SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number 333-85834
A. Full title of the plan: The Children's Place 401(k) Savings and
Investment Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
The Children's Place Retail Stores, Inc.
915 Secaucus Road
Secaucus, NJ 07094
REQUIRED INFORMATION
The Statement of Net Assets Available for Plan Benefits of The Children's
Place 401(k) Savings and Investment Plan (the "Plan") as of December 31, 2001
and the related Statement of Changes in Net Assets Available for Plan Benefits
of the Plan and supplemental schedules for the year ended December 31, 2001,
together with the Independent Public Accountants' Report and Consent, are
attached and filed herewith.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Committee under the Plan, which administers the Plan, has duly cause this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
THE CHILDREN'S PLACE
401(K) SAVINGS AND INVESTMENT PLAN
By: /s/ Steven Balasiano
-------------------------------
Name: Steven Balasiano
Title: Vice President, Secretary
and General Counsel
Dated: May 31, 2002
THE CHILDREN'S PLACE 401(K) SAVINGS AND INVESTMENT PLAN
INDEX
Page
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 4
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits as of
December 31, 2001 and 2000 5
Statement of Changes In Net Assets Available for Plan Benefits
for the Year Ended December 31, 2001 6
NOTES TO FINANCIAL STATEMENTS 7
SUPPLEMENTAL SCHEDULE:
I - Schedule of Assets (Held at End of Year) as of
December 31, 2001 11
EXHIBITS:
Exhibit 1 - Independent Public Accountants' Consent
Exhibit 99 - Letter to Commission Pursuant to Temporary Note 3T.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of
The Children's Place 401(k) Savings and Investment Plan:
We have audited the accompanying statements of net assets available for benefits
of The Children's Place 401(k) Savings and Investment Plan (the "Plan") as of
December 31, 2001 and 2000, and the related statement of changes in net assets
available for benefits for the year ended December 31, 2001. These financial
statements and the schedule referred to below are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and signification
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2001 and 2000, and the changes in its net assets available for
benefits for the year ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedule of assets held at end of
year as of December 31, 2001 is presented for purposes of additional analysis
and is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rule and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Roseland, New Jersey
May 3, 2002
THE CHILDREN'S PLACE
401(k) SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 2001 AND 2000
2001 2000
---- ----
ASSETS:
Cash equivalents $ 4,159 $ 3,288
Investments, at fair value 11,084,213 8,423,873
Receivables-
Participant contributions receivable 69,983 51,066
Employer contributions receivable 24,413 16,288
---------- ---------
Total receivables 94,396 67,354
---------- ---------
Total assets 11,182,768 8,494,515
---------- ---------
LIABILITIES:
Refunds payable to participants 105,423 47,736
---------- ---------
Total liabilities 105,423 47,736
---------- ---------
Net assets available for plan benefits $ 11,077,345 $ 8,446,779
========== =========
The accompanying notes to financial statements are an integral part of these
statements.
THE CHILDREN'S PLACE
401(k) SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001
2001
----
ADDITIONS:
Additions to net assets attributed to-
Investment income $ 219,939
Contributions-
Participant 2,752,081
Employer (net of forfeitures of $7,731)
852,980
----------
3,605,061
----------
Total additions 3,825,000
----------
DEDUCTIONS:
Deductions from net assets attributed to-
Benefits paid to participants 512,529
Net depreciation and net realized loss on sale of investments
681,905
---------------
Total deductions 1,194,434
---------------
Net increase in net assets available for plan
benefits
2,630,566
NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of year
8,446,779
---------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of year $ 11,077,345
===============
The accompanying notes to financial statements are an integral part of this
statement.
THE CHILDREN'S PLACE
401(k) SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
1. DESCRIPTION OF THE PLAN
The following description is provided for general information purposes.
Participants of The Children's Place 401(k) Savings and Investment Plan (the
"Plan") should refer to the Plan document for more detailed and complete
information.
General
The Plan is a defined contribution 401(k) profit-sharing plan established on
September 1, 1990, to provide retirement benefits for eligible employees of The
Children's Place Retail Stores, Inc. (the "Sponsor"). The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
Eligibility
Each employee (full-time and part-time) becomes eligible to participate in the
Plan after the completion of one thousand hours of service during one year of
participation service (determined from participant's date of hire to his/her
first anniversary, or if not met in the first year, then in subsequent years)
and the attainment of age 21.
Contributions
Participants may elect to make salary reduction contributions to the Plan at a
rate of 1% to 15% of their compensation, up to a maximum of $10,500 in 2001.
Merrill Lynch is the appointed trustee and asset custodian of the Plan.
