<PAGE> 1
UNITED STATES
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 August 2, 1997
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-7258
CHARMING SHOPPES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-1721355
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 WINKS LANE BENSALEM, PA 19020
(Address of principal executive offices) (Zip Code)
(215) 245-9100
(Registrant's telephone number, including Area Code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports re-
quired 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 ( )
The number of shares outstanding of the issuer's Common Stock, as of August
2, 1997, was 105,960,697 shares.
<PAGE> 2
CHARMING SHOPPES, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)
August 2, 1997 and February 1, 1997........................... 1-2
Condensed Consolidated Statements of Operations (Unaudited)
Thirteen weeks ended August 2, 1997 and August 3, 1996........ 3
Condensed Consolidated Statements of Operations (Unaudited)
Twenty-six weeks ended August 2, 1997 and August 3, 1996...... 4
Condensed Consolidated Statements of Cash Flows (Unaudited)
Twenty-six weeks ended August 2, 1997 and August 3, 1996...... 5
Notes to Condensed Consolidated Financial Statements (Unaudited). 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............................8-12
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders........ 13
Item 6. Exhibits and Reports on Form 8-K........................... 14
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CHARMING SHOPPES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
August 2, February 1,
(In thousands) 1997 1997
---- ----
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents............................$ 37,583 $ 78,979
Available-for-sale securities(including fair
value adjustments of $0 and ($2), respectively).... 56,289 55,856
Income tax refund receivable......................... 1,572 3,836
Merchandise inventories.............................. 200,549 193,977
Deferred taxes....................................... 3,277 3,277
Prepayments and other................................ 36,309 30,301
-------- --------
Total current assets................................. 335,579 366,226
Property, equipment and leasehold improvements....... 443,005 438,933
Less: accumulated depreciation and amortization...... 256,164 238,539
-------- --------
Net property, equipment and leasehold improvements... 186,841 200,394
Available-for-sale securities (including fair
value adjustments of $109 and $220, respectively) 186,975 119,975
Other assets......................................... 21,055 23,802
-------- --------
Total assets.........................................$730,450 $710,397
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
(1)
<PAGE> 4
CHARMING SHOPPES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
August 2, February 1,
(In thousands except shares) 1997 1997
---- ----
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable.....................................$ 65,884 $ 55,501
Accrued expenses..................................... 88,865 84,226
Accrued restructuring expenses....................... 2,202 2,339
Current portion -- long-term debt.................... 16 16
-------- --------
Total current liabilities............................ 156,967 142,082
Deferred taxes....................................... 9,152 9,152
Long-term debt....................................... 138,124 138,128
Stockholders' equity
Common Stock $.10 par value
Authorized 300,000,000 shares
Issued and outstanding 105,960,697 and
105,470,251 shares................................ 10,596 10,547
Additional paid-in capital........................... 63,522 62,818
Deferred employee compensation....................... (1,466) (1,444)
Unrealized gains on available-for-sale
securities (net of income tax
expense of $20 and $59, respectively)............. 89 159
Retained earnings.................................... 353,466 348,955
-------- --------
Total stockholders' equity........................... 426,207 421,035
-------- --------
Total liabilities and stockholders' equity...........$730,450 $710,397
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
(2)
<PAGE> 5
CHARMING SHOPPES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
(In thousands except share and August 2, August 3,
per-share amounts) 1997 1996
---- ----
<S> <C> <C>
Net sales..........................................$265,696 $266,678
Other income....................................... 3,675 1,571
-------- --------
Total revenue...................................... 269,371 268,249
-------- --------
Cost of goods sold, buying and occupancy expenses.. 198,322 204,601
Selling, general and administrative expenses....... 58,411 61,624
Interest expense................................... 2,559 1,606
-------- --------
Total expenses..................................... 259,292 267,831
-------- --------
Income before income taxes......................... 10,079 418
Income tax provision............................... 3,226 114
-------- --------
Net income.........................................$ 6,853 $ 304
======== ========
Per-share data
Net income......................................... $ .06 $ .00
====== ======
Weighted average number of common shares
