The Children's Place Retail Stores, Inc. Reports Preliminary Fourth Quarter and Fiscal Year 2004 Financial Results.SECAUCUS Secaucus (sēkô`kəs), town (1990 pop. 14,061), Hudson co., NE N.J., on the Hackensack River, adjoining Jersey City; inc. 1917. It is a distribution and factory-outlet center and an area of industrial development, especially in the , N.J. -- The Children's Place Retail Stores, Inc. (Nasdaq: PLCE PLCE Personal Load Carrying Equipment (British Army) ) --Comparable Store Sales Increased 17% for the Fourth Quarter and 16% for the Fiscal Year --Earnings Per Share Increased 55% to $0.85 for the Fourth Quarter and 85% to $1.57 for the Full Year --Adjusted Earnings Per Share was $0.95 for the Fourth Quarter and $1.67 for the Full Year --Company Raises Fiscal 2005 Outlook The Children's Place Retail Stores, Inc. (Nasdaq: PLCE) today reported preliminary unaudited financial results for the fourth quarter and fiscal year ended January January: see month. 29, 2005. As discussed below, all results presented in this press release exclude the effect of any potential corrections to the Company's lease-related accounting practices in light of a recent SEC clarification Clarification The removal of small amounts of fine, particulate solids from liquids. The purpose is almost invariably to improve the quality of the liquid, and the removed solids often are discarded. . Fourth Quarter Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the fourth quarter increased 97% to $462.1 million, compared with $234.6 million for the same period in 2003. Fourth quarter sales results included 10 weeks of sales totaling $163.4 million from the Disney Dis·ney , Walter Elias Known as "Walt." 1901-1966. American animator, showman, and film producer. Noted for his creation of the cartoon characters Mickey Mouse and Donald Duck, he produced the first animated film with sound, Store North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , which was acquired as of November November: see month. 21, 2004. Comparable store sales at The Children's Place stores increased 17% in the quarter, on top of a 9% increase for the same period last year. The Company's fourth quarter net income was $24.0 million and income before extraordinary gain was $23.7 million, as compared to net income of $15.2 million for the fourth quarter last year. The extraordinary gain, net of taxes, of $0.3 million, in the fourth quarter of 2004, resulted from the acquisition of Disney Store North America, and represents the excess of the fair value of assets acquired and liabilities assumed over the amounts paid for the Disney Store North America business. Fourth quarter earnings per share were $0.85, compared to earnings per share of $0.55 in the fiscal 2003 period. Earnings per share before the extraordinary gain were $0.84 in the fourth quarter. To facilitate the analysis of net income, the Company has adjusted fourth quarter and fiscal 2004 net income to exclude a non-cash item and the extraordinary gain mentioned above, both associated with the Disney Store North America acquisition. The Company has excluded such items, because it does not believe they are indicative indicative: see mood. of the core business and that the adjusted presentation is a beneficial supplemental disclosure to investors in analyzing its past and future performance. Adjusted net income was $26.8 million in the fourth quarter 2004, a 76% increase over net income of $15.2 million in fiscal 2003. Adjusted earnings per share were $0.95 in the fourth quarter, a 73% increase over earnings per share of $0.55 in the fiscal 2003 period. Accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. this press release is a reconciliation of net income to adjusted net income for the fourth quarter and fiscal year ended January 29, 2005. The Company opened 17 Children's Place stores and closed one store during the fourth quarter. In addition, consistent with its plans, the Company closed seven Disney Stores. Fiscal Year 2004 Net sales for the fiscal year increased 45% to $1.157 billion, from $797.9 million in 2003. Fiscal 2004 sales results included 10 weeks of sales totaling $163.4 million from the Disney Store North America. Comparable store sales at The Children's Place stores increased 16% for the fiscal year, compared to a 4% increase last year. Net income was $43.3 million and income before extraordinary gain was $43.0 million, compared to net income of $23.0 million last year. Fiscal 2004 earnings per share were $1.57 compared to earnings per share of $0.85 in fiscal 2003. Earnings per share before the extraordinary gain were $1.56 in fiscal 2004. Adjusted net income, as defined above, was $46.1 million in fiscal 2004, a 100% increase over net income of $23.0 million in fiscal 2003. Adjusted earnings per share were $1.67 compared to earnings per share of $0.85 in 2003. The Company opened 62 Children's Place stores and closed three stores during the fiscal year. In addition, the Company closed seven Disney Stores. "Fiscal 2004 was a remarkable year. We are pleased with our fourth quarter and full year financial performance, as evidenced by our strong revenues and earnings results," said Ezra Ezra, persons in the Bible Ezra, in the Bible. 