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):
October
9, 2007
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
4.01 Changes
in Registrant’s Certifying Accountant
(a) On
October 9, 2007, The Children’s Place Retail Stores, Inc. (the “Company”) was
advised by Deloitte & Touche LLP (“Deloitte”), the Company’s current
independent auditor, that it will not stand for re-election as the Company’s
independent registered public accounting firm for the fiscal year ending
February 2, 2008 (“fiscal 2007”). Deloitte will complete its current engagement
as auditor of the Company’s financial statements for the three fiscal years in
the period ended February 3, 2007 (as to which there is a pending restatement
of
previously issued financial statements for fiscal 2005 and 2004).
As
previously announced, because the financial statements for the fiscal years
ended January 29, 2005 and January 28, 2006 are being restated, these
financial statements and the related audit reports of Deloitte should no
longer
be relied upon. Such Deloitte audit reports neither contained any adverse
opinion or disclaimer of opinion, nor were such reports qualified or modified
as
to uncertainty, audit scope or accounting principles..
During
the Company’s two most recent fiscal years ended January 28, 2006 and
February 3, 2007, and during the subsequent interim period to October 9,
2007, there has been no disagreement between the Company and Deloitte on
any
matter of accounting principles or practices, financial statement disclosure,
or
auditing scope or procedure that, if not resolved to Deloitte’s satisfaction,
would have caused Deloitte to make reference to the subject matter of the
disagreement in connection with its audit report.
Other
than as described below, during the Company’s two most recent fiscal years ended
January 28, 2006 and February 3, 2007, and during the subsequent interim
period to October 9, 2007, there have been no “reportable events” (as defined in
Item 304(a)(1)(v) of Regulation S-K).
Prior
to
the resignation of the Company’s former chief executive officer on
September 24, 2007, Deloitte advised the Company that it had determined, in
its professional judgment, that it was no longer willing to rely on his
representations in connection with its audits.
The
Company’s management has determined, and discussed with Deloitte, in connection
with the preparation of the Company’s Annual Report on Form 10-K for fiscal 2006
that there are two material weaknesses in the Company’s internal control over
financial reporting.
As
previously disclosed in the Company’s January 31, 2007 press release
and in a
Current Report on Form 8-K filed with the Securities and Exchange
Commission (the “SEC”) on February 1, 2007,
in
connection with its internal investigation of option granting practices,
the
Company found that it did not maintain appropriate governance and other internal
controls relating to its option grants. Management has determined that the
lack
of adequate controls over the granting of stock options and the related
documentation constituted a material weakness, which resulted in the use
of
incorrect accounting measurement dates for certain stock option grants and
related errors in recording compensation expense.
2
As
previously disclosed in the Company’s August 23, 2007 press release
and in a
Current Report on Form 8-K filed with the SEC on August 23, 2007,
the
Company’s Audit Committee found that two violations of the Company’s Code of
Business Conduct by members of the Company’s senior management had occurred in
the past year. Considering these incidents, taken in the context of other
relevant circumstances, management has determined that deficiencies exist
in the
implementation of the Company’s policies and procedures, resulting in a material
weakness in the Company’s control environment.
A
material weakness is a control deficiency, or a combination of control
deficiencies, that result in a more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. In connection with the completion of the Company’s Annual Report on
Form 10-K for fiscal 2006, management will assess the Company’s internal control
over financial reporting as of the end of fiscal 2006. Because this report
has
not yet been completed, it is possible that additional material weaknesses
in
the Company’s internal control over financial reporting may yet be identified
and be discussed in such report.
The
Audit
Committee has discussed the subject matter of the above described reportable
events with Deloitte.
The
Company has furnished a copy of the above disclosure to Deloitte and requested
that Deloitte furnish the Company with a letter addressed to the SEC stating
whether or not Deloitte agrees with such disclosure. A copy of Deloitte’s letter
is attached as Exhibit 16.1 to this Current Report on Form 8-K.
