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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) August 20, 2002
Charming Shoppes, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Pennsylvania
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(State or Other Jurisdiction of Incorporation)
000-07258 23-1721355
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(Commission File Number) (I.R.S. Employer Identification No.)
450 Winks Lane
Bensalem, Pennsylvania 19020
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(Address of Principal Executive Offices) (Zip Code)
(215) 245-9100
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events and Regulation FD Disclosure
On August 20, 2002, Charming Shoppes, Inc. (the "Company") issued a
press release announcing its second quarter earnings results. The following is
an excerpt of financial information included in the text of the release:
Charming Shoppes, Inc. Reports Second Quarter Earnings Results
Bensalem, PA., August 20, 2002 - Charming Shoppes, Inc. (NASDAQ:CHRS) the retail
apparel chain specializing in women's plus-size apparel, today reported earnings
and sales for the second quarter ended August 3, 2002. The Company has also
announced the recording of the cumulative effect of an accounting change related
to the adoption of FAS 142, "Goodwill and Other Intangible Assets."
For the three months ended August 3, 2002, net income increased 72% to
$25,549,000 or $0.20 per diluted share, compared to net income of $14,860,000 or
$0.14 per diluted share for the corresponding period last year.
Sales for the quarter ended August 3, 2002 increased 59% to $638,307,000,
compared to sales of $402,700,000 during the corresponding period of the prior
year. The current period's total sales include sales from Lane Bryant, which was
acquired August 16, 2001. Comparable store sales for the corporation increased
1% for the quarter ended August 3, 2002.
Net income for the six months ended August 3, 2002 increased 80% to $41,860,000
or $0.33 per diluted share, before the cumulative effect of an accounting
change, as described below. This compares to net income of $23,228,000 or $0.22
per diluted share for the corresponding period last year.
Related to the adoption of FAS 142, "Goodwill and Other Intangible Assets", the
Company has recorded a cumulative effect of an accounting change in the amount
of $43,975,000, or $0.33 per diluted share, effective as of the beginning of the
current fiscal year. Net loss after the cumulative effect of an accounting
change was $2,115,000 or $0.00 per diluted share for the six months ended August
3, 2002. The non-cash charge represents the write-down of goodwill related to
the acquisition of the Catherines Stores Corporation on January 7, 2000. The
majority of the write-down is attributable to the value of unrecorded
trademarks.
Sales for the six months ended August 3, 2002 increased 59% to $1,268,923,000,
compared to sales of $797,461,000 during the corresponding period of the prior
year. The current period's total sales include sales from Lane Bryant, which was
acquired August 16, 2001. Comparable store sales for the corporation were flat
for the six months ended August 3, 2002.
During the quarter, the Company repurchased 2.7 million shares of its common
stock for approximately $18.3 million, and ended the quarter with approximately
122.3 million outstanding common shares.
The Company has reaffirmed earnings per share projections for the second half of
fiscal 2003, with comparable store sales for the third and fourth quarters
projected in the positive low single digits. Based on these sales projections,
earnings per share for the third and fourth quarters is projected to be
approximately $0.03, and $0.08, respectively, resulting in a full year earnings
per share projection of approximately $0.44, before the cumulative effect of an
accounting change.
At the end of the quarter, Charming Shoppes, Inc., operated 2,334 stores in 48
states under the names LANE BRYANT(R), FASHION BUG(R), FASHION BUG PLUS(R),
CATHERINE'S PLUS SIZES(R), MONSOON(R) and ACCESSORIZE(R). Monsoon and
Accessorize are registered trademarks of Monsoon Accessorize Ltd. During the six
months ended August 3, 2002, the Company opened 32, converted 9, relocated 14,
and closed 125 stores. The Company ended the quarter with 1,208 Fashion Bug and
Fashion Bug Plus stores, 650 Lane Bryant stores, 467 Catherine's Plus Sizes
stores, and 9 Monsoon/Accessorize stores. The Company ended the quarter with
approximately 16,649,000 square feet of leased space.
This press release contains certain forward-looking statements concerning the
Company's operations, performance, and financial condition. These
forward-looking statements include statements regarding future performance,
including earnings,
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sales performance, and other matters. Such forward-looking statements are
subject to various risks and uncertainties that could cause actual results to
differ materially from those indicated. Such risks and uncertainties may
include, but are not limited to: failure to achieve successful integrations,
failure to successfully implement the restructuring plan, failure to
successfully implement the Company's business plan for increased profitability
and growth in the plus-size women's apparel business, the availability of
suitable store locations on appropriate terms, changes in or miscalculation of
fashion trends, extreme or unseasonable weather conditions, economic downturns,
a weakness in overall consumer demand, the ability to hire and train associates,
trade restrictions and political or financial instability in countries where
goods are manufactured, the interruption of merchandise flow to the Company's
retail stores from its centralized distribution facilities, competitive
pressures, and the adverse effects of acts or threats of war, terrorism, or
other armed conflict on the United States and international economies. These,
and other risks and uncertainties, are 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 2, 2002. Charming Shoppes assumes
no duty to update or revise its forward-looking statements even if experience or
future changes make it clear that any projected results expressed or implied
therein will not be realized.
