FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT
| For the Quarter Ended: | Commission File Number: | |
| November 2, 2002 | 0-21258 |
CHICO’S FAS, Inc.
(Exact name of registrant as specified in charter)
| Florida | 59-2389435 | |
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| (State of Incorporation) | (I.R.S. Employer Identification No.) |
11215 Metro Parkway, Fort Myers, Florida 33912
239-277-6200
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, and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.
At November 25, 2002, there were 84,897,613 shares (post-split) outstanding of Common Stock, $.01 par value per share.
CHICO’S FAS, Inc.
Index
PART I – Financial Information |
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Item 1. Financial Statements (Unaudited): |
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Condensed Consolidated Balance Sheets – November 2, 2002 and February 2, 2002 |
3 | ||||
Condensed Consolidated Statements of Income for the Thirteen and Thirty-Nine
Weeks Ended November 2, 2002 and November 3, 2001 |
4 | ||||
Condensed Consolidated Statements of Cash Flows for the Thirty-Nine Weeks
Ended November 2, 2002 and November 3, 2001 |
5 | ||||
Notes to Condensed Consolidated Financial Statements |
6 | ||||
Item 2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations |
8 | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
14 | ||||
Item 4. Controls and Procedures |
14 | ||||
PART II – Other Information |
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Item 1. Legal Proceedings |
14 | ||||
Item 6. Exhibits and Reports on Form 8-K |
15 | ||||
Signatures |
16 | ||||
Certifications |
16 | ||||
2
CHICO’S FAS, Inc. and
Subsidiaries
Condensed Consolidated Statements of
Income
(Unaudited)
| November 2, | February 2, | ||||||||||
| 2002 | 2002 | ||||||||||
ASSETS |
|||||||||||
Current Assets: |
|||||||||||
Cash and cash equivalents |
$ | 17,222,610 | $ | 13,376,864 | |||||||
Marketable securities, at market |
72,531,626 | 40,428,675 | |||||||||
Receivables |
6,194,924 | 2,083,470 | |||||||||
Inventories |
39,663,646 | 28,905,066 | |||||||||
Prepaid expenses |
5,892,021 | 3,796,798 | |||||||||
Deferred taxes |
7,276,000 | 4,400,000 | |||||||||
Total Current Assets |
148,780,827 | 92,990,873 | |||||||||
Property and Equipment: |
|||||||||||
Land and land improvements |
4,785,007 | 2,870,111 | |||||||||
Building and building improvements |
19,422,075 | 12,424,784 | |||||||||
Equipment, furniture and fixtures |
64,875,731 | 41,752,754 | |||||||||
Leasehold improvements |
73,476,967 | 57,259,004 | |||||||||
Total Property and Equipment |
162,559,780 | 114,306,653 | |||||||||
Less accumulated depreciation and amortization |
(32,199,520 | ) | (23,000,701 | ) | |||||||
Property and Equipment, Net |
130,360,260 | 91,305,952 | |||||||||
Other Assets: |
|||||||||||
Deferred taxes |
818,000 | 1,166,000 | |||||||||
Other assets |
2,299,101 | 922,535 | |||||||||
Total Other Assets |
3,117,101 | 2,088,535 | |||||||||
| $ | 282,258,188 | $ | 186,385,360 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities: |
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Accounts payable |
$ | 30,516,699 | $ | 18,054,137 | |||||||
Accrued liabilities |
19,208,626 | 16,585,157 | |||||||||
Current portion of debt and lease obligations |
315,559 | 306,876 | |||||||||
Total Current Liabilities |
50,040,884 | 34,946,170 | |||||||||
Noncurrent Liabilities: |
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Long-term debt, excluding current portion |
4,916,279 | 5,022,499 | |||||||||
Deferred liabilities |
5,985,698 | 2,921,760 | |||||||||
Total Noncurrent Liabilities |
10,901,977 | 7,944,259 | |||||||||
Stockholders’ Equity: |
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Common stock |
848,976 | 815,814 | |||||||||
Additional paid-in capital |
60,313,344 | 34,226,489 | |||||||||
Retained earnings |
160,059,453 | 108,350,203 | |||||||||
Accumulated other comprehensive income |
93,554 | 102,425 | |||||||||
Total Stockholders’ Equity |
221,315,327 | 143,494,931 | |||||||||
| $ | 282,258,188 | $ | 186,385,360 | ||||||||
See Accompanying Notes.