The
Company continues to work to complete its overdue Annual Report on Form 10-K
for
fiscal 2006, including its audited financial statements, and its other overdue
SEC periodic reports as soon as practicable.
(b) On
October 15, 2007, the Company, as approved by the Audit Committee of the
Board
of Directors, engaged BDO Seidman, LLP (“BDO”) as the Company’s independent
registered public accounting firm for fiscal 2007.
During
the Company’s two most recent fiscal years ended January 28, 2006 and
January 29, 2005, and during the subsequent interim periods preceding the
engagement of BDO, the Company did not consult with BDO regarding either
(i)
the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered
on
the company’s financial statements, and neither a written report was provided to
the company nor oral advice was provided that BDO concluded was an important
factor considered by the Company in reaching a decision as to the accounting,
auditing or financial reporting issue; or (ii) any matter that was either
the
subject of a disagreement, as that term is defined in paragraph 304(a)(1)(iv)
of
Regulation S-K, or a reportable event required to be reported under paragraph
304(a)(1)(v) of Regulation S-K.
In
connection with the engagement of BDO, the Company disclosed to BDO the matters
described in Item 4.01(a) above.
The
Company has authorized Deloitte to respond fully to the inquiries of BDO
concerning Deloitte’s unwillingness to rely on the representations of the
Company’s former CEO, with respect to the two material weaknesses in the
Company’s internal control over financial reporting identified by the Company’s
management, as referred to above, and also on any other matter pertinent
to the
Company’s financial statements.
3
On
October 11, 2007, the Company issued a press release regarding the decision
by
Deloitte not to stand for re-election.
A
copy of
this press release is included as Exhibit 99.1 hereto.
On
October 15, 2007, the Company issued a press release regarding the engagement
of BDO.
A
copy of
this press release is included as Exhibit 99.3 hereto.
Item
8.01 Other
Events
On
October 10, 2007, the Company learned that, on October 9, 2007, a stockholder
class action was filed in the United States District Court, Southern District
of
New York, against the Company and certain of its current and former senior
executives. The complaint alleges, among other things, that certain of the
Company’s current and former officers made statements to the investing public
which misrepresented material facts about the business and operations of
the
Company, or omitted to state material facts required in order for the statements
made by them not to be misleading, thereby causing the price of the Company’s
stock to be artificially inflated in violation of provisions of the Securities
Exchange Act of 1934, as amended. According to the complaint, more recent
disclosures establish the misleading nature of these earlier disclosures.
The
complaint seeks, among other relief, class certification of the lawsuit,
compensatory damages plus interest, and costs and expenses of the lawsuit,
including counsel and expert fees. The complaint has not yet been served
on the
Company. The Company intends to vigorously contest these allegations and
the
claims made.
In
addition, on October 11, 2007, the Company issued a press release containing
its
sales results for the five-week period ended October 6, 2007.
A
copy of
this press release is included as Exhibit 99.2 hereto.
Item
9.01 Financial
Statement and Exhibits.
(d) Exhibits.
|
Exhibit
16.1
|
Letter
on change in certifying accountant.
|
|
|
Exhibit
99.1
|
Press
Release dated October 11, 2007 (regarding auditor’s decision not to stand
for re-election)
|
|
|
Exhibit
99.2
|
Second
Press Release dated October 11, 2007 (regarding sales
results).
|
|
|
Exhibit
99.3
|
Press
Release dated October 15, 2007 (regarding appointment of
auditors)
|
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.
| THE CHILDREN’S PLACE RETAIL STORES, INC. | ||
| |
|
|
| Date: October 15, 2007 | By: | /s/ Susan J. Riley |
|
Name: Susan J. Riley |
||
| Title: Executive Vice President, Finance and Administration | ||
5
EXHIBIT
INDEX
| Exhibit No. |
Description
|
|
|
Exhibit
16.1
|
Letter
on change in certifying accountant.
|
|
|
Exhibit
99.1
|
Press
Release dated October 11, 2007 (regarding auditor’s decision not to stand
for re-election)
|
|
|
Exhibit
99.2
|
Second
Press Release dated October 11, 2007 (regarding sales
results).
|
|
|
Exhibit
99.3
|
Press
Release dated October 15, 2007 (regarding appointment of
auditors)
|
6
October
15, 2007
Securities
and Exchange Commission
100
F
Street, N.E.
