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
18,
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 Conditions. |
On
March
20, 2008, The Children’s Place Retail Stores, Inc. (the “Company”) issued a
press release containing its fiscal 2007 fourth quarter and full year financial
results.
A
copy of
the press release relating to the foregoing is attached hereto as Exhibit 99.1
and is incorporated in this Item 2.02 by reference.
| Item 2.05 | Costs Associated with Exit or Disposal Activities. |
On
March
20, 2008, the Company announced that it expects to exit the Disney Store North
America (“DSNA”) business conducted by its subsidiaries, Hoop Retail Stores, LLC
and Hoop Canada, Inc. (collectively, “Hoop”). In connection with such exit, the
Company currently estimates that it may incur pre-tax cash costs in the range
of
$50 million to $100 million, payable over a period of time. The Company is
unable to make a determination at this time of the total amount of each type
of
cost included in the estimated range of expenses.
The
Company expects that the above charges will result in future cash expenditures
within its estimated range.
A
copy of
the press release relating to the foregoing is attached hereto as Exhibit
99.1.
| Item 2.06 | Material Impairments. |
As
a
result of the Company’s previously announced strategic review of its operations,
which included consideration of the exit from the DSNA business and the
determination to cease construction of the building the Company had planned
to
use as its corporate headquarters (“Emerson Building”), the Company conducted an
impairment test on the carrying amounts of the DSNA business and the Emerson
Building. The impairment test indicated that the estimated values of the DSNA
business and the Emerson Building were less than their respective carrying
amounts; and, as a result, on March 18, 2008, the Audit Committee of the Board
of Directors concluded that a material charge for impairment must be recognized
to reduce the carrying amounts of these assets to their estimated fair
values.
The
Company currently estimates approximately $96.9 million in asset impairment
charges, including $80.3 million in impairments related to the decision to
exit
the DSNA business, $14.8 in impairments related to the decision to cease
construction of the Emerson Building, and $1.8 million of impairment related
to
12 underperforming stores.
A
copy of
the press release relating to the foregoing is attached hereto as Exhibit
99.1.
| Item 8.01 | Other Events. |
The
Company disclosed on March 20, 2008, that it has decided to exit the DSNA
business after a review of the operation, its potential for earnings growth,
its
capital needs and its ability to fund such needs from its own resources.
The
Company and Hoop are actively pursuing available alternatives for immediately
implementing the exit from the DSNA business, including a possible disposition
by Hoop of a substantial portion of the business or other means to terminate
its
operations. The Company and Hoop are in an advanced phase of discussions
with
The Walt Disney Company (“Disney”) regarding the terms under which Disney might
regain ownership and control of approximately two-thirds of the existing
stores
operated by Hoop. Hoop and the Company intend to disclose the arrangements
for
exiting the DSNA business in the very near term.
2
The
Company expects to incur costs associated with the exit and has recognized
a
material impairment in connection with the decision as described above in Items
2.05 and 2.06, respectively, of this current report on Form 8-K and in the
press
release attached as Exhibit 99.1 hereto.
The
DSNA
business is conducted by Hoop under a license agreement (the “License
Agreement”) with TDS Franchising, LLC, an affiliate of Disney. Hoop recently
received notices of several material breaches under the License Agreement.
Hoop
believes it has cured some of the asserted breaches and intends to cure or
to
assert defenses to other asserted breaches.
A
copy of
the press release relating to the foregoing is attached hereto as Exhibit
99.1.
