AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 17, 2003
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 28, 2003 |
| ¨ | 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.
(Exact Name of Registrant as Specified in Its Charter)
| DELAWARE | 33-0724325 | |
| (State or Other Jurisdiction | (I.R.S. Employer | |
| of Incorporation or Organization) | 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 by a check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). Yes ¨ No x
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 14, 2003: 21,250,582 shares.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
| Page | ||||
| ITEM 1. | CONSOLIDATED FINANCIAL STATEMENTS | |||
| Consolidated Balance Sheets as of June 28, 2003 (unaudited) and September 28, 2002 | 2 | |||
| Consolidated Statements of Income (unaudited) for the three and nine months ended June 28, 2003 and June 29, 2002 | 3 | |||
| Consolidated Statements of Cash Flows (unaudited) for the three and nine months ended June 28, 2003 and June 29, 2002 | 4 | |||
| Notes to Consolidated Financial Statements (unaudited) | 5 | |||
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 8 | ||
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 13 | ||
| ITEM 4. | CONTROLS AND PROCEDURES | 14 | ||
| PART II. OTHER INFORMATION | ||||
| ITEM 1. | LEGAL PROCEEDINGS | 15 | ||
| ITEM 2. | CHANGES IN SECURITIES AND USE OF PROCEEDS | 15 | ||
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 15 | ||
| ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 15 | ||
| ITEM 5. | OTHER INFORMATION | 15 | ||
| ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K | 15 | ||
i
CHARLOTTE RUSSE HOLDING, INC.
| June 28, 2003 |
September 28, 2002 |
|||||||
| (unaudited) | (audited) | |||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 17,458,738 | $ | 13,553,480 | ||||
| Inventories |
29,060,922 | 33,319,014 | ||||||
| Other current assets |
7,990,509 | 2,502,201 | ||||||
| Deferred tax assets |
4,900,000 | 4,300,000 | ||||||
| Total current assets |
59,410,169 | 53,674,695 | ||||||
| Fixed assets, net |
95,779,722 | 95,632,346 | ||||||
| Goodwill |
28,790,000 | 28,790,000 | ||||||
| Other assets |
1,329,749 | 1,405,928 | ||||||
| Total assets |
$ | 185,309,640 | $ | 179,502,969 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable trade |
$ | 15,838,838 | $ | 24,928,743 | ||||
| Accounts payable other |
5,192,540 | 5,444,806 | ||||||
| Accrued payroll and related expense |
3,792,170 | 2,372,134 | ||||||
| Income and sales taxes payable |
1,562,685 | 1,259,525 | ||||||
| Other current liabilities |
9,561,819 | 6,752,135 | ||||||
| Total current liabilities |
35,948,052 | 40,757,343 | ||||||
| Deferred rent |
9,206,469 | 8,376,994 | ||||||
| Other liabilities |
297,777 | 208,883 | ||||||
| Deferred tax liabilities |
5,700,000 | 1,600,000 | ||||||
| Total liabilities |
51,152,298 | 50,943,220 | ||||||
| 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 – 21,238,695 at June 28, 2003 and 21,210,707 at September 28, 2002 |
212,387 | 212,107 | ||||||
| Additional paid-in capital |
43,999,022 | 43,793,497 | ||||||
| Deferred compensation |
(90,000 | ) | (171,000 | ) | ||||
| Retained earnings |
90,035,933 | 84,725,145 | ||||||
| Total stockholders’ equity |
134,157,342 | 128,559,749 | ||||||
| Total liabilities and stockholders’ equity |
$ | 185,309,640 | $ | 179,502,969 | ||||
See accompanying notes.
