UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant to
Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
report (Date of earliest event reported):
August
21, 2008
|
THE
CHILDREN’S PLACE RETAIL STORES, INC.
|
|
(Exact
Name of Registrants as Specified in Their
Charters)
|
|
Delaware
|
|
(State
or Other Jurisdiction of
Incorporation)
|
|
0-23071
|
31-1241495
|
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
|
915
Secaucus Road, Secaucus, New Jersey
|
07094
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
|
(201)
558-2400
|
|
(Registrant’s
Telephone Number, Including Area
Code)
|
|
Not
Applicable
|
|
(Former
Name or Former Address, if Changed Since Last
Report)
|
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
2.02 Results of Operations and Financial Condition
On
August
21, 2008, The Children’s Place Retail Stores, Inc. (the “Company”) issued a
press release containing results for the Company's second quarter and fiscal
year-to-date ended August 2, 2008. A copy of the press release is being
furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The
information in this report is being furnished pursuant to Item 2.02 of Form
8-K,
insofar as it discloses historical information regarding the Company's results
of operations and financial condition as of, and for the second quarter and
fiscal year-to-date ended August 2, 2008. In accordance with General
Instructions B.2 of Form 8-K, the information in this Current Report on Form
8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise
subject to the liability of that section, nor shall it be deemed incorporated
by
reference in any filing under the Securities Act of 1933, as amended, except
as
shall be expressly set forth by specific reference in such a
filing.
Forward
Looking Statements
This
Current Report on Form 8-K, including Exhibit 99.1, contains forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements typically are
identified by use of terms such as “may,” “will,” “should,” “plan,” “expect,”
“anticipate,” “estimate” and similar words, although some forward-looking
statements are expressed differently. Forward-looking statements represent
our
management’s judgment regarding future events. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, the Company can give no assurance that such expectations will prove
to be correct. All statements other than statements of historical fact included
in this Current Report on Form 8-K are forward-looking statements. The Company
cannot guarantee the accuracy of the forward-looking statements, and you should
be aware that the Company’s actual results could differ materially from those
contained in the forward-looking statements due to a number of factors,
including the statements under the heading “Risk Factors” contained in the
Company’s filings with the Securities and Exchange Commission.
Item
9.01 Financial
Statement and Exhibits.
| (d) |
Exhibits.
|
| Exhibit 99.1 |
Press
release, dated August 21, 2008, issued by the Company regarding results
for its second quarter and fiscal year-to-date ended August 2, 2008
(Exhibit 99.1 is furnished as part of this Current Report on Form
8-K).
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date:
August 21, 2008
| THE CHILDREN’S PLACE RETAIL STORES, INC. | ||
| |
|
|
| By: | /s/ Susan J. Riley | |
|
Name: Susan
J. Riley
Title:
Executive Vice President, Finance and
Administration
|
||
FOR
IMMEDIATE RELEASE
THE
CHILDREN’S PLACE RETAIL STORES, INC. REPORTS
SECOND
QUARTER 2008 FINANCIAL RESULTS
Secaucus,
New Jersey –
August 21, 2008 – The Children’s Place Retail Stores, Inc. (Nasdaq:
PLCE) today
reported financial results for the second quarter and fiscal year-to-date ended
August 2, 2008. Results from continuing operations for the second quarters
and
fiscal year-to-date periods ended August 2, 2008 and August 4, 2007 are based
on
The Children’s Place business only. The Disney Store
North
America (“DSNA”) business has been classified as a discontinued operation in
accordance with generally accepted accounting principles (“GAAP”) reflecting the
Company’s exit of the business.
