Form 8-K

 

 

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 (Date of earliest event reported): September 5, 2017

 

 

CLAIRE’S STORES, INC.

(Exact name of registrant as specified in its charter)

 

 

Florida

(State or other jurisdiction

of incorporation)

 

1-8899, 333-148108, 333-175171   59-0940416

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

2400 West Central Road, Hoffman Estates, Illinois 60192

(Address of principal executive offices)

Registrant’s telephone number, including area code: (847) 765-1100

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 (see General Instruction A.2. below):

 

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 7.01 Regulation FD Disclosures

Claire’s Stores, Inc. (the “Company”) is furnishing schedules containing certain supplemental financial information as of and for the three and six months ended July, 29 2017 respecting (i) the Company and its subsidiaries (excluding CLSIP Holdings LLC and CLSIP LLC, which have been designated as “unrestricted subsidiaries” under the Company’s debt agreements), (ii) Claire’s (Gibraltar) Holdings Limited and its subsidiaries, and (iii) CLSIP Holdings LLC and CLSIP LLC that has been provided to lenders of these entities under existing credit agreements.

The information furnished pursuant to this Item 7.01 and the attached exhibit shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

 

Exhibit 99.1   

Schedules of Supplemental Financial Information as of July 29, 2017

 

2


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.

 

    CLAIRE’S STORES, INC.
Date: September 5, 2017     By:  

/s/ Scott Huckins

    Name:   Scott Huckins
    Title:   Chief Financial Officer

 

3


EXHIBIT INDEX

 

Exhibit 99.1   

Schedules of Supplemental Financial Information as of July  29, 2017

 

4

EX-99.1

Exhibit 99.1

CLAIRE’S STORES, INC. AND SUBSIDIARIES

(EXCLUDING UNRESTRICTED SUBSIDIARIES)

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

(in thousands)

 

     July 29, 2017  

ASSETS

  

Current assets:

  

Cash and cash equivalents

   $ 30,689  

Inventories

     157,617  

Prepaid expenses

     18,772  

Other current assets

     25,136  
  

 

 

 

Total current assets

     232,214  
  

 

 

 

Property and equipment:

  

Furniture, fixtures and equipment

     224,812  

Leasehold improvements

     304,130  
  

 

 

 
     528,942  

Accumulated depreciation and amortization

     (402,795
  

 

 

 
     126,147  
  

 

 

 

Leased property under capital lease:

  

Land and building

     18,055  

Accumulated depreciation and amortization

     (6,765
  

 

 

 
     11,290  
  

 

 

 

Goodwill

     1,132,575  

Intangible assets, net of accumulated amortization

     307,123  

Other assets

     43,337  
  

 

 

 
     1,483,035  
  

 

 

 

Total assets

   $ 1,852,686  
  

 

 

 

LIABILITIES AND STOCKHOLDER’S DEFICIT

  

Current liabilities:

  

Trade accounts payable

   $ 71,017  

Income taxes payable

     5,117  

Accrued interest payable

     53,111  

Accrued expenses and other current liabilities

     83,904  
  

 

 

 

Total current liabilities

     213,149  
  

 

 

 

Intercompany payables

     81,487  

Long-term debt, net

     1,970,062  

Revolving credit facility, net

     44,361  

Obligation under capital lease

     16,187  

Deferred tax liability

     99,488  

Deferred rent expense

     33,867  

Unfavorable lease obligations and other long-term liabilities

     9,090  
  

 

 

 
     2,254,542  
  

 

 

 

Commitments and contingencies

  

Stockholder’s deficit:

  

Common stock

     —    

Additional paid-in capital

     546,018  

Accumulated other comprehensive loss, net of tax

     (37,840

Accumulated deficit

     (1,123,183
  

 

 

 
     (615,005
  

 

 

 

Total liabilities and stockholder’s deficit

   $ 1,852,666  
  

 

 

 


CLAIRE’S STORES, INC. AND SUBSIDIARIES

(EXCLUDING UNRESTRICTED SUBSIDIARIES)

UNAUDITED CONDENSED CONSOLIDATED STATEMENT

OF OPERATIONS

(in thousands)

 

     Three Months     Six Months  
     Ended     Ended  
     July 29, 2017     July 29, 2017  

Net sales

   $ 316,637     $ 616,258  

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

     161,583       313,371  
  

 

 

   

 

 

 

Gross profit

     155,054       302,887  
  

 

 

   

 

 

 

Other expenses:

    

Selling, general and administrative

     112,774       223,286  

Depreciation and amortization

     10,890       22,093  

Severance and transaction-related costs

     389       532  

Other income, net

     (2,171     (4,872
  

 

 

   

 

 

 
     121,882       241,039  
  

 

 

   

 

 

 

Operating income

     33,172       61,848  

Interest expense, net

     43,394       86,974  
  

 

 

   

 

 

 

Loss before income tax expense

     (10,222     (25,126

Income tax expense

     10,266       2,120  
  

 

 

   

 

 

 

Net loss

   $ (20,488   $ (27,246
  

 

 

   

 

 

 


CLAIRE’S STORES, INC. AND SUBSIDIARIES

(EXCLUDING UNRESTRICTED SUBSIDIARIES)

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands)

 

     Six Months  
     Ended  
     July 29, 2017  

Cash flows from operating activities:

  

Net loss

   $ (27,246

Adjustments to reconcile net loss to net cash used in operating activities:

  

Depreciation and amortization

     22,093  

Amortization of lease rights and other assets

     1,862  

Amortization of debt issuance costs

     4,312  

Accretion of debt premium

     (1,457

Non-cash pay-in-kind interest expense

     750  

Net unfavorable accretion of lease obligations

     (55

Loss on sale/retirement of property and equipment, net

     128  

Stock-based compensation expense

     156  

(Increase) decrease in:

  

Inventories

     (22,083

Prepaid expenses

     (1,926

Other assets

     (75

Increase (decrease) in:

  

Trade accounts payable

     (709

Income taxes payable

     (279

Accrued interest payable

     (155

Accrued expenses and other liabilities

     (6,994

Deferred income taxes

     (359

Deferred rent expense

     (1,196
  

 

 

 

Net cash used in operating activities

     (33,233
  

 

 

 

Cash flows from investing activities:

  

Acquisition of property and equipment

     (8,101

Acquisition of intangible assets/lease rights

     (38
  

 

 

 

Net cash used in investing activities

     (8,139
  

 

 

 

Cash flows from financing activities:

  

Proceeds from revolving credit facilities

     81,000  

Payments on revolving credit facilities

     (41,200

Payments on short-term debt

     (18,420

Payments of unamortized interest related to long-term debt

     (1,857

Payment of debt issuance costs

     (386

Principal payments of capital lease

     (156

Intercompany activity, net

     (2,915
  

 

 

 

Net cash provided by financing activities

     16,066  
  

 

 

 

Effect of foreign currency exchange rate changes on cash and cash equivalents

     203  
  

 

 

 

Net decrease in cash and cash equivalents

     (25,103

Cash and cash equivalents, at beginning of period

     55,792  
  

 

 

 

Cash and cash equivalents, at end of period

   $ 30,689  
  

 

 

 


Claire’s (Gibraltar) Holdings Limited

Unaudited Condensed Consolidated Balance Sheet

(in thousands)

 

     July 29, 2017  

ASSETS

  

Current assets:

  

Cash and cash equivalents

   $ 20,028  

Inventories

     65,941  

Prepaid expenses

     14,797  

Other current assets

     10,033  
  

 

 

 

Total current assets

     110,799  
  

 

 

 

Property and equipment:

  

Furniture, fixtures and equipment

     71,559  

Leasehold improvements

     104,483  
  

 

 

 
     176,042  

Accumulated depreciation and amortization

     (128,564
  

 

 

 
     47,478  
  

 

 

 

Intercompany receivables

     145,279  

Goodwill

     145,058  

Intangible assets, net

     203,470  

Other assets

     36,820  
  

 

 

 
     530,627  
  

 

 

 

Total assets

   $ 688,904  
  

 

 

 

LIABILITIES AND STOCKHOLDER’S EQUITY

  

Current liabilities:

  

Trade accounts payable

   $ 46,491  

Income taxes payable

     4,934  

Accrued interest payable

     370  

Accrued expenses and other current liabilities

     34,575  
  

 

 

 

Total current liabilities

     86,370  
  

 

 

 

Long-term debt, net

     156,925  

Deferred tax liability

     5,934  

Deferred rent expense

     9,419  
  

 

 

 
     172,278  
  

 

 

 

Stockholder’s equity:

  

Common stock

     2  

Additional paid in capital

     770,858  

Accumulated other comprehensive loss, net of tax

     (40,356

Accumulated deficit

     (300,248
  

 

 

 
     430,256  
  

 

 

 

Total liabilities and stockholder’s equity

   $ 688,904  
  

 

 

 


Claire’s (Gibraltar) Holdings Limited

Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income

(in thousands)

 

     Three Months     Six Months  
     Ended     Ended  
     July 29, 2017     July 29, 2017  

Net sales

   $ 120,604     $ 224,265  

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

     59,891       114,168  
  

 

 

   

 

 

 

Gross profit

     60,713       110,097  
  

 

 

   

 

 

 

Other expenses:

    

Selling, general and administrative

     43,679       86,985  

Depreciation and amortization

     3,867       7,980  

Severance and transaction-related costs

     139       223  

Other income, net

     (5,001     (6,418
  

 

 

   

 

 

 
     42,684       88,770  
  

 

 

   

 

 

 

Operating income

     18,029       21,327  

Interest expense, net

     2,791       5,573  
  

 

 

   

 

 

 

Income before income tax expense

     15,238       15,754  

Income tax expense

     10,320       3,132  
  

 

 

   

 

 

 

Net income

     4,918       12,622  

Foreign currency translation adjustments

     3,362       3,846  

Net gain on intra-entity foreign currency transactions, net of tax

     5,395       8,132  
  

 

 

   

 

 

 

Other comprehensive income

     8,757       11,978  
  

 

 

   

 

 

 

Comprehensive income

   $ 13,675     $ 24,600  
  

 

 

   

 

 

 


CLSIP Holdings LLC

Unaudited Condensed Statement of Cash Flows

(in thousands)

 

     Six Months  
     Ended  
     July 29, 2017  

Net cash provided by operating activities

   $ —    

Net cash provided by investing activities

     —    

Net cash provided by financing activities

     —    
  

 

 

 

Net increase in cash and cash equivalents

     —    

Cash and cash equivalents, at beginning of period

     —    
  

 

 

 

Cash and cash equivalents, at end of period

   $ —    
  

 

 

 

CLSIP LLC

Unaudited Condensed Statement of Cash Flows

(in thousands)

 

     Six Months  
     Ended  
     July 29, 2017  

Net cash provided by operating activities

   $ —    

Net cash provided by investing activities

     —    

Payments of unamortized interest related to long-term debt

     (2,415

Intercompany activity, net

     2,915  
  

 

 

 

Net cash provided by financing activities

     500  
  

 

 

 

Net increase in cash and cash equivalents

     500  

Cash and cash equivalents, at beginning of period

     —    
  

 

 

 

Cash and cash equivalents, at end of period

   $ 500