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|Saks Incorporated Completes Sale of Its Northern Department Store Group; Company Declares $4 Per Share Special Cash Dividend|
BIRMINGHAM, Ala.--(BUSINESS WIRE)--March 6, 2006--Retailer Saks Incorporated (NYSE: SKS) (the "Company" or "Saks") today announced it has completed the sale of its Northern Department Store Group ("NDSG") to The Bon-Ton Stores, Inc. (NASDAQ: BONT; "Bon-Ton") for a total purchase price (including the assumption of certain liabilities) of approximately $1.185 billion. Net after-tax proceeds from the transaction will total approximately $1.0 billion.
Last week, the Company announced the intention of its Board of Directors to declare a special cash dividend of $4 per share upon the closing of the NDSG transaction. The Company announced today that its Board of Directors has authorized the special dividend. The special dividend will be payable on May 1, 2006 to shareholders of record as of April 14, 2006. The dividend payout will total approximately $550 million based on the current shares outstanding. Douglas E. Coltharp, Chief Financial Officer of the Company, commented, "We believe this special dividend will represent an efficient and straightforward way to distribute to all of our shareholders a substantial portion of the NDSG sale proceeds."
Bon-Ton's acquisition of NDSG was effective midnight on March 4, 2006. The acquisition included NDSG's operations consisting of real and personal property, operating leases, and inventory associated with 142 NDSG units (31 Carson Pirie Scott stores, 14 Bergner's stores, 10 Boston Store stores, 40 Herberger's stores, and 47 Younkers stores); the administrative/headquarters facilities in Milwaukee, Wisconsin; and distribution centers located in Rockford, Illinois, Naperville, Illinois; Green Bay, Wisconsin, and Ankeny, Iowa.
Stephen I. Sadove, Chief Executive Officer, noted, "The Company's Board of Directors and management team remain actively engaged in creating shareholder value. In 2005, the Company established a process to carefully consider its mix of businesses and their future potential to create this value. This process identified a significant opportunity to create value through monetizing assets in our slower growth traditional department store businesses. Consequently, we sold our Proffitt's/McRae's business to Belk, Inc. in July 2005 and our NDSG business to Bon-Ton this month. In addition, we are currently exploring strategic alternatives for our Parisian business, which could include its sale.
"As we engage in the review of strategic alternatives for Parisian, we are intensely focused on improving the financial performance of Saks Fifth Avenue Enterprises and appropriately sizing our corporate infrastructure."
As part of the transaction, the Company has entered into a fee for services agreement to provide Bon-Ton with specified support services, including information technology, credit services, and other back office support functions, for a limited period of time.
Management estimates a pre-tax book gain ranging from $300 million to $310 million and an after-tax book gain ranging from $120 million to $130 million on the transaction. These estimates are preliminary and are subject to change.
Goldman Sachs & Co. and Citigroup Corporate and Investment Banking were retained to advise the Company on the NDSG transaction.
Saks Incorporated operates Saks Fifth Avenue Enterprises (SFAE), which consists of 55 Saks Fifth Avenue stores, 50 Saks Off 5th stores, and saks.com. The Company also operates 39 Parisian stores and 57 Club Libby Lu specialty stores. On January 9, 2006, the Company announced it is exploring strategic alternatives for Parisian.
The information contained in this press release that addresses future results or expectations is considered "forward-looking" information within the definition of the Federal securities laws. Forward-looking information in this document can be identified through the use of words such as "may," "will," "intend," "plan," "project," "expect," "anticipate," "should," "would," "believe," "estimate," "contemplate," "possible," and "point." The forward-looking information is premised on many factors, some of which are outlined below. Actual consolidated results might differ materially from projected forward-looking information if there are any material changes in management's assumptions.
The forward-looking information and statements are or may be based on a series of projections and estimates and involve risks and uncertainties. These risks and uncertainties include such factors as: the level of consumer spending for apparel and other merchandise carried by the Company and its ability to respond quickly to consumer trends; adequate and stable sources of merchandise; the competitive pricing environment within the department and specialty store industries as well as other retail channels; the effectiveness of planned advertising, marketing, and promotional campaigns; favorable customer response to relationship marketing efforts of proprietary credit card loyalty programs; appropriate inventory management; effective expense control; successful operation of the Company's proprietary credit card strategic alliance with HSBC Bank Nevada, N.A.; geo-political risks; changes in interest rates; the outcome of the formal investigation by the Securities and Exchange Commission and the inquiry the Company understands has been commenced by the Office of the United States Attorney for the Southern District of New York into the matters that were the subject of the investigations conducted during 2004 and 2005 by the Audit Committee of the Company's Board of Directors and any related matters that may be under investigation or the subject of inquiry; the ultimate amount of reimbursement to vendors of improperly collected markdown allowances; the ultimate impact of improper timing of recording of inventory markdowns; the ultimate impact of incorrect timing of recording of vendor markdown allowances; the outcome of the shareholder litigation that has been filed relating to the matters that were the subject of the Audit Committee's initial investigation; the effects of the delay in the filing with the SEC of the Company's Form 10-K for the fiscal year ended January 29, 2005 and its Quarterly Reports on Form 10-Q for the fiscal quarters ended April 30, 2005 and July 30, 2005; and the success of the Company's exploration of strategic alternatives for its Parisian business.
For additional information regarding these and other risk factors, please refer to Exhibit 99.1 to the Company's Form 10-K for the fiscal year ended January 29, 2005 filed with the SEC, which may be accessed via EDGAR through the Internet at www.sec.gov.
Management undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events, or otherwise. Persons are advised, however, to consult any further disclosures management makes on related subjects in its reports filed with the SEC and in its press releases.
CONTACT: Saks Incorporated