Second
Quarter
|
·
|
Net
sales from continuing operations for the second quarter increased
16% to
$338.0 million, compared to $290.5 million last year.
|
|
·
|
Comparable
store sales increased 9% in the second quarter of 2008 compared to
a 1%
decrease last year.
|
|
·
|
Income
from continuing operations after tax was $2.7 million, or $0.09 earnings
per share, in the second quarter of 2008, compared to a loss of $19.8
million, or $0.68 loss per share, last year. The Company’s second quarter
income from continuing operations included several items which the
Company
deems to be unusual or one-time in nature,
including:
|
| · |
Transition
services income net of variable expenses of $5.4 million pre-tax
in the
second quarter of 2008 for services being provided to the acquirer
of the
DSNA business;
|
| · |
Sale
of a significant store lease for approximately $2.3 million pre-tax
in the
second quarter of 2008;
|
| · |
Professional
fees associated with the Company’s restructuring activities of $1.2
million pre-tax in the second quarter of 2008;
|
| · |
Legal
fees related to the Company’s 2006 stock-option investigation of $0.5
million pre-tax in the second quarter of 2008, and $1.8 million pre-tax
in
the second quarter of 2007; and
|
| · |
Stock
option tolling expenses of $1.3 million pre-tax in the second quarter
of
2007.
|
|
·
|
Excluding
the unusual or one-time items mentioned above from the second quarters
of
both years, adjusted loss from continuing operations after tax was
$0.9
million, or $0.03 loss per share, in the second quarter of 2008,
compared
to a loss of $17.8 million, or $0.61 loss per share, in the second
quarter
of 2007. The second quarter loss excluding these items is a non-GAAP
measure. The Company believes the excluded items are not indicative
of the
performance of its core business and that by providing this supplemental
disclosure to investors it may facilitate comparisons of its past
and
future performance. A reconciliation of income (loss) from continuing
operations as reported to adjusted loss is included in this press
release.
|
|
·
|
Net
income including the impact of discontinued operations was breakeven
in
the second quarter of 2008, compared to a loss of $28.1 million,
or $0.97
loss per share, last year.
|
|
·
|
The
effective tax rate for continuing operations in the second quarter
was
39%.
|
|
·
|
During
the second quarter, the Company closed four stores.
|
-more-
1
PLCE
- Second Quarter 2008 Financial Results
Page
2
Fiscal
Year-to-Date
|
·
|
Net
sales from continuing operations increased 14% to $738.2 million,
for
fiscal year-to-date 2008, compared to $646.5 million for the same
period
of the prior year.
|
|
·
|
Comparable
store sales increased 7% year-to-date 2008 compared to a 1% increase
last
year.
|
|
·
|
Income
from continuing operations after tax was $22.2 million, or $0.75
earnings
per share, year-to-date 2008, compared to a loss of $0.7 million,
or $0.03
loss per share, last year.
|
|
·
|
Excluding
the unusual or one-time items from both years, income from continuing
operations after tax was $19.8 million, or $0.67 earnings per share,
year-to-date 2008, compared to $2.5 million, or $0.09 earnings per
share,
last year. As previously noted, this is a non-GAAP measure which
the
Company is providing as a supplemental
disclosure.
|
|
·
|
Net
income including the impact of discontinued operations was $19.5
million,
or $0.66 earnings per share, year-to-date 2008, compared to a loss
of
$13.4 million, or $0.46 loss per share, last
year.
|
|
·
|
Year-to-date,
the Company opened three stores and closed
five.
|
As
previously announced, during the second quarter the Company closed on an $85
million five-year term loan to ensure adequate liquidity would be available
in
the event that the difficult economic conditions persist and adversely impact
the Company’s business. Under negotiated terms of the loan, the Company has
voluntary prepayment opportunities and is required to repay 50% of excess cash
flow, as defined by the agreement, at the end of each fiscal year. The Company
also signed a new credit agreement for a $200 million asset-based revolving
credit facility during the quarter which replaced the revolving credit facility
previously in effect.
Chuck
Crovitz, Interim Chief Executive Officer of The Children’s Place Retail Stores,
Inc., commented, “We are gratified to see that the hard work and dedication of
our entire team continued to pay off in the second quarter. Overall, we achieved
solid top-line growth for the quarter while implementing cost reduction
initiatives to better support our value positioning. Our merchandise assortment
for summer was very well-received by customers and our sharpened E-commerce
marketing and merchandising efforts helped to drive web traffic and
sales.
