AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 19, 2002
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| /X/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED JUNE 29, 2002
| / / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
COMMISSION FILE NUMBER 0-27677
CHARLOTTE RUSSE HOLDING, INC.
| DELAWARE (State or Other Jurisdiction of Incorporation or Organization) |
33-0724325 (I.R.S. Employer Identification No.) |
4645 MORENA BOULEVARD, SAN DIEGO, CA 92117
(Address, including Zip Code, of Registrant’s Principal Executive Offices)
(858) 587-1500
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
|
COMMON STOCK, par value $0.01 per share, number of shares outstanding as of July 18, 2002: 21,210,107 shares. |
CHARLOTTE RUSSE HOLDING, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
| Page | ||||||
| ITEM 1. | CONSOLIDATED FINANCIAL STATEMENTS | |||||
| Consolidated Balance Sheets as of June 29, 2002 (unaudited) and September 29, 2001 | 2 | |||||
| Consolidated Statements of Income (unaudited) for the three and nine months ended June 29, 2002 and June 30, 2001 | 3 | |||||
| Consolidated Statements of Cash Flows (unaudited) for the three and nine months ended June 29, 2002 and June 30, 2001 | 4 | |||||
| Notes to Consolidated Financial Statements (unaudited) | 5 | |||||
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 7 | ||||
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 10 | ||||
| PART II. OTHER INFORMATION | ||||||
| ITEM 1. | LEGAL PROCEEDINGS | 11 | ||||
| ITEM 2. | CHANGES IN SECURITIES | 11 | ||||
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 11 | ||||
| ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 11 | ||||
| ITEM 5. | OTHER INFORMATION | 11 | ||||
| ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K | 11 | ||||
1
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED BALANCE SHEETS
| June 29, | September 29, | |||||||||
| 2002 | 2001 | |||||||||
| (unaudited) | (audited) | |||||||||
ASSETS |
||||||||||
Current assets: |
||||||||||
Cash and cash equivalents |
$ | 11,141,593 | $ | 10,031,398 | ||||||
Inventories |
28,985,152 | 23,536,420 | ||||||||
Other current assets |
3,496,148 | 2,560,153 | ||||||||
Deferred tax assets |
4,200,000 | 3,700,000 | ||||||||
Total current assets |
47,822,893 | 39,827,971 | ||||||||
Fixed assets, net |
90,740,171 | 77,350,576 | ||||||||
Goodwill, net |
28,790,000 | 28,790,000 | ||||||||
Other assets |
1,430,822 | 1,452,387 | ||||||||
Total assets |
$ | 168,783,886 | $ | 147,420,934 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||
Current liabilities: |
||||||||||
Accounts payable trade |
$ | 22,921,411 | $ | 19,607,137 | ||||||
Accounts payable other |
1,104,977 | 4,825,946 | ||||||||
Accrued payroll and related expense |
3,799,638 | 1,931,838 | ||||||||
Income and sales taxes payable |
1,707,233 | 5,091,687 | ||||||||
Other current liabilities |
8,035,735 | 5,928,411 | ||||||||
Total current liabilities |
37,568,994 | 37,385,019 | ||||||||
Notes payable to bank |
— | — | ||||||||
Deferred rent |
7,754,707 | 5,574,982 | ||||||||
Other liabilities |
193,882 | 269,470 | ||||||||
Deferred tax liabilities |
1,700,000 | 2,000,000 | ||||||||
Total liabilities |
47,217,583 | 45,229,471 | ||||||||
Commitments |
||||||||||
Stockholders’ equity: |
||||||||||
Preferred Stock $0.01 par value, 3,000,000 shares authorized,
none issued and outstanding |
— | — | ||||||||
Common Stock $0.01 par value, 100,000,000 shares authorized,
issued and outstanding shares — 21,210,107 at June 29, 2002
and 20,802,747 at September 29, 2001 |
212,101 | 208,028 | ||||||||
Additional paid-in capital |
42,715,203 | 40,038,464 | ||||||||
Deferred compensation |
(198,000 | ) | (372,000 | ) | ||||||
Retained earnings |
78,836,999 | 62,316,971 | ||||||||
Total stockholders’ equity |
121,566,303 | 102,191,463 | ||||||||
Total liabilities and stockholders’ equity |
$ | 168,783,886 | $ | 147,420,934 | ||||||
See accompanying notes.
