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þ
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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NEVADA
(State
or other jurisdiction of incorporation or organization)
|
91-1826900
(I.R.S.
Employer Identification No.)
|
10201
Main Street, Houston, Texas
(Address
of principal executive offices)
|
77025
(Zip
Code)
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Page
No.
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Item
1.
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3
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4
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5
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6
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7
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Item
2.
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16
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Item
3.
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22
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Item
4.
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22
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Item
1.
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23
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Item
1A.
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23
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Item
2.
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23
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Item
3.
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23
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Item
4.
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23
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Item
5.
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24
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Item
6.
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24
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25
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Condensed
Consolidated Balance Sheets
|
||||||||
(in
thousands, except par value)
|
||||||||
(Unaudited)
|
||||||||
October
31, 2009
|
January
31, 2009
|
|||||||
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 45,483 | $ | 26,278 | ||||
Merchandise
inventories, net
|
379,331 | 314,517 | ||||||
Prepaid
expenses and other current assets
|
26,575 | 30,824 | ||||||
Total
current assets
|
451,389 | 371,619 | ||||||
Property,
equipment and leasehold improvements, net
|
353,199 | 367,135 | ||||||
Intangible
asset
|
14,910 | 14,910 | ||||||
Other
non-current assets, net
|
15,619 | 14,379 | ||||||
Total
assets
|
$ | 835,117 | $ | 768,043 | ||||
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
||||||||
Accounts
payable
|
$ | 172,577 | $ | 97,760 | ||||
Current
portion of debt obligations
|
11,856 | 11,161 | ||||||
Accrued
expenses and other current liabilities
|
62,415 | 60,727 | ||||||
Total
current liabilities
|
246,848 | 169,648 | ||||||
Debt
obligations
|
37,936 | 45,851 | ||||||
Other
long-term liabilities
|
99,676 | 102,541 | ||||||
Total
liabilities
|
384,460 | 318,040 | ||||||
Commitments
and contingencies
|
||||||||
Common
stock, par value $0.01, 100,000 shares authorized,
|
||||||||
56,077
and 55,849 shares issued, respectively
|
561 | 558 | ||||||
Additional
paid-in capital
|
500,308 | 494,765 | ||||||
Less
treasury stock - at cost, 17,986 shares
|
(287,040 | ) | (286,751 | ) | ||||
Accumulated
other comprehensive loss
|
(4,898 | ) | (5,138 | ) | ||||
Retained
earnings
|
241,726 | 246,569 | ||||||
Total
stockholders' equity
|
450,657 | 450,003 | ||||||
Total
liabilities and stockholders' equity
|
$ | 835,117 | $ | 768,043 |
Condensed
Consolidated Statements of Operations
|
||||||||||||||||
(in
thousands, except earnings per share)
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Thirteen