Forward-Looking
Statements
This
Current Report on Form 8-K 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 reports on Forms 10-K and 10-Q. Risks and uncertainties relating
to the exit of the DSNA business operations and other elements of the Company’s
strategic review could also cause actual results, events and performance to
differ materially. 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.
| Item 9.01 | Financial Statement and Exhibits. |
| (d) | Exhibits. |
| Exhibit 99.1 | Press release issued by the Company dated March 20, 2008. |
3
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 20, 2008 | ||
|
THE
CHILDREN’S PLACE RETAIL
STORES,
INC.
|
||
| |
|
|
| By: | /s/ Susan J. Riley | |
|
Name:
Susan
J. Riley
Title:
Executive
Vice President, Finance
and
Administration
|
||
|
|
||
 |
EXHIBIT
99.1
|
FOR
IMMEDIATE RELEASE
THE
CHILDREN’S PLACE RETAIL STORES, INC. ANNOUNCES FISCAL 2007 FOURTH
QUARTER
AND FULL YEAR FINANCIAL RESULTS AND PROVIDES UPDATE ON
STRATEGIC
REVIEW
- Company
to Exit the Disney Store North America Chain -
- Company
to Cut $12.0 Million out of Annualized Administrative Expense -
-
Company
Plans to Reduce Fiscal 2008 Capital Expenditures by at Least 50%
-
-
Q407 Loss Per Share of $2.01 Includes Impairment Charges & Other Costs
Related to the Exit of the Disney
Store
North America Business -
Secaucus,
New Jersey - March 20, 2008 - The Children’s Place Retail Stores, Inc. (Nasdaq:
PLCE)
today
announced its fiscal 2007 fourth quarter and full year financial results and
also announced several important actions the Company is taking as a result
of
its strategic review process.
SUMMARY
OVERVIEW OF FISCAL 2007 FOURTH QUARTER AND FULL YEAR
RESULTS
| · |
Consolidated
net sales for the fourth quarter increased 4% to $670.9
million.
|
| · |
Consolidated
comparable store sales for the fourth quarter increased 3%.
|
| · |
The
Company’s fourth quarter net loss was $58.5 million, or $2.01 per share
for the thirteen-week period compared to net income of $44.7 million,
or
$1.48 per share in the fourteen-week period last year.
|
| · |
Consolidated
sales for the fiscal year increased 7% to $2,162.6
million.
|
| · |
Consolidated
comparable store sales for the fiscal year increased
2%
|
| · |
Net
loss for the full year was $59.6 million,
or $2.05 per share, compared to net income of $87.4 million, or $2.92
per
share last year.
|
A
full
overview of our fiscal 2007 fourth quarter and full year financial results
is
included below.
UPDATE
ON STRATEGIC REVIEW - KEY ACTIONS & PRIORITIES
As
part
of the Company’s strategic review process first announced in October 2007, the
Company is taking the following actions:
| 1. |
Exiting
the Disney Store North America business
|
| 2. |
Enhancing
Profitability through Workforce Reduction
|
| 3. |
Reducing
Planned 2008 Capital Expenditure Budget
|
| 4. |
Inventory
Strategy Update
|
Chuck
Crovitz, Interim Chief Executive Officer of The Children’s Place Retail Stores,
Inc., commented, “The corporate actions announced today are consistent with the
strategic priorities we put forth at the end of 2007. Given the challenging
macro-economic environment, we believe the steps we are taking today, while
difficult, will put The Children’s Place in position to realize its full
potential. We remain firmly focused on executing our initiatives to increase
sales and streamline operations, and believe that we will drive profitable
growth over the long-term. We
believe The Children’s Place brand, as a leading value player in the specialty
children’s apparel arena, is well-positioned in this environment.”
1.
Exiting the Disney Store North America Business
The
Company has decided to exit the Disney Store North America (“DSNA”) business
after a thorough review of the operation, its potential for earnings growth,
its
capital needs and its ability to fund such needs from its own resources. The
DSNA business is conducted by the Company’s subsidiaries Hoop Holdings LLC and
Hoop Holding Canada, Inc. under a license from The Walt Disney Company.