“We
expect that consumer purchasing power will continue to be pressured by ongoing
weakness in the economy and we are maintaining our focus on offering
great
color, great outfitting, and great fashion at a tremendous value.”
The
Children’s Place will host a conference call to discuss its second quarter
results today at 10:00 a.m. Eastern Time. Interested parties are invited to
listen to the call by dialing 1-800-862-9098
and
providing the Conference ID, PLCE. The call will also be webcast live and can
be
accessed via the Company’s web site, www.childrensplace.com.
A
replay of the call will be available approximately one hour after the conclusion
of the call, until midnight on August 28, 2008. To access the replay, please
dial 1-800-753-6121,
or you
may listen to the audio archive on the Company’s website.
The
Children’s Place Retail Stores, Inc. is a leading specialty retailer of
children’s merchandise. The Company designs, contracts to manufacture and sells
high-quality, value-priced merchandise under the proprietary “The Children’s
Place” brand name. As of August 2, 2008, the Company owned and operated 902
stores and its online store at www.childrensplace.com.
-more-
2
This
press release (and above referenced call) may contain certain forward-looking
statements regarding future circumstances. These forward-looking statements
are
based upon the Company's current expectations and assumptions and are subject
to
various risks and uncertainties that could cause actual results to differ
materially. Some of these risks and uncertainties are described in the Company's
filings with the Securities and Exchange Commission, including in the “Risk
Factors” section of its report on Form 10-K. The following risks and
uncertainties could cause actual results, events and performance to differ
materially: the risk that the Company will be unsuccessful in gauging fashion
trends and changing consumer preferences, the risk resulting from the highly
competitive nature of the Company’s business and its dependence on consumer
spending patterns, which may be affected by the downturn in the economy, and
risks and uncertainties relating to other elements of the Company’s strategic
review. Readers (or listeners on the call) are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
they were made. The Company undertakes no obligation to release publicly 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. The inclusion of any statement in this release does not
constitute an admission by the Company or any other person that the events
or
circumstances described in such statement are material.
| Contact: |
The
Children’s Place Retail Stores,
Inc.
|
Susan
Riley, EVP, Finance & Administration, (201) 558-2400
Jane
Singer, VP, Investor Relations, (201) 453-6955
(Tables
Follow)
3
THE
CHILDREN’S PLACE RETAIL STORES, INC.
CONDENSED
STATEMENTS OF OPERATIONS
(In
thousands, except per share amounts)
(Unaudited)
|
Second
Quarter
Ending
|
Year-to-Date
Ending
|
||||||||||||
|
August
2, 2008
|
August
4, 2007
|
|
August
2, 2008
|
August
4, 2007
|
|||||||||
|
Net
sales
|
$
|
338,029
|
$
|
290,498
|
$
|
738,241