and equivalents outstanding..................107,319,834 107,018,245
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
(3)
<PAGE> 6
CHARMING SHOPPES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Twenty-six Weeks Ended
(In thousands except share and August 2, August 3,
per-share amounts) 1997 1996
---- ----
<S> <C> <C>
Net sales..........................................$501,384 $504,132
Other income....................................... 7,068 2,090
-------- --------
Total revenue...................................... 508,452 506,222
-------- --------
Cost of goods sold, buying and occupancy expenses.. 381,273 388,723
Selling, general and administrative expenses....... 115,266 121,024
Interest expense................................... 5,180 4,494
-------- --------
Total expenses..................................... 501,719 514,241
-------- --------
Income (loss) before income taxes.................. 6,733 (8,019)
Income tax provision (benefit)..................... 2,222 (2,165)
-------- --------
Net income (loss)..................................$ 4,511 $ (5,854)
======== ========
Per-share data
Net income (loss).................................. $ .04 $ (.06)
====== ======
Weighted average number of common shares
and equivalents outstanding..................107,247,549 105,264,041
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
(4)
<PAGE> 7
CHARMING SHOPPES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Twenty-six Weeks Ended
August 2, August 3,
(In thousands) 1997 1996
---- ----
<S> <C> <C>
Operating activities
Net income (loss)...................................$ 4,511 $ (5,854)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization.................... 20,080 21,515
Amortization of deferred compensation expense.... 384 1,927
Gain from disposition of capital assets.......... (1,064) 0
Gain on sale of available-for-sale securities.... (97) 0
Changes in operating assets and liabilities:
Income tax refund receivable.................. 2,303 53,370
Prepayments and other......................... (6,359) 17,527
Merchandise inventories....................... (6,572) 5,795
Accounts payable.............................. 10,383 20,723
Accrued expenses.............................. 4,639 (668)
Accrued restructuring expenses................ (137) (14,221)
-------- --------
Net cash provided by operating activities........... 28,071 100,114
-------- --------
Investing activities
Investment in capital assets........................ (5,402) (3,881)
Proceeds from sales of capital assets............... 2,414 0
Proceeds from sales of available-for-sale securities 125,281 20,118
Gross purchases of available-for-sale securities....(192,696) (22,275)
Decrease in other assets............................ 242 507
-------- --------
Net cash used in investing activities............... (70,161) (5,531)
-------- --------
Financing activities
Proceeds from exercise of stock options............. 698 3,555
Reduction of long-term borrowings................... (4) (93,825)
Proceeds from short-term borrowings................. 0 539,702
Reduction of short-term borrowings.................. 0 (539,702)
Proceeds from long-term borrowings.................. 0 133,860
Reduction of restricted cash........................ 0 7,000
-------- --------
Net cash provided by financing activities........... 694 50,590
-------- --------
(Decrease) increase in cash and cash equivalents.... (41,396) 145,173
Cash and cash equivalents, beginning of period...... 78,979 25,117
-------- --------
Cash and cash equivalents, end of period............$ 37,583 $170,290
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
(5)
<PAGE> 8
CHARMING SHOPPES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Condensed Consolidated Financial Statements
The condensed consolidated balance sheet as of August 2, 1997 and the
condensed consolidated statements of operations and cash flows for the
thirteen and twenty-six week periods ended August 2, 1997 and August 3,
1996 have been prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring adjust-
ments) necessary to present fairly the financial position at August 2, 1997
and the results of operations and cash flows for the thirteen and twenty-
six week periods ended August 2, 1997 and August 3, 1996 have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted ac-
counting principles have been condensed or omitted. These condensed
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's February
1, 1997 Annual Report on Form 10-K. The results of operations for the
thirteen and twenty-six week periods ended August 2, 1997 and August 3,
1996 are not necessarily indicative of operating results for the full
fiscal year.
2. Stockholders' Equity
During the twenty-six weeks ended August 2, 1997, stockholders' equity
changed as a result of the following items: net income of $4,511,000; an
increase in common stock and additional paid-in capital of $849,000 from
the exercise of options for Common Stock; a decrease in paid-in capital of
$502,000 from shares of Common Stock tendered by employees in payment of
payroll taxes due from the exercise of stock options; amortization of
deferred compensation expense of $384,000; and unrealized losses on
available-for-sale securities of $70,000 (net of income tax benefit of
$39,000).
