CLAIRES STORES INC

CIK:0000034115|SEC Filings

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Aug. 04, 2018

Jul. 29, 2017

Aug. 04, 2018

Jul. 29, 2017

Net sales

$ 314,448

$ 316,637

$ 625,454

$ 616,258

Cost of sales, occupancy and buying expenses (exclusive of depreciation and amortization shown separately below)

154,723

161,583

310,371

313,371

Gross profit

159,725

155,054

315,083

302,887

Other expenses (income):

Selling, general and administrative

111,459

112,774

237,240

223,286

Depreciation and amortization

13,709

10,890

26,903

22,093

Severance and transaction-related costs

629

389

1,005

532

Other income, net

(3,348)

(2,171)

(7,354)

(4,872)

Total other expenses

122,449

121,882

257,794

241,039

Operating income before interest, reorganization items and income taxes

37,276

33,172

57,289

61,848

Reorganization items, net

30,453

40,462

Interest expense, net

5,072

43,394

29,961

86,974

Income (loss) before income tax expense

1,751

(10,222)

(13,134)

(25,126)

Income tax expense

5,040

10,266

1,786

2,120

Net income (loss)

(3,289)

(20,488)

(14,920)

(27,246)

Other comprehensive (loss) income:

Foreign currency translation adjustments

(1,067)

4,523

(3,602)

4,567

Net (loss) gain on intra-entity foreign currency transactions, net of tax (benefit) expense of $(35), $714, $5 and $944

(4,952)

7,593

(11,460)

9,474

Other comprehensive (loss) income

(6,019)

12,116

(15,062)

^[1]

14,041

Comprehensive loss

$ (9,308)

$ (8,372)

$ (29,982)

$ (13,205)

[1]	Represents foreign currency items and $5.7 million of other income associated with expired derivative instruments.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Aug. 04, 2018	Jul. 29, 2017
Cash flows from operating activities:
Net income (loss)	$ (14,920)	$ (27,246)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	26,903	22,093
Reorganization items, net	40,462
Amortization of lease rights and other assets	2,517	1,862
Amortization of debt issuance costs	1,613	4,312
Accretion of debt premium	(360)	(1,457)
Non-cash pay-in-kind interest expense	2,889	750
Net unfavorable accretion of lease obligations	9	(55)
Loss on sale/retirement of property and equipment, net	46	128
Stock-based compensation expense	75	156
(Increase) decrease in:
Inventories	(17,945)	(22,083)
Prepaid expenses	(7,130)	(1,926)
Other assets	(6,461)	(75)
Increase (decrease) in:
Trade accounts payable	(7,122)	(709)
Income taxes payable	12,249	(279)
Accrued interest payable	17,955	(155)
Accrued expenses and other liabilities	(6,128)	(6,994)
Deferred income taxes	(15,287)	(359)
Deferred rent expense	(2,460)	(1,196)
Net cash provided by (used in) operating activities	26,905	(33,233)
Cash flows from investing activities:
Acquisition of property and equipment	(9,027)	(8,101)
Acquisition of intangible assets/lease rights	(100)	(38)
Net cash used in investing activities	(9,127)	(8,139)
Cash flows from financing activities:
Proceeds from debtor-in-possession credit facility	57,000
Repayments under debtor-in-possession credit facility	(57,000)
Proceeds from debtor-in-possession term loans	60,000
Debt issuance costs related to debtor-in-possession financing	(4,470)
Proceeds from revolving credit facilities	43,000	81,000
Payments on revolving credit facilities	(74,000)	(41,200)
Payment on current portion of long-term debt	(6,000)	(18,420)
Payments of unamortized interest related to long-term debt	(5,321)	(4,272)
Payment of debt issuance costs	(2)	(386)
Principal payments on capital lease	(200)	(156)
Net cash provided by (used in) financing activities	13,007	16,566
Effect of foreign currency exchange rate changes on cash and cash equivalents	(3,786)	203
Net increase (decrease) in cash and cash equivalents	26,999	(24,603)
Cash and cash equivalents, at beginning of period	42,446	55,792
Cash and cash equivalents, at end of period	69,445	31,189
Supplemental disclosure of cash flow information:
Interest paid	13,002	87,454
Income taxes paid	2,112	3,927
Non-cash supplemental financing activities:
Increase in term loans due 2021 from pay-in-kind interest	2,976	2,207
Decrease in adjustment to carrying value	$ 2,976	$ 2,207

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands

Aug. 04, 2018

Feb. 03, 2018

Current assets:

Cash

$ 69,445

$ 42,446

Inventories

148,331

134,690

Prepaid expenses

36,889

32,284

Other current assets

21,737

26,858

Total current assets

276,402

236,278

Property and equipment:

Furniture, fixtures and equipment

208,288

223,644

Leasehold improvements

279,104

301,338

Total property and equipment, gross

487,392

524,982

Accumulated depreciation and amortization

(387,631)

(405,284)

Total property and equipment, net

99,761

119,698

Leased property under capital lease:

Land and building

18,055

Accumulated depreciation and amortization

(7,667)

(7,216)

Total leased property under capital lease

10,388

10,839

Goodwill

1,132,575

Intangible assets, net of accumulated amortization of $88,005 and $87,295, respectively

450,145

457,078

Other assets

61,107

44,255

Total other noncurrent assets

1,643,827

1,633,908

Total assets

2,030,378

2,000,723

Current liabilities:

Current portion of long-term debt, net

^[1]

84,732

1,894,039

Debtor-in-possession term loan

60,000

Trade accounts payable

55,272

62,965

Income taxes payable

14,096

4,049

Accrued interest payable

1,083

56,182

Accrued expenses and other current liabilities

101,216

94,934

Total current liabilities

316,399

2,112,169

Long-term debt, net

208,847

250,355

Obligation under capital lease

15,718

15,970

Deferred tax liability

29,179

32,614

Deferred rent expense

31,557

34,851

Unfavorable lease obligations and other long-term liabilities

8,646

10,040

Total Non current liabilities

293,947

343,830

Liabilities subject to compromise

1,905,215

Commitments and contingencies

Stockholder's deficit:

Common stock par value $0.001 per share; authorized 1,000 shares; issued and outstanding 100 shares

Additional paid-in capital

630,794

630,719

Accumulated other comprehensive loss, net of tax

(40,364)

(25,302)

Accumulated deficit

(1,075,613)

(1,060,693)

Total stockholder's deficit

(485,183)

(455,276)

Total liabilities and stockholder's deficit

$ 2,030,378

$ 2,000,723

[1]

LSTC must be reported at the amounts expected to be allowed by the Bankruptcy Court. The carrying value of the debt will be adjusted as claims are approved. As of August 4, 2018, the Company wrote off $5.0 million of debt issuance costs, debt premium, and the adjustment to carrying value to present the debt at the outstanding face value. The write-offs are included within reorganization items, net in the Unaudited Condensed Consolidated Statements of Operations. See Note 2 - Bankruptcy Filing for additional details.