Weeks Ended
|
Thirty-Nine
Weeks Ended
|
|||||||||||||||
October
31, 2009
|
November
1, 2008
|
October
31, 2009
|
November
1, 2008
|
|||||||||||||
Net
sales
|
$ | 324,944 | $ | 333,756 | $ | 1,000,247 | $ | 1,059,999 | ||||||||
Cost
of sales and related buying, occupancy
|
||||||||||||||||
and
distribution expenses
|
251,396 | 259,036 | 742,019 | 783,123 | ||||||||||||
Gross
profit
|
73,548 | 74,720 | 258,228 | 276,876 | ||||||||||||
Selling,
general and administrative expenses
|
83,222 | 84,417 | 250,682 | 261,277 | ||||||||||||
Store
opening costs
|
1,174 | 2,340 | 2,825 | 5,879 | ||||||||||||
Goodwill
impairment
|
- | 95,374 | - | 95,374 | ||||||||||||
Interest
expense, net
|
1,079 | 1,365 | 3,378 | 3,887 | ||||||||||||
(Loss)
income before income tax
|
(11,927 | ) | (108,776 | ) | 1,343 | (89,541 | ) | |||||||||
Income
tax (benefit) expense
|
(4,608 | ) | (5,980 | ) | 474 | 1,329 | ||||||||||
Net
(loss) income
|
$ | (7,319 | ) | $ | (102,796 | ) | $ | 869 | $ | (90,870 | ) | |||||
Basic
and diluted (loss) income per share data:
|
||||||||||||||||
Basic
(loss) income per share
|
$ | (0.19 | ) | $ | (2.66 | ) | $ | 0.02 | $ | (2.37 | ) | |||||
Basic
weighted average shares outstanding
|
38,084 | 38,603 | 38,028 | 38,396 | ||||||||||||
Diluted
(loss) income per share
|
$ | (0.19 | ) | $ | (2.66 | ) | $ | 0.02 | $ | (2.37 | ) | |||||
Diluted
weighted average shares outstanding
|
38,084 | 38,603 | 38,403 | 38,396 |
(in
thousands)
|
||||||||
(Unaudited)
|
||||||||
Thirty-Nine
Weeks Ended
|
||||||||
October
31, 2009
|
November
1, 2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income (loss)
|
$ | 869 | $ | (90,870 | ) | |||
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
||||||||
Depreciation,
amortization and leasehold impairments
|
45,053 | 43,615 | ||||||
Deferred
income taxes
|
662 | 330 | ||||||
Tax
(deficiency) benefits from stock-based compensation
|
(391 | ) | 1,564 | |||||
Stock-based
compensation expense
|
4,953 | 5,717 | ||||||
Amortization
of debt issue costs
|
218 | 191 | ||||||
Goodwill
impairment
|
- | 95,374 | ||||||
Excess
tax benefits from stock-based compensation
|
(129 | ) | (2,270 | ) | ||||
Deferred
compensation obligation
|
93 | 396 | ||||||
Amortization
of employee benefit related costs
|
390 | - | ||||||
Construction
allowances from landlords
|
3,543 | 18,921 | ||||||
Other
changes in operating assets and liabilities:
|
||||||||
Increase
in merchandise inventories
|
(64,814 | ) | (85,194 | ) | ||||
Decrease
in other assets
|
2,060 | 12,899 | ||||||
Increase
in accounts payable and other liabilities
|
74,431 | 66,897 | ||||||
Total
adjustments
|
66,069 | 158,440 | ||||||
Net
cash provided by operating activities
|
66,938 | 67,570 | ||||||
Cash
flows from investing activities:
|
||||||||
Additions
to property, equipment and leasehold improvements
|
(36,110 | ) | (79,710 | ) | ||||
Proceeds
from insurance and retirements of property, equipment
|
||||||||
and
leasehold improvements
|
578 | 3 | ||||||
Net
cash used in investing activities
|
(35,532 | ) | (79,707 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from (payments on) revolving credit facility, net
|
- | 2,124 | ||||||
Proceeds
from long-term debt obligations
|
1,585 | 20,586 | ||||||
Payments
of long-term debt obligations
|
(8,805 | ) | (5,431 | ) | ||||
Payments
of debt issuance costs
|
- | (190 | ) | |||||
Repurchases
of common stock
|
(289 | ) | (6,949 | ) | ||||
Proceeds
from exercise of stock options
|
891 | 4,687 | ||||||
Excess
tax benefits from stock-based compensation
|
129 | 2,270 | ||||||
Cash
dividends paid
|
(5,712 | ) | (5,777 | ) | ||||
Net
cash (used in) provided by financing activities
|
(12,201 | ) | 11,320 | |||||
Net
increase (decrease) in cash and cash equivalents
|
19,205 | (817 | ) | |||||
Cash
and cash equivalents:
|
||||||||
Beginning
of period
|
26,278 | 17,028 | ||||||
End
of period
|