The
Company and Hoop are actively pursuing alternatives for immediately implementing
the exit from the DSNA business. These include a possible disposition by Hoop
of
a substantial portion of the business or other means to terminate its
operations. The Company and Hoop are in an advanced phase of discussions with
The Walt Disney Company regarding the terms under which Disney might regain
ownership and control of approximately two-thirds of the existing stores. Hoop
and the Company intend to disclose the arrangements for exiting the DSNA
business in the very near term.
In
addition to costs that will be incurred by the Hoop subsidiaries in connection
with exiting the DSNA business, at this time the Company expects that it may
incur pre-tax cash exit costs in the range of $50 million to $100 million,
payable over a period of time. Reflecting its decision to exit the business,
the
Company recognized a pre-tax asset impairment charge of $80.3 million in the
fourth quarter of fiscal 2007, as described below.
Unrelated
to the Company’s decision to exit the business, Hoop recently received notices
of several material breaches under its license agreement with The Walt Disney
Company. Hoop believes it has cured some of the asserted breaches and intends
to
cure or to assert defenses to other asserted breaches.
2.
Enhancing Profitability through Workforce Reduction
Consistent
with its plans to exit the DSNA business and in connection with the review
of
its expense structure, the Company is implementing a workforce reduction to
enhance profitability. Specifically, the Company plans to eliminate
approximately 80 current positions from its shared services workforce which
is
on top of approximately 50 open positions the Company has determined not to
fill, for a combined reduction in size of approximately 30%. The Company expects
to realize annualized savings of approximately $12.0 million, pre-tax, which
represented 11% of its fiscal 2007 shared services expense. The Company expects
to incur expenses in association with this workforce reduction of $1.5 million
to $2.0 million, pre-tax, in the first quarter of fiscal 2008, primarily
relating to severance costs.
Beyond
the workforce reduction, the Company is committed to streamlining operations
to
generate efficiencies that are expected to benefit the Company in future
periods.
3.
Reducing
Planned 2008 Capital Expenditure Budget
Reflecting
the Company’s planned exit of the DSNA business, coupled with capital expense
reductions at its core Children’s Place brand, the Company now anticipates
spending $65 million to $75 million in fiscal 2008, more than 50% below its
previously announced fiscal 2008 capital expenditure level of $150 million,
and
over 60% below its capital spending level of $200 million in fiscal 2007. Of
the
anticipated spend, $55 million reflects new store openings, remodels and
maintenance and approximately $15 million reflects information technology and
other initiatives. The primary drivers of the Company’s anticipated capital
expenditure reduction are the decisions pertaining to exiting of the DSNA
business and the Company’s decision not to move forward with the build out of
its new corporate headquarters.
4.
Inventory
Strategy Update
The
Company continues to make progress related to its inventory investment strategy.
At the end of the fourth quarter, inventory per square foot was up 9% at The
Children’s Place brand, below the Company’s previous guidance of an increase in
the low-teens range. Further, the Company expects Children’s Place inventory per
square foot to be flat to low single digit increases in year-over-year at the
end of the first quarter and further anticipates that its inventory position
will be below last year’s levels on a per square foot basis at the end of the
second quarter.
FOURTH
QUARTER & FULL YEAR FINANCIAL RESULTS
Fiscal
2007 Fourth Quarter
| · |
Consolidated
net sales for the thirteen-weeks ended February 2, 2008, increased
4% to
$670.9 million compared to $645.2 million for the fourteen-weeks
ended
February 3, 2007. Fourth quarter sales were comprised of $443.4 million
from The Children’s Place brand, a 6% increase over last year, and $227.5
million from Disney Store, flat to last
year.
|
| · |
Consolidated
comparable store sales for the 13 weeks ended February 2, 2008, increased
3%. The Children’s Place brand’s comparable store sales increased 7% on
top of last year’s 2% increase. Disney Store’s comparable store sales
decreased 4% versus last year’s 14% increase.
