Pacific Sunwear Q1'FY14 comparable store sales up 3%

The forecasted second quarter non-GAAP loss from continuing operations per diluted share guidance range is based on the following assumptions:

-Comparable store sales from -5% to flat;

Pacific Sunwear of California, Inc., announced that net sales from continuing operations for the first quarter of fiscal 2014 ended May 3, 2014, were #

-Revenue from $200 million to $210 million;-Gross margin rate, including buying, distribution and occupancy, of 26% to 29%;

-SG&A expenses in the range of $56 million to $58 million; and Applicable non-GAAP adjustments are tax effected using a normalized annual income tax rate.

 

The Company's second fiscal quarter of 2014 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.

 

Discontinued Operations

In accordance with applicable accounting literature and consistent with the Company's financial statement presentation in its fiscal 2013 annual report, the Company has reclassified the results of operations of its closed stores as discontinued operations for all periods presented, as applicable.

 

Derivative Liability

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 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).