2
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| June 29, | June 30, | June 29, | June 30, | ||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||||||
Net sales |
$ | 101,956,349 | $ | 78,405,523 | $ | 299,964,241 | $ | 235,485,698 | |||||||||||
Cost of goods sold, including buying,
distribution and occupancy costs |
74,060,688 | 55,410,915 | 216,947,189 | 162,512,528 | |||||||||||||||
Gross profit |
27,895,661 | 22,994,608 | 83,017,052 | 72,973,170 | |||||||||||||||
Selling, general and administrative expenses |
18,604,917 | 14,877,943 | 55,821,032 | 45,621,013 | |||||||||||||||
Amortization of goodwill |
— | 223,842 | — | 671,526 | |||||||||||||||
Operating income |
9,290,744 | 7,892,823 | 27,196,020 | 26,680,631 | |||||||||||||||
Other income (expense): |
|||||||||||||||||||
Interest income, net |
13,335 | 114,995 | 97,050 | 324,331 | |||||||||||||||
Other charges, net |
(62,500 | ) | (91,892 | ) | (211,056 | ) | (232,414 | ) | |||||||||||
Total other income (expense) |
(49,165 | ) | 23,103 | (114,006 | ) | 91,917 | |||||||||||||
Income before income taxes |
9,241,579 | 7,915,926 | 27,082,014 | 26,772,548 | |||||||||||||||
Income taxes |
3,604,217 | 3,126,790 | 10,561,986 | 10,575,156 | |||||||||||||||
Net income |
$ | 5,637,362 | $ | 4,789,136 | $ | 16,520,028 | $ | 16,197,392 | |||||||||||
Earnings per share: |
|||||||||||||||||||
Basic |
$ | 0.27 | $ | 0.23 | $ | 0.79 | $ | 0.79 | |||||||||||
Diluted |
$ | 0.24 | $ | 0.20 | $ | 0.70 | $ | 0.69 | |||||||||||
Weighted average shares outstanding: |
|||||||||||||||||||
Basic |
21,193,883 | 20,718,658 | 20,989,745 | 20,530,928 | |||||||||||||||
Diluted |
23,877,320 | 23,593,848 | 23,704,176 | 23,398,585 | |||||||||||||||
See accompanying notes.
3
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | Nine Months Ended | . | |||||||||||||||||||
| June 29, | June 30, | June 29, | June 30, | ||||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||||||||
Operating Activities |
|||||||||||||||||||||
Net income |
$ | 5,637,362 | $ | 4,789,136 | $ | 16,520,028 | $ | 16,197,392 | |||||||||||||
Adjustments to reconcile net income to net cash
provided by operating activities: |
|||||||||||||||||||||
Depreciation and amortization |
3,627,878 | 2,740,268 | 10,012,636 | 7,627,095 | |||||||||||||||||
Deferred rent |
791,256 | 535,165 | 2,179,725 | 1,470,546 | |||||||||||||||||
Amortization of deferred compensation |
27,000 | 36,000 | 81,000 | 108,000 | |||||||||||||||||
Loss on disposal of asset |
(1 | ) | (13,147 | ) | 23,744 | 203,709 | |||||||||||||||
Deferred income taxes |
(400,000 | ) | (200,000 | ) | (800,000 | ) | (340,000 | ) | |||||||||||||
Changes in operating assets and liabilities: |
|||||||||||||||||||||
Inventories |
(3,798,016 | ) | (3,382,267 | ) | (5,448,732 | ) | (6,224,492 | ) | |||||||||||||
Other current assets |
(574,339 | ) | 500,938 | (935,995 | ) | 245,842 | |||||||||||||||
Accounts payable trade |
(258,254 | ) | 81,868 | 3,314,274 | 5,893,369 | ||||||||||||||||
Accounts payable other |
(2,243,428 | ) | 91,070 | (3,720,969 | ) | (4,059,209 | ) | ||||||||||||||
Accrued payroll and related expense |
1,130,373 | 1,023,107 | 1,867,800 | 1,288,868 | |||||||||||||||||
Income and sales taxes payable |
145,967 | 1,450,673 | (1,265,084 | ) | 831,197 | ||||||||||||||||
Other current liabilities |
51,441 | (1,023,298 | ) | 2,152,341 | 608,097 | ||||||||||||||||