3. Per-Share Data
Net income per share is based on the weighted average number of shares
of Common Stock and Common Stock equivalents outstanding during the
periods. Common Stock equivalents are not included in the weighted average
shares outstanding for determining net loss per share for the twenty-six
weeks ended August 3, 1996 as the result would be anti-dilutive.
(6)
<PAGE> 9
CHARMING SHOPPES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In February 1997 the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earn-
ings Per Share." SFAS No. 128 establishes revised standards for reporting
earnings per share. The provisions of SFAS No. 128 are effective for in-
terim and annual periods ending after December 15, 1997, with restatement
of prior periods required. Adoption of SFAS No. 128 will not have a
material impact on the net income (loss) per share as currently reported
for the thirteen and twenty-six week periods ended August 2, 1997 and
August 3, 1996. The Company does not believe the adoption of SFAS No. 128
will have a material impact on the Company's Fiscal 1998 financial state-
ments.
4. Asset Securitization
In June 1996 the FASB issued SFAS No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities."
SFAS No. 125 establishes the accounting for certain financial asset trans-
fers, including securitization transactions. The provisions of SFAS No.
125 are effective for transactions occurring after December 31, 1996, and
are applied prospectively. The adoption of SFAS No. 125 did not have a
material impact on the financial statements for the thirteen and twenty-six
week periods ended August 2, 1997. Based on the anticipated performance of
securitization transactions the Company has undertaken, the Company does
not believe the adoption of the new standard will have a material impact on
the Company's Fiscal 1998 financial statements. However, the Company will
continuously assess the performance of new and existing securitization
transactions as assumptions of cash flows change.
(7)
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains certain forward-looking statements concern-
ing the Company's operations, performance and financial condition, in-
cluding, in particular, certain forward-looking statements regarding store
openings, capital requirements, the level of credit card delinquencies and
other matters. Such forward-looking statements are subject to various
risks and uncertainties that could cause actual results to differ mater-
ially from those indicated in the forward-looking statements due to a
number of factors. Such factors may include, but are not limited to, risks
and uncertainties detailed in the Company's filings with the Securities and
Exchange Commission, including the Company's Annual Report on Form 10-K for
the fiscal year ended February 1, 1997.
RESULTS OF OPERATIONS
The following table sets forth, as a percentage of net sales, certain
items appearing in the Condensed Consolidated Statements of Operations:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
August 2, August 3, August 2, August 3,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales..................... 100.0% 100.0% 100.0% 100.0%
Cost of goods sold, buying
and occupancy expenses..... 74.6 76.7 76.1 77.1
Selling, general and
administrative expenses.... 22.0 23.1 23.0 24.0
Interest expense.............. 1.0 .6 1.0 .9
Income tax provision (benefit) 1.2 .1 .4 (.4)
Net income (loss)............. 2.6 .1 .9 (1.2)
</TABLE>
Thirteen Weeks Ended August 2, 1997 and August 3, 1996
Net sales for the second quarter ended August 2, 1997 ("Fiscal 1998
Second Quarter") were $265,696,000, a 0.4% decrease from $266,678,000 for
the second quarter ended August 3, 1996 ("Fiscal 1997 Second Quarter").
The Company recorded a 3.2% increase in the Fiscal 1998 Second Quarter in
comparable store sales (sales generated by stores in operation during the
same weeks of each period) as compared to the Fiscal 1997 Second Quarter.
The increase in comparable store sales was primarily attributable to in-
creased sales of sportswear and dresses which accounted for 73% of Fiscal
1998 Second Quarter sales and achieved a comparable store sales increase of
5%. In addition, the Fiscal 1998 Second Quarter sales from new stores
opened less than a full year equaled 0.6% of the Fiscal 1997 Second Quarter
(8)
<PAGE> 11
sales. During the period from the beginning of the Fiscal 1997 Second
Quarter to the end of the Fiscal 1998 Second Quarter, the Company closed
102 stores as part of the implementation of its restructuring plan and its
ongoing real estate activities. Sales of these stores equaled 4.0% of
sales for the Fiscal 1997 Second Quarter.