$ | 45,483 | $ | 16,211 | ||||
Supplemental
disclosures:
|
||||||||
Interest
paid
|
$ | 3,336 | $ | 3,679 | ||||
Income
taxes paid
|
$ | 3,310 | $ | 2,841 | ||||
Unpaid
liabilities for capital expenditures
|
$ | 3,082 | $ | 5,954 |
|
For
the Thirty-Nine Weeks Ended October 31, 2009
|
||||||||||||||||||||||||||||||||
(in
thousands, except per share amount)
|
||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||||||
Common
|
Additional
|
Treasury
|
Other
|
|||||||||||||||||||||||||||||
Stock
|
Paid-in
|
Stock
|
Comprehensive
|
Retained
|
||||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Shares
|
Amount
|
Loss
|
Earnings
|
Total
|
|||||||||||||||||||||||||
Balance,
January 31, 2009
|
55,849 | $ | 558 | $ | 494,765 | (17,986 | ) | $ | (286,751 | ) | $ | (5,138 | ) | $ | 246,569 | $ | 450,003 | |||||||||||||||
Net
income
|
- | - | - | - | - | - | 869 | 869 | ||||||||||||||||||||||||
Amortization
of employee benefit
|
||||||||||||||||||||||||||||||||
related
costs, net of tax of $0.1 million
|
- | - | - | - | - | 240 | - | 240 | ||||||||||||||||||||||||
Comprehensive
income
|
1,109 | |||||||||||||||||||||||||||||||
Dividends
on common stock,
|
||||||||||||||||||||||||||||||||
$0.15
per share
|
- | - | - | - | - | - | (5,712 | ) | (5,712 | ) | ||||||||||||||||||||||
Deferred
compensation
|
- | - | 93 | - | (93 | ) | - | - | - | |||||||||||||||||||||||
Stock
options exercised
|
127 | 2 | 888 | - | - | - | - | 890 | ||||||||||||||||||||||||
Issuance
of stock awards, net
|
101 | 1 | - | - | (196 | ) | - | - | (195 | ) | ||||||||||||||||||||||
Stock-based
compensation expense
|
- | - | 4,953 | - | - | - | - | 4,953 | ||||||||||||||||||||||||
Tax
deficiency from stock-based
|
||||||||||||||||||||||||||||||||
compensation
|
- | - | (391 | ) | - | - | - | - | (391 | ) | ||||||||||||||||||||||
Balance,
October 31, 2009
|
56,077 | $ | 561 | $ | 500,308 | (17,986 | ) | $ | (287,040 | ) | $ | (4,898 | ) | $ | 241,726 | $ | 450,657 |
Thirteen
Weeks Ended
|
Thirty-Nine
Weeks Ended
|
|||||||||||||||
October
31, 2009
|
November
1, 2008
|
October
31, 2009
|
November
1, 2008
|
|||||||||||||
Stock
options and SARs
|
$ | 882 | $ | 1,636 | $ | 2,874 | $ | 3,105 | ||||||||
Non-vested
stock
|
276 | 358 | 827 | 1,002 | ||||||||||||
Performance
shares
|
501 | 443 | 1,252 | 1,610 | ||||||||||||
Total
compensation expense
|
1,659 | 2,437 | 4,953 | 5,717 | ||||||||||||
Related
tax benefit
|
(635 | ) | (926 | ) | (1,897 | ) | (2,172 | ) | ||||||||
$ | 1,024 | $ | 1,511 | $ | 3,056 | $ | 3,545 |
Thirty-Nine
Weeks Ended
|
|||
October
31, 2009
|
November
1, 2008
|
||
Expected
volatility
|
59.4%
- 61.6%
|
37.6%
- 42.8%
|
|
Weighted
average volatility
|
59.4%
|
40.1%
|
|
Risk-free
rate
|
1.6%
- 2.0%
|
2.2%
- 3.1%
|
|
Expected
life (in years)
|
4.1
|
4.4
|
|
Expected
dividend yield
|
1.6%
- 2.1%
|
1.3%
- 1.8%
|
Number
of Shares
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Contractual Term (years)
|
Aggregate
Intrinsic Value (in thousands)
|
|||||||||||||
Outstanding
at January 31, 2009
|
4,331,975 | $ | 14.96 | |||||||||||||
Granted
|
837,000 | 9.77 | ||||||||||||||
Exercised
|
(126,592 | ) | 7.03 | |||||||||||||
Forfeited
|
(413,145 | ) | 17.35 | |||||||||||||
Outstanding
at October 31, 2009
|
4,629,238 | $ | 14.03 | 4.2 | $ | 6,684 | ||||||||||
Vested
or expected to vest at October 31, 2009
|
4,244,293 | $ | 14.05 | 4.1 | $ | 6,247 | ||||||||||
Exercisable
at October 31, 2009
|
2,704,513 | $ | 14.18 | 3.2 | $ | 4,496 |
Stock
Options/SARs
|
Number
of Shares
|
Weighted
Average Grant Date Fair Value
|
||||||
Non-vested
at January 31, 2009
|
1,787,877 | $ | 5.64 | |||||
Granted
|
837,000 | 4.02 | ||||||
Vested
|
(571,242 | ) | 6.06 | |||||
Forfeited
|
(128,910 | ) | 5.65 | |||||
Non-vested
at October 31, 2009
|
1,924,725 | $ | 4.81 |
Non-vested
Stock
|
Number
of Shares
|
Weighted
Average Grant Date Fair Value
|
||||||
Outstanding
at January 31, 2009
|
