UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
report (Date of earliest event reported): August 18,
2010
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 August
18, 2010, the Credit Agreement, dated July 31, 2008, among The Children’s
Place Retail Stores, Inc. (the “Company”), as lead borrower and borrower, The
Children’s Place Services Company, LLC, as borrower, The Children’s Place
(Virginia), LLC, The Children’s Place Canada Holdings, Inc. and
thechildrensplace.com, inc., as guarantors, Wells Fargo Retail Finance, LLC
(“Wells
Fargo”), Bank of America, N.A., HSBC Business Credit (USA) Inc., and
JPMorgan Chase Bank, N.A., as lenders (collectively, the “Lenders”), and Wells
Fargo, as administrative agent, collateral agent and swing line lender, was
amended (the “Fifth
Amendment to Credit Agreement”) to permit the transactions contemplated
by the share repurchase program approved by the Board of Directors of the
Company on August 18, 2010 as described in Item 8.01 of this Current Report on
Form 8-K.
The
description of the Fifth 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 Quarterly Report on Form 10-Q
for the fiscal quarter ending October 30, 2010.
Item
2.02 Results
of Operations and Financial Condition.
On August
19, 2010, the Company issued a press release containing the Company's financial
results for the second quarter of the fiscal year ending January 29, 2011
(“Fiscal 2010”), updating its estimated range of earnings per diluted share from
continuing operations for Fiscal 2010 and providing a preliminary estimated
range of earnings per diluted share from continuing operations for the third
quarter of Fiscal 2010. A copy of the press release is being
furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this report is being
furnished pursuant to Item 2.02 of Form 8-K, insofar as it discloses historical
information regarding the Company’s results of operations and financial
condition as of and for the first quarter of Fiscal 2010. In
accordance with General Instructions B.2 of Form 8-K, the information in this
Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed”
for the purposes of Section 18 of the Securities Exchange Act of 1934 (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.
2
Item
8.01 Other
Events
On August 18, 2010, the Board of
Directors of the Company approved a $100 million share repurchase program,
authorizing the Company to repurchase its common stock. Under the
program, the Company may repurchase shares in the open market over the next
twelve months 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 conditions, and
the Company may suspend or discontinue the program at any time.
Item
9.01 Financial
Statement and Exhibits.
| (d) | Exhibits | |
|
Exhibit 99.1
|
Press
release, dated August 19, 2010, issued by the Company (Exhibit 99.1 is
furnished as part of this Current Report on Form
8-K).
|
Forward Looking
Statements
This Current Report on Form 8-K,
including Exhibit 99.1, contains forward-looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements typically are identified by use of
terms such as “may,” “will,” “should,” “plan,” “expect,” “anticipate,”
“estimate” and similar words, although some forward-looking statements are
expressed differently. Forward-looking statements represent the
Company’s management’s judgment regarding future events. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, the Company can give no assurance that such
expectations will prove to be correct. All statements other than
statements of historical fact included in this Current Report on Form 8-K are
forward-looking statements. The Company cannot guarantee the accuracy
of the forward-looking statements, and you should be aware that the Company’s
actual results could differ materially from those contained in the
forward-looking statements due to a number of factors, including the statements
under the heading “Risk Factors” contained in the Company’s filings with the
Securities and Exchange Commission.
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: August
19, 2010
| 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 REPORTS SECOND QUARTER 2010 FINANCIAL RESULTS
Board
of Directors Authorizes $100 Million Share Repurchase Program
Management
Raises Fiscal 2010 Earnings Guidance
Secaucus, New Jersey – August 19,
2010 – The Children’s Place Retail Stores, Inc. (Nasdaq: PLCE), the largest pure-play
children’s specialty apparel retailer in North America, today announced second
quarter net sales of $345.3 million for the thirteen weeks ended July 31, 2010,
a 9.4% increase compared to $315.7 million in the second quarter of
2009.
Comparable
retail sales, which include online sales, increased 4.7% in the second quarter
of fiscal 2010 compared to a decline of 8.5% the previous year. During the
second quarter of 2010, comparable store sales increased 3.3% in the U.S. and
0.8% in Canada, and comparable online sales increased 30.4%.
