<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 8, 2000
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-Q
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/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 25, 2000
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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COMMISSION FILE NUMBER 0-27677
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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 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
May 3, 2000: 20,234,080 shares
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<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
PART I. FINANCIAL INFORMATION
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 25, 2000 (unaudited)
and September 25, 1999........................................................2
Consolidated Statements of Income (unaudited) for the three
and six months ended March 25, 2000 and March 27, 1999........................3
Consolidated Statements of Cash Flows (unaudited) for the three
and six months ended March 25, 2000 and March 27, 1999........................4
Notes to Consolidated Financial Statements....................................5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS....................................................6
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....................9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.............................................................9
ITEM 2. CHANGES IN SECURITIES.........................................................9
ITEM 3. DEFAULTS UPON SENIOR SECURITIES...............................................9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........................9
ITEM 5. OTHER INFORMATION............................................................10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.............................................10
</TABLE>
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<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 25, September 25,
2000 1999
--------- ------------
(unaudited) (audited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents............................. $ 1,131,821 $ 2,982,025
Inventories........................................... 12,679,868 11,193,914
Deferred tax assets................................... 2,550,000 2,450,000
Other current assets.................................. 2,006,229 2,454,230
----------- -----------
Total current assets.................................. 18,367,918 19,080,169
Fixed assets, net........................................ 43,369,113 37,028,566
Goodwill, net............................................ 30,032,131 30,446,323
Other assets............................................. 1,541,402 2,013,962
----------- -----------
Total assets.......................................... $93,310,564 $88,569,020
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable trade................................ $12,643,541 $11,893,255
Accounts payable other................................ 2,466,037 4,620,881
Accrued payroll and related expense................... 2,239,335 2,338,833
Income and sales taxes payable........................ 2,289,216 1,890,342
Other current liabilities............................. 6,182,115 5,554,516
----------- -----------
Total current liabilities............................. 25,820,244 26,297,827
Notes payable to bank.................................... 700,000 18,000,000
Deferred rent............................................ 2,723,222 1,991,252
Deferred tax liabilities................................. 1,900,000 1,800,000
Other liabilities........................................ 342,096 442,632
----------- -----------
Total liabilities..................................... 31,485,562 48,531,711
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 -
20,136,980 at March 25, 2000 and 18,310,800 at
September 25, 1999................................. 201,370 183,108
Additional paid-in capital............................ 32,963,311 19,448,073
Deferred compensation................................. (588,000) (660,000)
Notes receivable from officers........................ -- (1,000,000)
Retained earnings..................................... 29,248,321 22,066,128
----------- -----------
Total stockholders' equity............................ 61,825,002 40,037,309
----------- -----------
Total liabilities and stockholders' equity............... $93,310,564 $88,569,020
=========== ===========
</TABLE>
See accompanying notes.
