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8-K - 8-K - GENESCO INCform8k113012.htm
EX-2 - EXHIBIT - GENESCO INCexhibit992113012.htm
Exhibit 99.1

Financial Contact:     James S. Gulmi (615) 367-8325
Media Contact:    Claire S. McCall (615) 367-8283


GENESCO REPORTS THIRD QUARTER FISCAL 2013 RESULTS
--Third Quarter Comparable Store Sales Increase 4%--
--Company Raises Fiscal 2013 Outlook--

NASHVILLE, Tenn., Nov. 30, 2012 --- Genesco Inc. (NYSE:GCO) today reported earnings from continuing operations for the third quarter ended October 27, 2012, of $41.0 million, or $1.71 per diluted share, compared to earnings from continuing operations of $26.2 million, or $1.09 per diluted share, for the third quarter ended October 29, 2011. Fiscal 2013 third quarter results reflect pretax items of $3.4 million, or $0.13 per diluted share after tax, including compensation expense related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited in June 2011, asset impairments and other legal matters, decreased by tax rate adjustments of $0.40 per diluted share. As previously announced, because the obligation to pay the deferred purchase price for Schuh is contingent upon the continued employment of the payees, U.S. Generally Accepted Accounting Principles require that it be treated as compensation expense. Fiscal 2012 third quarter results reflect pretax items of $3.4 million, or $0.12 per diluted share after tax, including compensation expense related to deferred purchase price payments in connection with the acquisition of Schuh Group Limited in June 2011, acquisition expenses and other legal matters.

Adjusted for the items described above in both periods, earnings from continuing operations were $34.5 million, or $1.44 per diluted share, for the third quarter of Fiscal 2013, compared to earnings from continuing operations of $29.1 million, or $1.21 per diluted share, for the third quarter of Fiscal 2012. For consistency with Fiscal 2013's previously announced earnings expectations and with previously reported adjusted results for the prior year period, the Company believes that the disclosure of the results from continuing operations adjusted for these items will be useful to investors. Additionally, the Company believes that the presentation of earnings from continuing operations before the compensation expense associated with the Schuh deferred purchase price will enable investors to understand the effect attributable to incorporating a continuing employment condition into the obligation to pay deferred purchase price. Since the compensation expense is a non-cash charge until the deferred purchase price is actually paid, the Company believes that earnings including such expense may not be fully reflective of the Company's ongoing results or indicative of its prospects. A reconciliation of earnings and earnings per share from continuing operations in accordance with U.S. Generally Accepted Accounting Principles with the adjusted earnings and earnings per share numbers presented in this paragraph is set forth on Schedule B to this press release.

Net sales for the third quarter of Fiscal 2013 increased 7.8% to $664.5 million from $616.5 million in the third quarter of Fiscal 2012. Comparable store sales in the third quarter of Fiscal 2013 increased by 4% for the Company, with an 8% increase in the Journeys Group, a 5% decrease in the Lids Sports Group, a 9% increase in the Schuh Group, and a 6% increase in Johnston & Murphy Group.

Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, “Our third quarter results were highlighted by strong earnings growth as we were able to meaningfully leverage expenses on a mid single digit comparable store sales gain.

“The fourth quarter got off to a slow start with November comparable store sales down 4% compared with a 12% increase in November last year. We estimate that Hurricane Sandy reduced



Exhibit 99.1

November comparable store sales by approximately 1% to 2%. For the long Thanksgiving weekend, U.S. comparable store sales increased by low single digits.”

Dennis also discussed the Company's updated outlook. "Based on our third quarter performance and our view of current trends in the marketplace, we are raising our Fiscal 2013 guidance. We now expect full year adjusted diluted earnings per share to be in the range of $5.00 to $5.08, an increase from our previous guidance range of $4.88 to $5.00. This new outlook represents an increase of 22% to 24% over last year's adjusted earnings per share of $4.09. Consistent with previous guidance, these expectations do not include expected non-cash asset impairments and other charges, which are projected to total approximately $1.5 million to $2.5 million pretax, or $0.04 to $0.07 per share, after tax, in Fiscal 2013. In addition, this guidance does not reflect compensation expense associated with the Schuh deferred purchase price as described above, totaling approximately $12.0 million, or $0.50 per diluted share, for the full year. This guidance assumes comparable store sales in the 4% range for the full fiscal year." A reconciliation of the adjusted financial measures cited in the guidance to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.