2
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| June 28, 2003 |
June 29, 2002 |
June 28, 2003 |
June 29, 2002 |
|||||||||||||
| Net sales |
$ | 107,185,543 | $ | 101,956,349 | $ | 333,612,882 | $ | 299,964,241 | ||||||||
| Cost of goods sold, including buying, distribution and occupancy costs |
80,893,361 | 74,060,688 | 252,471,872 | 216,947,189 | ||||||||||||
| Gross profit |
26,292,182 | 27,895,661 | 81,141,010 | 83,017,052 | ||||||||||||
| Selling, general and administrative expenses |
21,715,953 | 18,604,917 | 66,801,153 | 55,821,032 | ||||||||||||
| Store closing costs |
— | — | 5,500,000 | — | ||||||||||||
| Operating income |
4,576,229 | 9,290,744 | 8,839,857 | 27,196,020 | ||||||||||||
| Other income(expense): |
||||||||||||||||
| Interest income, net |
26,059 | 13,335 | 57,464 | 97,050 | ||||||||||||
| Other charges, net |
(55,964 | ) | (62,500 | ) | (191,112 | ) | (211,056 | ) | ||||||||
| Total other expense |
(29,905 | ) | (49,165 | ) | (133,648 | ) | (114,006 | ) | ||||||||
| Income before income taxes |
4,546,324 | 9,241,579 | 8,706,209 | 27,082,014 | ||||||||||||
| Income taxes |
1,773,066 | 3,604,217 | 3,395,421 | 10,561,986 | ||||||||||||
| Net income |
$ | 2,773,258 | $ | 5,637,362 | $ | 5,310,788 | $ | 16,520,028 | ||||||||
| Earnings per share: |
||||||||||||||||
| Basic |
$ | 0.13 | $ | 0.27 | $ | 0.25 | $ | 0.79 | ||||||||
| Diluted |
$ | 0.12 | $ | 0.24 | $ | 0.23 | $ | 0.70 | ||||||||
| Weighted average shares outstanding: |
||||||||||||||||
| Basic |
21,237,310 | 21,193,883 | 21,229,635 | 20,989,745 | ||||||||||||
| Diluted |
23,462,555 | 23,877,320 | 23,480,988 | 23,704,176 | ||||||||||||
See accompanying notes.
3
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| June 28, 2003 |
June 29, 2002 |
June 28, 2003 |
June 29, 2002 |
|||||||||||||
| Operating Activities |
||||||||||||||||
| Net income |
$ | 2,773,258 | $ | 5,637,362 | $ | 5,310,788 | $ | 16,520,028 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||
| Depreciation and amortization |
4,101,960 | 3,627,878 | 11,912,123 | 10,012,636 | ||||||||||||
| Deferred rent |
140,170 | 791,256 | 829,475 | 2,179,725 | ||||||||||||
| Amortization of deferred compensation |
27,000 | 27,000 | 81,000 | 81,000 | ||||||||||||
| Loss on impairment and disposal of assets |
12,042 | (1 | ) | 3,247,838 | 23,744 | |||||||||||
| Deferred income taxes |
400,000 | (400,000 | ) | 3,500,000 | (800,000 | ) | ||||||||||
| Changes in operating assets and liabilities: |
||||||||||||||||
| Inventories |
5,622,455 | (3,798,016 | ) | 4,258,092 | (5,448,732 | ) | ||||||||||
| Other current assets |
53,253 | (574,339 | ) | (5,488,308 | ) | (935,995 | ) | |||||||||
| Accounts payable trade |
(10,744,600 | ) | (258,254 | ) | (9,089,905 | ) | 3,314,274 | |||||||||
| Accounts payable other |
1,143,018 | (2,243,428 | ) | (252,266 | ) | (3,720,969 | ) | |||||||||
| Accrued payroll and related expense |
1,472,631 | 1,130,373 | 1,420,036 | 1,867,800 | ||||||||||||
| Income and sales taxes payable |
(3,737 | ) | 145,967 | 337,896 | (1,265,084 | ) | ||||||||||
| Other current liabilities |
(681,752 | ) | 51,441 | 2,809,684 | 2,152,341 | |||||||||||
| Other liabilities |
15,000 | 14,999 | 88,894 | (75,588 | ) | |||||||||||
| Net cash provided by operating activities |
4,330,698 | 4,152,238 | 18,965,347 | 23,905,180 | ||||||||||||
| Investing Activities |
||||||||||||||||
| Purchases of fixed assets |
(4,618,807 | ) | (4,297,825 | ) | (15,290,888 | ) | (23,359,348 | ) | ||||||||
| Other assets |
46,273 | (26,498 | ) | 59,730 | (45,062 | ) | ||||||||||
| Net cash used in investing activities |
(4,572,534 | ) | ||||||||||||||