HUDSON, Ohio, May 24 /PRNewswire/ -- Jo-Ann Stores, Inc. (NYSE: JAS.A, JAS.B) today announced financial results for its fiscal first quarter ended May 1, 1999. Net income for the quarter was $2.3 million or $0.12 per diluted share compared to net income, excluding the after-tax effect of a prior year non-recurring charge related to the House of Fabrics acquisition, of $3.1 million or $0.15 per diluted share for the first quarter of fiscal 1999. Net sales for the first quarter increased 16.9% to $295.7 million from $252.9 million in the first quarter of last year. Of this increase, $31.0 million was attributable to the acquired House of Fabrics units, which were included in Jo-Ann Stores' results for eight of the thirteen weeks in the first quarter of fiscal 1999. Excluding the impact of these acquired units, total sales increased 5.1% for the quarter, or $11.8 million. The majority of this increase is attributable to a greater number of Jo-Ann etc superstores in operation. Comparable store sales increased 1.8% for the quarter. Operating profit ("EBIT"), excluding the prior year non-recurring charge, increased 23.1% to $8.0 million for the quarter and improved as a rate to sales to 2.7%, from $6.5 million, or 2.6% of sales in the first quarter of the prior year. Earnings before interest, taxes, depreciation and amortization ("EBITDA"), excluding the prior year non-recurring charge, increased 21.7% to $15.7 million for the quarter and improved as a rate to sales to 5.3% from $12.9 million or 5.1% of sales in the first quarter of the prior year. Alan Rosskamm, Chairman of the Board and Chief Executive Officer, commented, "Our first quarter results were within our planned expectations, delivering a 23.1% increase on the operating profit line on a 16.9% sales increase. In addition, operating margins improved slightly as a rate to sales. Nevertheless, earnings were down as expected due to the higher level of interest expense." Mr. Rosskamm continued, "From an operations standpoint, we are on plan with our interim logistics efforts to ensure that product is in place in our stores for the important third and fourth quarters. That effort calls for higher inventory carrying levels in the first and second quarters, as well as incurring the incremental handling and freight costs of this inventory earlier in the year. We believe the steps we have taken to date, and our efforts in the second quarter will be rewarded in the second half of the year." Mr. Rosskamm concluded, "We are on schedule with our planned real estate program in the current year of 18 - 20 superstore openings, coupled with 10 - 12 new and 25 relocations of our Jo-Ann Fabrics and Crafts traditional stores. We successfully completed our previously announced financing initiatives early in the second quarter. The capital structure we have put into place allows the Company to execute its growth plans over the next several years, bringing creativity to America through continued rollout of our superstore concept in major metropolitan markets and continuing to reposition and expand our traditional store base in small and middle markets. These investments in our store base, coupled with the infrastructure investments we are making in systems and logistics, will allow Jo-Ann Stores to continue to grow as the nation's leading fabric and craft retailer." During the first quarter of fiscal 2000, Jo-Ann Stores opened 4 traditional stores and 3 superstores, relocated 5 traditional stores and closed 14 smaller or underperforming traditional stores. During the first week of May, the Company issued $150.0 million of 10-3/8% senior subordinated notes due 2007. In addition, the Company entered into a new five-year $300.0 million senior credit facility with a group of financial institutions. Proceeds from the senior subordinated notes, coupled with borrowings under the new senior credit facility, were used to refinance the Company's prior credit facility. Jo-Ann Stores, Inc., the leading national fabric and craft retailer with locations in 49 states, operates 1,024 Jo-Ann Fabrics and Crafts traditional stores and 27 Jo-Ann etc superstores. This press release contains certain forward-looking statements that are subject to risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company's Securities and Exchange Commission filings. JO-ANN STORES, INC. Consolidated Statements of Income (Unaudited) Thirteen Weeks Ended May 1, May 2, 1999 1998 (Millions of dollars, except per share data) Net sales $ 295.7 $ 252.9 Cost of sales 157.7 136.8 Selling, general and administrative expenses 122.3 103.2 Depreciation and amortization 7.7 6.4 Non-recurring charge -- 12.2 Operating profit (loss) 8.0 (5.7) Interest expense, net 4.3 1.5 Income (loss) before income taxes 3.7 (7.2) Income tax provision (benefit) 1.4 (2.8) Net income (loss) $ 2.3 $ (4.4) Net income (loss) per common share Basic and diluted $ 0.12 $ (0.23) Diluted average shares and equivalents outstanding (millions): Basic 18.7 18.8 Diluted 19.1 18.8 OTHER INFORMATION: EBITDA-excluding non-recurring charge $ 15.7 $ 12.9 Net income per common share (diluted): Excluding after-tax effect of non-recurring charge $ 0.12 $ 0.15 Number of stores open at period end: Traditional stores 1,024 1,054 Superstores 27 11 1,051 1,065 Square footage at period end (000's): Traditional stores 14,075 13,871 Superstores 1,259 516 15,334 14,387 Average square footage per store: Traditional stores 13,700 13,200 Superstores 46,600 46,900 JO-ANN STORES, INC. Condensed Consolidated Balance Sheets (Unaudited) May 1, May 2, January 30, 1999 1998 1999 (Millions of dollars) Assets Current assets: Cash and temporary cash investments $14.9 $19.6 $20.4 Inventories 446.3 359.4 420.2 Other current assets 44.1 64.3 49.5 Total current assets 505.3 443.3 490.1 Property and equipment, net 165.3 116.5 164.0 Goodwill, net 37.0 33.6 37.2 Other assets 10.4 15.9 10.1 Total assets $718.0 $609.3 $701.4 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $142.1 $143.5 $150.4 Other current liabilities 45.2 54.3 58.8 Total current liabilities 187.3 197.8 209.2 Long-term debt 240.1 132.0 182.5 Other liabilities 38.6 41.9 50.7 Shareholders' equity 252.0 237.6 259.0 Total liabilities and shareholders' equity $718.0 $609.3 $701.4  