Contributions to the Plan are invested by the trustee and asset custodian, as
directed by the participants. Plan assets are administered by Merrill Lynch,
which enable the participant to invest in any investment option, including The
Children's Place Common Stock (Participant directed). During 2001, the Plan
offered one common/collective trust fund, nine mutual funds and The Children's
Place Common Stock. Participants elect to have their participant accounts
invested among these investments in 1% multiples. Participants immediately vest
in their participant contributions.
The Company provides employer-matching contributions equal to the lesser of 50%
of the participant's contribution or 2.5% of the participant's compensation. The
total compensation that can be considered for employer contribution purposes is
limited to $170,000 in 2001. These contributions vest as follows-
Years of Service Vested Percentage
--------------------------- -----------------------
1 0%
2 25
3 50
4 75
5 100
Forfeitures are used to reduce future employer contributions. At December 31,
2001, forfeited nonvested accounts totaled $52,810. Also in 2001, employer
contributions were reduced by $7,731 from forfeited nonvested accounts.
Each participant's account is credited with the participant's salary reduction
contribution and an allocation of (a) the employer-matching contribution (b)
Plan earnings, and (c) rollovers.
Distributions
Except for permitted withdrawals after attaining age 59-1/2 and hardship
distributions, interest in a participant's account is distributable when
employment terminates. Distributions can be made in a lump-sum payment in cash
or in annual installments, or more frequent installments, for a period not to
exceed the life expectancy of the participant or the beneficiary of the
participant or in the form of an annuity providing periodic payments to the
participant and/or the beneficiary of the participant. Upon disability,
retirement, or death of a participant, participants become 100% vested in their
account balance. Participants are entitled to all vested benefits in their
accounts upon termination of service.
Loans
Participants may borrow the lesser of 50% of their vested account balance or
$50,000. The repayment of a loan is required within a five year period, except
when the loan is used for the purchase of a primary residence. Loans are subject
to interest charges at an annual rate of prime plus 1%. The interest rate on all
loans outstanding as of December 31, 2001 ranged from 6.00% to 10.50%.
Plan Termination
Although it has not expressed any intention to do so, the Sponsor has the right
under the Plan to terminate the Plan subject to the provisions of ERISA. Upon
Plan termination, participants' will be 100% vested in their total account
balance. Distributions from the Plan after termination may be made in the form
of cash or nontransferable annuity contracts, at the discretion of the plan
administrator.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Plan's financial statements have been prepared on the accrual basis of
accounting. A summary of the significant accounting principles and policies used
by the Plan are as follows-
Valuation of Investments
As of December 31, 2001 and 2000, the Plan's investments are stated at each
investment's market value at quoted market prices. Such investments are credited
with participant and employer contributions plus actual earnings on, and the net
appreciation (depreciation) of the underlying investments and are reduced for
distributions.
Purchases and sales of securities are recorded on a trade date basis.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
changes therein, and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
Risks and Uncertainties
The Plan provides for various investment options in investment securities.
Investment securities are exposed to various risks, such as interest rate,
market and credit. Due to the level of risk associated with certain investment
securities and the level of uncertainty related to changes in the value of
investment securities, it is at least reasonably possible that changes in risks
in the near term could materially affect participants' account balances and the
amounts reported in the statements of net assets available for plan benefits and
the statement of changes in net assets available for plan benefits.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Quoted market prices are used
to value investments. Shares of mutual funds are valued at the net asset value
of shares held by the Plan at year end.
Purchases and sales of securities are recorded on a trade-date basis. Dividends
are recorded on the ex-dividend date.
Payment of Benefits
Benefits are recorded when paid.
Administrative Expenses
All administrative expenses of the Plan are paid by the Sponsor.
3. INVESTMENTS
The market value of individual investments that represent 5% or more of the
Plan's total net assets available for plan benefits as of December 31, 2001 and
2000 is as follows-
2001 2000
---- ----
Merrill Lynch Retirement Preservation Trust $ 3,413,116 $ 1,969,144
Merrill Lynch US Government Mortgage Fund 666,410* -
AIM Equity Constellation Fund 1,056,687 1,153,429
Templeton Foreign Fund 758,835 712,602
Davis New York Venture Fund 3,570,607 3,473,026
The Children's Place Common Stock 599,228* -
* This investment did not represent 5% of the Plan's net assets as of December
31, 2000.
During 2001 the Plan's investments, including gains and losses on investments
bought and sold, as well as held during the year, depreciated in value by
($681,905).
