UNITED STATES
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: December 24, 2008
(Date of earliest event
reported)
CHRISTOPHER & BANKS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
|
001-31390 (Commission file number) |
|
06-1195422 (IRS Employer Identification No.) |
2400 Xenium Lane North
Plymouth, Minnesota 55441
(Address of principal
executive offices, including zip code)
(763) 551-5000
(Registrant’s telephone
number, including area code)
Not Applicable
(Former name or former
address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.01 Completion of Acquisition or Disposition of Assets.
On December 24, 2008, Christopher & Banks Corporation (the “Company”) closed the last of its remaining Acorn stores, thus essentially completing the disposition and abandonment of assets related to the closure of its Acorn division business.
On July 31, 2008, the Company announced its decision to exit its Acorn business when management concluded, after a comprehensive review and evaluation, that the concept had not demonstrated the potential to deliver an acceptable long-term return on the Company’s investment. On July 30, 2008, the Company’s Board of Directors authorized a plan to close all of the Company’s 36 Acorn stores by December 31, 2008, allowing the Company to focus its resources on its two core brands, Christopher & Banks and C.J. Banks. The Company closed 29 of its 36 Acorn stores during its third fiscal quarter ended November 29, 2008 and closed its seven remaining Acorn stores on December 24, 2008.
Item 9.01 Financial Statements and Exhibits.
(b) Pro forma financial information.
The Company completed the exit of its Acorn division business by closing its seven remaining Acorn stores on December 24, 2008. The following unaudited pro forma financial statements reflect the exit of the Company’s Acorn division business which will be presented as a discontinued operation in the Company’s consolidated financial statements in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”).
The unaudited condensed pro forma balance sheet assumes the Company exited its Acorn business on August 30, 2008. The consolidated, Acorn adjustment and pro forma information is based upon the historical balance sheet data of the Company and Acorn as of that date.
The unaudited condensed pro forma statement of operations reflects the exit of the Acorn business as of February 27, 2005. The consolidated, Acorn adjustment and pro forma information is based upon the historical operating statement data for the Company and for Acorn for the fiscal years ended March 1, 2008, March 3, 2007 and February 25, 2006, and for the six month periods ended August 30, 2008 and September 1, 2007.
No significant estimates or assumptions were utilized in determining the historical balance sheet and operating statement data. These unaudited pro forma financial statements should be read in conjunction with the historical financial statements and notes thereto of the Company.
2
CHRISTOPHER & BANKS CORPORATION
UNAUDITED CONDENSED PRO FORMA BALANCE SHEET
AUGUST 30, 2008
(in thousands)
|
|
|
Consolidated |
|
Acorn |
|
Pro Forma |
|
|||
|
ASSETS |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Current assets: |
|
|
|
|
|
|
|
|||
|
Cash and cash equivalents |
|
$ |
84,037 |
|
$ |
(9 |
) |
$ |
84,028 |
|
|
Accounts receivable |
|
4,311 |
|
— |
|
4,311 |
|
|||
|
Merchandise inventories |
|
51,531 |
|
(1,630 |
) |
49,901 |
|
|||
|
Prepaid expenses |
|
12,176 |
|
— |
|
12,176 |
|
|||
|
Other current assets |
|
6,222 |
|
— |
|
6,222 |
|
|||
|
Total current assets |
|
158,277 |
|
(1,639 |
) |
156,638 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Property, equipment and improvements, net |
|
131,771 |
|
— |
|
131,771 |
|
|||
|
Long-term investments |
|
18,536 |
|
— |
|
18,536 |
|
|||
|
Other assets |
|
6,681 |
|
— |
|
6,681 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Total assets |
|
$ |
315,265 |
|
$ |
(1,639 |
) |
$ |
313,626 |
|
|
|
|
|
|
|
|
|
|
|||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Current liabilities: |
|
|
|
|
|
|
|
|||
|
Accounts payable |
|
$ |
11,290 |
|
— |
|
$ |
11,290 |
|
|
|
Accrued salaries, wages and related expenses |
|
9,192 |
|
— |
|
9,192 |
|
|||
|
Other accrued liabilities |
|
27,357 |
|
— |
|
27,357 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Total current liabilities |
|
47,839 |
|
— |
|
47,839 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Non-current liabilities: |
|
|
|
|
|
|
|
|||
|
Deferred lease incentives |
|
24,191 |
|
(1,499 |
) |
22,692 |
|
|||
|
Deferred rent obligations |
|
10,880 |
|
(477 |
) |
10,403 |
|
|||
|
Other |
|
4,450 |
|
— |
|
4,450 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Total non-current liabilities |
|
39,521 |
|
(1,976 |
) |
37,545 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Commitments |
|
— |
|
— |
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|||
|
Preferred stock – $0.01 par value |
|
— |
|
— |
|
— |
|
|||
|
Common stock – $0.01 par value |
|
453 |
|
— |
|
453 |
|
|||
|
Additional paid-in capital |
|
111,511 |
|
337 |
|
111,848 |
|
|||
|
Retained earnings |
|
229,814 |
|
— |
|
229,814 |
|
|||
|
Common stock held in treasury |
|
(112,859 |
) |
— |
|
(112,859 |
) |
|||
|
Accumulated other comprehensive income (loss) |
|
(1,014 |
) |
— |
|
(1,014 |
) |
|||
|
|
|
|
|
|
|
|
|
|||
|
Total stockholders’ equity |
|
227,905 |
|
337 |
|
228,242 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Total liabilities and stockholders’ equity |
|
$ |
315,265 |
|
$ |
(1,639 |
) |
$ |
313,626 |
|
The accompanying notes are an integral part of these pro forma statements.
