UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended October 30, 2004
Commission File Number 0-15898
CASUAL MALE RETAIL GROUP, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 04-2623104 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | |
| 555 Turnpike Street, Canton, MA | 02021 | |
| (Address of principal executive offices) | (Zip Code) | |
(781) 828-9300
(Registrant’s telephone number, including area code)
Indicate by “X” 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 “X” whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
The number of shares of common stock outstanding as of December 1, 2004 was 34,217,796.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
CASUAL MALE RETAIL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| October 30, 2004 |
January 31, 2004 |
|||||||
| (unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 6,387 | $ | 4,179 | ||||
| Accounts receivable |
5,368 | 5,556 | ||||||
| Notes receivable |
5,270 | — | ||||||
| Inventories |
122,408 | 98,673 | ||||||
| Prepaid expenses and other current assets |
5,993 | 5,275 | ||||||
| Total current assets |
145,426 | 113,683 | ||||||
| Property and equipment, net of accumulated depreciation and amortization |
72,584 | 68,345 | ||||||
| Other assets: |
||||||||
| Goodwill |
52,812 | 50,677 | ||||||
| Other intangible assets |
35,579 | 30,629 | ||||||
| Other assets |
9,127 | 9,408 | ||||||
| Total assets |
$ | 315,528 | $ | 272,742 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Current portion of long-term debt |
$ | 5,651 | $ | 3,710 | ||||
| Accounts payable |
43,034 | 32,125 | ||||||
| Accrued expenses and other current liabilities |
24,470 | 22,884 | ||||||
| Accrued liabilities for severance and store closings |
2,024 | 2,945 | ||||||
| Notes payable |
51,498 | 3,623 | ||||||
| Total current liabilities |
126,677 | 65,287 | ||||||
| Long-term liabilities: |
||||||||
| Long-term debt, net of current portion |
119,430 | 122,374 | ||||||
| Other long-term liabilities |
473 | 436 | ||||||
| Total long-term liabilities |
119,903 | 122,810 | ||||||
| Minority interest |
— | 3,804 | ||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $0.01 par value, 1,000,000 shares authorized, none outstanding at October 30, 2004 and January 31, 2004 |
— | — | ||||||
| Common stock, $0.01 par value, 75,000,000 shares authorized, 39,390,094 and 39,246,364 shares issued at October 30, 2004 and January 31, 2004, respectively |
394 | 392 | ||||||
| Additional paid-in capital |
154,531 | 153,650 | ||||||
| Accumulated deficit |
(62,526 | ) | (56,165 | ) | ||||
| Treasury stock at cost, 5,171,930 and 4,171,930 shares at October 30, 2004 and January 31, 2004, respectively |
(23,362 | ) | (17,036 | ) | ||||
| Accumulated other comprehensive loss |
(89 | ) | — | |||||
| Total stockholders’ equity |
68,948 | 80,841 | ||||||
| Total liabilities and stockholders’ equity |
$ | 315,528 | $ | 272,742 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
CASUAL MALE RETAIL GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| October 30, 2004 |
November 1, 2003 |
October 30, 2004 |
November 1, 2003 |
|||||||||||||
| Sales |
$ | 93,922 | $ | 97,910 | $ | 298,239 | $ | 285,901 | ||||||||
| Cost of goods sold, including occupancy |
58,663 | 59,597 | 186,696 | 177,299 | ||||||||||||
| Gross profit |
35,259 | 38,313 | 111,543 | 108,602 | ||||||||||||
| Expenses: |
||||||||||||||||
| Selling, general and administrative |
32,152 | 33,793 | 103,434 | 97,441 | ||||||||||||
| Reversal of provision for impairment of assets, store closings and severance |
(591 | ) | — | (591 | ) | — | ||||||||||
| Depreciation and amortization |
2,864 | 2,241 | 8,144 | 6,177 | ||||||||||||
| Total expenses |
34,425 | 36,034 | 110,987 | 103,618 | ||||||||||||
| Operating income |
834 | 2,279 | 556 | 4,984 | ||||||||||||
| Other income (expense), net |
— | (425 | ) | 308 | (425 | ) | ||||||||||
