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): March 4, 2014
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.) |
| 500 Plaza Drive, Secaucus, New Jersey | 07094 |
| (Address of Principal Executive Offices) | (Zip Code) |
(201) 558-2400
(Registrant’s Telephone Number, Including Area Code)
(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 1.01 | Entry into a Material Definitive Agreement |
On March 4, 2014, the Company entered into that certain Eleventh Amendment to the Credit Agreement (the “Eleventh Amendment to Credit Agreement”) by and among The Children’s Place Retail Stores, Inc. (the “Company”), as lead borrower and a borrower, The Children’s Place Services Company, LLC, as a borrower, The Children’s Place International, LLC, The Children’s Place Canada Holdings, Inc., thechildrensplace.com, inc., TCP IH II, LLC, TCP International IP Holdings, LLC and TCP International Product Holdings, LLC, each as a guarantor, Wells Fargo Bank, National Association (successor by merger to Wells Fargo Retail Finance, LLC), as administrative agent, collateral agent, L/C issuer, swing line lender and as a lender, Bank of America, N.A., HSBC Bank (USA), N.A. and JPMorgan Chase Bank, N.A., each as a lender, amending the current credit agreement to extend the term until August 2018, increase the revolving credit limit from $150 million to $200 million, with a $50 million sublimit for standby and documentary letters of credit and an uncommitted accordion feature that could provide up to $25 million of additional availability, and permit the payment of dividends on the same basis as stock repurchases.
The description of the Eleventh Amendment to Credit Agreement set forth herein is qualified in its entirety by reference to the full text thereof, a copy of which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2014.
| Item 2.02 | Results of Operations and Financial Condition. |
On March 6, 2014, the Company issued a press release containing the Company's financial results for the fourth quarter of the fiscal year ended February 1, 2014 (“Fiscal 2013”) and for Fiscal 2013, and providing a preliminary estimated range of non-GAAP adjusted net income per diluted share for the first quarter of the fiscal year ending January 31, 2015 (“Fiscal 2014”) and for Fiscal 2014. 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 Current 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. In accordance with General Instruction B.2 of Form 8-K, such 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 (the “Exchange Act”), 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, or the Exchange Act except as shall be expressly set forth by specific reference in such a filing.
| Item 8.01 | Other Events. |
On March 6, 2014, the Company issued a press release announcing that its Board of Directors has approved (i) the commencement of the payment of a quarterly cash dividend, with the first such dividend to be payable on April 17, 2014 to holders of record of the Company’s common stock on March 27, 2014 and (ii) a $100 million share repurchase program, authorizing the Company to repurchase its common stock. Under the share repurchase program, the Company may repurchase shares in the open market at current market prices at the time of purchase or in privately negotiated transactions. The timing and actual number of shares repurchased under the program will depend on a variety of factors including price, corporate and regulatory requirements, and other business and market conditions, and the Company may suspend or discontinue the share repurchase program at any time, and may thereafter reinstitute purchases, all without prior announcement. A copy of the press release is being furnished as Exhibit 99.2 to this Current Report on Form 8-K.
| 2 |
| Item 9.01 | Financial Statement and Exhibits. |
| (d) | Exhibits |
Exhibit 99.1 Press release, dated March 6, 2014, issued by the Company (Exhibit 99.1 is furnished as part of this Current Report on Form 8-K).
Exhibit 99.2 Press release, dated March 6, 2014, issued by the Company.
| 3 |
Forward Looking Statements
This Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2, contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to the Company’s positioning, and forecasts regarding store openings and earnings per diluted share from continuing operations. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “project,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements are expressed differently. 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 and performance 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 annual report on Form 10-K for the fiscal year ended February 2, 2013. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, the risks resulting from the highly competitive nature of the Company’s business and its dependence on consumer spending patterns, which may be affected by the continued weakness in the economy or by other factors such as increases in the cost of gasoline and food, and the risk that the cost of raw materials or energy prices will increase beyond current expectations or that the Company is unable to offset cost increases through value engineering or price increases, and the uncertainty of weather patterns. Readers 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.
| 4 |
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: March 6, 2014
| THE CHILDREN’S PLACE RETAIL STORES, INC. | |||
| By: | /s/ Jane Elfers | ||
| Name: | Jane Elfers | ||
| Title: | President and Chief Executive Officer | ||
| 5 |
Exhibit 99.1
FOR IMMEDIATE RELEASE
THE CHILDREN’S PLACE REPORTS FOURTH QUARTER AND FISCAL 2013 RESULTS
Issues Guidance for First Quarter and Fiscal 2014
Initiates Quarterly Dividend
Announces New $100 Million Share Repurchase Authorization
Renaming Company ‘The Children’s Place, Inc.’