3
CHRISTOPHER & BANKS CORPORATION
UNAUDITED CONDENSED PRO FORMA STATEMENT OF OPERATIONS
(in thousands, except per share data)
|
|
|
Six Months Ended |
|
|||||||
|
|
|
Consolidated |
|
Acorn |
|
Proforma |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Net sales |
|
$ |
291,279 |
|
$ |
7,433 |
|
$ |
283,846 |
|
|
|
|
|
|
|
|
|
|
|||
|
Costs and expenses: |
|
|
|
|
|
|
|
|||
|
Merchandise, buying and occupancy, exclusive of depreciation and amortization |
|
171,927 |
|
6,478 |
|
165,449 |
|
|||
|
Selling, general and administrative |
|
86,227 |
|
2,421 |
|
83,806 |
|
|||
|
Depreciation and amortization |
|
14,425 |
|
100 |
|
14,325 |
|
|||
|
Impairment of store assets |
|
— |
|
1,221 |
|
(1,221 |
) |
|||
|
|
|
|
|
|
|
|
|
|||
|
Total costs and expenses |
|
272,579 |
|
10,220 |
|
262,359 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Operating income (loss) |
|
18,700 |
|
(2,787 |
) |
21,487 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Interest income |
|
1,413 |
|
— |
|
1,413 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Income (loss) before income taxes |
|
20,113 |
|
(2,787 |
) |
22,900 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Income tax provision |
|
8,005 |
|
5,967 |
|
2,038 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) |
|
$ |
12,108 |
|
$ |
(8,754 |
) |
$ |
20,862 |
|
|
|
|
|
|
|
|
|
|
|||
|
Basic earnings (loss) per common share: |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) |
|
$ |
0.35 |
|
$ |
(0.25 |
) |
$ |
0.60 |
|
|
|
|
|
|
|
|
|
|
|||
|
Basic shares outstanding |
|
35,086 |
|
35,086 |
|
35,086 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Diluted earnings (loss) per common share: |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) |
|
$ |
0.34 |
|
$ |
(0.25 |
) |
$ |
0.59 |
|
|
|
|
|
|
|
|
|
|
|||
|
Diluted shares outstanding |
|
35,112 |
|
35,112 |
|
35,112 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Dividends per share |
|
$ |
0.12 |
|
$ |
— |
|
$ |
0.12 |
|
The accompanying notes are an integral part of these pro forma statements.