199,673 | $ | 15.43 | |||||
Granted
|
50,086 | 13.34 | ||||||
Vested
|
(45,896 | ) | 21.43 | |||||
Outstanding
at October 31, 2009
|
203,863 | $ | 13.56 |
Period
Granted
|
Target
Shares Granted
|
Target
Shares Forfeited
|
Target
Shares Outstanding
|
Weighted
Average Grant Date Fair Value per Share
|
||||||||||||
2007
|
78,500 | (26,000 | ) | 52,500 | $ | 29.43 | ||||||||||
2008
|
115,000 | (17,000 | ) | 98,000 | 24.53 | |||||||||||
2009
|
137,500 | - | 137,500 | 12.79 | ||||||||||||
Total
|
331,000 | (43,000 | ) | 288,000 |
October
31, 2009
|
January
31, 2009
|
|||||||
Equipment
financing
|
$ | 41,474 | $ | 49,937 | ||||
Finance
lease obligations
|
8,318 | 7,075 | ||||||
Total
debt obligations
|
49,792 | 57,012 | ||||||
Less:
Current portion of debt obligations
|
11,856 | 11,161 | ||||||
Long-term
debt obligations
|
$ | 37,936 | $ | 45,851 |
Thirteen
Weeks Ended
|
Thirty-Nine
Weeks Ended
|
|||||||||||||||
October
31, 2009
|
November
1, 2008
|
October
31, 2009
|
November
1, 2008
|
|||||||||||||
Basic
weighted average shares outstanding
|
38,084 | 38,603 | 38,028 | 38,396 | ||||||||||||
Effect
of dilutive securities:
|
||||||||||||||||
Stock
options, SARs and non-vested stock grants
|
- | - | 375 | - | ||||||||||||
Diluted
weighted average shares outstanding
|
38,084 | 38,603 | 38,403 | 38,396 |
Thirteen
Weeks Ended
|
Thirty-Nine
Weeks Ended
|
|||||||||||||||
October
31, 2009
|
November
1, 2008
|
October
31, 2009
|
November
1, 2008
|
|||||||||||||
Number
of anti-dilutive stock options and SARs outstanding
|
2,617 | 3,071 | 2,646 | 2,988 |
Thirteen
Weeks Ended
|
Thirty-Nine
Weeks Ended
|
|||||||||||||||
October
31, 2009
|
November
1, 2008
|
October
31, 2009
|
November
1, 2008
|
|||||||||||||
Interest
cost
|
$ | 580 | $ | 626 | $ | 1,741 | $ | 1,878 | ||||||||
Expected
return on plan assets
|
(501 | ) | (674 | ) | (1,503 | ) | (2,022 | ) | ||||||||
Net
loss amortization
|
130 | - | 390 | - | ||||||||||||
Net
periodic pension cost (income)
|
$ | 209 | $ | (48 | ) | $ | 628 | $ | (144 | ) |
|
||||||||||||||||
Balance
as of
October
31, 2009
|
Quoted
Prices in Active Markets for Identical Instruments (Level
1) |
Significant
Other Observable Inputs (Level 2) |
Significant
Unobservable Inputs (Level 3) |
|||||||||||||
Assets
|
||||||||||||||||
Securities
held in grantor trust for deferred compensation plans
(1)(2)
|
$ | 12,583 | $ | 12,583 | $ | - | $ | - | ||||||||
Liabilities
|
||||||||||||||||
Deferred
non-employee director equity compensation plan liability
(2)
|
$ | 254 | $ | 254 | $ | - | $ | - |
(1)
|
The
Company has a liability recorded related to these assets for the amount
due to participants corresponding in value to the securities held in the
grantor trust.
|
(2)
|
Using
the market approach, the
fair values of these items represent quoted market prices multiplied by
the quantities held. Gross gains and losses related to the
changes in fair value in the assets and liabilities under the various
deferred compensation plans are recorded in selling, general and
administrative expenses and were a net gain of $0.1 million for the
thirty-nine weeks ended October 31,
2009.
|
Balance
as of October 31, 2009 |
Quoted
Prices in Active Markets for Identical Instruments (Level
1) |
Significant
Other Observable Inputs (Level 2) |
Significant
Unobservable Inputs (Level 3) |
|||||||||||||
Assets
|
||||||||||||||||
Leasehold
improvements (3)
|
$ | 458 | $ | - | $ | - | $ | 458 |
|
(3)
|
In
accordance with ASC 360-10, Accounting for the Impairment
or Disposal of Long-Lived Assets, leasehold improvements with a
carrying amount of $1.2 million were written down to their fair value of
$0.5 million, resulting in impairment charges of $0.7 million during the
current year second quarter which were included in cost of sales and
related buying, occupancy and distribution expenses in the Condensed
Consolidated Statements of Operations
(Unaudited).