Cost of goods sold, buying and occupancy expenses expressed as a per-
centage of sales decreased 2.1% in the Fiscal 1998 Second Quarter as
compared to the Fiscal 1997 Second Quarter. Cost of goods sold as a
percentage of sales decreased 1.0% in the Fiscal 1998 Second Quarter as
compared to the Fiscal 1997 Second Quarter. The decrease in cost of goods
sold as a percentage of sales resulted primarily from lower merchandise
markdowns as compared to the prior year. Buying and occupancy expenses
expressed as a percentage of sales decreased 1.1% in the Fiscal 1998 Second
Quarter as compared to the Fiscal 1997 Second Quarter. The decrease in
buying and occupancy expenses was due primarily to the elimination of
occupancy expenses for stores closed during the second half of the fiscal
year ended February 1, 1997 ("Fiscal 1997") and a reduction in distribution
center operating expenses.
Selling, general and administrative expenses expressed as a percentage
of sales decreased 1.1% in the Fiscal 1998 Second Quarter as compared to
the Fiscal 1997 Second Quarter. This was primarily attributable to a
reduction in selling expenses resulting from the closing of stores since
the beginning of the Fiscal 1997 Second Quarter and administrative expense
reductions as part of the Company's expense reduction initiative. Selling
expenses for the Fiscal 1998 Second Quarter have continued to be adversely
impacted by high levels of delinquencies within the Company's securitized
proprietary credit card receivables portfolio. However, the effect of such
delinquencies has been partially offset by reduced expenses related to the
servicing of the credit card operations.
Interest expense increased in the Fiscal 1998 Second Quarter as com-
pared to the Fiscal 1997 Second Quarter. The increase resulted from an
increase in the average level of borrowings outstanding. During the Fiscal
1998 Second Quarter the Company had outstanding $138 million of 7.5%
Convertible Subordinated Notes which were issued on July 22, 1996, just
prior to the end of the Fiscal 1997 Second Quarter.
The income tax provision for the Fiscal 1998 Second Quarter was 32% of
the Company's pre-tax income, as compared to a provision of 27% of the pre-
tax income for the Fiscal 1997 Second Quarter.
Twenty-six Weeks Ended August 2, 1997 and August 3, 1996
Net sales for the first half of the year ending January 31, 1998
("Fiscal 1998") were $501,384,000, a 0.6% decrease from $504,132,000 for
the corresponding period of Fiscal 1997. Comparable store sales, however,
increased 4.4% in the first half of Fiscal 1998 as compared to the first
half of Fiscal 1997. Sales for the first half of Fiscal 1998 from new
stores opened since the Fiscal 1997 Second Quarter equaled 0.6% of sales
for the first half of Fiscal 1997. During Fiscal 1997 and the first half
of Fiscal 1998, the Company closed 180 stores as part of the implementation
(9)
<PAGE> 12
of its restructuring plan and its ongoing real estate activities. Sales of
these stores equaled 5.3% of sales for the first half of Fiscal 1997.
Cost of goods sold, buying and occupancy expenses expressed as a
percentage of sales decreased 1.0% in the first half of Fiscal 1998 as
compared to the corresponding period of Fiscal 1997. An increase in cost
of goods sold as a percentage of sales was offset by a decrease of 1.6% in
buying and occupancy expenses as a percentage of sales. The increase in
cost of goods sold resulted primarily from higher merchandise markdowns in
the first quarter of Fiscal 1998 as compared to the same period in Fiscal
1997. This increase was partially offset by a reduced level of markdowns
in the Fiscal 1998 Second Quarter as compared to the same period in Fiscal
1997. The decrease in buying and occupancy expenses was due primarily to
(i) elimination of occupancy expenses for stores closed during Fiscal 1997,
(ii) the reduction in distribution center operating expenses during the
Fiscal 1998 Second Quarter and (iii) savings achieved as part of the
Company's expense reduction initiative.