4
CHRISTOPHER & BANKS CORPORATION
UNAUDITED CONDENSED PRO FORMA STATEMENT OF OPERATIONS
(in thousands, except per share data)
|
|
|
Six Months Ended |
|
|||||||
|
|
|
Consolidated |
|
Acorn |
|
Proforma |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Net sales |
|
$ |
290,499 |
|
$ |
7,119 |
|
$ |
283,380 |
|
|
|
|
|
|
|
|
|
|
|||
|
Costs and expenses: |
|
|
|
|
|
|
|
|||
|
Merchandise, buying and occupancy, exclusive of depreciation and amortization |
|
177,511 |
|
5,862 |
|
171,649 |
|
|||
|
Selling, general and administrative |
|
79,706 |
|
2,425 |
|
77,281 |
|
|||
|
Depreciation and amortization |
|
10,805 |
|
534 |
|
10,271 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Total costs and expenses |
|
268,022 |
|
8,821 |
|
259,201 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Operating income (loss) |
|
22,477 |
|
(1,702 |
) |
24,179 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Interest income |
|
2,219 |
|
— |
|
2,219 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Income (loss) before income taxes |
|
24,696 |
|
(1,702 |
) |
26,398 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Income tax provision |
|
9,631 |
|
(83 |
) |
9,714 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) |
|
$ |
15,065 |
|
$ |
(1,619 |
) |
$ |
16,684 |
|
|
|
|
|
|
|
|
|
|
|||
|
Basic earnings (loss) per common share: |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) |
|
$ |
0.42 |
|
$ |
(0.04 |
) |
$ |
0.46 |
|
|
|
|
|
|
|
|
|
|
|||
|
Basic shares outstanding |
|
35,900 |
|
35,900 |
|
35,900 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Diluted earnings (loss) per common share: |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) |
|
$ |
0.42 |
|
$ |
(0.04 |
) |
$ |
0.46 |
|
|
|
|
|
|
|
|
|
|
|||
|
Diluted shares outstanding |
|
36,010 |
|
36,010 |
|
36,010 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Dividends per share |
|
$ |
0.12 |
|
$ |
— |
|
$ |
0.12 |
|
The accompanying notes are an integral part of these pro forma statements.
5
CHRISTOPHER & BANKS CORPORATION
UNAUDITED CONDENSED PRO FORMA STATEMENT OF OPERATIONS
(in thousands, except per share data)
|
|
|
Year Ended |
|
|||||||
|
|
|
|
|
Acorn |
|
|
|
|||
|
|
|
Consolidated |
|
Adjustment |
|
Proforma |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Net sales |
|
$ |
575,781 |
|
$ |
14,869 |
|
$ |
560,912 |
|
|
|
|
|
|
|
|
|
|
|||
|
Costs and expenses: |
|
|
|
|
|
|
|
|||
|
Merchandise, buying and occupancy, exclusive of depreciation and amortization |
|
354,468 |
|
12,541 |
|
341,927 |
|
|||
|
Selling, general and administrative |
|
166,362 |
|
5,182 |
|
161,180 |
|
|||
|
Depreciation and amortization |
|
22,603 |
|
840 |
|
21,763 |
|
|||
|
Impairment of store assets |
|
6,925 |
|
6,513 |
|
412 |
|
|||
|
Impairment of goodwill |
|
3,587 |
|
3,587 |
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Total costs and expenses |
|
553,945 |
|
28,663 |
|
525,282 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Operating income (loss) |
|
21,836 |
|
(13,794 |
) |
35,630 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Interest income |
|
4,662 |
|
— |
|
4,662 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Income (loss) before income taxes |
|
26,498 |
|
(13,794 |
) |
40,292 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Income tax provision |
|
9,480 |
|
(5,348 |
) |
14,828 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) |
|
$ |
17,018 |
|
$ |
(8,446 |
) |
$ |
25,464 |
|
|
|
|
|
|
|
|
|
|
|||
|
Basic earnings (loss) per common share: |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) |
|
$ |
0.48 |
|
$ |
(0.24 |
) |
$ |
0.72 |
|
|
|
|
|
|
|
|
|
|
|||
|
Basic shares outstanding |
|
35,772 |
|
35,772 |
|
35,772 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Diluted earnings (loss) per common share: |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Net income (loss) |
|
$ |
0.47 |
|
$ |
(0.24 |
) |
$ |
0.71 |
|
|
|
|
|
|
|
|
|
|
|||
|
Diluted shares outstanding |
|
35,852 |
|
35,852 |
|
35,852 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Dividends per share |
|
$ |
0.24 |
|
$ |
— |
|
$ |
0.24 |
|
The accompanying notes are an integral part of these pro forma statements.
6
CHRISTOPHER & BANKS CORPORATION
UNAUDITED CONDENSED PRO FORMA STATEMENT OF OPERATIONS
(in thousands, except per share data)
The accompanying notes are an integral part of these pro forma statements.
7
CHRISTOPHER & BANKS CORPORATION
UNAUDITED CONDENSED PRO FORMA STATEMENT OF OPERATIONS
(in thousands, except per share data)
The accompanying notes are an integral part of these pro forma statements.