Washington,
D.C. 20549-7561
Dear
Sirs/Madams:
We
have
read Item 4 of The
Children’s Place Retail Stores, Inc. Form
8-K
dated October 9, 2007 and filed with the Securities and Exchange Commission
on October 15, 2007, and have the following comments:
| 1. |
We
agree with the statements made in first 11 paragraphs in section (a)
and the fourth, fifth and sixth paragraphs in section (b) of Item
4.01.
|
| 2. |
We
have no basis on which to agree or disagree with the statements made
in
the last paragraph in section (a) and the first three paragraphs
in
section (b) of Item 4.01.
|
Yours
truly,
/s/
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
FOR
IMMEDIATE RELEASE
THE
CHILDREN’S PLACE RETAIL STORES, INC. ANNOUNCES AUDITOR NOT STANDING FOR
RE-ELECTION FOLLOWING COMPLETION OF 2006 FORM 10-K
-
Company in Discussions to Engage Nationally Recognized Public Accounting Firm
for Fiscal 2007 -
Secaucus,
New Jersey - October 11, 2007 - The Children’s Place Retail Stores, Inc.
(Nasdaq: PLCE),
announced
that on October 9, 2007, its current independent auditor, Deloitte & Touche
LLP, advised that it will not stand for re-election as the Company's auditor
for
fiscal 2007, ending February 2, 2008. Deloitte & Touche will complete its
current engagement as auditor of the Company's financial statements for the
three fiscal years in the period ended February 3, 2007 (as to which there
is a
pending restatement of previously issued financial statements for fiscal 2005
and 2004). Deloitte & Touche's decision not to stand for re-election does
not reflect any disagreement between it and the Company regarding any matter
of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure.
The
Company stated that it is in discussions with a nationally recognized public
accounting firm, which it expects to engage shortly as its independent auditor
for fiscal 2007.
The
Company continues to work to complete its overdue Annual Report on Form 10-K
for
fiscal 2006, including its audited financial statements, and its other overdue
SEC periodic reports as soon as practicable.
Prior
to
the resignation of the Company’s former chief executive officer on September 24,
2007, Deloitte & Touche advised the Company that it had determined, in its
professional judgment, that it was no longer willing to rely on his
representations in connection with its audits.
In
light
of the independent auditor’s decision not to stand for re-election, the Company
is also reporting that Company management has determined that certain previously
disclosed matters will be classified, in the Company’s Annual Report on Form
10-K for fiscal 2006, as reflecting two material weaknesses in the Company’s
internal control over financial reporting:
| · |
As
reported in the Company’s January 31, 2007, press release, in connection
with its internal investigation of option granting practices, the Company
found that it did
not maintain appropriate governance and other internal controls relating
to its option grants. Management
has determined that the lack of adequate controls over the granting
of
stock options and the related documentation constituted a material
weakness, which resulted in the use of incorrect accounting measurement
dates for certain stock option grants and related errors in recording
compensation expense.
|
| · |
As
reported in the Company’s August 23, 2007, press release, two violations
of the Company’s Code of Business Conduct by members of the Company’s
senior management had occurred in the past year. Considering these
incidents, taken in the context of other relevant circumstances,
management has determined that deficiencies exist in the implementation
of
the Company’s policies and procedures, resulting in a material weakness in
the Company’s control environment.
|
A
material weakness is a control deficiency, or a combination of control
deficiencies, that result in a more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. In connection with the completion of the Company’s Annual Report on
Form 10-K for fiscal 2006, management will assess the Company’s internal control
over financial reporting as of the end of fiscal 2006. Because this report
has
not yet been completed, it is possible that additional material weaknesses
in
the Company’s internal control over financial reporting may yet be identified
and be discussed in such report.