Dennis concluded, “Our teams have done a good job managing their businesses through the first nine months of Fiscal 2013. Collectively they have the Company on pace to deliver another year of solid sales and earnings per share growth. We look to continue the progress we have made profitably expanding our top-line, and have recently adopted updated 5-year targets for annual sales of $3.5 billion and operating margins of at least 9.5% by Fiscal 2017.”

Conference Call and Management Commentary

The Company has posted detailed financial commentary in writing on its website, www.genesco.com, in the investor relations section. The Company's live conference call on November 30, 2012 at 7:30 a.m. (Central time), may be accessed through the Company's internet website, www.genesco.com. To listen live, please go to the website at least 15 minutes early to register, download and install any necessary software.

Cautionary Note Concerning Forward-Looking Statements
This release contains forward-looking statements, including those regarding the performance outlook for the Company and its individual businesses (including, without limitation, sales, earnings and operating margins), and all other statements not addressing solely historical facts or present conditions. Actual results could vary materially from the expectations reflected in these statements. A number of factors could cause differences. These include adjustments to estimates reflected in forward-looking statements, including the amount of required accruals related to the contingent bonus potentially payable to Schuh management in three years based on the achievement of certain performance objectives; the costs of responding to and liability in connection with the network intrusion announced in December 2010; the timing and amount of non-cash asset impairments, potentially including fixed assets in retail stores and intangible assets of acquired businesses; weakness in the consumer economy; competition in the Company's markets; inability of customers to obtain credit; fashion trends that affect the sales or product margins of the Company's retail product offerings; changes in buying patterns by significant wholesale customers; bankruptcies or deterioration in financial condition of significant wholesale customers; disruptions in product supply or distribution; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and material costs, and other factors affecting the cost of products; the Company's ability to continue to complete and integrate acquisitions, expand its business and diversify its product base; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. Additional factors that could affect the Company's prospects and cause



Exhibit 99.1

differences from expectations include the ability to build, open, staff and support additional retail stores and to renew leases in existing stores and maintain reductions in occupancy costs achieved in recent lease negotiations, and to conduct required remodeling or refurbishment on schedule and at expected expense levels; deterioration in the performance of individual businesses or of the Company's market value relative to its book value, resulting in impairments of fixed assets or intangible assets or other adverse financial consequences; unexpected changes to the market for the Company's shares; variations from expected pension-related charges caused by conditions in the financial markets; and the outcome of litigation, investigations and environmental matters involving the Company. Additional factors are cited in the "Risk Factors," "Legal Proceedings" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of, and elsewhere in, our SEC filings, copies of which may be obtained from the SEC website, www.sec.gov, or by contacting the investor relations department of Genesco via our website, www.genesco.com. Many of the factors that will determine the outcome of the subject matter of this release are beyond Genesco's ability to control or predict. Genesco undertakes no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Forward-looking statements reflect the expectations of the Company at the time they are made. The Company disclaims any obligation to update such statements.

About Genesco Inc.

Genesco Inc., a Nashville-based specialty retailer, sells footwear, headwear, sports apparel and accessories in more than 2,440 retail stores throughout the U.S., Canada, the United Kingdom and the Republic of Ireland, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Underground by Journeys, Schuh, Lids, Lids Locker Room, Johnston & Murphy, and on internet websites www.journeys.com, www.journeyskidz.com, www.shibyjourneys.com, www.undergroundbyjourneys.com, www.schuh.co.uk, www.johnstonmurphy.com, www.lids.com, www.lids.ca, www.lidslockerroom.com, www.lidsteamsports.com, www.lidsclubhouse.com, www.suregripfootwear.com and www.dockersshoes.com. The Company's Lids Sports Group division operates the Lids headwear stores and the lids.com website, the Lids Locker Room and other team sports fan shops and single team clubhouse stores, and the Lids Team Sports team dealer business. In addition, Genesco sells wholesale footwear under its Johnston & Murphy brand, the licensed Dockers brand, SureGrip, and other brands. For more information on Genesco and its operating divisions, please visit www.genesco.com.