|
| · |
The
Company’s fourth quarter net loss was $58.5 million, or $2.01 per share
for the thirteen-week period compared to net income of $44.7 million,
or
$1.48 per share in the fourteen-week period last year. As a reminder,
last
year’s extra fiscal week generated $29.5 million in sales, and earnings
per share of $0.04. Included in the fourth quarter 2007 net loss
are
certain significant items including:
|
| · |
Approximately
$95.1 million, pre-tax, in asset impairment charges, including $80.3
million in impairments related to the decision to exit the DSNA business;
$14.8 million in impairments related to the decision to cease construction
of
the building the Company had planned to use as its corporate
headquarters
|
| · |
Approximately
$12.0 million, pre-tax, in other costs, which comprised $6.1 million
in
costs associated primarily with the cancellation of the Disney Store
remodeling program and $5.9 million in lease exit costs related to
the
Company’s decision not to move forward with the building it
had planned to use as its corporate headquarters.
|
| · |
$6.1
million in tax provisions related to the Company’s decision to repatriate
a portion of retained earnings of its overseas subsidiaries. As part
of
the decision to exit the DSNA business, the Company repatriated
approximately $45 million of its foreign earnings in order meet
obligations pertaining to its Disney Store subsidiaries.
|
| · |
$4.8
million, pre-tax, in accelerated depreciation and Disney Store refresh
expense
|
| · |
$3.6
million, pre-tax, in wrap-up fees and tender offer resulting from
the
Company’s 2006 stock option investigation and the filing of its delinquent
financial reports and other audit
fees
|
| · |
$2.0
million, pre-tax, in costs associated with the Company’s strategic review
process.
|
| · |
$0.7
million, pre-tax, in executive severance
|
| · |
Excluding
these items, fourth quarter net income was $20.5 million. Net income
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. For a reconciliation
of
net loss as reported to adjusted net income please see the attached
table.
|
| · |
Basic
shares outstanding in the fourth quarter were 29.1 million. Had
the
Company generated income in the fourth quarter, diluted shares
outstanding
would have been approximately 29.3 million.
|
| · |
During
the fourth quarter, the Company opened seven Children’s Place stores and
closed ten. In addition, the Company opened fifteen Disney Stores
and
closed eight.
|
Fiscal
Year 2007
| · |
Consolidated
sales for the fifty-two weeks ended February 2, 2008, increased 7%
to
$2,162.6 million, compared to $2,017.7 million for the fifty-three
weeks
ended February 3, 2007. Fiscal 2007 sales were comprised of $1,520.4
million from The Children’s Place, an 8% increase over last year, and
$642.2 million in sales from Disney Store, a 5% increase over last
year.
|
| · |
Consolidated
comparable store sales for the 52 weeks ended February 2, 2008, increased
2% on top of last year’s 11% increase. The Children’s Place brand’s
comparable store sales increased 3% on top of last year’s 10% increase.
Disney Store’s comparable store sales were flat compared to last year’s
14% increase.
|
| · |
Net
loss for the full year was $59.6 million, or $2.05 per share, compared
to
net income of $87.4 million, or $2.92 per share last year. As a reminder,
last year’s extra fiscal week generated $29.5 million in sales, and
earnings per share of $0.04. Included in fiscal 2007’s net loss are
several significant items:
|
| · |
Approximately
$95.1 million, pre-tax, in asset impairment charges, as discussed
in
detail above
|
| · |
Approximately
$12.0 million, pre-tax in other costs, as discussed in detail above
|
| · |
$6.1
million in tax provisions, as discussed in detail above
|
| · |
$10.5
million, pre-tax, in accelerated depreciation and Disney Store refresh
expense
|
| · |
$11.7
million, pre-tax, in wrap-up fees and tender offer resulting from
the
Company’s 2006 stock option investigation the filing of its delinquent
financial reports and other audit fees
|
| · |
$4.7
million, pre-tax, in executive
severance
|
| · |
$2.2
million, pre-tax, in costs associated with the Company’s strategic review
|
| · |
Excluding
the impact of these items, fiscal 2007 net income was $30.1 million.