1 Central figure of the book of Ezra. 2 Priest who returned with Zerubbabel. Dabah, Chairman and Chief Executive Officer of The Children's Place. "Especially gratifying grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. is that we achieved our strong results while consummating and seamlessly integrating the Disney Store business. This is a testament to the team, the teamwork (product, software, tool) Teamwork - A SASD tool from Sterling Software, formerly CADRE Technologies, which supports the Shlaer/Mellor Object-Oriented method and the Yourdon-DeMarco, Hatley-Pirbhai, Constantine and Buhr notations. , and the infrastructure we have in place." Mr. Dabah concluded, "The Children's Place brand achieved new heights, while the Disney Store acquisition gives us an extraordinary new platform for growth and earnings. We are intent on continuing our strong growth into 2005, and are confident that our business is well-positioned to achieve profitable growth over the long term." Outlook The Company now anticipates fiscal 2005 earnings per share in the range of $2.10 to $2.20, before any changes made to the way the Company accounts for lease-related transactions, a non-cash item associated with the Disney Store acquisition, and the effect of new accounting rules requiring the expensing of stock options. The Company plans to initiate INITIATE. A right which is incomplete. By the birth of a child, the husband becomes tenant by the curtesy initiate, but his estate is not consummate until the death of the wife. 2 Bouv. Inst. n. 1725. the expensing of stock options prospectively beginning with the third quarter of fiscal 2005, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the requirements of FASB Statement FASB Statement A standard set by the Financial Accounting Standards Board regarding a financial accounting and reporting method. Essentially, FASB statements determine the acceptable accounting practices that Certified Public Accountants use in reporting No. 123R. Lease-Related Accounting Practices As previously announced and as discussed above, the Company is re-evaluating its lease-related accounting practices in light of a recent SEC clarification. While this evaluation has not been completed, and therefore no decisions have been made, management believes that a restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of the Company's previously issued financial statements is likely. Management continues to believe that any correction CORRECTION,punishment. Chastisement by one having authority of a person who has committed some offence, for the purpose of bringing him to legal subjection. 2. It is chiefly exercised in a parental manner, by parents, or those who are placed in loco parentis. to the Company's lease-related accounting practices, if necessary, would not have a material impact on net income for the year ended January 29, 2005, nor will any potential restatement have any impact on net sales, comparable store sales or overall cash flows for any period. Further, any correction to the Company's lease accounting practices would not materially impact its anticipated results of operations for the year ending January 28, 2006. The Company is in the process of completing its analysis, which it will review with its audit committee and independent auditors Independent Auditor An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report. Notes: These auditors aren't affiliated with the company being audited. , and will report the results of its review as soon as it has been completed. Conference Call Information The Children's Place will host a webcast of its fourth quarter conference call today at 10:00 a.m., Eastern Time. Interested parties are invited to listen to the call at the Company's web site, www.childrensplace.com. An archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. of the webcast will be available on the site through Thursday Thursday: see week. , March 17, 2005. About The Children's Place Retail Stores, Inc. The Children's Place Retail Stores, Inc. is a leading specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. retailer of children's merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain , ages newborn newborn /new·born/ (noo´born?) 1. recently born. 2. newborn infant. new·born adj. Very recently born. n. A neonate. to ten years old. The Company designs, contracts to manufacture and sells high-quality, value-priced apparel and accessories under the "The Children's Place" brand name. As of February February: see month. 26, 2005, the Company operated 750 The Children's Place stores in North America and owns the subsidiary that operates 306 Disney Stores in North America. The Company also sells The Children's Place merchandise through its virtual store located at www.childrensplace.com. Use of Non-GAAP Measures Adjusted net income and adjusted earnings per share are "Non-GAAP financial measures" as defined by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. The Company has excluded a non-cash item and the extraordinary gain, both associated with the Disney Store North America acquisition, because it does not believe they are indicative of the core business. The Company is providing adjusted financial information as an addition to, and not as a substitute for, financial measures presented in accordance with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). The Company believes that the adjusted presentation is a beneficial supplemental disclosure to investors in analyzing its past and future performance. Accompanying this press release is a reconciliation of net income to adjusted net income for the fourth quarter and fiscal year ended January 29, 2005. This press release and above referenced call may contain certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding future circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . These forward-looking statements are based upon the Company's current expectations and assumptions and are subject to various risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements including, in particular, the risks and uncertainties described in the Company's filings with the Securities and Exchange Commission. Actual results, events, and performance may differ. Readers or listeners (on the call) are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . We undertake no obligation to release publicly any revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The inclusion of any statement in this release does not constitute an admission by The Children's Place or any other person that the events or circumstances described in such statement are material.