GENESCO INC.
 
 
 
 
 
 
 
 
Consolidated Earnings Summary
 
Three Months Ended
 
 
Nine Months Ended
 
 
Oct. 27,

 
Oct. 29,

 
Oct. 27,

 
Oct. 29,

In Thousands
2012

 
2011*

 
2012

 
2011*

Net sales
$
664,458

 
$
616,525

 
$
1,808,124

 
$
1,568,618

Cost of sales
330,110

 
306,068

 
894,090

 
775,604

Selling and administrative expenses**
281,613

 
264,200

 
807,798

 
717,990

Asset impairments and other, net
357

 
345

 
896

 
1,936

Earnings from operations**
52,378

 
45,912

 
105,340

 
73,088

Interest expense, net
1,301

 
1,869

 
3,625

 
3,464

Earnings from continuing operations
 
 
 
 
 
 
 
    before income taxes
51,077

 
44,043

 
101,715

 
69,624

 
 
 
 
 
 
 
 
Income tax expense
10,108

 
17,882

 
29,394

 
28,138

Earnings from continuing operations
40,969

 
26,161

 
72,321

 
41,486

 
 
 
 
 
 
 
 
Provision for discontinued operations
(94
)
 
(73
)
 
(312
)
 
(997
)
Net Earnings
$
40,875

 
$
26,088

 
$
72,009

 
$
40,489


*Certain shipping and warehouse expenses have been reclassed from selling and administrative expenses to cost of sales in Fiscal 2012 to conform to the current year presentation.
**Includes $3.0 million and $8.9 million, respectively, in deferred payments related to the Schuh acquisition for the three and nine months ended October 27, 2012. Includes $3.1 million and $10.9 million, respectively, of deferred payments related to the Schuh acquisition and acquisition related expenses for the three and nine months ended October 29, 2011.

Earnings Per Share Information
 
Three Months Ended
 
 
Nine Months Ended
 
 
Oct. 27,

 
Oct. 29,

 
Oct. 27,

 
Oct. 29,

In Thousands (except per share amounts)
2012

 
2011

 
2012

 
2011

Preferred dividend requirements
$
33

 
$
49

 
$
114

 
$
147

 
 
 
 
 
 
 
 
Average common shares - Basic EPS
23,584

 
23,407

 
23,653

 
23,158

 
 
 
 
 
 
 
 
Basic earnings per share:
 
 
 
 
 
 
 
     Before discontinued operations
$
1.74

 
$
1.12

 
$
3.05

 
$
1.79

     Net earnings
$
1.73

 
$
1.11

 
$
3.04

 
$
1.74

 
 
 
 
 
 
 
 
Average common and common
 
 
 
 
 
 
 
    equivalent shares - Diluted EPS
23,996

 
23,976

 
24,121

 
23,728

 
 
 
 
 
 
 
 
Diluted earnings per share:
 
 
 
 
 
 
 
     Before discontinued operations
$
1.71

 
$
1.09

 
$
3.00

 
$
1.74

     Net earnings
$
1.70

 
$
1.09

 
$
2.98

 
$
1.70







GENESCO INC.
 
 
 
 
 
 
 
 
Consolidated Earnings Summary
 
Three Months Ended
 
 
Nine Months Ended
 
 
Oct. 27,

 
Oct. 29,

 
Oct. 27,

 
Oct. 29,

In Thousands
2012

 
2011

 
2012

 
2011

Sales:
 
 
 
 
 
 
 
    Journeys Group
$
300,718

 
$
274,158

 
$
773,997

 
$
703,368

    Schuh Group
92,250

 
78,212

 
243,718

 
112,185

    Lids Sports Group
185,737

 
185,547

 
550,752

 
532,746

    Johnston & Murphy Group
53,079

 
48,146

 
152,771

 
141,768

    Licensed Brands
32,450

 
30,259

 
85,972

 
77,727

    Corporate and Other
224

 
203

 
914

 
824

    Net Sales
$
664,458

 
$
616,525

 
$
1,808,124

 
$
1,568,618

Operating Income (Loss):
 
 
 
