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 26, 2004
| ¨ | 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 of Incorporation) | (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)
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Each Class)
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 check mark if the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act): 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:
The number of shares of common stock outstanding as of July 14, 2004 was approximately 21,591,000.
TABLE OF CONTENTS
| PART I. FINANCIAL INFORMATION | ||||
| Page | ||||
| ITEM 1. |
CONSOLIDATED FINANCIAL STATEMENTS | |||
| Consolidated Balance Sheets as of June 26, 2004 (unaudited) and September 27, 2003 (audited) | 2 | |||
| Consolidated Statements of Income for the three and nine months ended June 26, 2004 (unaudited) and June 28, 2003 (unaudited) | 3 | |||
| Consolidated Statements of Cash Flows for the three and nine months ended June 26, 2004 (unaudited) and June 28, 2003 (unaudited) | 4 | |||
| Notes to Consolidated Financial Statements (unaudited) | 5 | |||
| ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 9 | ||
| ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 14 | ||
| ITEM 4. |
CONTROLS AND PROCEDURES | 14 | ||
| PART II. OTHER INFORMATION | ||||
| ITEM 1. |
LEGAL PROCEEDINGS | 15 | ||
| ITEM 2. |
CHANGES IN SECURITIES | 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 | ||
1
CONSOLIDATED BALANCE SHEETS
| June 26, 2004 |
September 27, 2003 |
||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Current assets: |
|||||||
| Cash and cash equivalents |
$ | 40,215,339 | $ | 22,967,317 | |||
| Inventories |
39,250,246 | 34,506,912 | |||||
| Other current assets |
4,649,833 | 5,410,123 | |||||
| Deferred tax assets |
6,000,000 | 5,300,000 | |||||
| Total current assets |
90,115,418 | 68,184,352 | |||||
| Fixed assets, net |
100,835,944 | 100,018,536 | |||||
| Goodwill |
28,790,000 | 28,790,000 | |||||
| Other assets |
1,936,745 | 1,371,894 | |||||
| Total assets |
$ | 221,678,107 | $ | 198,364,782 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: |
|||||||
| Accounts payable, trade |
$ | 28,412,361 | $ | 20,928,264 | |||
| Accounts payable, other |
2,026,738 | 6,457,132 | |||||
| Accrued payroll and related expense |
5,885,084 | 2,526,756 | |||||
| Income and sales taxes payable |
2,023,046 | 2,320,337 | |||||
| Other current liabilities |
10,982,861 | 9,886,267 | |||||
| Total current liabilities |
49,330,090 | 42,118,756 | |||||
| Deferred rent |
11,190,660 | 9,946,860 | |||||
| Other liabilities |
43,893 | 312,777 | |||||
| Deferred tax liabilities |
6,400,000 | 5,600,000 | |||||
| Total liabilities |
66,964,643 | 57,978,393 | |||||
| Commitments and contingencies |
|||||||
| 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 – 21,582,370 and 21,290,182 at June 26, 2004 and September 27, 2003, respectively. |
215,824 | 212,902 | |||||
| Additional paid-in capital |
46,665,306 | 44,498,540 | |||||
| Deferred compensation |
— | (63,000 | ) | ||||
| Retained earnings |
107,832,334 | 95,737,947 | |||||
| Total stockholders’ equity |
154,713,464 | 140,386,389 | |||||
| Total liabilities and stockholders’ equity |
$ | 221,678,107 | $ | 198,364,782 | |||
See accompanying notes.
