catalogs and at http://www.gandermtn.com/. For the nearest store location call 800-282-5993 or visit http://www.gandermtn.com/. Gander Mountain is also the parent company of Overton's (http://www.overtons.com/), a leading catalog and Internet based retailer of products for boating and other water sports enthusiasts. Cautionary Note Regarding Forward-Looking Statements Any statements in this release that are not historical or current facts are forward-looking statements. All forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward- looking statements. Certain of these risks and uncertainties are described in the "Risk Factors" section of the company's Annual Report on Form 10-K for fiscal 2007 and other required reports, as filed with the SEC, which are available at http://www.gandermtn.com/ and at the SEC's Website at http://www.sec.gov/. Gander Mountain Company Consolidated Statements of Operations - Unaudited (In thousands, except per share data) 13 Weeks Ended 39 Weeks Ended November November November November 1, 3, 1, 3, 2008 2007 2008 2007 Sales $269,920 $259,539 $730,455 $651,799 Cost of goods sold 200,160 189,445 551,183 496,293 Gross profit 69,760 70,094 179,272 155,506 Operating expenses: Selling, general and administrative expenses 64,975 64,946 190,871 171,754 Exit costs, impairment and other charges (1,112) 1,582 (20) 2,208 Pre-opening expenses - 3,041 2,035 4,753 Income (loss) from operations 5,897 525 (13,614) (23,209) Interest expense, net 4,950 5,543 14,301 14,049 Income (loss) before income taxes 947 (5,018) (27,915) (37,258) Income tax provision 182 125 619 375 Net Income (loss) $765 $(5,143) $(28,534) $(37,633) Basic and diluted loss per common share $0.03 $(0.25) $(1.18) $(1.86) Weighted average common shares outstanding 24,162 20,362 24,086 20,255 Gander Mountain Company Consolidated Balance Sheets (In thousands) November 1, February 2, 2008 2008 Assets (Unaudited) Current assets: Cash and cash equivalents $1,651 $2,622 Accounts receivable 21,408 10,992 Income taxes receivable 450 486 Inventories 441,860 403,683 Prepaids and other current assets 16,554 15,987 Total current assets 481,923 433,770 Property and equipment, net 167,639 168,685 Goodwill 54,332 48,803 Acquired intangible assets, net 19,345 25,098 Other assets, net 1,985 3,576 Total assets $725,224 $679,932 Liabilities and shareholders' equity Current liabilities: Borrowings under credit facility $306,264 $246,013 Accounts payable 88,327 72,563 Accrued and other current liabilities 48,363 60,606 Notes payable - related parties 10,000 - Current maturities of long term debt 14,077 8,247 Total current liabilities 467,031 387,429 Long term debt 56,801 64,173 Deferred income taxes 7,406 7,113 Other long term liabilities 27,476 27,397 Shareholders' equity: Preferred stock ($.01 par value, 5,000,000 shares authorized; no shares issued and outstanding) - - Common stock ($.01 par value, 100,000,000 shares authorized; 24,118,755 and 24,049,064 shares issued and outstanding) 241 241 Additional paid-in-capital 278,334 277,110 Accumulated deficit (112,065) (83,531) Total shareholders' equity 166,510 193,820 Total liabilities and shareholders' equity $725,224 $679,932 Gander Mountain Company Consolidated Statements of Cash Flows - Unaudited (In thousands) 39 Weeks Ended November 1, November 3, Operating activities 2008 2007 Net loss $(28,534) $(37,633) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 23,434 19,770 Exit costs, impairment and other charges (1,205) - Stock-based compensation expense 989 1,278 (Gain)/ loss on disposal of assets (62) 60 Change in operating assets and liabilities: Accounts receivable (10,380) (12,108) Inventories (38,177) (122,435) Prepaids and other current assets (567) (2,651) Other assets (121) (1,483) Accounts payable and other liabilities 4,786 50,407 Deferred income taxes 293 - Net cash used in operating activities (49,544) (104,795) Investing activities Purchases of property and equipment (16,195) (40,548) Acquisition of business and related expenses (172) (7,080) Proceeds from sale of assets 77 - Net cash used in investing activities (16,290) (47,628) Financing activities Borrowings under credit facility, net of repayments 60,251 139,093 Proceeds from short term notes payable - related parties 10,000 - Proceeds from long term debt - 13,082 Reductions in long term debt (5,623) (2,463) Proceeds from exercise of stock options and employee stock purchases 235 3,053 Net cash provided by financing activities 64,863 152,765 Net (decrease) increase in cash (971) 342 Cash, beginning of period 2,622 1,342 Cash, end of period $1,651 $1,684 Non-cash investing activities: During the 39 weeks ended November 1, 2008 and November 3, 2007, the Company acquired equipment totaling approximately $4.1 million and $2.6 million, respectively, that was financed through capital leases. Additionally, during the 39 weeks ended November 1, 2008 and November 3, 2007, there were $1.5 million and $1.2 million, respectively, in non-cash accruals and reclassifications for property and equipment that did not require the use of cash. These amounts are excluded from Purchases of property and equipment in this statement of cash flows. Gander Mountain Company Segment Information - Unaudited (In thousands) Statement of Operations data: 13 Weeks Ended 13 Weeks Ended November 1, 2008 November 3, 2007 Retail Direct Total Retail Direct Total Sales $255,506 $14,414 $269,920 $259,539 $- $259,539 Depreciation and amortization 7,447 326 7,773 7,086 - 7,086 Income (loss) from operations 8,086 (2,189) 5,897 525 - 525 Net income (loss) 3,705 (2,940) 765 (5,143) - (5,143) 39 Weeks Ended 39 Weeks Ended November 1, 2008 November 3, 2007 Retail Direct Total Retail Direct Total Sales $656,644 $73,811 $730,455 $651,799 $- $651,799 Depreciation and amortization 22,319 1,115 23,434 19,770 - 19,770 Income (loss) from operations (13,630) 16 (13,614) (23,209) - (23,209) Net income (loss) (25,940) (2,594) (28,534) (37,633) - (37,633) Balance Sheet data: As of November 1, 2008 As of November 3, 2007 Retail Direct Total Retail Direct Total Total assets $631,448 $93,776 $725,224 $691,011 $- $691,011 Inventories 420,780 21,080 441,860 474,953 - 474,953 Goodwill and intangible assets 7,007 66,670 73,677 7,204 - 7,204 Long term debt 21,801 35,000 56,801 25,901 - 25,901 DATASOURCE: Gander Mountain Company CONTACT: Investor Relations, Bob Vold or Brad Kanter, +1-651-325-4300, or Media, David Ewald, +1-651-290-6276, Cell, +1-612-490-2650, all of Gander Mountain Company Web site: http://www.gandermountain.com/ http://www.overtons.com/

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