|
$
|
646,493
|
|||||
|
Cost
of sales
|
209,480
|
197,054
|
438,600
|
401,075
|
|||||||||
|
Gross
profit
|
128,549
|
93,444
|
299,641
|
245,418
|
|||||||||
|
Selling,
general and
|
|||||||||||||
|
administrative
expenses
|
105,793
|
109,219
|
225,203
|
216,994
|
|||||||||
|
Asset
impairment charge
|
127
|
635
|
127
|
635
|
|||||||||
|
Depreciation
and amortization
|
17,709
|
15,154
|
35,361
|
29,751
|
|||||||||
|
Income
(loss) from continuing
|
|||||||||||||
|
operations
before interest and taxes
|
4,920
|
(31,564
|
)
|
38,950
|
(1,962
|
)
|
|||||||
|
Interest
income (expense), net
|
(398
|
)
|
428
|
(891
|
)
|
1,428
|
|||||||
|
Income
(loss) from continuing
|
|||||||||||||
|
operations
before income taxes
|
4,522
|
(31,136
|
)
|
38,059
|
(534
|
)
|
|||||||
|
Provision
(benefit) for income taxes
|
1,786
|
(11,330
|
)
|
15,903
|
203
|
||||||||
|
Income
(loss) from continuing
|
|||||||||||||
|
operations
net of income taxes
|
2,736
|
(19,806
|
)
|
22,156
|
(737
|
)
|
|||||||
|
(Loss)
from discontinued
|
|||||||||||||
|
operations
net of income taxes
|
(2,725
|
)
|
(8,285
|
)
|
(2,627
|
)
|
(12,640
|
)
|
|||||
|
Net
income (loss)
|
$
|
11
|
$
|
(28,091
|
)
|
19,529
|
$
|
(13,377
|
)
|
||||
|
Basic
income (loss) from continuing
|
|||||||||||||
|
operations
per common share
|
$
|
0.09
|
$
|
(0.68
|
)
|
$
|
0.76
|
$
|
(0.03
|
)
|
|||
|
(Loss)
from discontinued
|
|||||||||||||
|
operations
per common share
|
(0.09
|
)
|
(0.28
|
)
|
(0.09
|
)
|
(0.43
|
)
|
|||||
|
Basic
net income (loss) per common
|
|||||||||||||
|
share
|
$
|
0.00
|
$
|
(0.97
|
)*
|
$
|
0.67
|
$
|
(0.46
|
)
|
|||
|
Basic
weighted average common
|
|||||||||||||
|
shares
outstanding
|
29,255 | 29,084 | 29,177 |
29,084
|
|||||||||
|
Diluted
income (loss) from continuing
|
|||||||||||||
|
operations
per common share
|
$
|
0.09
|
$
|
(0.68
|
)
|
$
|
0.75
|
$
|
(0.03
|
)
|
|||
|
Income
(loss) from discontinued
|
|||||||||||||
|
operations
per common share
|
(0.09 | ) | (0.28 | ) | (0.09 | ) | (0.43 | ) | |||||
|
Diluted
net income (loss)
|
|||||||||||||
|
per
common share
|
$
|
0.00
|
$
|
(0.97
|
)*
|
$
|
0.66
|
$
|
(0.46
|
)
|
|||
|
Diluted
weighted average common
|
|||||||||||||
|
shares
and common share equivalents
|
|||||||||||||
|
outstanding
|
29,599 | 29,084 | 29,395 | 29,084 | |||||||||
*
Does
not add due to rounding.
Note:
All
periods presented above reflect the exit of the DSNA business, which has
been
classified as a discontinued operation in accordance with GAAP. Continuing
operations, as presented above, includes the operations of The Children’s Place
business only.
4
THE
CHILDREN’S PLACE RETAIL STORES, INC.
CONDENSED
BALANCE SHEETS
(In
thousands)
(Unaudited)
|
August
2, 2008
|
February
2, 2008
|
August
4, 2007
|
||||||||
|
Current
assets:
|
||||||||||
|
Cash
and investments
|
$
|
146,704
|
$
|
81,626
|
$
|
80,161
|
||||
|
Accounts
receivable
|
26,150
|
41,143
|
34,609
|
|||||||
|
Inventories
|
219,100
|
196,606
|
247,091
|
|||||||
|
Other
current assets
|
100,316
|
92,910
|
84,642
|
|||||||
|
Restricted
assets in bankruptcy estate of
|
||||||||||
|
subsidiary
|
85,265
|
--
|
--
|
|||||||
|
