<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 7, 2000
================================================================================
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 24, 2000
/ / 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 (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
August 7, 2000: 20,312,912 shares.
================================================================================
<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of June 24, 2000 (unaudited)
and September 25, 1999........................................................2
Consolidated Statements of Income (unaudited) for the three
and nine months ended June 24, 2000 and June 26, 1999.........................3
Consolidated Statements of Cash Flows (unaudited) for the three
and nine months ended June 24, 2000 and June 26, 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.............................................................9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..............................................9
</TABLE>
1
<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 24, September 25,
2000 1999
----------- -----------
(unaudited) (audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $ 847,554 $ 2,982,025
Inventories........................................... 13,647,895 11,193,914
Deferred tax assets................................... 2,550,000 2,450,000
Other current assets.................................. 1,974,834 2,454,230
----------- -----------
Total current assets.................................. 19,020,283 19,080,169
Fixed assets, net........................................ 48,006,131 37,028,566
Goodwill, net............................................ 29,825,035 30,446,323
Other assets............................................. 1,611,417 2,013,962
----------- -----------
Total assets............................................. $98,462,866 $88,569,020
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable trade................................ $12,779,505 $11,893,255
Accounts payable other................................ 3,730,552 4,620,881
Accrued payroll and related expense................... 1,819,069 2,338,833
Income and sales taxes payable........................ 2,464,808 1,890,342
Other current liabilities............................. 5,542,806 5,554,516
----------- -----------
Total current liabilities............................. 26,336,740 26,297,827
Notes payable to bank.................................... -- 18,000,000
Deferred rent............................................ 3,181,253 1,991,252
Deferred tax liabilities................................. 2,000,000 1,800,000
Other liabilities........................................ 245,505 442,632
----------- -----------
Total liabilities..................................... 31,763,498 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 - 20,237,680 at June 24, 2000 and 18,310,800 at
September 25, 1999................................. 202,377 183,108
Additional paid-in capital............................ 33,444,819 19,448,073
Deferred compensation................................. (552,000) (660,000)
Notes receivable from officers........................ -- (1,000,000)
Retained earnings..................................... 33,604,172 22,066,128
----------- -----------
Total stockholders' equity............................ 66,699,368 40,037,309
----------- -----------
Total liabilities and stockholders' equity............... $98,462,866 $88,569,020
=========== ===========
</TABLE>
See accompanying notes.
2
<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
-------------------------------- -----------------------------------
JUNE 24, 2000 JUNE 26, 1999 JUNE 24, 2000 JUNE 26, 1999
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Net sales...................................... $ 58,694,969 $ 44,681,803 $ 168,893,946 $ 126,378,315
Cost of goods sold, including buying,
distribution and occupancy costs............ 39,997,003 30,074,967 115,268,447 85,996,435
------------- ------------- -------------- -------------
Gross profit................................... 18,697,966 14,606,836 53,625,499 40,381,880
Selling, general and administrative expenses... 11,071,532 8,585,175 32,679,050 24,743,176
Amortization of goodwill and other
intangibles................................. 223,842 223,842 671,526 671,526
------------- ------------- -------------- -------------
Operating income............................... 7,402,592 5,797,819 20,274,923 14,967,178
Other expenses:
Interest expense, net....................... 22,517 643,812 164,014 2,042,507
Other charges, net.......................... 68,266 66,350 196,028 204,393
------------- ------------- -------------- -------------
Total other expenses........................... 90,783 710,162 360,042 2,246,900
------------- ------------- -------------- -------------
Income before income taxes and extraordinary
item........................................ 7,311,809 5,087,657 19,914,881 12,720,278
Income taxes................................... 2,955,959 2,136,230 8,065,524 5,342,517
------------- ------------- -------------- -------------
Income before extraordinary item............... 4,355,850 2,951,427 11,849,357 7,377,761
Extraordinary loss from early debt
retirement.................................. -- 519,100 311,314 519,100
------------- ------------- -------------- -------------
Net income .................................... $ 4,355,850 $ 2,432,327 $ 11,538,043 $ 6,858,661
============= ============= ============== =============
Basic earnings per share:
Income before extraordinary item............. $ 0.22 $ 0.16 $ 0.59 $ 0.40
============= ============= ============== =============
Net income................................... $ 0.22 $ 0.13 $ 0.58 $ 0.37
============= ============= ============== =============
Diluted earnings per share:
Income before extraordinary item............. $ 0.19 $ 0.14 $ 0.52 $ 0.35
============= ============= ============== =============
Net income................................... $ 0.19 $ 0.11 $ 0.51 $ 0.32
============= ============= ============== =============
Weighted average shares outstanding:
Basic........................................ 20,205,485 18,300,300 20,005,961 18,300,100
============= ============= ============== =============
Diluted...................................... 22,877,255 21,317,300 22,780,011 21,207,100
============= ============= ============== =============
</TABLE>
See accompanying notes.