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)(a)
13 Weeks Ended:
---------------
January 29, January 31,
----------- -------------
2005 2004
---- ----
Net sales $ 462,108 $ 234,569
Cost of sales 284,322 133,952
----------- --------------
Gross profit 177,786 100,617
Selling, general and
administrative expenses 129,003 65,831
Asset impairment charges 164 448
Depreciation and amortization 10,724 10,471
----------- --------------
Operating income 37,895 23,867
Interest expense (income), net 177 (127)
----------- --------------
Income before income taxes and
extraordinary gain 37,718 23,994
Provision for income taxes 14,031 8,819
----------- --------------
Income before extraordinary gain 23,687 15,175
Extraordinary gain (net of taxes) 273 --
----------- --------------
Net income $ 23,960 $ 15,175
=========== ==============
Basic income per share $ 0.88 $ 0.57
Basic weighted average number
of shares outstanding 27,076 26,726
Diluted income per share before
extraordinary gain $ 0.84 $ 0.55
Diluted Income per share $ 0.85 $ 0.55
Diluted weighted average number
of shares outstanding 28,106 27,510
52 Weeks Ended:
---------------
January 29, January 31,
----------- -------------
2005 2004
---- ----
Net sales $ 1,157,548 $ 797,938
Cost of sales 715,623 485,671
----------- --------------
Gross profit 441,925 312,267
Selling, general and
administrative expenses 329,916 235,293
Asset impairment charges 164 448
Depreciation and amortization 41,920 40,028
----------- --------------
Operating income 69,925 36,498
Interest expense (income), net 22 (255)
----------- --------------
Income before income taxes and
extraordinary gain 69,903 36,753
Provision for income taxes 26,912 13,796
----------- --------------
Income before extraordinary gain 42,991 22,957
Extraordinary gain (net of taxes) 273 --
----------- --------------
Net income $ 43,264 $ 22,957
=========== ==============
Basic income per share $ 1.61 $ 0.86
Basic weighted average number
of shares outstanding 26,919 26,646
Diluted income per share before
extraordinary gain $ 1.56 $ 0.85
Diluted income per share $ 1.57 $ 0.85
Diluted weighted average number
of shares outstanding 27,633 27,099
(a)These condensed consolidated statements of income
exclude the effects of any potential corrections to the Company's
lease-related accounting practices in light of a recent SEC
clarification.
THE CHILDREN'S PLACE RETAIL STORES, INC.