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CHARMING SHOPPES, INC.
2nd Quarter 2nd Quarter
Ended Ended
Percent August 3, Percent August 4, Percent
(in thousands except per share amounts) Change 2002(a) of Sales 2001(b) of Sales
Net sales .............................................. 58.5% $638,307 100.0% $402,700 100.0%
Cost of goods sold, buying, and occupancy .............. 51.2 441,246 69.1 291,881 72.5
Selling, general, and administrative ................... 79.6 151,391 23.7 84,308 20.9
Amortization of goodwill ............................... (100.0) 0 0.0 1,221 0.3
Total operating expenses ............................... 57.0 592,637 92.8 377,410 93.7
Income from operations ................................. 80.6 45,670 7.2 25,290 6.3
Other income, principally interest ..................... (47.8) 719 0.1 1,377 0.3
Interest expense ....................................... 138.0 (5,678) (0.9) (2,386) (0.6)
Income before income taxes ............................. 67.7 40,711 6.3 24,281 6.0
Income tax provision ................................... 65.1 15,552 2.4 9,421 2.3
Income before minority interest ........................ 69.3 25,159 3.9 14,860 3.7
Minority interest in net loss of consolidated subsidiary NA 390 0.1 0 0.0
Net income ............................................. 71.9% $ 25,549 3.9% $ 14,860 3.7%
Basic net income per share ............................. $ 0.22 $ 0.15
Weighted average shares outstanding .................... 115,621 101,377
Net income per share, assuming dilution ................ $ 0.20 $ 0.14
Weighted average shares and equivalents outstanding .... 137,210 115,225
(a) The results of operations for the quarter ended August 3, 2002 include the
results of operations of Lane Bryant, Inc., acquired on August 16, 2001.
(b) Certain prior-year amounts have been reclassified to conform to the current
presentation.
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CHARMING SHOPPES, INC.
Six Months Six Months
Ended Ended
Percent August 3, Percent August 4, Percent
(in thousands except per share amounts) Change 2002(a) of Sales 2001(b) of Sales
Net sales .............................................. 59.1% $1,268,923 100.0% $797,461 100.0%
Cost of goods sold, buying,
and occupancy .......................................... 52.4 880,054 69.4 577,457 72.4
Selling, general, and administrative ................... 74.2 310,547 24.5 178,241 22.4
Amortization of goodwill ............................... (100.0) 0 0.0 2,443 0.3
Total operating expenses ............................... 57.0 1,190,601 93.8 758,141 95.1
Income from operations ................................. 99.2 78,322 6.2 39,320 4.9
Other income, principally interest ..................... (65.8) 1,163 0.1 3,405 0.4
Interest expense ....................................... 161.6 (12,480) (1.0) (4,771) (0.6)
Income before income taxes and cumulative effect of
accounting change ...................................... 76.5 67,005 5.3 37,954 4.8
Income tax provision ................................... 73.8 25,596 2.0 14,726 1.9
Income before minority interest and cumulative effect
of accounting change ................................... 78.3 41,409 3.3 23,228 2.9
Minority interest in net loss of consolidated subsidiary NA 451 0.0 0 0.0
Income before cumulative effect of accounting change ... 80.2 41,860 3.3 23,228 2.9
Cumulative effect of accounting change(c)............... NA (43,975) (3.4) 0 0.0
Net income (loss) ...................................... (109.1)% $ (2,115) (0.2)% $ 23,228 2.9%
Basic net income (loss) per share:
Income before cumulative effect of accounting change ... $ 0.37 $ 0.23
Cumulative effect of accounting change(c) .............. (0.39) 0.00
Net income (loss) ...................................... $ (0.02) $ 0.23
Weighted average shares outstanding .................... 113,681 101,311
Net income (loss) per share, assuming dilution:
Income before cumulative effect of accounting change ... $ 0.33 $ 0.22
Cumulative effect of accounting change(c) .............. (0.33) 0.00
Net income (loss) ...................................... $ 0.00 $ 0.22
Weighted average shares and equivalents outstanding .... 132,107 115,187
(a) The results of operations for the six months ended August 3, 2002 include
the results of operations of Lane Bryant, Inc., acquired on August 16, 2001.
(b) Certain prior-year amounts have been reclassified to conform to the current
presentation.
(c) Write-down of non-deductible goodwill in connection with adoption of FASB
Statement No. 142, "Goodwill and Other Intangible Assets."
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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 hereunto duly authorized.
CHARMING SHOPPES, INC.
(Registrant)
Dated: August 20, 2002 By: /S/ Eric. M. Specter
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Name: Eric M. Specter
Title: Executive Vice President
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