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Thirteen
Weeks Ended (1)
|
Thirty-Nine
Weeks Ended (1)
|
|||||||||||||||
October
31, 2009
|
November
1, 2008
|
October
31, 2009
|
November
1, 2008
|
|||||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of sales and related buying, occupancy
|
||||||||||||||||
and
distribution expenses
|
77.4 | 77.6 | 74.2 | 73.9 | ||||||||||||
Gross
profit
|
22.6 | 22.4 | 25.8 | 26.1 | ||||||||||||
Selling,
general and administrative expenses
|
25.6 | 25.3 | 25.1 | 24.6 | ||||||||||||
Store
opening costs
|
0.4 | 0.7 | 0.3 | 0.6 | ||||||||||||
Goodwill
impairment
|
0.0 | 28.6 | 0.0 | 9.0 | ||||||||||||
Interest
expense, net
|
0.3 | 0.4 | 0.3 | 0.4 | ||||||||||||
(Loss)
income before income tax
|
(3.7 | ) | (32.6 | ) | 0.1 | (8.4 | ) | |||||||||
Income
tax (benefit) expense
|
(1.4 | ) | (1.8 | ) | 0.0 | 0.1 | ||||||||||
Net
(loss) income
|
(2.3 | ) % | (30.8 | ) % | 0.1 | % | (8.6 | ) % | ||||||||
(1) Percentages
may not foot due to rounding.
|
Thirteen
Weeks Ended
|
Thirty-Nine
Weeks Ended
|
|||||||||||||||
October
31, 2009
|
November
1, 2008
|
October
31, 2009
|
November
1, 2008
|
|||||||||||||
Net
(loss) income:
|
||||||||||||||||
On
a U.S. GAAP basis
|
$ | (7,319 | ) | $ | (102,796 | ) | $ | 869 | $ | (90,870 | ) | |||||
Goodwill
impairment
|
- | 95,374 | - | 95,374 | ||||||||||||
On
a non-GAAP basis
|
$ | (7,319 | ) | $ | (7,422 | ) | $ | 869 | $ | 4,504 | ||||||
Diluted
(loss) earnings per share:
|
||||||||||||||||
On
a U.S. GAAP basis
|
$ | (0.19 | ) | $ | (2.66 | ) | $ | 0.02 | $ | (2.37 | ) | |||||
Goodwill
impairment
|
- | 2.47 | - | 2.48 | ||||||||||||
On
a non-GAAP basis
|
$ | (0.19 | ) | $ | (0.19 | ) | $ | 0.02 | $ | 0.12 |
Increase
(Decrease)
Q3
|
||||
Merchandise
cost of sales
|
(0.7 | ) % | ||
Buying,
occupancy and distribution expenses
|
0.5 | |||
Decrease
in merchandise cost of sales and related buying,
|
||||
occupancy
and distribution expenses rate
|
(0.2 | ) % |
Increase
(Decrease)
YTD
|
||||
Merchandise
cost of sales
|
(0.8 | ) % | ||
Buying,
occupancy and distribution expenses
|
1.1 | |||
Increase
in merchandise cost of sales and related buying,
|
||||
occupancy
and distribution expenses rate
|
0.3 | % |
|
(1)
|
Pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the
issuer;
|
|
(2)
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the issuer
are being made only in accordance with authorizations of management and
directors of the issuer; and
|
|
(3)
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the issuer's assets that
could have a material adverse effect on the financial
statements.
|
Exhibit
Number
|
Description
|
31.1*
|
Certification
of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under
the Securities Exchange Act of 1934, as amended.
|
31.2*
|
Certification
of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under
the Securities Exchange Act of 1934, as amended.
|
32*
|
Certification
Pursuant to 18 U.S.C. Section
1350.
|
|
*
|
Filed
electronically herewith
|
STAGE
STORES, INC.
|
|
December 9, 2009
|
/s/ Andrew T. Hall
|
(Date)
|
Andrew
T. Hall
|
President
and Chief Executive Officer
|
|
(Principal
Executive Officer)
|
|
December 9, 2009
|
/s/ Edward J. Record
|
(Date)
|
Edward
J. Record
|
Executive
Vice President, Chief Financial Officer
and
Secretary
|
|
(Principal
Financial Officer)
|