FORM 10−Q CHILDRENS PLACE RETAIL STORES INC − PLCE Filed: December 09, 2004 (period: October 30, 2004) Quarterly report which provides a continuing view of a company's financial position Table of Contents Part I − Financial Information Item 1. Consolidated Financial Statements: Page Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures about Market Risks 16 Item 4. Controls and Procedures 16 Part II − Other Information Item 1. Legal Proceedings 17 Item 6. Exhibits and Reports on Form 8−K 17 PART I − FINANCIAL INFORMATION Item 1. CONSOLIDATED FINANCIAL STATEMENTS Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF Item 3. Quantitative and Qualitative Disclosures about Market Risks. Item 4. Controls and Procedures. Part II − Other Information Item 1. Legal Proceedings. Item 6. Exhibits and Reports on Form 8−K. SIGNATURES EX−2 (Plan of acquisition) EX−10 (Material contracts) EX−10 (Material contracts) EX−10 (Material contracts) EX−10 (Material contracts) EX−31 EX−32 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10−Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 30, 2004 / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission file number 0−23071 THE CHILDREN'S PLACE RETAIL STORES, INC. (Exact name of registrant as specified in its charter) Delaware 31−1241495 (State or other jurisdiction of (I. R. S. Employer Identification incorporation or organization) Number) 915 Secaucus Road Secaucus, New Jersey 07094 (Address of principal executive offices) (Zip Code) (201) 558−2400 (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 check mark whether the registrant is an accelerated filer. 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 $0.10 per share, outstanding at December 7, 2004: 26,995,055 shares. THE CHILDREN'S PLACE RETAIL STORES, INC. QUARTERLY REPORT ON FORM 10−Q FOR THE PERIOD ENDED OCTOBER 30, 2004 TABLE OF CONTENTS Part I − Financial Information Item 1. Consolidated Financial Statements: Page Consolidated Balance Sheets 1 Consolidated Statements of Income 2 Consolidated Statements of Cash Flows 3 Notes to Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures about Market Risks 16 Item 4. Controls and Procedures 16 Part II − Other Information Item 1. Legal Proceedings 17 Item 6. Exhibits and Reports on Form 8−K 17 Signatures 18 PART I − FINANCIAL INFORMATION Item 1. CONSOLIDATED FINANCIAL STATEMENTS THE CHILDREN'S PLACE RETAIL STORES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) October 30, 2004 January 31, 2004 November 1, 2003 −−−−−−−−−−−−−−−− −−−−−−−−−−−−−−−− −−−−−−−−−−−−−−−− (Unaudited) (Unaudited) ASSETS Current assets: Cash and cash equivalents................................. $ 45,344 $ 74,772 $ 44,182 Accounts receivable....................................... 14,249 8,462 12,747 Inventories............................................... 143,367 96,128 95,893 Prepaid expenses and other current assets................. 23,588 20,070 21,065 −−−−−−−−− −−−−−−−−− −−−−−−−−− Total current assets................................... 226,548 199,432 173,887 Long−term assets: Property and equipment, net............................... 153,866 146,707 149,354 Other assets.............................................. 14,054 13,527 9,200 −−−−−−−−− −−−−−−−−− −−−−−−−−− Total assets........................................... $ 394,468 $ 359,666 $ 332,441 ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Current liabilities: Accounts payable.......................................... $ 40,721 $ 35,173 $ 34,152 Income taxes payable...................................... 6,979 9,733 2,986 Accrued expenses, interest and other current liabilities.. 49,204 40,251 41,022 −−−−−−−−− −−−−−−−−− −−−−−−−−− Total current liabilities.............................. 96,904 85,157 78,160 Long−term liabilities: Deferred rent liabilities................................. 15,608 14,187 13,548 Other long−term liabilities............................... 0 3,317 2,267 −−−−−−−−− −−−−−−−−− −−−−−−−−− Total liabilities...................................... 112,512 102,661 93,975 ========= ========= ========= COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock, $0.10 par value; 100,000,000 shares authorized; 26,945,104 shares, 26,733,313 shares and 26,664,294 shares issued and outstanding, at October 30, 2004, January 31, 2004 and November 1, 2003, respectively................... 