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<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------------- ---------------------------------
MARCH 25, MARCH 27, MARCH 25, MARCH 27,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales...................................... $47,267,889 $35,689,161 $110,198,977 $81,696,512
Cost of goods sold, including buying,
distribution and occupancy costs............ 33,648,362 25,063,963 75,271,444 55,921,466
------------ ------------ ------------ ------------
Gross profit................................... 13,619,527 10,625,198 34,927,533 25,775,046
Selling, general and administrative expenses... 9,691,692 7,617,547 21,607,518 16,158,013
Amortization of goodwill and other
intangibles................................. 223,842 223,842 447,684 447,684
------------ ------------ ------------ ------------
Operating income............................... 3,703,993 2,783,809 12,872,331 9,169,349
Other expenses:
Interest income(expense), net............... 54,627 (634,160) (141,497) (1,399,695)
Other charges, net.......................... (62,500) (73,673) (127,762) (137,043)
------------ ------------ ------------ ------------
Total other expenses........................... (7,873) (707,833) (269,259) (1,536,738)
------------ ------------ ------------ ------------
Income before income taxes and extraordinary
item, net of income taxes................... 3,696,120 2,075,976 12,603,072 7,632,611
Income taxes................................... 1,413,180 871,910 5,109,565 3,205,277
------------ ------------ ------------ ------------
Income before extraordinary item............... 2,282,940 1,204,066 7,493,507 4,427,334
Extraordinary loss from early debt
retirement.................................. -- -- 311,314 --
------------ ------------ ------------ ------------
Net income..................................... $2,282,940 $1,204,066 $7,182,193 $4,427,334
============ ============ ============ ============
Basic earnings per share:
Income before extraordinary item............. $0.11 $0.07 $0.37 $0.24
============ ============ ============ ============
Net income................................... $0.11 $0.07 $0.36 $0.24
============ ============ ============ ============
Diluted earnings per share:
Income before extraordinary item............. $0.10 $0.06 $0.33 $0.21
============ ============ ============ ============
Net income................................... $0.10 $0.06 $0.32 $0.21
============ ============ ============ ============
Weighted average shares outstanding:
Basic........................................ 20,136,980 18,300,000 19,906,199 18,300,000
============ ============ ============ ============
Diluted...................................... 22,958,420 21,152,000 22,770,058 21,152,000
============ ============ ============ ============
</TABLE>
See accompanying notes.
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<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------------- ---------------------------------
MARCH 25, MARCH 27, MARCH 25, MARCH 27,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Reconciliation of net income to net cash
provided by (used in) operating activities:
Net income.................................... $2,282,940 $1,204,066 $7,182,193 $4,427,334
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Amortization of deferred compensation........ 36,000 -- 72,000 --
Depreciation and amortization................ 1,841,563 1,449,311 3,589,193 2,747,674
Deferred rent................................ 383,979 226,816 731,970 455,537
Loss on disposal of asset.................... -- 17,802 -- 17,802
Extraordinary loss from early debt retirement -- -- 532,160 --
Deferred income taxes........................ -- 75,000 -- 75,000
Changes in operating assets and liabilities:
Inventories.............................. (3,324,905) (2,646,995) (1,485,954) (281,467)
Other current assets..................... 996,057 280,501 448,001 328,207
Accounts payable trade................... 2,829,277 3,004,057 750,286 2,453,824
Accounts payable other................... 1,543,844 (474,475) (2,154,844) (366,055)
Accrued payroll and related expense...... 773,507 607,595 (99,498) 732,542
Income and sales taxes payable........... (3,772,231) (2,543,414) 398,874 231,470
Other current liabilities................ (3,532,559) 211,660 722,449 1,200,546
Other liabilities........................ 119,097 7,944 15,390 (4,246)
------------ ------------ ------------ ------------
Net cash provided by operating activities...... 176,569 1,419,868 10,702,220 12,018,168
INVESTING ACTIVITIES
Other assets................................... (141,775) 8,880 (93,092) (5,830)
Purchases of fixed assets...................... (3,428,284) (1,530,945) (9,482,056) (5,596,471)
------------ ------------ ------------ ------------
Net cash used in investing activities.......... (3,570,059) (1,522,065) (9,575,148) (5,602,301)
FINANCING ACTIVITIES
Payments on capital leases..................... (103,394) (92,816) (210,776) (211,088)
Payments on notes payable to bank.............. -- (6,200,000) (19,000,000) (7,300,000)
Proceeds from notes payable to bank............ 700,000 1,000,000 1,700,000 1,500,000
Repayments of notes receivable from officers... -- -- 1,000,000 --
Proceeds from issuance of common stock......... -- -- 13,533,500 --
------------ ------------ ------------ ------------
Net cash provided by (used in) financing
activities.................................. 596,606 (5,292,816) (2,977,276) (6,011,088)
------------ ------------ ------------ ------------
Net (decrease) increase in cash and cash
equivalents................................. (2,796,884) (5,395,013) (1,850,204) 404,779
Cash and cash equivalents at beginning of the
period...................................... 3,928,705 6,803,698 2,982,025 1,003,906
------------ ------------ ------------ ------------
Cash and cash equivalents at end of the
period...................................... $1,131,821 $1,408,685 $1,131,821 $1,408,685
============ ============ ============ ============
</TABLE>
See accompanying notes.