Secaucus, New Jersey – March 6, 2014 – The Children’s Place Retail Stores, Inc. (Nasdaq: PLCE), the largest pure-play children’s specialty apparel retailer in North America, today announced financial results for the fourth quarter and fiscal 2013 periods ended February 1, 2014.
“The Children’s Place delivered fiscal 2013 earnings near the top end of our guidance range despite an intensely promotional environment and a series of storms brought on by the polar vortex in the fourth quarter,” said Jane Elfers, President and Chief Executive Officer. “2013 was a challenging year but we demonstrated our ability to deliver solid financial results through a combination of superior value, tight expense discipline, strong merchandise offerings that resonated with our customers and well-controlled inventories.”
Elfers continued, “We generated over $170 million in operating cash and returned $66 million to shareholders through our share repurchase program during 2013. Today we announced that we are expanding our capital return program in 2014 with the initiation of a quarterly dividend and a new $100 million share repurchase authorization. This program reflects our confidence in our ability to execute on our growth strategies and our continuing commitment to return excess capital to shareholders.”
“In 2014, we expect to double our international store count to 65-70, significantly increase our eCommerce business, grow our wholesale business through existing and new partners, and improve the productivity of our North American fleet. In addition, we plan to complete the rollout of our ERP system which will set the foundation for enhanced sales and operating margin over time through state-of-the-art inventory management and omni-channel capabilities.”
“In recognition of our significant progress over the past few years, we are changing our Company’s name in 2014 from ‘The Children’s Place Retail Stores, Inc.’ to ‘The Children’s Place, Inc.’ to better reflect our strategic positioning as a leading global children’s brand,” Elfers concluded. “Looking ahead, our focus on eCommerce, international markets and the wholesale channel creates a diversified business model that positions the Company well for future growth.”
Fourth Quarter 2013 Results
The Company follows the retail 4-5-4 reporting calendar, which included a 53rd week in 2012.
Net sales were $467.5 million in the fourth quarter of 2013. The quarter included the negative impact of approximately $3.9 million from currency exchange rate fluctuations. On a constant currency basis, sales for the quarter would have been $471.4 million. This compares to net sales of $509.2 million for the 14-week quarter in 2012, and sales of $480.1 million for the comparable 13 weeks in 2012.
Comparable retail sales declined 4.3% for the 13 week period ended February 1, 2014, following an increase of 4.9% for the 13 week period ending February 2, 2013.
Net income was $15.7 million, or $0.69 per diluted share, in the fourth quarter of 2013, compared to $19.1 million, or $0.80 per diluted share, the previous year. Adjusted net income was $21.8 million, or $0.96 per diluted share, compared to $24.3 million, or $1.02 per diluted share, the previous year.
Gross profit was $164.3 million, compared to $188.6 million in the fourth quarter of 2012. Adjusted gross profit in the fourth quarter of 2013 was $166.1 million, and declined 150 basis points to 35.5% of sales due to deleverage on the lower sales base and higher promotions.
As a result of the Company’s strong expense management, selling, general and administrative expenses were $118.7 million, compared to $136.1 million in the fourth quarter of 2012. Adjusted SG&A in the fourth quarter of 2013 was $118.8 million, and leveraged 130 basis points to 25.4% of sales.
Operating income was $21.9 million, compared to $25.9 million in the fourth quarter of 2012. Adjusted operating income in the fourth quarter of 2013 was $31.3 million, and deleveraged 10 basis points to 6.7% of sales.
During the fourth quarter, the Company recorded charges of $9.4 million for unusual items, which primarily consisted of store impairment charges related to the continued review of underperforming stores and early closure expenses. As part of this ongoing review, the Company now expects to close a total of 125 underperforming stores through 2016, including the 41 stores which were closed in 2013.
Adjusted net income, adjusted gross profit, adjusted SG&A, and adjusted operating income are Non-GAAP measures. The Company believes the excluded transactions are not indicative of the performance of its core business and that by providing this supplemental disclosure to investors it will facilitate comparisons of its past and present performance. A reconciliation to GAAP financial information is provided at the end of this release.