Current
assets held for sale
|
--
|
98,591
|
95,776
|
|||||||
|
Total
current assets
|
577,535
|
510,876
|
542,279
|
|||||||
|
Property
and equipment, net
|
333,783
|
354,141
|
342,708
|
|||||||
|
Other
assets, net
|
97,868
|
128,357
|
87,273
|
|||||||
|
Non-current
assets held for sale
|
--
|
4,163
|
60,026
|
|||||||
|
Total
assets
|
$
|
1,009,186
|
$
|
997,537
|
$
|
1,032,286
|
||||
|
Current
liabilities:
|
||||||||||
|
Revolving
credit facility
|
$
|
--
|
$
|
88,976
|
$
|
72,225
|
||||
|
Short
term portion of term loan
|
30,000
|
--
|
--
|
|||||||
|
Accounts
payable
|
80,287
|
80,807
|
120,766
|
|||||||
|
Accrued
expenses and
|
||||||||||
|
other
current liabilities
|
99,145
|
140,712
|
127,702
|
|||||||
|
Liabilities
of the bankrupt estate of
|
||||||||||
|
subsidiary
|
108,409
|
--
|
--
|
|||||||
|
Total
current liabilities
|
317,841
|
310,495
|
320,693
|
|||||||
|
Long
term portion of term loan
|
55,000
|
--
|
--
|
|||||||
|
Other
liabilities
|
140,119
|
214,809
|
197,963
|
|||||||
|
Total
liabilities
|
512,960
|
525,304
|
518,656
|
|||||||
|
Stockholders’
equity
|
496,226
|
472,233
|
513,630
|
|||||||
|
Total
liabilities and stockholders’ equity
|
$
|
1,009,186
|
$
|
997,537
|
$
|
1,032,286
|
||||
Note:
The
balance sheet as of August 2, 2008, reflects DSNA restricted assets available
to
settle its liabilities through bankruptcy. “Assets held for sale” on the
February 2, 2008 and August 4, 2007, balance sheets reflect the assets sold
to
an affiliate of The Walt Disney Company. The remaining assets and liabilities
of
the Disney Store business are reflected in their respective balance sheet
categories on the February 2, 2008 and August 4, 2007 balance sheets.
5
|
THE
CHILDREN’S PLACE RETAIL STORES, INC.
|
|||||||
|
RECONCILIATION
OF NON-GAAP FINANCIAL INFORMATION TO GAAP
|
|||||||
|
(In
millions, except per share amounts)
|
|||||||
|
(Unaudited)
|
|
Second
Quarter Ending
|
Year-to-Date
Ending
|
||||||||||||
|
August
2, 2008
|
August
4, 2007
|
August
2, 2008
|
August
4, 2007
|
||||||||||
|
Income/(loss)
from continuing operations
net of income taxes
|
$
|
2.7
|
$
|
(19.8
|
)
|
$
|
22.2
|
$
|
(0.7
|
)
|
|||
|
Net
transition services income
|
(5.4
|
)
|
-
|
(5.4
|
)
|
-
|
|||||||
|
Sale
of store lease
|
(2.3
|
)
|
-
|
(2.3
|
)
|
-
|
|||||||
|
Tolling
of stock options
|
-
|
1.3
|
-
|
1.7
|
|||||||||
|
Professional
fees:
|
|||||||||||||
|
Stock
option/special investigation fees
|
0.5
|
1.8
|
1.3
|
3.4
|
|||||||||
|
Company
restructuring
|
1.2
|
2.5
|
|||||||||||
|
Aggregate
impact of significant items
|
(6.0
|
)
|
3.1
|
(3.9
|
)
|
5.1
|
|||||||
|
Income
tax effect of significant items
|
2.4
|
(1.1
|
)
|
1.5
|
(1.9
|
)
|
|||||||
|
Adjustments
after taxes
|
(3.6
|
)
|
2.0
|
(2.4
|
)
|
3.2
|
|||||||
|
Adjusted
income (loss) from continuing operations
net of income taxes
|
(0.9
|
)
|
(17.8
|
)
|
19.8
|
2.5
|
|||||||
|
GAAP
income (loss) from continuing operations
per common share
|
$
|
0.09
|
$
|
(0.68
|
)
|
$
|
0.75
|
$
|
(0.03
|
)
|
|||
|
Adjusted
income (loss) from continuing operations
per common share
|
$
|
(0.03
|
)
|
$
|
(0.61
|
)
|
$
|
0.67
|
$
|
0.09
|
|||
###
6