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<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements of Charlotte
Russe Holding, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain
information and footnote disclosures required by generally accepted accounting
principles for complete financial statements have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
In the opinion of management, the accompanying unaudited financial statements
contain all material adjustments, consisting of normal recurring accruals,
necessary to present fairly the Company's financial position, results of
operations and cash flows for the periods indicated, and have been prepared in a
manner consistent with the audited financial statements as of September 25,
1999.
Due to the seasonal nature of the Company's business, the results of
operations for the three and six month periods ended March 25, 2000 are not
necessarily indicative of the results of a full fiscal year.
These financial statements should be read in conjunction with the audited
financial statements and the footnotes for the fiscal year ended September 25,
1999 included in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
2. RECLASSIFICATIONS
Certain amounts in prior year financial statements have been reclassified
to conform with the fiscal 2000 presentation.
3. NET INCOME PER COMMON SHARE
In accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share", the following table reconciles income and share amounts
utilized to calculate basic and diluted net income per common share.
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------------- ---------------------------------
MARCH 25, MARCH 27, MARCH 25, MARCH 27,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income before extraordinary item............... $2,282,940 $1,204,066 $7,493,507 $4,427,334
============ ============ ============ ============
Net income..................................... $2,282,940 $1,204,066 $7,182,193 $4,427,334
============ ============ ============ ============
Income before extraordinary item per share:
Basic....................................... $0.11 $0.07 $0.37 $0.24
Effect of dilutive securities stock options. - - (0.01) (0.01)
Effect of dilutive securities warrants...... (0.01) (0.01) (0.03) (0.02)
------------ ------------ ------------ ------------
Diluted..................................... $0.10 $0.06 $0.33 $0.21
============ ============ ============ ============
Net income:
Basic....................................... $0.11 $0.07 $0.36 $0.24
Effect of dilutive securities stock options. - - (0.01) (0.01)
Effect of dilutive securities warrants...... (0.01) (0.01) (0.03) (0.02)
------------ ------------ ------------ ------------
Diluted..................................... $0.10 $0.06 $0.32 $0.21
============ ============ ============ ============
Weighted average number of shares:
Basic....................................... 20,136,980 18,300,000 19,906,199 18,300,000
Effect of dilutive securities stock options. 990,918 814,000 985,306 814,000
Effect of dilutive securities warrants...... 1,830,522 2,038,000 1,878,533 2,038,000
------------ ------------ ------------ ------------
Diluted..................................... 22,958,420 21,152,000 22,770,058 21,152,000
============ ============ ============ ============
</TABLE>
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
We have made statements in this Quarterly Report, that are forward-looking
statements. You can identify these statements by forward-looking words such as
"may," "will," "expect," "intend," "anticipate," "believe," "estimate" and
"continue" or similar words. These forward-looking statements may also use
different phrases. We have based these forward-looking statements on our current
expectations and projections about future events. These forward-looking
statements, which are subject to certain risks, uncertainties, and assumptions
about us, may include, among other things, projections of our future results of
operations or of our financial condition, our anticipated growth strategies,
general and regional economic conditions, industry trends, consumer demands and
preferences, competition from other retailers and uncertainties generally
associated with women's apparel and accessory retailing.
There may be events in the future that we are not able to accurately
predict, or which we do not fully control, that could cause actual results to
differ materially from those expressed or implied in our forward-looking
statements. Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause results to differ
materially from those expressed or implied by these forward-looking statements,
including shopping mall traffic and shopping patterns, timing of openings for
new shopping malls or our stores, fashion trends, national or regional economic
influences, and weather. A description of these factors, as well as others that
could affect the Company's business, is set forth in the Company's Form 10-K for
the fiscal year ended September 25, 1999 which should be read in conjunction
with this Quarterly Report.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this Quarterly Report might not occur.