Other liabilities |
14,999 | 12,076 | (75,588 | ) | (2,078 | ) | |||||||||||||||
Net cash provided by operating activities |
4,152,238 | 6,641,589 | 23,905,180 | 23,848,336 | |||||||||||||||||
Investing Activities |
|||||||||||||||||||||
Purchases of fixed assets |
(4,297,825 | ) | (11,433,921 | ) | (23,359,348 | ) | (21,345,812 | ) | |||||||||||||
Other assets |
(26,498 | ) | (30,112 | ) | (45,062 | ) | (19,010 | ) | |||||||||||||
Net cash used in investing activities |
(4,324,323 | ) | (11,464,033 | ) | (23,404,410 | ) | (21,364,822 | ) | |||||||||||||
Financing Activities |
|||||||||||||||||||||
Payments on capital leases |
— | (20,066 | ) | (45,017 | ) | (59,544 | ) | ||||||||||||||
Proceeds from notes payable to bank |
— | — | 11,000,000 | 6,300,000 | |||||||||||||||||
Payments on notes payable to bank |
— | — | (11,000,000 | ) | (6,300,000 | ) | |||||||||||||||
Secondary stock offering costs |
(450,000 | ) | — | (450,000 | ) | — | |||||||||||||||
Proceeds from issuance of common stock |
231,446 | 319,700 | 1,104,442 | 2,740,174 | |||||||||||||||||
Net cash provided by (used in) financing activities |
(218,554 | ) | 299,634 | 609,425 | 2,680,630 | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents |
(390,639 | ) | (4,522,810 | ) | 1,110,195 | 5,164,144 | |||||||||||||||
Cash and cash equivalents at beginning of the period |
11,532,232 | 13,516,306 | 10,031,398 | 3,829,352 | |||||||||||||||||
Cash and cash equivalents at end of the period |
$ | 11,141,593 | $ | 8,993,496 | $ | 11,141,593 | $ | 8,993,496 | |||||||||||||
See accompanying notes.
4
CHARLOTTE RUSSE HOLDING, INC.
Notes to Consolidated Financial Statements
(Unaudited)
1. Interim Financial Statements
The accompanying unaudited consolidated financial statements of Charlotte Russe Holding, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the accompanying unaudited financial statements contain all material adjustments, consisting of normal recurring accruals, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods indicated, and have been prepared in a manner consistent with the audited financial statements as of September 29, 2001.
Due to the seasonal nature of the Company’s business, the results of operations for the nine month period ended June 29, 2002 are not necessarily indicative of the results of a full fiscal year.
These financial statements should be read in conjunction with the audited financial statements and the footnotes for the fiscal year ended September 29, 2001 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.
2. Net Income Per Common Share
In accordance with Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share, the following table reconciles income and share amounts utilized to calculate basic and diluted net income per common share.
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| June 29, | June 30, | June 29, | June 30, | ||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||||
Net income |
$ | 5,637,362 | $ | 4,789,136 | $ | 16,520,028 | $ | 16,197,392 | |||||||||
Earnings per share: |
|||||||||||||||||
Basic |
$ | 0.27 | $ | 0.23 | $ | 0.79 | $ | 0.79 | |||||||||
Effect of dilutive stock options |
(0.01 | ) | (0.01 | ) | (0.03 | ) | (0.03 | ) | |||||||||
Effect of dilutive warrants |
(0.02 | ) | (0.02 | ) | (0.06 | ) | (0.07 | ) | |||||||||
Diluted |
$ | 0.24 | $ | 0.20 | $ | 0.70 | $ | 0.69 | |||||||||