2,694 2,673 2,666 Additional paid−in capital.................................... 103,963 101,288 99,747 Accumulated other comprehensive income........................ 5,705 2,754 938 Retained earnings............................................. 169,594 150,290 135,115 −−−−−−−−− −−−−−−−−− −−−−−−−−− Total stockholders' equity............................. 281,956 257,005 238,466 −−−−−−−−− −−−−−−−−− −−−−−−−−− Total liabilities and stockholders' equity............. $ 394,468 $ 359,666 $ 332,441 ========= ========= ========= The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. THE CHILDREN'S PLACE RETAIL STORES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts) Thirteen Weeks Ended Thirty−Nine Weeks Ended −−−−−−−−−−−−−−−−−−−− −−−−−−−−−−−−−−−−−−−−−−− October 30, 2004 November 1, 2003 October 30, 2004 November 1, 2003 −−−−−−−−−−−−−−−− −−−−−−−−−−−−−−−− −−−−−−−−−−−−−−−− −−−−−−−−−−−−−−−− Net sales........................................ $ 280,496 $ 223,277 $ 695,440 $ 563,369 Cost of sales.................................... 166,513 131,987 431,300 351,719 −−−−−−−−− −−−−−−−−− −−−−−−−−− −−−−−−−−− Gross profit..................................... 113,983 91,290 264,140 211,650 Selling, general and administrative expenses..... 74,010 62,083 200,914 169,462 Depreciation and amortization.................... 10,493 10,154 31,195 29,557 −−−−−−−−− −−−−−−−−− −−−−−−−−− −−−−−−−−− Operating income................................. 29,480 19,053 32,031 12,631 Interest (income) expense, net................... (48) 17 (154) (128) −−−−−−−−− −−−−−−−−− −−−−−−−−− −−−−−−−−− Income before income taxes....................... 29,528 19,036 32,185 12,759 Provision for income taxes....................... 11,845 7,424 12,881 4,977 −−−−−−−−− −−−−−−−−− −−−−−−−−− −−−−−−−−− Net income....................................... $ 17,683 $ 11,612 $ 19,304 $ 7,782 ========= ========= ========= ========= Basic net income per common share................ $ 0.66 $ 0.44 $ 0.72 $ 0.29 Basic weighted average common shares outstanding. 26,928 26,640 26,867 26,620 Diluted net income per common share.............. $ 0.65 $ 0.43 $ 0.70 $ 0.29 Diluted weighted average common shares outstanding 27,393 27,153 27,475 26,961 The accompanying notes to consolidated financial statements are an integral part of these consolidated statements. THE CHILDREN'S PLACE RETAIL STORES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Thirty−Nine Weeks Ended −−−−−−−−−−−−−−−−−−−−−−− October 30, 2004 November 1, 2003 −−−−−−−−−−−−−−−− −−−−−−−−−−−−−−−− CASH FLOWS FROM OPERATING ACTIVITIES: Net income.................................................................. $ 19,304 $ 7,782 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization........................................ 31,195 29,557 Deferred financing fee amortization.................................. 44 45 Loss on disposals of property and equipment.......................... 495 314 Deferred taxes....................................................... 803 (64) Deferred rent........................................................ 1,604 1,788 Changes in operating assets and liabilities: Accounts receivable.................................................. (5,707) 1,158 Inventories.......................................................... (46,061) (19,610) Prepaid expenses and other current assets............................ (2,880) (1,394) Other assets......................................................... (2,607) 58 Accounts payable..................................................... 5,210 3,062 Income taxes payable................................................. (2,754) 2,788 Accrued expenses, interest and other current liabilities............. 5,399 6,791 −−−−−−−−− −−−−−−−−− Total adjustments................................................. (15,259) 24,493 −−−−−−−−− −−−−−−−−− Net cash provided by operating activities................................... 4,045 32,275 −−−−−−−−− −−−−−−−−− CASH FLOWS FROM INVESTING ACTIVITIES: Property and equipment purchases...........................................