Fiscal 2013 Results
Net sales were $1,765.8 million for fiscal 2013. Net sales included the negative impact of approximately $8.9 million from currency exchange rate fluctuations. On a constant currency basis, sales for the year would have been $1,774.7 million. This compares to net sales of $1,809.5 million for 53-weeks in fiscal 2012, and sales of $1,783.4 million for the comparable 52 weeks in 2012.
Comparable retail sales declined 2.8% for the 52 week period ending February 1, 2014, following an increase of 1.6% for the 52 week period ending February 2, 2013.
Net income was $53.0 million, or $2.32 per diluted share, compared to $63.2 million, or $2.61 per diluted share, the previous year. Adjusted net income was $74.4 million, or $3.26 per diluted share, compared to $78.8 million, or $3.25 per diluted share the previous year.
Gross profit was $655.5 million, compared to $691.4 million the previous year. Adjusted gross profit for fiscal 2013 was $658.4 million, and deleveraged 90 basis points to 37.3% of sales.
Selling, general and administrative expenses were $485.7 million, compared to $510.9 million the previous year. Adjusted SG&A for fiscal 2013 was $483.2 million, and leveraged 60 basis points to 27.4% of sales.
Operating income was $76.3 million, compared to operating income of $89.7 million for the same time period last year. Adjusted operating income for fiscal 2013 was $110.4 million, and deleveraged 10 basis points to 6.3% of sales.
Store Openings and Closures
The Company opened 8 stores and closed 24 during the fourth quarter of 2013. During fiscal 2013, the Company opened 53 stores and closed 41, ending the year with 1,107 stores and square footage of 5.21 million, a decrease of 0.8% compared to the prior year.
In 2014, the Company plans to open approximately 35 stores and close 30, for a net of 5 additional stores in North America. Square footage is expected to remain comparable to 2013.
Capital Return Program
During the fourth quarter of 2013, the Company repurchased 200 thousand shares for approximately $11.0 million. In fiscal 2013, the Company repurchased 1.3 million shares for approximately $65.7 million. At the end of fiscal 2013, $14.7 million of the $100 million share repurchase program authorized in November 2012 remained available for future share repurchases.
In a separate announcement today, the Company reported its Board of Directors initiated a quarterly dividend of $0.1325 per share, payable on April 17, 2014 to shareholders of record at the close of business on March 27, 2014. In addition, the Board authorized a new share repurchase program in the amount of $100 million.
Outlook
The Company is taking a cautious stance on its outlook for fiscal 2014 given the severe weather conditions experienced in February and early March and the heightened promotional environment. This guidance also anticipates a significant negative impact from foreign exchange in 2014.
Adjusted net income per diluted share for the first quarter is expected to be between $0.58 and $0.66. This compares to adjusted net income per diluted share of $0.83 in the first quarter of 2013. This guidance assumes comparable retail sales will be in the range of negative 2% to 4%.
For fiscal 2014, the Company is forecasting adjusted net income per diluted share will be between $2.85 and $3.05. This compares to adjusted net income per diluted share of $3.26 in fiscal 2013. This guidance assumes comparable retail sales for the year will be in the range of flat to negative 1%.
The Company estimates foreign exchange will negatively impact adjusted net income per diluted share by approximately $0.03 in the first quarter and $0.12 for fiscal 2014 at current exchange rates.
Conference Call Information
The Children’s Place will host a conference call to discuss its fourth quarter and fiscal year 2013 results today at 8:30 a.m. Eastern Time. The call will be broadcast live at http://investor.childrensplace.com. An audio archive will be available on the Company’s website approximately one hour after the conclusion of the call.
About The Children’s Place Retail Stores, Inc.
The Children’s Place is the largest pure-play children’s specialty apparel retailer in North America. The Company designs, contracts to manufacture, sells and licenses to sell fashionable, high-quality merchandise at value prices, primarily under the proprietary “The Children’s Place,” “Place” and “Baby Place” brand names. As of February 1, 2014, the Company operated 1,107 stores and an online store at www.childrensplace.com.