Selling, general and administrative expenses expressed as a percent-
age of sales decreased 1.0% in the first half of Fiscal 1998 as compared to
the corresponding period of Fiscal 1997. This was primarily attributable to
a reduction in selling expenses resulting from the closing of stores during
Fiscal 1997 and administrative expense reductions as part of the Company's
expense reduction initiative. Selling expenses for the current-year period
have been adversely impacted by high levels of delinquencies within the
Company's securitized proprietary credit card receivables portfolio. How-
ever, the effect of such delinquencies has been partially offset by reduced
expenses related to the servicing of the credit card operations.
Interest expense increased in the first half of Fiscal 1998 as com-
pared to the corresponding period of Fiscal 1997 primarily as a result of
an increase in the average level of borrowings outstanding, which was
partially offset by a lower average interest rate on borrowings outstanding
during the first quarter of Fiscal 1998 as compared to the first quarter of
Fiscal 1997. During Fiscal 1998 the Company had outstanding $138 million
of 7.5% Convertible Subordinated Notes which were issued just prior to the
end of the Fiscal 1997 Second Quarter.
The income tax provision for the first half of Fiscal 1998 was 33% of
the Company's pre-tax income, as compared to a benefit of 27% of the pre-
tax loss for the first half of Fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of working capital are (i) cash flow
from operations, (ii) proprietary credit card receivables securitization
agreements, (iii) its long-term investment portfolio and (iv) its $150 mil-
lion revolving credit facility. As of August 2, 1997 the Company had work-
ing capital of $178,612,000 as compared to $224,144,000 at February 1,
1997. Working capital at August 2, 1997 included $37,583,000 of cash and
(10)
<PAGE> 13
cash equivalents, compared to cash and cash equivalents of $78,979,000 at
February 1, 1997. The ratio of current assets to current liabilities was
2.1 to 1 at August 2, 1997 and 2.6 to 1 at February 1, 1997. The Company
increased its long-term investment portfolio to $186,975,000 as of August
2, 1997, as compared to $119,975,000 as of February 1, 1997.
Net cash provided by operating activities was $28,071,000 for the
first half of Fiscal 1998 as compared to net cash provided by operating
activities of $100,114,000 for the first half of Fiscal 1997. The primary
reasons for the $72,043,000 decrease in cash provided by operations were
(i) a decrease of $51,067,000 in income tax refunds receivable, (ii) an
increase of $22,707,000 in the Company's investment in merchandise inven-
tories, net of accounts payable and (iii) an increase of $23,886,000 in
prepaid and other current assets. These decreases in cash provided by
operations were partially offset by (i) a decrease of $14,084,000 in pay-
ments for accrued restructuring expenses, (ii) an increase of $10,365,000
in the Company's net income and (iii) other net sources of cash of
$1,168,000.
The Company has an agreement with a commercial finance company to
provide a revolving credit facility with a maximum availability of
$150,000,000, subject to limitations based upon eligible inventory. The
primary purpose of this facility, which expires on June 1, 1998, is to
enable the Company to issue letters of credit for overseas purchases of
merchandise as well as to provide for seasonal cash borrowings. This
facility is secured by merchandise inventory, furniture and fixtures in the
retail stores and certain other Company assets. As of August 2, 1997 the
availability under this facility was approximately $106,800,000, against
which the Company had outstanding letters of credit of $40,323,000. There
were no cash borrowings outstanding under this agreement as of August 2,
1997. This agreement requires that, among other things, the Company main-
tain a minimum net worth of $350,000,000 and not pay dividends on its
Common Stock.
Capital expenditures of $5,402,000 during the first half of Fiscal
1998 were primarily for the fixturing of existing retail stores and the
construction and fixturing of five new stores which were opened during the
current year. During Fiscal 1998 the Company anticipates capital expendi-
tures of approximately $20 million, which are intended principally for the
remodeling and fixturing of existing retail stores, construction and fix-
turing of new stores and investment in management information systems
technology. The Company plans to open approximately 25 new stores during
Fiscal 1998. It is anticipated that the funds required for capital expend-
itures will be financed principally through internally generated funds.
As of August 2, 1997 the Company had approximately $2,202,000 of ac-
crued, unpaid restructuring costs, primarily related to severance benefits.
These costs are included in current liabilities, and are expected to be
paid by the end of Fiscal 1998.