Net
income 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. For a reconciliation
of
net loss as reported to adjusted net income please see the attached
table.
|
| · |
Basic
shares outstanding for the full year were 29.1 million. Had the Company
generated income for the full year, diluted shares outstanding would
have
been 29.7 million.
|
| · |
During
fiscal 2007, the Company opened 54 Children’s Place stores and closed
sixteen. In addition, the Company opened 15 Disney Stores and closed
eight.
|
Chuck
Crovitz, Interim Chief Executive Officer of The Children’s Place Retail Stores,
Inc., commented, “By any measure, fiscal 2007 was a very tough year for our
Company. For the majority of the year, our merchandise assortments at The
Children’s Place brand did not resonate with the consumer and our inventory
levels were too high, particularly given the challenging economic environment.
We believe, however, that the changes we have made to our merchandising strategy
should put us in better position going forward. At Disney Store, we also owned
too much inventory for the majority of the year, and, as it pertains to the
fourth quarter, results were further impacted by late deliveries, difficult
year-over-year comparisons and a lack of enthusiasm for toys this holiday
season.”
The
Company’s fiscal 2006 fourth quarter and full year results also have several
significant items that it does not believe are
indicative of the core business.
For
further detail, please see the attached table.
Mr.
Crovitz concluded, “As we look ahead, while the environment is currently
challenging, at this time we anticipate growing sales in the mid-single digits
in 2008 which will be driven in part by 30 new store openings in the latter
part
of the year. Selling, general and administrative expense as a percent to sales
are anticipated to be flat year-over-year, reflecting the Company’s workforce
reduction and other expense reduction initiatives, partially offset by the
absorption of shared services expense.”
Conference
Call Information
The
Children’s Place will host a conference call to discuss today’s announcements at
10:00 a.m. Eastern Time. Interested parties are invited to listen to the call
by
dialing (785) 424-1071 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 March 27, 2008. To access the replay, please
dial
(402) 220-0116, or you may listen to the audio archive on the Company’s website,
www.childrensplace.com.
About
The Children’s Place Retail Stores, Inc.
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 February 2, 2008, the
Company owned and operated 904 The Children’s Place stores and 335 Disney Stores
in North America and The Children’s Place online store at www.childrensplace.com.
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 reports of Forms 10-K and 10-Q. Risks and uncertainties
relating to the exit of the Disney Store North America operations, and other
elements of the Company’s strategic review, the restatement of the Company's
historical financial information, the Company’s historical stock option granting
practices and other historical practices identified as material weaknesses
as
described in the Company’s filings on December 5, 2007, the delays in scheduling