Forward Looking Statements
This press release (and the above referenced call) may contain certain forward-looking statements regarding future circumstances, including statements relating to the Company’s positioning, and forecasts regarding adjusted net income per diluted share. 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 and performance 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 annual report on Form 10-K for the fiscal year ended February 2, 2013. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, the risks resulting from the highly competitive nature of the Company’s business and its dependence on consumer spending patterns, which may be affected by the continued weakness in the economy or by other factors such as increases in the cost of gasoline and food, the risk that the cost of raw materials or energy prices will increase beyond current expectations or that the Company is unable to offset cost increases through value engineering or price increases, and the uncertainty of weather patterns. Readers 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: Jane Singer, Vice President, Investor Relations, (201) 453-6955
(Tables Follow)
THE CHILDREN’S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Fourth Quarter Ended | Year-to-Date Ended | |||||||||||||||
| 13 Weeks | 14 Weeks | 52 Weeks | 53 Weeks | |||||||||||||
| February 1, | February 2, | February 1, | February 2, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net sales | $ | 467,497 | $ | 509,224 | $ | 1,765,789 | $ | 1,809,486 | ||||||||
| Cost of sales | 303,187 | 320,667 | 1,110,268 | 1,118,046 | ||||||||||||
| Gross profit | 164,310 | 188,557 | 655,521 | 691,440 | ||||||||||||
| Selling, general and administrative expenses | 118,716 | 136,089 | 485,653 | 510,918 | ||||||||||||
| Asset impairment charges | 7,867 | 215 | 29,633 | 2,284 | ||||||||||||
| Other costs (income) | (144 | ) | 6,622 | (906 | ) | 11,088 | ||||||||||
| Depreciation and amortization | 15,968 | 19,712 | 64,858 | 77,435 | ||||||||||||
| Operating income | 21,903 | 25,919 | 76,283 | 89,715 | ||||||||||||
| Interest income (expense), net | 123 | 84 | 265 | (20 | ) | |||||||||||
| Income before taxes | 22,026 | 26,003 | 76,548 | 89,695 | ||||||||||||
| Provision for income taxes | 6,375 | 6,875 | 23,522 | 26,452 | ||||||||||||
| Net income | $ | 15,651 | $ | 19,128 | $ | 53,026 | $ | 63,243 | ||||||||
| Earnings per common share | ||||||||||||||||
| Basic | $ | 0.70 | $ | 0.81 | $ | 2.35 | $ | 2.63 | ||||||||
| Diluted | $ | 0.69 | $ | 0.80 | $ | 2.32 | $ | 2.61 | ||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic | 22,253 | 23,541 | 22,537 | 24,092 | ||||||||||||
| Diluted | 22,652 | 23,789 | 22,835 | 24,276 | ||||||||||||
THE CHILDREN’S PLACE RETAIL STORES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In thousands, except per share amounts)
(Unaudited)
| Fourth Quarter Ended | Year-to-Date Ended | |||||||||||||||
| 13 Weeks | 14 Weeks | 52 Weeks | 53 Weeks | |||||||||||||
| February 1, | February 2, | February 1, | February 2, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net income | $ | 15,651 | $ | 19,128 | $ | 53,026 | $ | 63,243 | ||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Expenses: | ||||||||||||||||
| Store disposition | 9,842 | - | 23,716 | 1,250 | ||||||||||||
| Asia reorganization | - | - | 1,237 | - | ||||||||||||
| DC exit costs (income) | (144 | ) | 8,641 | (906 | ) | 18,793 | ||||||||||
| IT impairment and costs | - | - | 10,323 | - | ||||||||||||
| Restructuring severance costs | - | - | - | 1,971 | ||||||||||||
| Obsolete supply and fixture costs | - | - | - | 883 | ||||||||||||
| Legal settlement | (267 | ) | - | (267 | ) | 1,087 | ||||||||||
| Accelerated depreciation for Canadian store remodels | - | - | - | 1,630 | ||||||||||||
| Aggregate impact of non-GAAP adjustments | 9,431 | 8,641 | 34,103 | 25,614 | ||||||||||||
| Income tax effect (1) | (3,325 | ) | (3,456 | ) | (12,774 | ) | (10,025 | ) | ||||||||
| Net impact of non-GAAP adjustments | 6,106 | 5,185 | 21,329 | 15,589 | ||||||||||||
| Adjusted net income | $ | 21,757 | $ | 24,313 | $ | 74,355 | $ | 78,832 | ||||||||
| GAAP net income per common share | $ | 0.69 | $ | 0.80 | $ | 2.32 | $ | 2.61 | ||||||||
| Adjusted net income per common share | $ | 0.96 | $ | 1.02 | $ | 3.26 | $ | 3.25 | ||||||||
| (1) | The tax effects of the non-GAAP items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides. |
THE CHILDREN’S PLACE RETAIL STORES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In thousands, except per share amounts)
