Access the March 19, 2010, filing of the 10-K report (for fiscal year ending Jan
ID: 2368369 • Letter: A
Question
Access the March 19, 2010, filing of the 10-K report (for fiscal year ending January 30, 2010) of J. Crew Group, Inc. (ticker JCG), at www .sec.gov. Required 1. Does J. Crew use the direct or indirect method to construct its consolidated statement of cash flows? 2. For the fiscal year ended January 30, 2010, what is the largest item in reconciling the net income to net cash provided by operating activities? 3. In the recent three years, has the company been more successful in generating operating cash flows or in generating net income? Identify the figures to support the answer. 4. In the year ended January 30, 2010, what was the largest cash outflow for investing activities and for financing activities? 5. What item(s) does J. Crew report as supplementary cash flow information? 6. Does J. Crew report any noncash financing activities for fiscal year 2010? Identify them, if any.Explanation / Answer
Folow this:Revenues increased 13% to $530.9 million, with comparable company sales increasing 6%. Comparable company sales were flat in the fourth quarter last year. Store sales increased 16% to $354.0 million, with comparable store sales increasing 6%. Comparable store sales decreased 5% in the fourth quarter last year. Direct sales increased 10% to $170.8 million on top of increasing 12% in the fourth quarter last year. Gross margin increased to 37.8% from 37.4% in the fourth quarter last year. Gross profit this year reflects the impact of purchase accounting of $2.7 million. Selling, general and administrative expenses decreased to $159.1 million from $160.7 million in the fourth quarter last year. Last year includes transaction costs of $20.0 million. Operating income was $41.7 million, or 7.9% of revenues, compared to $15.5 million, or 3.3% of revenues, in the fourth quarter last year. Last year includes transaction costs of $20.0 million. Net income was $15.1 million compared to $4.0 million in the fourth quarter last year. This year includes (i) transaction-related costs and the impact of purchase accounting noted above and (ii) increased interest expense as a result of debt incurred in connection with the acquisition. Last year includes the impact of transaction costs noted above. Adjusted EBITDA was $59.5 million compared to $51.6 million in the fourth quarter last year. An explanation of how we use Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are included in Exhibit (4). Pro forma fiscal 2011 highlights: Revenues increased 8% to $1,855.0 million, with comparable company sales increasing 3%. Comparable company sales increased 7% last year. Store sales increased 7% to $1,280.8 million, with comparable store sales increasing 1%. Comparable store sales increased 4% last year. Direct sales increased 11% to $545.7 million on top of increasing 15% last year. Gross margin decreased to 41.7% from 43.4% last year. Gross profit this year reflects the impact of purchase accounting of $4.0 million. Selling, general and administrative expenses increased to $587.4 million from $533.0 million last year. This year includes the impact of purchase accounting of $21.7 million. Last year includes transaction costs of $20.0 million. Operating income was $185.8 million, or 10.0% of revenues, compared to $214.0 million, or 12.4% of revenues, last year. This year includes the impact of purchase accounting of $25.7 million. Last year includes transaction costs of $20.0 million. Net income was $51.5 million compared to $121.5 million last year. This year reflects increased interest expense incurred in connection with the acquisition. Adjusted EBITDA was $282.2 million compared to $288.2 million last year. An explanation of how we use Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are included in Exhibit (5). Balance Sheet highlights as of January 28, 2012: Cash and cash equivalents were $221.8 million compared to $381.4 million last year. Total debt was $1,594 million, including the seven-year senior secured term loan of $1,194 million and the eight-year senior unsecured notes of $400 million, incurred in connection with the acquisition, compared with no debt outstanding last year. Inventories were $242.7 million compared to $214.4 million last year. Inventory per square foot increased 6%. Use of Non-GAAP Financial Measures This announcement contains non-GAAP financial measures. An explanation of these measures and a reconciliation to the most directly comparable GAAP financial measures are included in Exhibits (4) and (5). Conference Call Information A conference call to discuss fourth quarter results is scheduled for tomorrow, March 20, 2012, at 11:00 AM Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-3982 approximately ten minutes prior to the start of the call. The conference call will also be webcast live at www.jcrew.com. A replay of this call will be available until March 27, 2012 and can be accessed by dialing (877) 870-5176 and entering conference ID number 389713. About J.Crew Group, Inc. J.Crew Group, Inc. is a nationally recognized multi-channel retailer of women's, men's and children's apparel, shoes and accessories. As of March 9, 2012, the Company operates 267 retail stores (including 225 J.Crew retail stores, 10 crewcuts stores and 32 Madewell stores), jcrew.com, the J.Crew catalog, madewell.com, the Madewell catalog, and 96 factory outlet stores. Additionally, certain product, press release and SEC filing information concerning the Company are available at the Company's website www.jcrew.com. ForwardLooking Statements: Certain statements herein, including the information in Exhibit (6) hereof, are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company's current expectations or beliefs concerning future events and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including our substantial indebtedness and lease obligations, the strength of the economy, declines in consumer spending or changes in seasonal consumer spending patterns, competitive market conditions, our ability to anticipate and timely respond to changes in trends and consumer preferences, our ability to successfully develop, launch and grow our newer concepts, products offerings, sales channels and businesses, material disruption to our information systems, our ability to implement our real estate strategy, our ability to attract and retain key personnel, interruptions in our foreign sourcing operations, impact of costs of mailing, paper and printing, and other factors which are set forth in the Company's Annual Report on Form 10-K and in all filings with the SEC made by the Company subsequent to the filing of the Form 10-K. The Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise. Exhibit (1) J.Crew Group, Inc. Condensed Consolidated Statements of Operations (in thousands, except percentages) (unaudited) Fourth Quarter of Fiscal 2011 Fourth Quarter of Fiscal 2010 (Successor) (Predecessor) Net sales: Stores $ 354,044 $ 304,645 Direct 170,815 155,788 Other 6,083 11,067 Total revenues 530,942 471,500 Cost of goods sold, including buying and occupancy costs 330,131 295,275 Gross profit 200,811 176,225 As a percent of revenues 37.8% 37.4% Selling, general and administrative expenses 159,129 160,743 As a percent of revenues 30.0% 34.1% Operating income 41,682 15,482 As a percent of revenues 7.9% 3.3% Interest expense, net 25,095 528 Income before income taxes 16,587 14,954 Provision for income taxes 1,440 10,917 Net income $ 15,147 $ 4,037 Exhibit (2) J.Crew Group, Inc. Condensed Consolidated Pro Forma Statement of Operations (in thousands, except percentages) (unaudited) For the Period March 8, 2011 to January 28, 2012 For the Period January 30, 2011 to March 7, 2011 Adjustments Pro forma Fiscal 2011 Fiscal 2010 (Successor) (Predecessor) (Predecessor) Net sales: Stores $ 1,194,276 $ 86,474 $