3
<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
---------------------------------- -----------------------------------
JUNE 24, 2000 JUNE 26, 1999 JUNE 24, 2000 JUNE 26, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Reconciliation of net income to net cash
provided by operating activities:
Net income.................................... $ 4,355,850 $ 2,432,327 $ 11,538,043 $ 6,858,661
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of deferred compensation........ 36,000 -- 108,000 --
Depreciation and amortization................ 1,932,074 1,465,959 5,527,779 4,425,276
Deferred rent................................ 458,031 270,036 1,190,001 725,573
Loss on disposal of asset.................... -- 42,975 -- 60,777
Extraordinary loss from early debt retirement -- 519,100 311,314 519,100
Deferred income taxes........................ 100,000 73,000 100,000 148,000
Changes in operating assets and liabilities:
Inventories.............................. (968,027) 1,601,961 (2,453,981) 1,320,494
Other current assets..................... 31,396 336,211 479,396 644,416
Accounts payable trade................... 135,964 (830,249) 886,250 1,623,575
Accounts payable other................... 1,264,515 66,146 (890,329) (299,909)
Accrued payroll and related expense...... (420,266) (261,658) (519,764) 470,884
Income and sales taxes payable........... 175,592 (783,257) 574,466 (551,787)
Other current liabilities................ (539,368) 1,072,589 176,570 2,273,136
Other liabilities........................ (96,593) 29,218 (81,201) 25,973
------------- ------------- ------------- -------------
Net cash provided by operating activities...... 6,465,168 6,034,358 16,946,544 18,244,169
INVESTING ACTIVITIES
Other assets................................... (86,761) (149,925) 40,993 (347,398)
Purchases of fixed assets...................... (6,351,759) (2,517,896) (15,833,817) (8,114,367)
------------- ------------- ------------- -------------
Net cash used in investing activities.......... (6,438,520) (2,667,821) (15,792,824) (8,461,765)
FINANCING ACTIVITIES
Payments on capital leases..................... (93,430) (103,699) (304,206) (314,787)
Payments on notes payable to bank.............. (700,000) -- (19,700,000) (21,150,000)
Proceeds from notes payable to bank............ -- 7,450,000 1,700,000 22,800,000
Payments on notes payable from related parties. -- (11,000,000) -- (11,000,000)
Funding of notes receivable from officers...... -- (1,120,000) -- (1,120,000)
Repayments of notes receivable from officers... -- 100,000 1,000,000 100,000
Proceeds from issuance of common stock......... 482,515 10,800 14,016,015 10,800
------------- ------------- ------------- -------------
Net cash used in financing activities.......... (310,915) (4,662,899) (3,288,191) (10,673,987)
------------- ------------- ------------- -------------
Net decrease in cash and cash equivalents...... 284,267 1,296,362 2,134,471 891,583
Cash and cash equivalents at beginning of the
period...................................... 1,131,821 1,408,685 2,982,025 1,003,906
------------- ------------- ------------- -------------
Cash and cash equivalents at end of the
period...................................... $ 847,554 $ 112,323 $ 847,554 $ 112,323
============= ============= ============= =============
</TABLE>
See accompanying notes.