 
 
 
 
    Journeys Group
$
37,073

 
$
28,238

 
$
64,420

 
$
41,821

    Schuh Group (1)
2,709

 
4,417

 
(787
)
 
4,340

    Lids Sports Group
18,573

 
18,892

 
58,312

 
51,002

    Johnston & Murphy Group
3,158

 
2,979

 
8,981

 
8,029

    Licensed Brands
3,724

 
3,700

 
8,516

 
7,998

    Corporate and Other (2)
(12,859
)
 
(12,314
)
 
(34,102
)
 
(40,102
)
   Earnings from operations
52,378

 
45,912

 
105,340

 
73,088

   Interest, net
1,301

 
1,869

 
3,625

 
3,464

Earnings from continuing operations
 
 
 
 
 
 
 
    before income taxes
51,077

 
44,043

 
101,715

 
69,624

Income tax expense
10,108

 
17,882

 
29,394

 
28,138

Earnings from continuing operations
40,969

 
26,161

 
72,321

 
41,486

 
 
 
 
 
 
 
 
Provision for discontinued operations
(94
)
 
(73
)
 
(312
)
 
(997
)
Net Earnings
$
40,875

 
$
26,088

 
$
72,009

 
$
40,489


(1)Includes $3.0 million and $8.9 million in deferred payments related to the Schuh acquisition in the third quarter and nine months ended October 27, 2012, respectively, and $2.9 million and $4.3 million for the third quarter and nine months ended October 29, 2011, respectively.

(2)Includes a $0.4 million charge in the third quarter of Fiscal 2013 which includes $0.3 million for asset impairments and $0.1 million for other legal matters and includes a $0.9 million charge in the nine months of Fiscal 2013 which includes $0.7 million for asset impairments, $0.1 million for network intrusion expenses and $0.1 million for other legal matters. Includes a $0.3 million charge in the third quarter of Fiscal 2012 which includes $0.2 million for other legal matters and $0.1 million for network intrusion expenses and includes $1.9 million of other charges in the nine months of Fiscal 2012 which includes $1.1 million for asset impairments, $0.5 million for network intrusion expenses and $0.3 million for other legal matters. The third quarter and nine months of Fiscal 2012 also included $0.2 million and $6.6 million, respectively, of acquisition related expenses.






GENESCO INC.
 
 
 
 
Consolidated Balance Sheet
 
Oct. 27,

 
Recast Oct. 29,

In Thousands
2012

 
2011 (1)

Assets
 
 
 
Cash and cash equivalents
$
39,890

 
$
36,073

Accounts receivable
61,006

 
61,393

Inventories
600,251

 
544,099

Other current assets
65,629

 
76,124

Total current assets
766,776

 
717,689

Property and equipment
239,499

 
229,525

Other non-current assets
427,123

 
412,532

Total Assets
$
1,433,398

 
$
1,359,746

Liabilities and Equity
 
 
 
Accounts payable
$
219,826

 
$
243,594

Other current liabilities
169,109

 
146,017

Total current liabilities
388,935

 
389,611

Long-term debt
86,296

 
142,648

Other long-term liabilities
182,277

 
147,190

Equity
775,890

 
680,297

Total Liabilities and Equity
$
1,433,398

 
$
1,359,746


(1) Certain previously reported October 29, 2011 balances have been recast to reflect the effects of finalizing the allocation of
the Schuh purchase price.







GENESCO INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail Units Operated - Nine Months Ended October 27, 2012
 
 
 
 
 
 
 
 
 
 
 
Balance

 
Acquisi-

 
 
 
 
 
Balance

 
Acquisi-

 
 
 
 
 
Balance

 
1/29/2011

 
tions

 
Open

 
Close

 
1/28/2012

 
tions

 
Open

 
Close

 
10/27/2012

Journeys Group
1,168

 

 
18

 
32

 
1,154

 

 
23

 
20

 
1,157

    Journeys
813

 

 
14

 
15

 
812

 

 
16

 
10

 
818

    Underground by Journeys
151

 

 

 
14

 
137

 

 

 
4

 
133

    Journeys Kidz
149

 

 
4

 
1

 
152

 