The loss
from continuing operations after tax was $8.3 million, or $0.30 per share, in
the second quarter of 2010, compared to a loss of $7.2 million in the second
quarter of 2009, or $0.24 per share, including several transactions affecting
comparability between the quarters. Excluding those items that affect
comparability, the loss from continuing operations in the second quarter of 2010
narrowed 33% from the second quarter of 2009 when the Company reported an
adjusted loss from continuing operations of $12.4 million, or $0.42 per share.
Adjusted loss from continuing operations excluding transactions that affect
comparability 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 will facilitate comparisons of its
past and present performance. A reconciliation of loss from continuing
operations as reported is included in Table 3 of this press
release.
“We
posted solid results for the second quarter, narrowing our seasonal operating
loss through a combination of top line growth and disciplined expense
management. We also continued to make substantial progress on our longer-term
growth initiatives and believe we are well positioned to gain market share,”
commented Jane Elfers, President and Chief Executive Officer of The Children’s
Place. “While the economic environment remains uncertain, we are focused on
driving improved sales and profitability in our business for the long
term.”
Elfers
continued, “Our Board of Directors has authorized a $100 million share
repurchase program. We believe the timing is right and this strategic decision
to utilize the significant amount of cash on our balance sheet is aligned with
the Company’s commitment to increasing returns on capital and creating
shareholder value.”
During
the second quarter of 2010, the Company opened 18 stores and closed
three.
1
PLCE
– Second Quarter 2010 Financial Results
Page
2
Fiscal
Year-to-Date
Net sales
from continuing operations were $767.4 million fiscal year-to-date 2010, a 6.9%
increase compared to $717.6 million for the same period last year. Comparable
retail sales increased 1.7% fiscal year-to-date 2010 compared to a 3.3% decline
last year.
Income
from continuing operations after tax was $19.7 million, or $0.70 per diluted
share, fiscal year-to-date 2010, compared to $16.5 million, or $0.56 per diluted
share, last year, including several transactions that affect comparability.
Excluding those items that affect comparability, income from continuing
operations after tax in the first half of 2010 increased 111% compared to the
first half of 2009 when the Company reported adjusted income from continuing
operations of $9.3 million, or $0.31 per diluted share. As previously noted,
this is a non-GAAP measure which the Company is providing as a supplemental
disclosure. A reconciliation of income from continuing operations as reported is
included in Table 3 of this press release.
Net
income, including the impact of discontinued operations, was $19.7 million, or
$0.70 per diluted share, fiscal year-to-date 2010, compared to $16.5 million, or
$0.55 per diluted share, last year.
Fiscal
year-to-date, the Company has opened 34 stores and closed four.
Share
Repurchase Program
The
Company announced today that the Board of Directors authorized a share
repurchase program in the amount of $100.0 million. Under the program, the
Company may repurchase shares in the open market over the next twelve months 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 conditions, and the Company may
suspend or discontinue the program at any time.
Outlook
The
Company updated its guidance for fiscal 2010 and now projects earnings per
diluted share from continuing operations will be in the range of $3.08 to $3.18
for fiscal 2010, reflecting its first half results, from its previous guidance
of $3.05 to $3.15. The Company provided initial guidance for earnings per
diluted share from continuing operations for the third quarter of 2010 to be in
the range of $1.38 to $1.43. The earnings guidance assumes flat to positive
low-single digit comparable retail sales and assumes that currency exchange
rates will remain where they are today. This guidance does not include the
impact of a potential share repurchase.
Conference
Call Information
The
Children’s Place will host a conference call to discuss its second quarter 2010
results today at 8:00 a.m. Eastern Time. The call will be broadcast live at
http://investor.childrensplace.com.
An audio archive will be available 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 and sells
fashionable, high-quality merchandise at value prices under the proprietary “The
Children's Place” brand name. As of July 31, 2010, the Company owned and
operated 977 stores and an online store at www.childrensplace.com.
2
PLCE – Second Quarter 2010 Financial Results
Page
3
Forward-Looking
Statements
This press release (and above referenced
call) may contain certain forward-looking statements regarding future
circumstances, including statements relating to the Company’s positioning, and
forecasts regarding earnings per diluted share for the third quarter and fiscal 2010. 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 annual report on Form 10-K for the fiscal year
ended January 30, 2010. Included among the risks and uncertainties that could
cause actual results,
events and performance to differ materially are the risk that the Company will be
unsuccessful in gauging fashion trends and changing consumer preferences, and
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
a downturn in the economy. Readers (or listeners on the
call) are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date they were made. The Company
undertakes no obligation to release publicly any revisions to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events. The
inclusion of any statement in this release does not constitute an admission by
the Company or any other person that the events or circumstances described in
such statement are material.
|
CONTACT:
|
The
Children’s Place Retail Stores, Inc.