(11)
<PAGE> 14
The Company paid no dividends during the first half of Fiscal 1998 or
Fiscal 1997. On October 2, 1995 the Company's Board of Directors announced
an indefinite suspension of dividends on the Company's Common Stock. In
addition, the Company's revolving credit facility requires the Company to
refrain from paying dividends on its Common Stock during the term of such
agreement.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1996 the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities." SFAS No. 125 establishes the accounting for certain finan-
cial asset transfers, including securitization transactions. The provi-
sions of SFAS No. 125 are effective for transactions occurring after
December 31, 1996, and are applied prospectively. The adoption of SFAS No.
125 did not have a material impact on the financial statements for the
thirteen or twenty-six week periods ended August 2, 1997. Based on the
anticipated performance of securitization transactions the Company has
undertaken, the Company does not believe the adoption of the new standard
will have a material impact on the Company's Fiscal 1998 financial state-
ments. However, the Company will continuously assess the performance of
new and existing securitization transactions as assumptions of cash flows
change.
In February 1997 the FASB issued SFAS No. 128, "Earnings Per Share."
SFAS No. 128 establishes revised standards for reporting earnings per
share. The provisions of SFAS No. 128 are effective for interim and annual
periods ending after December 15, 1997, with restatement of prior periods
required. Adoption of SFAS No. 128 will not have a material impact on the
net income (loss) per share as currently reported for the thirteen and
twenty-six week periods ended August 2, 1997 and August 3, 1996. The
Company does not believe the adoption of SFAS No. 128 will have a material
impact on the Company's Fiscal 1998 financial statements.
(12)
<PAGE> 15
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company's Annual Meeting of Shareholders was held on June 19,
1997.
(b) Not applicable.
(c) Marvin L. Slomowitz, Geoffrey W. Levy and Marjorie Margolies-Mezvinsky
were elected to serve three-year terms as Class A Directors of the Company.
The vote tabulation with respect to their election as Directors was as
follows:
<TABLE>
<CAPTION>
Shares
For Withheld Represented
---------- -------- -----------
<S> <C> <C> <C>
Marvin L. Slomowitz................... 80,844,752 1,233,868 82,078,620
Geoffrey W. Levy...................... 81,113,052 965,568 82,078,620
Marjorie Margolies-Mezvinsky.......... 80,977,315 1,101,305 82,078,620
</TABLE>
Proposals to authorize and approve the issuance of shares under the
Non-Employee Directors Compensation Program and the Compensation Program
for the Non-Employee Chairman of the Board of Directors were approved. The
vote tabulation with respect to each proposal was as follows:
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Vote
---------- --------- ------- --------
<S> <C> <C> <C> <C>
Non-Employee Directors
Compensation Program....... 78,830,714 2,397,742 303,202 546,962
Compensation Program for the
Non-Employee Chairman of
the Board of Directors..... 69,275,516 10,783,601 349,784 1,669,719
</TABLE>
(13)
<PAGE> 16
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following is a list of Exhibits filed as part of this Quarterly
Report on Form 10-Q. Where so indicated by footnote, Exhibits which were
previously filed are incorporated by reference. For Exhibits incorporated
by reference, the location of the Exhibit in the previous filing is indi-
cated in parenthesis.
3.1 Restated Articles of Incorporation, incorporated by reference to Form
10-K of the Registrant for the fiscal year ended January 29, 1994.
(Exhibit 3.1)
3.2 Bylaws, as Amended and Restated, incorporated by reference to Form
10-K of the Registrant for the fiscal year ended January 29, 1994.
(Exhibit 3.2)
27 Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended August 2, 1997.
(14)
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
<TABLE>
<S> <C>
CHARMING SHOPPES, INC.
-------------------------------------
(Registrant)
Date: September 12, 1997 DORRIT J. BERN
------------------ -------------------------------------
Dorrit J. Bern
Chairman of the Board
President and Chief Executive Officer
Date: September 12, 1997 ERIC M. SPECTER
------------------ -------------------------------------
Eric M. Specter
Executive Vice President
Chief Financial Officer
</TABLE>
(15)
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<S> <C>
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0
0
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