 
6

 
3

 
155

    Shi by Journeys
55

 

 

 
2

 
53

 

 
1

 
3

 
51

Schuh Group

 
75

 
6

 
3

 
78

 

 
12

 
2

 
88

     Schuh UK

 
51

 
6

 
1

 
56

 

 
11

 
1

 
66

     Schuh ROI

 
8

 

 

 
8

 

 
1

 

 
9

     Schuh Concessions

 
16

 

 
2

 
14

 

 

 
1

 
13

Lids Sports Group
985

 
10

 
40

 
33

 
1,002

 
20

 
41

 
16

 
1,047

Johnston & Murphy Group
156

 

 
6

 
9

 
153

 

 
5

 
2

 
156

    Shops
111

 

 
1

 
9

 
103

 

 
3

 
2

 
104

    Factory Outlets
45

 

 
5

 

 
50

 

 
2

 

 
52

Total Retail Units
2,309

 
85

 
70

 
77

 
2,387

 
20

 
81

 
40

 
2,448

Retail Units Operated - Three Months Ended October 27, 2012
 
Balance

 
Acquisi-

 
 
 
 
 
Balance

 
7/28/2012

 
tions

 
Open

 
Close

 
10/27/2012

Journeys Group
1,147

 

 
11

 
1

 
1,157

    Journeys
810

 

 
8

 

 
818

    Underground by Journeys
133

 

 

 

 
133

    Journeys Kidz
152

 

 
3

 

 
155

    Shi by Journeys
52

 

 

 
1

 
51

Schuh Group
83

 

 
7

 
2

 
88

     Schuh UK
61

 

 
6

 
1

 
66

     Schuh ROI
8

 

 
1

 

 
9

     Schuh Concessions
14

 

 

 
1

 
13

Lids Sports Group
1,021

 
8

 
23

 
5

 
1,047

Johnston & Murphy Group
153

 

 
3

 

 
156

    Shops
103

 

 
1

 

 
104

    Factory Outlets
50

 

 
2

 

 
52

Total Retail Units
2,404

 
8

 
44

 
8

 
2,448


Constant Store Sales
 
 
 
 
 
 
 
 
          Three Months Ended
 
 
       Nine Months Ended
 
 
Oct. 27,

 
Oct. 29,

 
Oct. 27,

 
Oct. 29,

 
2012

 
2011

 
2012

 
2011

Journeys Group
8
 %
 
15
%
 
9
%
 
15
%
Schuh Group
9
 %
 
 
9
%
 
Lids Sports Group
(5
)%
 
8
%
 

 
12
%
Johnston & Murphy Group
6
 %
 
7
%
 
4
%
 
11
%
Total Constant Store Sales
4
 %
 
12
%
 
6
%
 
13
%







Schedule B
Genesco Inc.
Adjustments to Reported Earnings from Continuing Operations
Three Months Ended October 27, 2012 and October 29, 2011
 
 
 
 
 
 
 
 Impact on
 
 Impact on
 
 3 mos
  Diluted
 3 mos
  Diluted
In Thousands (except per share amounts)
 Oct 2012
 EPS
 Oct 2011
 EPS
Earnings from continuing operations, as reported
$
40,969

$
1.71

$
26,161

$
1.09

 
 
 
 
 
Adjustments: (1)
 
 
 
 
Impairment charges
179

0.01

32


Acquisition expenses


206

0.01

Deferred payment - Schuh acquisition
2,971

0.12

2,882

0.12

Other legal matters
46


120


Network intrusion expenses


68


Lower effective tax rate (2)
(9,694
)
(0.40
)
(355
)
(0.01
)
 
 
 
 
 
Adjusted earnings from continuing operations (3)
$
34,471

$
1.44

$
29,114

$
1.21

 
 
 
 
 

(1) All adjustments are net of tax where applicable. The tax rate for the third quarter of Fiscal 2013 is 36.6% excluding a FIN 48 discrete item of less than $0.1 million. The tax rate for the third quarter of Fiscal 2012 is 38.4% excluding a FIN 48 discrete item of $0.1 million.

(2) Includes a net benefit of $9.3 million recognized in connection with the resolution of various previously uncertain tax positions.