Net appreciation (depreciation) in market value of investments-
MFS Mid-Cap Growth Fund $ 2,831
Merrill Lynch S&P 500 Index 46
Merrill Lynch US Government Mortgage Fund 9,611
State Street Aurora Fund 8,057
MFS New Discovery Fund 1,746
Alliance Premier Growth Fund (95,195)
AIM Equity Constellation Fund (289,281)
Templeton Foreign Fund (75,697)
Davis New York Venture Fund (411,749)
The Children's Place Common Stock Fund 167,725
------------
$ (681,905)
============
4. TAX STATUS
The Internal Revenue Service has determined and informed the Sponsor by a letter
dated July 28, 1995, that the Plan is designed in accordance with applicable
sections of the Internal Revenue Code of 1986 (the "Code"). The Plan has been
amended since receiving the determination letter. However, the Plan
administrator and the Plan's legal counsel believe that the Plan is currently
designed and being operated in compliance with the applicable requirements of
the Code. Therefore, they believe that the Plan is qualified and the related
trust is tax-exempt as of the financial statement dates.
5. PARTY-IN-INTEREST TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Merrill Lynch.
Merrill Lynch is the trustee as defined by the Plan and, therefore, these
transactions qualify as party-in-interest transactions. Fees paid by the Sponsor
for the investment management services amounted to $36,686 for the year ended
December 31, 2001.
As of December 31, 2001, the Plan holds 22,071 shares of the Sponsor's common
stock with a market value of $599,228. During the year ended December 31, 2001,
15,751 shares of such common stock were acquired at a cost of $358,765; 10,542
shares were sold with an original cost basis of $210,346.
6. OTHER INFORMATION
There were no loans, fixed income obligations or leases which were either in
default or classified as uncollectible for the year ended December 31, 2001, as
defined by ERISA.
THE CHILDREN'S PLACE SCHEDULE I
401(k) SAVINGS AND INVESTMENT PLAN
EMPLOYER IDENTIFICATION NUMBER: 31-1241495
PLAN NUMBER:001
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2001
(b) Identity of
Issuer, Borrower, (c) Description of Investment Including Maturity Date, (e) Current
(a) Lessor or Similar Party Rate of Interest, Collateral, Par or Maturity Value Value
- ------ ----------------------- ----------------------------------------------------- ------------
* Merrill Lynch Retirement Preservation Trust - Common/Collective Trust Fund;
3,413,116 shares of participation
$ 3,413,116
* Merrill Lynch MFS Mid-Cap Growth Fund - Mutual Fund; 4,143 shares
of participation 45,412
* Merrill Lynch S&P 500 Index - Mutual Fund; 995 shares of participation 13,983
* Merrill Lynch State Street Aurora Fund - Mutual Fund; 2,947 shares
of participation 95,332
* Merrill Lynch MFS New Discovery Fund - Mutual Fund; 1,370 shares
of participation 23,548
* Merrill Lynch US Government Mortgage Fund - Mutual Fund; 67,178 shares of
participation 666,410
* Merrill Lynch Alliance Premier Growth Fund - Mutual Fund; 26,658 shares of
participation 541,694
* Merrill Lynch AIM Equity Constellation Fund - Mutual Fund; 47,814 shares of
participation 1,056,687
* Merrill Lynch Templeton Foreign Fund - Mutual Fund; 82,036 shares of
participation 758,835
* Merrill Lynch Davis New York Venture Fund - Mutual Fund; 140,410 shares of
participation 3,570,607
* Merrill Lynch The Children's Place - Common Stock; 22,071 shares of
participation 599,228
* Merrill Lynch Loan Fund - Loans; interest rate ranged from 6.00% to 10.50%
299,361
----------------
Total $ 11,084,213
================
* Represents a party-in-interest to the Plan
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included in this Form 11-K, into the Company's previously filed
Registration Statement on Form S-8 File No. 333-85834.
/s/ ARTHUR ANDERSEN LLP
New York, New York
May 31, 2002
Mr. Seth Udasin
Chief Financial Officer
The Children's Place Retail Stores, Inc.
915 Secaucus Road
Secaucus, New Jersey 07094
May 31, 2002
Dear Mr. Udasin:
We represent that our audit of the financial statements of The Children's Place
401(k) Savings and Investment Plan as of December 31, 2001 and 2000, and for the
year ended December 31, 2001, was subject to our quality control system for the
U.S. accounting and auditing practice to provide reasonable assurance that the
engagement was conducted in compliance with professional standards, that there
was appropriate continuity of Arthur Andersen personnel working on the audit and
availability of national office consultation. Availability of Arthur Andersen
personnel at foreign affiliates of Arthur Andersen is not relevant to this
audit.
This letter and its contents are intended solely for the internal use of The
Children's Place Retail Stores Inc. However, The Children's Place Retail Stores,
Inc. may reveal to third parties that it has received this letter and describe
its contents. This letter is not intended to be and should not be used by anyone
other than The Children's Place Retail Stores, Inc.
Very truly yours,
/s/ ARTHUR ANDERSEN LLP