4
<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 nine month periods ended June 24, 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 THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
-------------------------------- ----------------------------------
JUNE 24, 2000 JUNE 26, 1999 JUNE 24, 2000 JUNE 26, 1999
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Income before extraordinary item................ $ 4,355,850 $ 2,951,427 $ 11,849,357 $ 7,377,761
============= ============= ============== ==============
Net income...................................... $ 4,355,850 $ 2,432,327 $ 11,538,043 $ 6,858,661
============= ============= ============== ==============
Income before extraordinary item per share:
Basic........................................ $ 0.22 $ 0.16 $ 0.59 $ 0.40
Effect of dilutive securities stock options.. (0.01) (0.01) (0.03) (0.02)
Effect of dilutive securities warrants....... (0.02) (0.01) (0.04) (0.03)
------------- ------------- -------------- --------------
Diluted......................................... $ 0.19 $ 0.14 $ 0.52 $ 0.35
============= ============= ============== ==============
Net income:
Basic........................................ $ 0.22 $ 0.13 $ 0.58 $ 0.37
Effect of dilutive securities stock options.. (0.01) (0.01) (0.03) (0.02)
Effect of dilutive securities warrants....... (0.02) (0.01) (0.04) (0.03)
------------- ------------- -------------- --------------
Diluted......................................... $ 0.19 $ 0.11 $ 0.51 $ 0.32
============= ============= ============== ==============
Weighted average number of shares:
Basic........................................ 20,205,485 18,300,300 20,005,961 18,300,100
Effect of dilutive securities stock options.. 881,724 889,000 952,256 839,000
Effect of dilutive securities warrants....... 1,790,046 2,128,000 1,821,794 2,068,000
------------- ------------- -------------- --------------
Diluted......................................... 22,877,255 21,317,300 22,780,011 21,207,100
============= ============= ============== ==============
</TABLE>
5
<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
ITEM 2. MANAGEMENT'S DICUSSION 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 THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
JUNE 24, 2000 JUNE 26, 1999 JUNE 24, 2000 JUNE 26, 1999
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Net sales...................................... 100.0% 100.0% 100.0% 100.0%
Cost of goods.................................. 68.1 67.3 68.2 68.0
------------- ------------- -------------- -------------
Gross profit................................... 31.9 32.7 31.8 32.0
Selling, general and administrative expenses... 18.9 19.2 19.4 19.6
Amortization of goodwill and other
intangibles................................. 0.4 0.5 0.4 0.6
------------- ------------- -------------- -------------
Operating income............................... 12.6 13.0 12.0 11.8
Interest expense, net.......................... 0.0 1.4 0.1 1.6
Other charges, net............................. 0.1 0.2 0.1 0.2
------------- ------------- -------------- -------------
Income before income taxes and
extraordinary item.......................... 12.5 11.4 11.8 10.0
Income taxes................................... 5.1 4.8 4.8 4.2
------------- ------------- -------------- -------------
Income before extraordinary item............... 7.4 6.6 7.0 5.8
Extraordinary loss from early debt
retirement.................................. 0.0 1.2 0.2 0.4
------------- ------------- -------------- -------------
Net income..................................... 7.4% 5.4% 6.8% 5.4%
============= ============= ============== =============
Number of stores open at the end of period..... 123 85 123 85
============= ============= ============== =============
</TABLE>
6
<PAGE>
THREE MONTHS ENDED JUNE 24, 2000 COMPARED TO THREE MONTHS ENDED JUNE 26, 1999
NET SALES. Net sales increased to $58.7 million from $44.7 million, an increase
of $14.0 million or 31.4% over the same period last year. This increase is
attributable primarily to $13.7 million of net sales for the 11 new stores
opened during the three months ended June 24, 2000, as well as other stores
opened in prior fiscal periods that did not qualify as comparable stores. Our
comparable store sales increased by 0.6% and contributed $0.3 million to the net
sales increase during the three months ended June 24, 2000.