2
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| June 26, 2004 |
June 28, 2003 |
June 26, 2004 |
June 28, 2003 |
|||||||||||||
| Net sales |
$ | 133,043,878 | $ | 107,185,543 | $ | 401,111,107 | $ | 333,612,882 | ||||||||
| Cost of goods sold, including buying, distribution and occupancy costs |
96,719,620 | 80,893,361 | 300,603,338 | 252,471,872 | ||||||||||||
| Gross profit |
36,324,258 | 26,292,182 | 100,507,769 | 81,141,010 | ||||||||||||
| Selling, general and administrative expenses |
27,304,403 | 21,715,953 | 80,992,046 | 66,801,153 | ||||||||||||
| Store closing costs |
— | — | (325,000 | ) | 5,500,000 | |||||||||||
| Operating income |
9,019,855 | 4,576,229 | 19,840,723 | 8,839,857 | ||||||||||||
| Other income (expense): |
||||||||||||||||
| Interest income, net |
80,234 | 26,059 | 198,543 | 57,464 | ||||||||||||
| Other charges, net |
(62,498 | ) | (55,964 | ) | (212,402 | ) | (191,112 | ) | ||||||||
| Total other income (expense) |
17,736 | (29,905 | ) | (13,859 | ) | (133,648 | ) | |||||||||
| Income before income taxes |
9,037,591 | 4,546,324 | 19,826,864 | 8,706,209 | ||||||||||||
| Income taxes |
3,524,661 | 1,773,066 | 7,732,477 | 3,395,421 | ||||||||||||
| Net income |
$ | 5,512,930 | $ | 2,773,258 | $ | 12,094,387 | $ | 5,310,788 | ||||||||
| Earnings per share: |
||||||||||||||||
| Basic |
$ | 0.26 | $ | 0.13 | $ | 0.56 | $ | 0.25 | ||||||||
| Diluted |
$ | 0.23 | $ | 0.12 | $ | 0.51 | $ | 0.23 | ||||||||
| Weighted average shares outstanding: |
||||||||||||||||
| Basic |
21,551,135 | 21,237,310 | 21,475,381 | 21,229,635 | ||||||||||||
| Diluted |
24,081,514 | 23,462,555 | 23,925,425 | 23,480,988 | ||||||||||||
See accompanying notes.
3
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| June 26, 2004 |
June 28, 2003 |
June 26, 2004 |
June 28, 2003 |
|||||||||||||
| Operating Activities |
||||||||||||||||
| Net income |
$ | 5,512,930 | $ | 2,773,258 | $ | 12,094,387 | $ | 5,310,788 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||
| Depreciation and amortization |
4,897,217 | 4,101,960 | 14,227,028 | 11,912,123 | ||||||||||||
| Deferred rent |
256,785 | 140,170 | 1,243,800 | 829,475 | ||||||||||||
| Amortization of deferred compensation |
9,000 | 27,000 | 63,000 | 81,000 | ||||||||||||
| Loss on impairment and disposal of assets |
443,240 | 12,042 | 536,615 | 3,247,838 | ||||||||||||
| Deferred income taxes |
(100,000 | ) | 400,000 | 100,000 | 3,500,000 | |||||||||||
| Changes in operating assets and liabilities: |
||||||||||||||||
| Inventories |
(1,605,435 | ) | 5,622,455 | (4,743,334 | ) | 4,258,092 | ||||||||||
| Other current assets |
(1,755,704 | ) | 53,253 | 760,290 | (5,488,308 | ) | ||||||||||
| Accounts payable, trade |
(2,376,045 | ) | (10,744,600 | ) | 7,484,097 | (9,089,905 | ) | |||||||||
| Accounts payable, other |
(588,633 | ) | 1,143,018 | (4,430,394 | ) | (252,266 | ) | |||||||||
| Accrued payroll and related expense |
1,419,230 | 1,472,631 | 3,358,328 | 1,420,036 | ||||||||||||
| Income and sales taxes payable |
(1,296,110 | ) | (3,737 | ) | 396,673 | 337,896 | ||||||||||
| Other current liabilities |
360,640 | (681,752 | ) | 1,096,594 | 2,809,684 | |||||||||||
| Other liabilities |
(273,884 | ) | 15,000 | (268,884 | ) | 88,894 | ||||||||||
| Net cash provided by operating activities |
4,903,231 | 4,330,698 | 31,918,200 | 18,965,347 | ||||||||||||
| Investing Activities |
||||||||||||||||
| Purchases of fixed assets |
(5,838,019 | ) | (4,618,807 | ) | (15,514,660 | ) | (15,290,888 | ) | ||||||||
| Other assets |
(86,477 | ) | 46,273 | (631,242 | ) | 59,730 | ||||||||||
| Net cash used in investing activities |
(5,924,496 | ) | (4,572,534 | ) | (16,145,902 | ) | (15,231,158 | ) | ||||||||
| Financing Activities |
||||||||||||||||
| Stock offering costs |
(250,000 | ) | — | (250,000 | ) | — | ||||||||||
| Proceeds from issuance of common stock |
506,575 | 6,999 | 1,725,724 | 171,069 | ||||||||||||
| Net cash provided by financing activities |
256,575 | |||||||||||||||