(3) Reflects 24.0 million share count for both Fiscal 2013 and 2012 which includes common stock equivalents in both years.

The Company believes that disclosure of earnings and earnings per share from continuing operations adjusted for the items not reflected in the previously announced expectations will be meaningful to investors, especially in light of the impact of such items on the results.


Schuh Group
Adjustments to Reported Operating Income
Three Months Ended October 27, 2012 and October 29, 2011
 
 
 
 
 3 mos
 3 mos
In Thousands
 Oct 2012
 Oct 2011
Operating income
$
2,709

$
4,417

 
 
 
Adjustments:
 
 
Deferred payment - Schuh acquisition
2,971

2,882

 
 
 
Adjusted operating income
$
5,680

$
7,299








Schedule B
Genesco Inc.
Adjustments to Reported Earnings from Continuing Operations
Nine Months Ended October 27, 2012 and October 29, 2011
 
 
 
 
 
 
 
 Impact on
 
 Impact on
 
 9 mos
  Diluted
 9 mos
  Diluted
In Thousands (except per share amounts)
 Oct 2012
 EPS
Oct 2011
 EPS
Earnings from continuing operations, as reported
$
72,321

$
3.00

$
41,486

$
1.74

 
 
 
 
 
Adjustments: (1)
 
 
 
 
Impairment charges
456

0.02

674

0.03

Acquisition expenses


5,628

0.24

Deferred payment - Schuh acquisition
8,854

0.37

4,301

0.18

Other legal matters
46


180

0.01

Network intrusion expenses
65


329

0.01

Lower effective tax rate
(11,347
)
(0.47
)
(2,551
)
(0.11
)
 
 
 
 
 
Adjusted earnings from continuing operations (2)
$
70,395

$
2.92

$
50,047

$
2.10


(1) All adjustments are net of tax where applicable. The tax rate for the first nine months of Fiscal 2013 is 36.6% excluding a FIN 48 discrete item of $0.3 million. The tax rate for the first nine months of Fiscal 2012 is 38.9% excluding a FIN 48 discrete item of $0.3 million.

(2) Reflects 24.1 million share count for Fiscal 2013 and 23.7 million share count for Fiscal 2012 which includes common stock equivalents in both years.

The Company believes that disclosure of earnings and earnings per share from continuing operations adjusted for the items not reflected in the previously announced expectations will be meaningful to investors, especially in light of the impact of such items on the results.


Schuh Group
Adjustments to Reported Operating Income (Loss)
Nine Months Ended October 27, 2012 and October 29, 2011
 
 9 mos
 9 mos
In Thousands
Oct 2012
 Oct 2011
Operating income (loss)
$
(787
)
$
4,340

 
 
 
Adjustments:
 
 
Deferred payment - Schuh acquisition
8,854

4,301

 
 
 
Adjusted operating income
$
8,067

$
8,641







                                                                                                                                                                                         
Schedule B


Genesco Inc.
Adjustments to Forecasted Earnings from Continuing Operations
Fiscal Year Ending February 2, 2013
 
 
 
 
 
In Thousands (except per share amounts)
High Guidance
Low Guidance
 
Fiscal 2013
Fiscal 2013
Forecasted earnings from continuing operations
$
120,562

$
5.01

$
118,849

$
4.93

 
 
 
 
 
Adjustments: (1)
 
 
 
 
Impairment
1,000

0.04

1,000

0.04

Deferred payment - Schuh acquisition
11,965

0.50

11,965

0.50

Lower effective tax rate
(11,347
)
(0.47
)
(11,347
)
(0.47
)
 
 
 
 
 
Adjusted forecasted earnings from continuing operations (2)
$
122,180

$
5.08

$
120,467

$
5.00


(1) All adjustments are net of tax where applicable. The forecasted tax rate for Fiscal 2013 is approximately
37% excluding a FIN 48 discrete item of $0.4 million.

(2) Reflects 24.1 million share count for Fiscal 2013 which includes common stock equivalents.

This reconciliation reflects estimates and current expectations of future results. Actual results may vary materially from these expectations and estimates, for reasons including those included in the discussion of forward-looking statements elsewhere in this release. The Company disclaims any obligation to update such expectations and estimates.