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Financial Statements and Notes
thereto of the Company included elsewhere in this Form 10-Q. The following table
sets forth our operating results, expressed as a percentage of sales, and store
information for the periods indicated. These operating results are not
necessarily indicative of the results that may be expected for any future
period.
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------------- ---------------------------------
MARCH 25, MARCH 27, MARCH 25, MARCH 27,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales..................................... 100.0% 100.0% 100.0% 100.0%
Cost of goods sold............................ 71.2 70.2 68.3 68.5
------------ ------------ ------------ ------------
Gross profit.................................. 28.8 29.8 31.7 31.5
Selling, general and administrative expenses.. 20.5 21.4 19.6 19.8
Amortization of goodwill and other
intangibles................................ 0.5 0.6 0.4 0.5
------------ ------------ ------------ ------------
Operating income.............................. 7.8 7.8 11.7 11.2
Interest income (expense), net................ 0.0 (1.8) (0.1) (1.7)
Other charges, net............................ 0.0 (0.2) (0.1) (0.2)
------------ ------------ ------------ ------------
Income before income taxes and
extraordinary item......................... 7.8 5.8 11.5 9.3
Income taxes.................................. 3.0 2.4 4.7 3.9
------------ ------------ ------------ ------------
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Income before extraordinary item.............. 4.8 3.4 6.8 5.4
Extraordinary loss from early debt
retirement................................. 0.0 0.0 0.3 0.0
------------ ------------ ------------ ------------
Net income.................................... 4.8% 3.4% 6.5% 5.4%
============ ============ ============ ============
Number of stores open at end of period........ 112 82 112 82
============ ============ ============ ============
</TABLE>
THREE MONTHS ENDED MARCH 25, 2000 COMPARED TO THREE MONTHS ENDED MARCH 27, 1999
NET SALES. Net sales increased to $47.3 million from $35.7 million, an increase
of $11.6 million or 32.4% over the same period last year. This increase is
attributable primarily to $10.6 million of net sales for the three new stores
opened during the three months ended March 25, 2000, as well as other stores
opened in prior fiscal periods that did not qualify as comparable stores. Our
comparable store sales increased by 3.0% and contributed $1.0 million to the net
sales increase during the three months ended March 25, 2000.
GROSS PROFIT. Gross profit represents net sales less cost of goods sold, which
includes buying, distribution and occupancy costs. Gross profit increased to
$13.6 million from $10.6 million, an increase of $3.0 million or 28.2% over the
same period last year. This increase is the result of higher net sales partially
offset by decreased gross profit margin. As a percentage of net sales, gross
profit decreased to 28.8% from 29.8%. The decrease in gross profit as a
percentage of net sales was principally due to higher occupancy expense and
slightly higher markdown expense, partially offset by higher initial markups and
lower freight expense.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased to $9.7 million from $7.6 million, an increase
of $2.1 million or 27.2% over the same period last year. This increase is
attributable to new store expansion and increased corporate expenses. As a
percentage of sales, selling, general and administration expenses decreased to
20.5% from 21.4%. This decline is primarily due to the leveraging of corporate
expenses over a higher sales base.
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES. Amortization of goodwill and
other intangibles expense of $0.2 million is consistent with the same period
last year.
INCOME TAXES. The effective tax rate of 38.2% compares to an effective tax rate
of 42.0% for the same period of the prior year. Our effective tax rate exceeds
statutory tax rates due to non-deductible amortization of goodwill associated
with the acquisition of the business in September 1996. Since amortization is a
fixed amount, increases in pre-tax earnings reduce the effect of this tax
difference as a percentage of pre-tax earnings.
NET INCOME. Net income for the three months ended March 25, 2000 increased to
$2.3 million from $1.2 million, an increase of $1.1 million or 89.6% over the
same period last year. This increase was primarily due to an increase in gross
profit and lower interest expense, partially offset by an increase in selling,
general and administrative expenses.