Susan
Riley, EVP, Finance & Administration, (201) 558-2400
Jane
Singer, VP, Investor Relations, (201)
453-6955
|
(Tables
Follow)
3
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Table 1
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THE CHILDREN’S PLACE RETAIL
STORES, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
|
|
(In thousands, except per share
amounts)
|
|
(Unaudited)
|
|
Second Quarter
Ended
|
Year-to-Date
Ended
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|||||||||||||||
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July 31,
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August 1,
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July 31,
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August 1,
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|||||||||||||
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2010
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2009
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2010
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2009
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|||||||||||||
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Net sales
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$ | 345,301 | $ | 315,676 | $ | 767,434 | $ | 717,577 | ||||||||
|
Cost of
sales
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231,727 | 210,377 | 474,156 | 445,751 | ||||||||||||
|
Gross
profit
|
113,574 | 105,299 | 293,278 | 271,826 | ||||||||||||
|
Selling, general and
administrative expenses
|
107,281 | 106,093 | 220,736 | 217,986 | ||||||||||||
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Asset impairment
charge
|
1,222 | 315 | 2,152 | 1,414 | ||||||||||||
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Depreciation and
amortization
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18,199 | 17,564 | 35,824 | 35,088 | ||||||||||||
|
Income (loss) from continuing
operations before interest and taxes
|
(13,128 | ) | (18,673 | ) | 34,566 | 17,338 | ||||||||||
|
Interest (expense),
net
|
(381 | ) | (1,462 | ) | (837 | ) | (4,730 | ) | ||||||||
|
Income (loss) from continuing
operations before income
taxes
|
(13,509 | ) | (20,135 | ) | 33,729 | 12,608 | ||||||||||
|
Provision (benefit) for income
taxes
|
(5,241 | ) | (12,906 | ) | 13,990 | (3,904 | ) | |||||||||
|
Income (loss) from continuing
operations, net of income
taxes
|
(8,268 | ) | (7,229 | ) | 19,739 | 16,512 | ||||||||||
|
Income (loss) from discontinued
operations, net of income
taxes
|
35 | 178 | (70 | ) | (51 | ) | ||||||||||
|
Net income
(loss)
|
$ | (8,233 | ) | $ | (7,051 | ) | $ | 19,669 | $ | 16,461 | ||||||
|
Basic
earnings (loss) per share amounts
|
||||||||||||||||
|
Income (loss) from continuing
operations
|
$ | (0.30 | ) | $ | (0.24 | ) | $ | 0.71 | $ | 0.56 | ||||||
|
Income (loss) from discontinued
operations
|
0.00 | 0.01 | (0.00 | ) | (0.00 | ) | ||||||||||
|
Net income
(loss)
|
$ | (0.30 | ) | $ | (0.24 | ) | $ | 0.71 | $ | 0.56 | ||||||
|
Basic weighted average common
shares outstanding
|
27,755 | 29,552 | 27,669 | 29,514 | ||||||||||||
|
Diluted
earnings (loss) per share amounts
|
||||||||||||||||
|
Income (loss) from continuing
operations
|
$ | (0.30 | ) | $ | (0.24 | ) | $ | 0.70 | $ | 0.56 | ||||||
|
Income (loss) from discontinued
operations
|
0.00 | 0.01 | (0.00 | ) | (0.00 | ) | ||||||||||
|
Net income
(loss)
|
$ | (0.30 | ) | $ | (0.24 | ) | $ | 0.70 | $ | 0.55 | ||||||
|
Diluted weighted average common
shares outstanding
|
27,755 | 29,552 | 28,027 | 29,746 | ||||||||||||
Note: Table may not add due to
rounding
4
|
Table 2
|
|
THE CHILDREN’S PLACE RETAIL
STORES, INC.