GROSS PROFIT. Gross profit represents net sales less cost of goods sold, which
includes buying, distribution and occupancy costs. Gross profit increased to
$18.7 million from $14.6 million, an increase of $4.1 million or 28.0% 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 31.9% from 32.7%. The decrease in gross profit as a
percentage of net sales was principally due to higher markdown expense,
partially offset by higher initial markups.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased to $11.1 million from $8.6 million, an
increase of $2.5 million or 29.0% 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
18.9% from 19.2%. This decline is primarily due to the leveraging of corporate
expenses over a higher sales base, partially offset by slightly higher store
operating expenses.
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 40.4% 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 June 24, 2000 increased to
$4.4 million from $2.4 million, an increase of $2.0 million or 79.1% 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 and a $0.5 million charge related to early
repayment of the 12.5% subordinated debt in June 1999.
NINE MONTHS ENDED JUNE 24, 2000 COMPARED TO NINE MONTHS ENDED JUNE 26, 1999
NET SALES. Net sales increased to $168.9 million from $126.4 million, an
increase of $42.5 million or 33.6% over the same period last year. This increase
is attributable primarily to $38.4 million of net sales for the 27 new stores
opened during the nine months ended June 24, 2000, as well as other stores
opened in prior fiscal periods that did not qualify as comparable stores. Our
comparable store sales increased 3.4% and contributed $4.1 million to the net
sales increase during the nine months ended June 24, 2000.
GROSS PROFIT. Gross profit represents net sales less cost of goods sold, which
includes buying, distribution and occupancy costs. Gross profit increased to
$53.6 million from $40.4 million, an increase of $13.2 million or 32.8% over the
same period last year. This increase is the result of higher net sales partially
offset by decreased gross profit margins. As a percentage of net sales, gross
profit decreased to 31.8% from 32.0%. The decrease in gross profit as a
percentage of net sales was principally due to higher markdown expense and
higher occupancy expense offset by higher initial markups and lower freight
expense.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased to $32.7 million from $24.7 million, an
increase of $8.0 million or 32.1% 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
19.4% from 19.6%. This decline is primarily due to the leveraging of corporate
expenses over a higher sales base, partially offset by increased marketing
expenses.
7
<PAGE>
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES. Amortization of goodwill and
other intangibles expense of $0.7 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 nine months ended June 24, 2000 increased to
$11.5 million from $6.9 million, an increase of $4.6 million or 68.2% 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 June 24, 2000, we
had approximately $0.8 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 June
24, 2000, we had a working capital deficit of $7.3 million.
Net cash provided by operations was $16.9 million for the nine months
ended June 24, 2000 compared with $18.2 million during the nine months ended
June 26, 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 $15.8 million for the nine
months ended June 24, 2000 compared with $8.5 million in the nine months ended
June 26, 1999. Cash used in investing activities primarily represents capital
expenditures for store openings, store remodeling, and fixtures.
In the nine months ended June 24, 2000 and June 26, 1999, we opened 27
and 11 stores, respectively. During fiscal 2000, we plan to open between 37 to
39 stores including 3 Charlotte's Room stores which are at the early stage of
development and evaluation. We anticipate that total capital expenditures during
fiscal 2000 will approximate $22.0 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 $3.3 million for the nine
months ended June 24, 2000 compared with $10.7 million for the nine months ended
June 26, 1999. Financing activities for the nine months ended June 24, 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 cash generated from operations and funds available
under our revolving credit facility will be sufficient to fund our store
expansion program and working capital requirements for at least the next 12
months.
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.
8
<PAGE>
CHARLOTTE RUSSE HOLDING, INC.
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 June 24, 2000, there was no amount
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.
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.
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<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 7th day
of August, 2000.
CHARLOTTE RUSSE HOLDING, INC.
By: /s/ DANIEL T. CARTER
----------------------------------------------------
Daniel T. Carter
Executive Vice President and Chief Financial Officer
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