SIX MONTHS ENDED MARCH 25, 2000 COMPARED TO SIX MONTHS ENDED MARCH 27, 1999
NET SALES. Net sales increased to $110.2 million from $81.7 million, an increase
of $28.5 million or 34.9% over the same period last year. This increase is
attributable primarily to $24.7 million of net sales for the 16 new stores
opened during the six months ended March 25, 2000, as well as other stores
opened in prior fiscal periods that did not qualify as comparable stores. Our
comparable store sales increased 4.9% and contributed $3.8 million to the net
sales increase during the six months ended March 25, 2000.
GROSS PROFIT. Gross profit represents net sales less cost of goods sold, which
includes buying, distribution and occupancy costs. Gross profit increased to
$34.9 million from $25.8 million, an increase of $9.1 million or 35.5% over the
same period last year. This increase is the result of higher net sales and
improved gross profit margins. As a percentage of net sales, gross profit rose
to 31.7% from
-7-
<PAGE>
31.5%. The increase in gross profit as a percentage of net sales was principally
due to lower freight expense and higher initial markups, partially offset by
higher occupancy expense.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased to $21.6 million from $16.2 million, an
increase of $5.4 million or 33.7% over the same period last year. This increase
is attributable to new store expansion and increased corporate expenses. As a
percentage of sales, selling, general and administration expenses decreased to
19.6% from 19.8%. This decline is primarily due to the leveraging of corporate
expenses over a higher sales base.
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES. Amortization of goodwill and
other intangibles expense of $0.4 million is consistent with the same period
last year.
INCOME TAXES. The effective tax rate of 40.5% compares to an effective tax rate
of 42.0% for the same period of the prior year. Our effective tax rate exceeds
statutory tax rates due to non-deductible amortization of goodwill associated
with the acquisition of the business in September 1996. Since amortization is a
fixed amount, increases in pre-tax earnings reduce the effect of this tax
difference as a percentage of pre-tax earnings.
NET INCOME. Net income for the six months ended March 25, 2000 increased to $7.2
million from $4.4 million, an increase of $2.8 million or 62.2% over the prior
fiscal year. This increase was primarily due to an increase in gross profit and
lower interest expense, partially offset by an increase in selling, general and
administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
Our capital requirements result primarily from capital expenditures related
to new store openings. We have historically satisfied our cash requirements
principally through cash flow from operations. At March 25, 2000, we had
approximately $1.1 million of cash and cash equivalents on hand. Due to the
rapid turnover of our inventory, we generate trade payables and other accrued
liabilities sufficient to offset our working capital requirements. As of March
25, 2000, we had a working capital deficit of $7.5 million.
Net cash provided by operations was $10.7 million for the six months ended
March 25, 2000 compared with $12.0 million during the six months ended March 27,
1999. Cash flows from operating activities for the period was primarily
generated by income from operations and changes in working capital account
balances.
Net cash used in investing activities was $9.6 million for the six months
ended March 25, 2000 compared with $5.6 million in the six months ended March
27, 1999. Cash used in investing activities primarily represents capital
expenditures for store openings, store remodeling, and fixtures.
In the six months ended March 25, 2000 and March 27, 1999, we opened 16 and
eight stores, respectively. During fiscal 2000, we plan to open between 32 to 34
Charlotte Russe and Rampage stores. We anticipate that total capital
expenditures during fiscal 2000 will approximate $21.0 million. We plan to fund
these expenditures with cash flows from operations and from borrowings under the
$15.0 million revolving credit facility, as may be required.
Net cash used by financing activities was $3.0 million for the six months
ended March 25, 2000 compared with $6.0 million for the six months ended March
27, 1999. Financing activities for the six months ended March 25, 2000 primarily
represent the proceeds of $13.5 million from our initial public offering and the
repayment of the $18.0 million balance of our revolving credit facility.