of the Company’s fiscal 2006 shareholder meeting, 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 also
could cause actual results, events and performance to differ materially. 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 | ||
| Rich Paradise, SVP, Chief Financial Officer, 201/558-2400 | ||
| Heather Anthony, Senior Director, Investor Relations, 201/558-2865 | ||
| Media: | ||
| Diane Zappas/Leigh Parrish of FD, 212/850-5600 |
(Tables
Follow)
THE
CHILDREN’S PLACE RETAIL STORES, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In
thousands, except per share amounts)
(Unaudited)
|
13
Weeks Ended:
February
2,
2008
|
14
Weeks Ended:
February
3,
2007
|
52
Weeks Ended:
February
2,
2008
|
53
Weeks Ended:
February
3,
2007
|
||||||||||
|
Net
sales
|
$
|
670,871
|
$
|
645,180
|
$
|
2,162,559
|
$
|
2,017,713
|
|||||
|
Cost
of sales, excluding depreciation
|
420,332
|
363,192
|
1,364,096
|
1,189,300
|
|||||||||
|
Gross
profit
|
250,539
|
281,988
|
798,463
|
828,413
|
|||||||||
|
Selling,
general and administrative expenses
|
207,285
|
192,013
|
698,590
|
625,490
|
|||||||||
|
Asset
impairment charges
|
95,269
|
16,649
|
96,851
|
17,066
|
|||||||||
|
Other
costs
|
12,020
|
761
|
12,020
|
761
|
|||||||||
|
Depreciation
and amortization
|
22,844
|
19,309
|
79,700
|
65,701
|
|||||||||
|
Operating
(loss)/income
|
(86,879
|
)
|
53,256
|
(88,698
|
)
|
119,395
|
|||||||
|
Interest
expense/(income), net
|
1,163
|
(1,590
|
)
|
53
|
(3,933
|
)
|
|||||||
|
(Loss)/income
before income taxes
|
(88,042
|
)
|
54,846
|
(88,751
|
)
|
123,328
|
|||||||
|
(Benefit)
provision for income taxes
|
(29,549
|
)
|
10,185
|
(29,184
|
)
|
35,938
|
|||||||
|
Net
(loss)/income
|
$
|
(58,493
|
)
|
$
|
44,661
|
$
|
(59,567
|
)
|
$
|
87,390
|
|||
|
Basic
net (loss)/income per common share
|
$
|
(2.01
|
)
|
$
|
1.54
|
$
|
(2.05
|
)
|
$
|
3.03
|
|||
|
Basic
weighted average common shares and common shares equivalents
outstanding
|
29,107
|
29,084
|
29,090
|
28,828
|
|||||||||
|
Diluted
net (loss)/income per common share
|
$
|
(2.01
|
)
|
$
|
1.48
|
$
|
(2.05
|
)
|
$
|
2.92
|
|||
|
Diluted
weighted average common shares and common share equivalents
outstanding
|
29,107
|
30,096
|
29,090
|
29,907
|
|||||||||
THE
CHILDREN’S PLACE RETAIL STORES, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
thousands)
(Unaudited)
|
February
2, 2008
|
February
3, 2007
|
||||||
|
Current
assets:
|
|||||||
|
Cash
and investments
|
$
|
82,076
|
$
|
189,665
|
|||
|
Accounts
receivable
|
45,698
|
35,173
|
|||||
|
Inventories
|
285,280
|
239,039
|
|||||
|
Other
current assets
|
97,822
|
59,227
|
|||||
|
Total
current assets
|
510,876
|
523,104
|
|||||
|
Property
and equipment, net
|
357,458
|
341,739
|
|||||
|
Other
assets, net
|
129,203
|
72,142
|
|||||
|
Total
assets
|
$
|
997,537
|
$
|
936,985
|
|||
|
Current
liabilities:
|
|||||||
|
Revolving
credit facility
|
$
|
88,976
|
$
|
0
|
|||
|
Accounts
payable
|
80,807
|
80,469
|
|||||
|
Accrued
expenses and other current liabilities
|
140,673
|
158,886
|
|||||
|
Total
current liabilities
|
310,456
|
239,355
|
|||||
|
Other
liabilities
|
214,809
|
175,843
|
|||||
|
Total
liabilities
|
525,265
|
415,198
|
|||||
|
Stockholders’
equity
|
472,272
|
521,787
|
|||||
|
Total
liabilities and stockholders’ equity
|
$
|
997,537
|
$
|
936,985
|
|||
THE
CHILDREN’S PLACE RETAIL STORES, INC.