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME
(In thousands, except per share amounts)(a)
13 Weeks Ended January 29, 2005
---------------------------------------
Reported Adjustments Adjusted
---------- ----------- -----------
Net sales $ 462,108 $ -- $ 462,108
Cost of sales(b) 284,322 (5,044) 279,278
---------- ----------- -----------
Gross profit 177,786 5,044 182,830
Selling, general
and administrative
expenses 129,003 -- 129,003
Asset impairment
charges 164 -- 164
Depreciation
and amortization 10,724 -- 10,724
---------- ----------- -----------
Operating income 37,895 5,044 42,939
Interest expense
(income), net 177 -- 177
---------- ---------- -----------
Income before
income taxes and
extraordinary gain 37,718 5,044 42,762
Provision for
income taxes 14,031 1,942 15,973
---------- ----------- -----------
Income before
extraordinary gain 23,687 3,102 26,789
Extraordinary
gain (net of
taxes(c) 273 (273) 0
---------- ----------- -----------
Net income $ 23,960 $ 2,829 $ 26,789
========== =========== ===========
Basic income per
share $ 0.88 $ 0.11 $ 0.99
Basic weighted
average number
of shares
outstanding 27,076 27,076 27,076
Diluted income
per share $ 0.85 $ 0.10 $ 0.95
Diluted weighted
average number
of shares
outstanding 28,106 28,106 28,106
52 Weeks Ended January 29, 2005
---------------------------------------
Reported Adjustments Adjusted
---------- ----------- -----------
Net sales $1,157,548 $ -- $ 1,157,548
Cost of sales(b) 715,623 (5,044) 710,579
---------- ----------- -----------
Gross profit 441,925 5,044 446,969
Selling, general
and administrative
expenses 329,916 -- 329,916
Asset impairment
charges 164 -- 164
Depreciation
and amortization 41,920 -- 41,920
----------- ----------- -----------
Operating income 69,925 5,044 74,969
Interest expense
(income), net 22 -- 22
---------- ----------- -----------
Income before
income taxes and
extraordinary gain 69,903 5,044 74,947
Provision for
income taxes 26,912 1,942 28,854
---------- ---------- -----------
Income before
extraordinary gain 42,991 3,102 46,093
Extraordinary
gain (net of
taxes(c) 273 (273) 0
---------- ---------- -----------
Net income $ 43,264 $ 2,829 $ 46,093
========== =========== ===========
Basic income per
share $ 1.61 $ 0.10 $ 1.71
Basic weighted
average number
of shares
outstanding 26,919 26,919 26,919
Diluted income
per share $ 1.57 $ 0.10 $ 1.67
Diluted weighted
average number
of shares
outstanding 27,633 27,633 27,633
(a)This reconciliation of net income to adjusted net income
excludes the effects of any potential corrections to the Company's
lease-related accounting practices in light of a recent SEC
clarification.
(b)The adjustment reverses the higher cost of sales resulting from
the write-up of the acquired Disney Store inventory to its fair value
from the value determined under the retail inventory method for the
inventory that was sold during the 10 weeks ended January 29, 2005.
Approximately $1.2 million fair value inventory write-up remains on
the balance sheet as of January 29, 2005. The Company expects this
remaining balance will be recorded as a cost of sales during the first
quarter of fiscal 2005 as the remaining acquired inventory is sold.
(c) The extraordinary gain represents the fair value of assets
acquired and liabilities assumed in excess of amounts paid to acquire
the Disney Store North America.
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS(a)
(In thousands)
(Unaudited)
January 29, 2005 January 31, 2004
------------------ ------------------
Current assets:
Cash and cash equivalents $ 165,196 $ 74,772
Accounts receivable 23,987 8,462
Inventories 161,970 96,128
Other current assets 40,427 20,070
------------------ ------------------
Total current assets 391,580 199,432
Property and equipment, net 153,140 146,707
Other assets, net 12,350 13,527
------------------ ------------------
Total assets $ 557,070 $ 359,666
================== ==================
Current liabilities:
Revolving credit facility $ 37,268 $ 0
Accounts payable 78,106 35,173
Accrued expenses and
other current liabilities 100,657 49,984
------------------ ------------------
Total current liabilities 216,031 85,157
Other liabilities 28,472 17,504
------------------ ------------------
Total liabilities 244,503 102,661
Stockholders' equity 312,567 257,005
------------------ ------------------
Total liabilities and
stockholders' equity $ 557,070 $ 359,666
================== ==================
(1)These condensed balance sheets exclude the effects of any
potential corrections to the Company's lease-related accounting
practices in light of a recent SEC clarification.
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