8
CHRISTOPHER & BANKS CORPORATION
NOTES TO UNAUDITED CONDENSED PRO FORMA FINANCIAL STATEMENTS
NOTE 1: ACCOUNTING FOR EXIT
On December 24, 2008, Christopher & Banks Corporation (the “Company”) closed the last of its remaining Acorn stores, thus essentially completing the disposition of assets related to the closure of its Acorn division business.
On July 31, 2008, the Company announced its decision to exit its Acorn business when management concluded, after a comprehensive review and evaluation, that the concept had not demonstrated the potential to deliver an acceptable long-term return on the Company’s investment. On July 30, 2008, the Company’s Board of Directors authorized a plan to close all of the Company’s 36 Acorn stores by December 31, 2008, allowing the Company to focus its resources on its two core brands, Christopher & Banks and C.J. Banks. The Company closed 29 of its 36 Acorn stores during its third fiscal quarter ended November 29, 2008 and closed its seven remaining Acorn stores on December 24, 2008.
The exit of the Company’s Acorn division business will be accounted for as a discontinued operation in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”). The unaudited pro forma financial information reflects Acorn as a discontinued operation and, accordingly, Acorn’s net assets and results of operations are excluded from the continuing operations of the Company.
NOTE 2: PRO FORMA PRESENTATION
The unaudited condensed pro forma balance sheet assumes the Company exited its Acorn business on August 30, 2008. The consolidated, Acorn adjustment and pro forma information is based upon the historical balance sheet data of the Company and Acorn as of that date.
The unaudited condensed pro forma statement of operations reflects the exit of the Acorn business as of February 27, 2005. The consolidated, Acorn adjustment and pro forma information is based upon the historical operating statement data for the Company and for Acorn for the fiscal years ended March 1, 2008, March 3, 2007 and February 25, 2006, and for the six month periods ended August 30, 2008 and September 1, 2007.
No significant estimates or assumptions were utilized in determining the historical balance sheet and operating statement data. These unaudited pro forma financial statements should be read in conjunction with the historical financial statements and notes thereto of the Company.
NOTE 3: ASSET IMPAIRMENT
In addition to losses from store operations, the Acorn operating loss for the six months ended August 30, 2008 included approximately $1.2 million of impairment charges related to store-level assets and $69,000 of impairment charges related to intangible assets. No impairment charges were included in the Acorn operating loss for the six months ended September 1, 2007.
The Acorn operating loss for the fiscal year ended March 1, 2008 included approximately $6.1 million of impairment charges related to store-level assets, $3.6 million of charges related to goodwill impairment and $401,000 of impairment charges related to intangible assets. In addition to losses from store operations, the Acorn operating loss for the fiscal years ended March 3, 2007 and February 25, 2006 included $751,000 and $227,000 of impairment charges related to store-level assets, respectively.
9
NOTE 4: INCOME TAXES
Income taxes have been allocated to continuing and discontinued operations based on the methodology required by Financial Accounting Interpretation Number 18 (“FIN 18”). As required by this authoritative guidance, income taxes for annual periods are computed with and without the impact of results from discontinued operations and the difference in taxes between these computations is allocated to discontinued operations.
For interim periods, income taxes are allocated to continuing operations based on the effective tax rate on income from continuing operations for the year. The difference between income taxes allocated to continuing operations in interim periods and total income taxes prior to operations qualifying for discontinued operations presentation are allocated to discontinued operations.
Income taxes allocated to the loss from discontinued operations for the six month interim period ended August 30, 2008, result from the fact that the estimated effective tax rate on continuing operations for fiscal 2009 is 8.9%, while the effective tax rate for all operations (combined results for continuing and discontinued operations) per the Company’s previously filed Form 10-Q for the six month period ended August 30, 2008 was estimated to be 39.8%. The difference in taxes between those allocable to continuing operations and total taxes previously estimated for all operations are allocated to discontinued operations. Actual tax rates for fiscal 2009 could differ significantly from estimated rates based on results of operations for the balance of fiscal 2009.
10
SIGNATURE
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.
|
|
|
CHRISTOPHER & BANKS CORPORATION |
|
|
|
|
|
|
|
|
|
|
|
|
Date: |
December 31, 2008 |
By: |
/s/ Michael J. Lyftogt |
|
|
|
|
Michael J. Lyftogt |
11