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
(In
thousands)
|
|
(Unaudited)
|
|
July 31,
|
January 30,
|
August 1,
|
||||||||||
|
2010
|
2010*
|
2009
|
||||||||||
|
Assets:
|
||||||||||||
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Cash and
investments
|
$ | 198,228 | $ | 170,492 | $ | 152,198 | ||||||
|
Accounts
receivable
|
18,905 | 16,910 | 21,792 | |||||||||
|
Inventories
|
214,301 | 206,227 | 262,986 | |||||||||
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Other current
assets
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82,160 | 63,253 | 100,143 | |||||||||
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Total current
assets
|
513,594 | 456,882 | 537,119 | |||||||||
|
Property and equipment,
net
|
318,255 | 312,801 | 310,795 | |||||||||
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Other assets,
net
|
60,676 | 84,377 | 74,960 | |||||||||
|
Total
assets
|
$ | 892,525 | $ | 854,060 | $ | 922,874 | ||||||
|
Liabilities and Stockholder
Equity:
|
||||||||||||
|
Short term portion of term
loan
|
$ | - | $ | - | $ | 38,000 | ||||||
|
Accounts
payable
|
68,564 | 55,547 | 89,249 | |||||||||
|
Accrued expenses and other current
liabilities
|
81,878 | 89,969 | 93,088 | |||||||||
|
Total current
liabilities
|
150,442 | 145,516 | 220,337 | |||||||||
|
Other
liabilities
|
116,931 | 119,574 | 119,304 | |||||||||
|
Total
liabilities
|
267,373 | 265,090 | 339,641 | |||||||||
|
Stockholders'
equity
|
625,152 | 588,970 | 583,233 | |||||||||
|
Total liabilities and
stockholders' equity
|
$ | 892,525 | $ | 854,060 | $ | 922,874 | ||||||
* Derived from the audited financial
statements included in the Company's 10K filing for the year ended January 30,
2010.
5
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Table 3
|
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THE CHILDREN’S PLACE RETAIL
STORES, INC.
|
|
RECONCILIATION OF NON-GAAP
FINANCIAL INFORMATION TO GAAP
|
|
(In thousands, except per share
amounts)
|
|
(Unaudited)
|
|
Second Quarter
Ended
|
Year-to-Date
Ended
|
|||||||||||||||
|
July 31,
|
August 1,
|
July 31,
|
August 1,
|
|||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
Income (loss) from continuing
operations, net of income
taxes
|
$ | (8,268 | ) | $ | (7,229 | ) | $ | 19,739 | $ | 16,512 | ||||||
|
Transactions affecting
comparability:
|
||||||||||||||||
|
Gains:
|
||||||||||||||||
|
Favorable settlement of IRS
employment tax audit related to stock
options
|
- | (4,563 | ) | - | (4,563 | ) | ||||||||||
|
Expenses:
|
||||||||||||||||
|
Proxy contest
fees
|
- | 2,200 | - | 2,200 | ||||||||||||
|
Prepayment of term loan
expenses/deferred financing
fees
|
- | 1,530 | - | 2,390 | ||||||||||||
|
Company restructuring
fees
|
- | 250 | - | 2,805 | ||||||||||||
|
Impairment
charge
|
- | - | - | 852 | ||||||||||||
|
Aggregate impact of
transactions affecting
comparability
|
- | (583 | ) | - | 3,684 | |||||||||||
|
Income tax
effect
|
- | 233 | - | (1,474 | ) | |||||||||||
|
Excess foreign tax credits from
repatriation of cash
|
- | (4,834 | ) | - | (4,834 | ) | ||||||||||
|
Tax benefit from resolution of IRS
income tax audit
|
- | - | - | (4,540 | ) | |||||||||||
|
Adjusted (gain) from
transactions affecting
comparability
|
- | (5,184 | ) | - | (7,164 | ) | ||||||||||
|
Adjusted income (loss) from
continuing operations, net of income
taxes
|
$ | (8,268 | ) | $ | (12,413 | ) | $ | 19,739 | $ | 9,348 | ||||||
|
GAAP income (loss) from
continuing operations per diluted
share
|
$ | (0.30 | ) | $ | (0.24 | ) | $ | 0.70 | $ | 0.56 | ||||||
|
Adjusted income (loss) from
continuing operations per diluted
share
|
$ | (0.30 | ) | $ | (0.42 | ) | $ | 0.70 | $ | 0.31 | ||||||
###
6