SEGMENT
INFORMATION
(In
millions)
(Unaudited)
|
Thirteen
Weeks Ended February 2, 2008
|
|||||||||||||
|
The
Children’s
Place
|
Disney
Store
|
Shared
Services
|
Total
Company
|
||||||||||
|
Net
sales
|
$
|
443.4
|
$
|
227.5
|
$
|
---
|
$
|
670.9
|
|||||
|
Asset
impairment charges
|
15.0
|
80.3
|
---
|
95.3
|
|||||||||
|
Segment
operating profit (loss)
|
35.0
|
(92.1
|
)
|
(29.8
|
)
|
(86.9
|
)
|
||||||
|
Operating
profit (loss) as a percent of net sales
|
7.9
|
%
|
(40.5
|
)%
|
N/A
|
(13.0
|
)%
|
||||||
|
Fourteen
Weeks Ended February 3, 2007
|
|||||||||||||
|
The
Children’s
Place
|
Disney
Store
|
Shared
Services
|
Total
Company
|
||||||||||
|
Net
sales
|
$
|
416.8
|
$
|
228.4
|
$
|
---
|
$
|
645.2
|
|||||
|
Asset
impairment charges
|
---
|
16.6
|
---
|
16.6
|
|||||||||
|
Segment
operating profit (loss)
|
70.8
|
10.2
|
(27.7
|
)
|
53.3
|
||||||||
|
Operating
profit as a percent of net sales
|
17.0
|
%
|
4.5
|
%
|
N/A
|
8.3
|
%
|
||||||
|
52
Weeks Ended February 2, 2008
|
|||||||||||||
|
The
Children’s
Place
|
Disney
Store
|
Shared
Services
|
Total
Company
|
||||||||||
|
Net
sales
|
$
|
1,520.4
|
$
|
642.2
|
$
|
---
|
$
|
2,162.6
|
|||||
|
Asset
impairment charges
|
16.6
|
80.3
|
---
|
96.9
|
|||||||||
|
Segment
operating profit (loss)
|
125.6
|
(107.3
|
)
|
(107.0
|
)
|
(88.7
|
)
|
||||||
|
Operating
profit (loss) as a percent of net sales
|
8.3
|
%
|
(16.7
|
)%
|
N/A
|
(4.1
|
)%
|
||||||
|
53
Weeks Ended February 3, 2007
|
|||||||||||||
|
The
Children’s
Place
|
Disney
Store
|
Shared
Services
|
Total
Company
|
||||||||||
|
Net
sales
|
$
|
1,405.4
|
$
|
612.3
|
$
|
---
|
$
|
2,017.7
|
|||||
|
Asset
impairment charges
|
0.4
|
16.7
|
---
|
17.1
|
|||||||||
|
Segment
operating profit (loss)
|
204.5
|
11.4
|
(96.5
|
)
|
119.4
|
||||||||
|
Operating
profit as a percent of net sales
|
14.6
|
%
|
1.9
|
%
|
N/A
|
5.9
|
%
|
||||||
THE
CHILDREN’S PLACE RETAIL STORES, INC.
RECONCILIATION
OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In
millions)
(Unaudited)
|
13
Weeks
|
14
Weeks
|
||||||
|
Ended
|
Ended
|
||||||
|
2/2/2008
|
2/3/2007
|
||||||
|
(Loss)/Income
before income taxes
|
$
|
(88.0
|
)
|
$
|
54.8
|
||
|
Asset
impairment charges:
|
|||||||
|
-Exit
Disney Store business
|
80.3
|
-
|
|||||
|
-Write-off
construction of future corporate headquarters
|
14.8
|
-
|
|||||
|
-'Mickey'
Store impairment
|
9.6
|
||||||
|
-Write-offs
related to the decision not to proceed with the 42nd
|
|||||||
|
St. in New York City and infrastructure investments that
were
|
|||||||
|
made in connection with the Disneystore.com
|
-
|
7.1
|
|||||
|
Other
costs:
|
|||||||
|
-Lease
exit costs related to the future corporate headquarters
|
5.9
|
0.9
|
|||||
|
-Cancellation
of Disney store remodeling program
|
6.1
|
-
|
|||||
|
Disney
Store "maintenance and refresh" expense
|
3.9
|
-
|
|||||
|
Accelerated
depreciation on 'Mickey' Stores
|
0.9
|
-
|
|||||
|
Costs