(Unaudited)
| Fourth Quarter Ended | Year-to-Date Ended | |||||||||||||||
| 13 Weeks | 14 Weeks | 52 Weeks | 53 Weeks | |||||||||||||
| February 1, | February 2, | February 1, | February 2, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Operating income | $ | 21,903 | $ | 25,919 | $ | 76,283 | $ | 89,715 | ||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Expenses: | ||||||||||||||||
| Store disposition | 9,842 | - | 23,716 | 1,250 | ||||||||||||
| Asia reorganization | - | - | 1,237 | - | ||||||||||||
| DC exit costs (income) | (144 | ) | 8,641 | (906 | ) | 18,793 | ||||||||||
| IT impairment and costs | - | - | 10,323 | - | ||||||||||||
| Restructuring severance costs | - | - | - | 1,971 | ||||||||||||
| Obsolete supply and fixture costs | - | - | - | 883 | ||||||||||||
| Legal settlement | (267 | ) | - | (267 | ) | 1,087 | ||||||||||
| Accelerated depreciation for Canadian store remodels | - | - | - | 1,630 | ||||||||||||
| Aggregate impact of non-GAAP adjustments | 9,431 | 8,641 | 34,103 | 25,614 | ||||||||||||
| Adjusted operating income | $ | 31,334 | $ | 34,560 | $ | 110,386 | $ | 115,329 | ||||||||
THE CHILDREN’S PLACE RETAIL STORES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In thousands, except per share amounts)
(Unaudited)
| Fourth Quarter Ended | Year-to-Date Ended | |||||||||||||||
| 13 Weeks | 14 Weeks | 52 Weeks | 53 Weeks | |||||||||||||
| February 1, | February 2, | February 1, | February 2, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Gross Profit | $ | 164,310 | $ | 188,557 | $ | 655,521 | $ | 691,440 | ||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Expenses: | ||||||||||||||||
| Store disposition | 1,816 | - | 2,920 | - | ||||||||||||
| Aggregate impact of non-GAAP adjustments | 1,816 | - | 2,920 | - | ||||||||||||
| Adjusted Gross Profit | $ | 166,126 | $ | 188,557 | $ | 658,441 | $ | 691,440 | ||||||||
THE CHILDREN’S PLACE RETAIL STORES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In thousands, except per share amounts)
(Unaudited)
| Fourth Quarter Ended | Year-to-Date Ended | |||||||||||||||
| 13 Weeks | 14 Weeks | 52 Weeks | 53 Weeks | |||||||||||||
| February 1, | February 2, | February 1, | February 2, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Selling, general and administrative expenses | $ | 118,716 | $ | 136,089 | $ | 485,653 | $ | 510,918 | ||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Expenses: | ||||||||||||||||
| Store disposition | (159 | ) | - | (276 | ) | - | ||||||||||
| Asia reorganization | - | - | (1,190 | ) | - | |||||||||||
| IT costs | - | - | (1,210 | ) | - | |||||||||||
| Restructuring severance costs | - | - | - | (1,971 | ) | |||||||||||
| Obsolete supply and fixture costs | - | - | - | (883 | ) | |||||||||||
| Legal settlement | 267 | - | 267 | (1,087 | ) | |||||||||||
| Aggregate impact of non-GAAP adjustments | 108 | - | (2,409 | ) | (3,941 | ) | ||||||||||
| Adjusted selling, general and administrative expenses | $ | 118,824 | $ | 136,089 | $ | 483,244 | $ | 506,977 | ||||||||
THE CHILDREN’S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| February 1, | February 2, | |||||||
| 2014 | 2013* | |||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | 173,997 | $ | 194,128 | ||||
| Short-term investments | 62,500 | 15,000 | ||||||
| Accounts receivable | 25,960 | 18,490 | ||||||
| Inventories | 322,422 | 266,976 | ||||||
| Other current assets | 44,441 | 50,641 | ||||||
| Total current assets | 629,320 | 545,235 | ||||||
| Property and equipment, net | 312,149 | 330,101 | ||||||
| Other assets, net | 49,161 | 48,074 | ||||||
| Total assets | $ | 990,630 | $ | 923,410 | ||||
| Liabilities and Stockholders' Equity: | ||||||||
| Accounts payable | $ | 150,652 | $ | 87,461 | ||||
| Accrued expenses and other current liabilities | 120,697 | 104,045 | ||||||
| Total current liabilities | 271,349 | 191,506 | ||||||
| Other liabilities | 102,503 | 110,955 | ||||||
| Total liabilities | 373,852 | 302,461 | ||||||
| Stockholders' equity | 616,778 | 620,949 | ||||||
| Total liabilities and stockholders' equity | $ | 990,630 | $ | 923,410 | ||||
| * | Derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended February 2, 2013. |
THE CHILDREN’S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(In thousands)
(Unaudited)
| Year-to-Date Ended | ||||||||
| 52 Weeks | 53 Weeks | |||||||
| February 1, | February 2, | |||||||
| 2014 | 2013 | |||||||
| Net income | $ | 53,026 | $ | 63,243 | ||||