PLCE:
The Children’s Place Retail Stores, Inc. Announces Auditor Not Standing for
Re-election Following Completion of 2006 Form 10-K
Page
2
In
a
separate announcement made today, the Company reported final sales results
for
the five-week period ended October 6, 2007.
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” and licensed “Disney Store” brand names. As of October 6, 2007, the
Company owned and operated 899 The Children’s Place stores and 328 Disney Stores
in North America and its online stores, www.childrensplace.com
and
www.disneystore.com.
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 to differ materially from those
contemplated in such forward-looking statements including, in particular, the
risks and uncertainties described in the Company's filings with the Securities
and Exchange Commission, as well as the risks and uncertainties relating to
the
Company's stock option granting practices and the completed investigation by
the
special committee of the Company's Board of Directors, the previously announced
pending restatement of the Company's historical financial statements, the delays
in filing the Company's periodic reports with the Securities and Exchange
Commission, the pending NASDAQ proceedings regarding the Company's continued
listing, the outcome of the informal investigation of the Company being
conducted by the Securities and Exchange Commission, potential other
governmental proceedings, the shareholder litigation commenced against the
Company and certain of its officers and directors, and the potential impact
of
each of these matters on the Company. Actual results, events, and performance
may differ. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. 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.
|
Investors:
|
Susan
Riley, EVP, Finance and Administration (201)
558-2400
|
| Heather Anthony, Sr. Director, Investor Relations, (201) 558-2865 |
| Media: | Cara O’Brien/Leigh Parrish, FD, 212-850-5600 |
###
FOR
IMMEDIATE RELEASE
THE
CHILDREN’S PLACE RETAIL STORES, INC. REPORTS FINAL SEPTEMBER
SALES
~
Consolidated Sales Up 4% ~
~
Consolidated Comparable Store Sales Down 3% ~
Secaucus,
New Jersey - October 11, 2007 - The Children’s Place Retail Stores, Inc.
(Nasdaq: PLCE)
today
announced sales results for the five-week period ended October 6, 2007.
Total
sales for the five-week period ended October 6, 2007, increased 4% to $217.8
million compared to sales of $210.3 million for the five-week period ended
September 30, 2006. Consolidated comparable store sales decreased 3%. During
September, the Company opened 10 Children’s Place stores.
Total
Sales (millions):
|
September
2007
|
September
2006
|
%
Increase
|
Year-to-Date
2007
|
Year-to-Date
2006
|
%
Increase
|
|
|
The
Children’s Place brand
|
$
157.1
|
$
153.0
|
3%
|
$
944.0
|
$
860.2
|
10%
|
|
Disney
Store
|
$
60.7
|
$
57.2
|
6%
|
$
362.8
|
$
327.5
|
11%
|
|
Total
Company
|
$
217.8
|
$
210.3
|
4%
|
$
1,306.8
|
$
1,187.7
|
10%
|
Comparable
Store Sales Increase/(Decrease)1:
|
September
2007
|
September
2006
|
Year-to-Date
2007
|
Year-to-Date
2006
|
|
|
The
Children’s Place brand
|
(2)%
|
20%
|
1%
|
14%
|
|
Disney
Store
|
(6)%
|
7%
|
2%
|
15%
|
|
Total
Company
|
(3)%
|
16%
|
1%
|
14%
|
On
October 9, 2007, the Company commented that given its sales and margin results
it now anticipates earnings per share to fall well below its previous guidance
given on August 23, 2007. For further information, please see the Company’s
October 9th press release.
In
a
separate press release this morning, the Company announced that its auditor
will
not stand for re-election following the completion of the Company’s fiscal 2006
Form 10-K. The Company is in discussions with a nationally recognized public
accounting firm, which it expects to engage shortly as its independent auditor
for fiscal 2007.