3
CHICO’S FAS, Inc. and
Subsidiaries
Condensed Consolidated Statements of
Income
(Unaudited)
| Thirty-Nine Weeks Ended | Thirteen Weeks Ended | ||||||||||||||||||||||||||||||||
| November 2, 2002 | November 3, 2001 | November 2, 2002 | November 3, 2001 | ||||||||||||||||||||||||||||||
| Amount | % of Sales | Amount | % of Sales | Amount | % of Sales | Amount | % of Sales | ||||||||||||||||||||||||||
Net Sales by Company stores |
$ | 376,952,541 | 96.0 | $ | 265,325,484 | 95.9 | $ | 131,560,499 | 95.9 | $ | 89,915,937 | 95.7 | |||||||||||||||||||||
Net Sales by catalog & Internet |
10,923,805 | 2.8 | 7,316,643 | 2.6 | 3,866,768 | 2.8 | 2,676,732 | 2.8 | |||||||||||||||||||||||||
Net Sales to Franchisees |
4,906,381 | 1.2 | 4,061,226 | 1.5 | 1,833,696 | 1.3 | 1,385,455 | 1.5 | |||||||||||||||||||||||||
Net sales |
392,782,727 | 100.0 | 276,703,353 | 100.0 | 137,260,963 | 100.0 | 93,978,124 | 100.0 | |||||||||||||||||||||||||
Cost of goods sold |
153,464,426 | 39.1 | 111,184,799 | 40.2 | 54,885,267 | 40.0 | 38,435,837 | 40.9 | |||||||||||||||||||||||||
Gross profit |
239,318,301 | 60.9 | 165,518,554 | 59.8 | 82,375,696 | 60.0 | 55,542,287 | 59.1 | |||||||||||||||||||||||||
General, administrative and
store operating expenses |
145,796,258 | 37.1 | 106,651,779 | 38.5 | 53,665,916 | 39.1 | 38,651,195 | 41.1 | |||||||||||||||||||||||||
Depreciation and amortization |
10,739,969 | 2.7 | 7,050,283 | 2.6 | 3,867,996 | 2.8 | 2,679,438 | 2.9 | |||||||||||||||||||||||||
Income from operations |
82,782,074 | 21.1 | 51,816,492 | 18.7 | 24,841,784 | 18.1 | 14,211,654 | 15.1 | |||||||||||||||||||||||||
Interest income, net |
621,176 | 0.2 | 391,911 | 0.2 | 227,895 | 0.2 | 143,006 | 0.2 | |||||||||||||||||||||||||
Income before taxes |
83,403,250 | 21.3 | 52,208,403 | 18.9 | 25,069,679 | 18.3 | 14,354,660 | 15.3 | |||||||||||||||||||||||||
Income tax provision |
31,694,000 | 8.1 | 19,839,000 | 7.2 | 9,526,000 | 7.0 | 5,455,000 | 5.8 | |||||||||||||||||||||||||
Net income |
$ | 51,709,250 | 13.2 | $ | 32,369,403 | 11.7 | $ | 15,543,679 | 11.3 | $ | 8,899,660 | 9.5 | |||||||||||||||||||||
Per share data: |
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Net income per share–basic(1) |
$ | .63 | $ | 0.40 | $ | .19 | $ | 0.11 | |||||||||||||||||||||||||
Net income per share–diluted(1) |
$ | .60 | $ | 0.39 | $ | .18 | $ | 0.11 | |||||||||||||||||||||||||
Weighted average shares
outstanding–basic(1) |
82,699,669 | 80,014,742 | 83,744,659 | 80,792,154 | |||||||||||||||||||||||||||||
Weighted average shares
outstanding–diluted(1) |
85,720,375 | 83,477,264 | 86,158,224 | 83,969,790 | |||||||||||||||||||||||||||||
| (1) | Prior year amounts restated to give effect to the 3 for 2 stock split in January 2002 and the 2 for 1 stock split in July 2002. |
See Accompanying Notes.
4
CHICO’S FAS, Inc. and
Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Thirty-Nine Weeks Ended | |||||||||||
| November 2, | November 3, | ||||||||||
| 2002 | 2001 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
$ | 51,709,250 | $ | 32,369,403 | |||||||
Adjustments to reconcile net income to net cash
provided by operating activities: |
|||||||||||
Depreciation and amortization, cost of goods sold |
638,018 | 296,710 | |||||||||
Depreciation and amortization, other |
10,739,969 | 7,050,283 | |||||||||
Stock option compensation |
— | 44,644 | |||||||||
Deferred tax assets |
(2,528,000 | ) | (1,504,000 | ) | |||||||
Tax benefit of options exercised |
19,735,000 | 7,344,000 | |||||||||
Deferred rent expense, net |
1,054,783 | 725,632 | |||||||||
Loss from disposal of property and equipment |
1,073,418 | 1,266,134 | |||||||||
Net change in: |
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Receivables |
(4,111,454 | ) | (2,744,740 | ) | |||||||
Inventories |
(10,758,580 | ) | (6,394,202 | ) | |||||||
Prepaid expenses |
(2,095,223 | ) | (1,235,055 | ) | |||||||
Accounts payable |
12,462,562 | 2,412,026 | |||||||||
Accrued liabilities |
2,625,683 | 828,257 | |||||||||
Other, net |
658,594 | (75,209 | ) | ||||||||
Total adjustments |
29,494,770 | 8,014,480 | |||||||||
Net cash provided by operating activities |
81,204,020 | 40,383,883 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchases of marketable securities, net |
(32,111,822 | ) | (10,295,786 | ) | |||||||
Purchases of property and equipment |
(51,434,093 | ) | (29,335,814 | ) | |||||||
Net cash used in investing activities |
(83,545,915 | ) | (39,631,600 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from issuance of common stock |
6,385,017 | 5,515,923 | |||||||||
Principal payments on debt |
(99,751 | ) | (54,000 | ) | |||||||
Deferred finance costs |
(97,625 | ) | (50,000 | ) | |||||||
Net cash provided by financing activities |
6,187,641 | 5,411,923 | |||||||||
Net increase in cash and cash equivalents |
3,845,746 | 6,164,206 | |||||||||
CASH AND CASH EQUIVALENTS – Beginning of Period |
13,376,864 | 3,914,118 | |||||||||
CASH AND CASH EQUIVALENTS – End of Period |
$ | 17,222,610 | $ | 10,078,324 | |||||||
See Accompanying Notes.
5