paid or accrued for the stock option investigation, the
filing
|
|||||||
|
of
delinquent SEC reports and the re-mediation of tax
|
|||||||
|
implications
related to stock options, including a tender offer in 2007
|
|||||||
|
and
incremental external audit fees
|
3.6
|
10.5
|
|||||
|
Executive
severance
|
0.7
|
-
|
|||||
|
Costs
associated with the strategic review process
|
2.0
|
-
|
|||||
|
Aggregate
impact of significant items
|
118.2
|
28.1
|
|||||
|
Adjusted
income before taxes
|
30.2
|
82.9
|
|||||
|
Taxes
as reported:
|
29.5
|
(10.2
|
)
|
||||
|
Income
tax effect of significant items noted above
|
(45.3
|
)
|
(11.2
|
)
|
|||
|
Tax
provision related to Company's decision not to permanently
|
|||||||
|
re-invest
in certain foreign earnings
|
6.1
|
-
|
|||||
|
Foreign
tax credits
|
-
|
(9.5
|
)
|
||||
|
Taxes
as adjusted
|
(9.7
|
)
|
(30.9
|
)
|
|||
|
Adjusted
net income
|
$
|
20.5
|
$
|
52.0
|
|||
THE
CHILDREN’S PLACE RETAIL STORES, INC.
RECONCILIATION
OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In
millions)
(Unaudited)
|
52
Weeks
|
53
Weeks
|
||||||
|
Ended
|
Ended
|
||||||
|
2/2/2008
|
2/3/2007
|
||||||
|
(Loss)/Income
before income taxes
|
$
|
(88.8
|
)
|
$
|
123.3
|
||
|
Asset
impairment charges:
|
|||||||
|
-Exit
Disney Store business
|
80.3
|
-
|
|||||
|
-Write-off
construction of future corporate headquarters
|
14.8
|
-
|
|||||
|
-'Mickey'
Store impairment
|
9.6
|
||||||
|
-Write-offs
related to the decision not to proceed with the 42nd
|
|||||||
|
St. in New York City and infrastructure investments that
were
|
|||||||
|
made in connection with the Disneystore.com
|
-
|
7.1
|
|||||
|
Other
costs:
|
|||||||
|
-Lease
exit costs related to the future corporate headquarters
|
5.9
|
0.9
|
|||||
|
-Cancellation
of Disney store remodeling program
|
6.1
|
-
|
|||||
|
Disney
Store "maintenance and refresh" expense
|
6.9
|
-
|
|||||
|
Accelerated
depreciation on 'Mickey' Stores
|
3.6
|
-
|
|||||
|
Costs
paid or accrued for the stock option investigation, the
filing
|
|||||||
|
of
delinquent SEC reports and the re-mediation of tax
|
|||||||
|
implications
related to stock options, including a tender offer in 2007 and
|
11.7
|
16.8
|
|||||
|
incremental
external audit fees
|
|||||||
|
Executive
severance
|
4.7
|
0.8
|
|||||
|
Settlement
of a class action lawsuit
|
-
|
2.1
|
|||||
|
Costs
associated with the strategic review process
|
2.2
|
-
|
|||||
|
Aggregate
impact of significant items
|
136.2
|
37.3
|
|||||
|
Adjusted
income before taxes
|
47.4
|
160.6
|
|||||
|
Taxes
as reported:
|
29.2
|
(35.9
|
)
|
||||
|
Income
tax effect of significant items noted above
|
(52.6
|
)
|
(15.0
|
)
|
|||
|
Tax
provision related to Company's decision not to permanently re-invest
in
|
|||||||
|
certain
foreign earnings
|
6.1
|
-
|
|||||
|
Foreign
tax credits
|
-
|
(9.5
|
)
|
||||
|
Taxes
as adjusted
|
(17.3
|
)
|
(60.4
|
)
|
|||
|
Adjusted
net income
|
$
|
30.1
|
$
|
100.2
|
|||
###