-
more
-
PLCE:
September 2007 Sales Release
Page
2
In
conjunction with today’s September sales release, you are invited to listen to
the Company’s pre-recorded monthly sales call, which will be available beginning
at 7:30 a.m. Eastern Time today through Thursday, October 18, 2007. To access
the call, please dial (402) 220-2662 or you may listen through the Investor
Relations section of the Company’s website, www.childrensplace.com.
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” and licensed “Disney Store” brand names. As of October 6, 2007, the
Company owned and operated 899 The Children’s Place stores and 328 Disney Stores
in North America and its online stores, www.childrensplace.com
and
www.disneystore.com.
1
As
previously announced, due to the extra week in fiscal 2006, the Company’s fiscal
2007 comparable store sales have shifted by one week as compared to the
corresponding period of fiscal 2006. References made today and going forward
regarding last year’s comparable store sales results, in view of the shift, will
be on the “adjusted” basis. For a breakdown of the Company’s fiscal 2006
comparable store sales on an “as reported” and “as adjusted” basis, please refer
to the Company’s March 8, 2007, press release.
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 from those contemplated in such forward-looking statements including,
in particular, the risks and uncertainties described in the Company's filings
with the Securities and Exchange Commission, as well as the risks and
uncertainties relating to the Company's stock option granting practices and
the
completed investigation by the special committee of the Company's Board of
Directors, the previously announced pending restatement of the Company's
historical financial statements, the delays in filing the Company's periodic
reports with the Securities and Exchange Commission, the pending NASDAQ
proceedings regarding the Company's continued listing, the outcome of the
informal investigation of the Company being conducted by the Securities and
Exchange Commission, potential other governmental proceedings, the shareholder
litigation commenced against the Company and certain of its officers and
directors, and the potential impact of each of these matters on the Company.
Actual results, events, and performance may differ. 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 hereof. 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.
|
Investors:
|
Heather
Anthony, Sr. Director, Investor Relations, (201)
558-2865
|
| Susan LaBar, Manager, Investor Relations, (201) 453-6955 |
| Media: | Cara O’Brien/Leigh Parrish, FD, 212-850-5600 |
###
FOR
IMMEDIATE RELEASE
THE
CHILDREN’S PLACE RETAIL STORES, INC. ENGAGES BDO SEIDMAN, LLP AS ITS AUDITOR FOR
FISCAL 2007
Secaucus,
New Jersey - October 15, 2007 - The Children’s Place Retail Stores, Inc.
(Nasdaq: PLCE),
announced
that the Audit Committee of its Board of Directors has engaged BDO Seidman,
LLP
as the Company’s new independent registered public accounting firm for the
current fiscal year ending February 2, 2008. Deloitte & Touche LLP is
continuing to serve as the Company's auditor with respect to the Company's
financial statements for the three fiscal years in the period ended February
3,
2007 (as to which there is a pending restatement of previously issued financial
statements for fiscal 2005 and 2004).
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” and licensed “Disney Store” brand names. As of October 6, 2007, the
Company owned and operated 899 The Children’s Place stores and 328 Disney Stores
in North America and its online stores, www.childrensplace.com
and
www.disneystore.com.
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 to differ materially from those
contemplated in such forward-looking statements including, in particular, the
risks and uncertainties described in the Company's filings with the Securities
and Exchange Commission, as well as the risks and uncertainties relating to
the
Company's stock option granting practices and the completed investigation by
the
special committee of the Company's Board of Directors, the previously announced
pending restatement of the Company's historical financial statements, the delays
in filing the Company's periodic reports with the Securities and Exchange
Commission, the pending NASDAQ proceedings regarding the Company's continued
listing, the outcome of the informal investigation of the Company being
conducted by the Securities and Exchange Commission, potential other
governmental proceedings, the shareholder litigation commenced against the
Company and certain of its officers and directors, and the potential impact
of
each of these matters on the Company. Actual results, events, and performance
may differ. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. 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.
Investors:
Susan
Riley, EVP, Finance and Administration (201) 558-2400
Heather
Anthony, Sr. Director, Investor Relations, (201) 558-2865
Media:
Cara
O’Brien/Leigh Parrish, FD, 212-850-5600
###