We believe that anticipated cash flow from operations and funds anticipated
to be available under our revolving credit facility, will be sufficient to fund
our store expansion program and working capital requirements through at least
fiscal 2000.
-8-
<PAGE>
YEAR 2000 UPDATE
As described in our Form 10-K for the fiscal year ended September 25, 1999,
we had developed plans to address the possible exposures related to the impact
on our computer systems of the Year 2000. Since entering the year 2000, we have
not experienced any major disruptions to our business nor are we aware of any
significant Year 2000-related disruptions impacting our vendors. We will
continue to monitor our critical systems over the next several months but we do
not anticipate any significant impact due to Year 2000 exposures from our
internal systems or from the activities or our suppliers and customers. If we,
or any third parties with whom we have a material relationship, were to suffer
adverse effects of the change from 1999 to 2000, now or in the coming months, we
may be temporarily prevented from operating any or all aspects of our business
in the ordinary course.
INFLATION
We do not believe that inflation has had a material adverse impact on our
business or operating results during the periods presented. There can be no
assurance, however, that our business will not be affected by inflation in the
future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our market risks relate primarily to changes in interest rates. We borrow
money, when necessary, on a revolving basis under our $15.0 million revolving
credit facility to fund capital expenditures and other working capital needs.
Our revolving credit facility carries a variable interest rate pegged to market
indices and, therefore, our statement of income and our cash flows may be
impacted by changes in interest rates. As of March 25, 2000, a total of $0.7
million was outstanding under the revolving credit facility.
Another component of interest rate risk involves the short-term investment
of excess cash in short-term, investment-grade interest-bearing securities.
These are considered to be cash equivalents and are shown that way on our
balance sheet. Changes in interest rates affect the investment income we earn on
our investments and, therefore, impact our cash flows and results of operations.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company may be involved in litigation relating to
claims arising out of its operations. As of the date of this filing, the Company
is not engaged in any legal proceedings that are expected, individually or in
the aggregate, to have a material adverse effect on the Company's business,
financial condition or results of operations.
ITEM 2. CHANGES IN SECURITIES
UNREGISTERED SALES OF SECURITIES
None.
DIVIDENDS
We have never declared nor paid dividends on our common stock and we do not
intend to pay any dividends on our common stock in the foreseeable future. We
currently intend to retain earnings to finance future operations and expansions.
Moreover, under the terms of our revolving credit facility, dividends,
distributions and capital stock redemptions are restricted to $5.0 million or
less in any fiscal year, of which up to $2.5 million may be cash dividends paid
on a non-cumulative basis.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
-9-
<PAGE>
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
(27.1) Financial Data Schedule
(b) Reports on Form 8-K
No reports were filed on Form 8-K during the quarter for which this report
is filed.
-10-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Quarterly Report on Form 10-Q to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of San Diego, State of California, on the 8th day of May, 2000.
CHARLOTTE RUSSE HOLDING, INC.
By: /s/ DANIEL T. CARTER
----------------------------------------------------
Daniel T. Carter
Executive Vice President and Chief Financial Officer
-11-
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<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> DEC-26-1999
<PERIOD-END> MAR-25-2000
<CASH> 1,131,821
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 12,679,868
<CURRENT-ASSETS> 18,367,918
<PP&E> 56,285,991
<DEPRECIATION> 12,916,878
<TOTAL-ASSETS> 93,310,564
<CURRENT-LIABILITIES> 25,820,244
<BONDS> 0
0
0
<COMMON> 201,370
<OTHER-SE> 61,623,632
<TOTAL-LIABILITY-AND-EQUITY> 93,310,564
<SALES> 47,267,889
<TOTAL-REVENUES> 0
<CGS> 33,648,362
<TOTAL-COSTS> 9,915,534
<OTHER-EXPENSES> 62,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (54,627)
<INCOME-PRETAX> 3,696,120
<INCOME-TAX> 1,413,180
<INCOME-CONTINUING> 2,282,940
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,282,940
<EPS-BASIC> .11
<EPS-DILUTED> .10
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