| Interest expense, net |
(1,878 | ) | (3,135 | ) | (6,035 | ) | (8,996 | ) | ||||||||
| Loss from continuing operations before minority interest and income taxes |
(1,044 | ) | (1,281 | ) | (5,171 | ) | (4,437 | ) | ||||||||
| Minority interest |
— | (147 | ) | 701 | (55 | ) | ||||||||||
| Income taxes |
— | — | — | — | ||||||||||||
| Loss from continuing operations |
(1,044 | ) | (1,428 | ) | (4,470 | ) | (4,492 | ) | ||||||||
| Income (loss) from discontinued operations |
(322 | ) | 224 | (1,891 | ) | 1,192 | ||||||||||
| Net loss |
$ | (1,366 | ) | $ | (1,204 | ) | $ | (6,361 | ) | $ | (3,300 | ) | ||||
| Net loss per share - basic and diluted |
||||||||||||||||
| Loss from continuing operations |
$ | (0.03 | ) | $ | (0.04 | ) | $ | (0.13 | ) | $ | (0.12 | ) | ||||
| Income (loss) from discontinued operations |
(0.01 | ) | 0.01 | (0.05 | ) | 0.03 | ||||||||||
| Net loss |
$ | (0.04 | ) | $ | (0.03 | ) | $ | (0.18 | ) | $ | (0.09 | ) | ||||
| Weighted average number of common shares outstanding |
||||||||||||||||
| - Basic and diluted |
34,209 | 35,992 | 34,607 | 35,855 | ||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
CASUAL MALE RETAIL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended |
||||||||
| October 30, 2004 |
November 1, 2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (6,361 | ) | $ | (3,300 | ) | ||
| Adjustments to reconcile net loss to net cash used for operating activities: |
||||||||
| (Income) loss from discontinued operations |
1,891 | (1,192 | ) | |||||
| Reversal of provision for impairment of assets, store closings and severance |
(591 | ) | — | |||||
| Depreciation and amortization |
8,144 | 6,177 | ||||||
| Other expenses, principally related to debt redemption costs |
2,832 | — | ||||||
| Gain on sale of investment in joint venture |
(3,140 | ) | — | |||||
| Accretion of warrants |
103 | 1,351 | ||||||
| Issuance of common stock to related party |
151 | 207 | ||||||
| Issuance of common stock to Board of Directors |
70 | 86 | ||||||
| Minority interest |
(701 | ) | 55 | |||||
| Loss on disposal of fixed assets |
396 | — | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
145 | 2,869 | ||||||
| Notes receivable |
1,200 | — | ||||||
| Inventories |
(12,700 | ) | (14,425 | ) | ||||
| Prepaid expenses |
(900 | ) | (3,583 | ) | ||||
| Other assets |
(624 | ) | (615 | ) | ||||
| Reserve for severance and store closings |
(330 | ) | (1,215 | ) | ||||
| Accounts payable |
7,578 | 13,770 | ||||||
| Accrued expenses and other current liabilities |
(3,750 | ) | (1,797 | ) | ||||
| Net cash used for operating activities |
(6,587 | ) | (1,612 | ) | ||||
| Cash flows from investing activities: |
||||||||
| Additions to property and equipment |
(15,397 | ) | (8,875 | ) | ||||
| Proceeds from disposal of property and equipment |
166 | — | ||||||
| Acquisition of Rochester Big & Tall, net of cash acquired |
(17,006 | ) | — | |||||
| Proceeds from sale of investment in joint venture |
1,530 | — | ||||||
| Net cash used for investing activities |
(30,707 | ) | (8,875 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Net borrowings (repayments) under credit facility |
47,875 | (6,105 | ) | |||||
| Principal payments on long-term debt |
(9,897 | ) | (11,806 | ) | ||||
| Payment of premiums associated with prepayment of long-term debt |
(313 | ) | — | |||||
| Proceeds from issuance of long-term debt, net of discount |
7,500 | 24,300 | ||||||
| Proceeds from issuance of warrants |
— | 4,791 | ||||||
| Repurchase of common stock |
(6,326 | ) | (36 | ) | ||||
| Issuance of common stock under option program and warrants |
663 | 820 | ||||||
| Net cash provided by financing activities |
39,502 | 11,964 | ||||||
| Net change in cash and cash equivalents |
2,208 | 1,477 | ||||||
| Cash and cash equivalents: |
||||||||
| Beginning of the period |
4,179 | 4,692 | ||||||
| End of the period |
$ | 6,387 | $ | 6,169 | ||||