| Non-cash adjustments | 106,830 | 85,060 | ||||||
| Working capital | 13,614 | 56,739 | ||||||
| Net cash provided by operating activities | 173,470 | 205,042 | ||||||
| Net cash used in investing activities | (119,700 | ) | (105,220 | ) | ||||
| Net cash used in financing activities | (64,140 | ) | (82,257 | ) | ||||
| Effect of exchange rate changes on cash | (9,761 | ) | (92 | ) | ||||
| Net (decrease) increase in cash and cash equivalents | (20,131 | ) | 17,473 | |||||
| Cash and cash equivalents, beginning of period | 194,128 | 176,655 | ||||||
| Cash and cash equivalents, end of period | $ | 173,997 | $ | 194,128 | ||||
###
Exhibit 99.2
FOR IMMEDIATE RELEASE
THE CHILDREN’S PLACE ANNOUNCES EXPANDED
CAPITAL RETURN PROGRAM
Initiates Quarterly Dividend
Increases Authorized Stock Repurchases by $100 Million
Upsizes Credit Facility
Secaucus, New Jersey – March 6, 2014 – The Children’s Place Retail Stores, Inc. (Nasdaq: PLCE), the largest pure-play children’s specialty apparel retailer in North America, today announced that its Board of Directors has instituted a quarterly dividend and has approved a $100 million share repurchase authorization as part of the Company’s strategy to return excess capital to shareholders.
Jane Elfers, President and Chief Executive Officer, commented, “The Children’s Place has a profitable business model which generates strong cash flow. Over the past five years, we have returned over $400 million to shareholders through share repurchases. The initiation of a quarterly dividend and the new share repurchase authorization reflect our confidence in our ability to execute on our growth strategies and our continuing commitment to return excess capital to shareholders.”
The Board authorized a quarterly cash dividend of $0.1325 per share to be paid April 17, 2014 for shareholders of record at the close of business on March 27, 2014. The quarterly dividend is the first for The Children’s Place since becoming a public company in 1997. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the Company’s Board of Directors based on a number of factors, including business and market conditions, the Company’s future financial performance and other investment priorities.
The share repurchase authorization announced today permits the Company to repurchase shares in the open market at current market prices at the time of purchase or in privately negotiated transactions. The timing and actual number of shares repurchased under the program will depend on a variety of factors including price, corporate and regulatory requirements, and other market and business conditions, and the Company may suspend or discontinue the program at any time, and may thereafter reinstitute purchases, all without prior announcement.
In conjunction with the expanded capital return program, the Company amended its existing credit facility to increase its line of credit to $200 million from $150 million and to permit dividend payments on the same basis as stock repurchases. It also extended the agreement an additional year to August 2018.
About The Children’s Place Retail Stores, Inc.
The Children’s Place is the largest pure-play children’s specialty apparel retailer in North America. The Company designs, contracts to manufacture, sells and licenses to sell fashionable, high-quality merchandise at value prices, primarily under the proprietary “The Children’s Place,” “Place” and “Baby Place” brand names. As of February 1, 2014, the Company operated 1,107 stores and an online store at www.childrensplace.com.
Forward Looking Statements
This press release 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 and performance 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 annual report on Form 10-K for the fiscal year ended February 2, 2013. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, the risks resulting from the highly competitive nature of the Company’s business and its dependence on consumer spending patterns, which may be affected by the continued weakness in the economy or by other factors such as increases in the cost of gasoline and food, the risk that the cost of raw materials or energy prices will increase beyond current expectations or that the Company is unable to offset cost increases through value engineering or price increases, and the uncertainty of weather patterns. Readers 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: Jane Singer, Vice President, Investor Relations, (201) 453-6955
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