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Christopher & Banks enhancing its product design
23 Dec '10
5 min read
Non-Cash Charge Related to Valuation Allowance on Deferred Tax Assets
As noted above, the Company also announced that it recorded a non-cash charge of $12.9 million, or $0.36 per share, included within its provision for income taxes in the third quarter of fiscal 2011. This charge relates to the Company's determination that a full valuation allowance against its deferred tax assets is necessary in order to reflect the Company's current assessment of its ability to realize the benefits of those deferred tax assets.
The Company made this determination in accordance with U.S. generally accepted accounting principles after weighing the available evidence, which included a projected three-year historical cumulative loss related to earnings before taxes as of the end of the third quarter of fiscal 2011. Recording the valuation allowance does not have any impact on cash, nor does such an allowance preclude the Company from utilizing its deferred tax assets in future profitable periods.
Third Quarter Balance Sheet Highlights
The Company ended the third quarter of fiscal 2011 with total cash, cash-equivalents and investments of $102.3 million. Inventory, excluding e-Commerce inventory, increased 12% on a per-store basis at the end of the third quarter of fiscal 2011, as compared to the end of the third quarter of fiscal 2010. The Company's balance sheet remains strong and management believes that its cash, cash-equivalents and investments are sufficient to meet the Company's cash and liquidity needs for the current fiscal year.
Capital Expenditures
The Company funded approximately $7.3 million of capital expenditures during the first nine months of fiscal 2011.
Fourth Quarter Fiscal 2011 Outlook
• For the fourth quarter of fiscal 2011, the Company expects same store sales to be flat to up low single digits as compared to the fourth quarter of last year.
• Total gross margin is expected to decrease by 400 to 500 basis points in the fourth quarter of fiscal 2011, as compared to last year's fourth quarter, due to increased promotional activity and higher product costs, somewhat offset by the anticipated leveraging of buying and occupancy costs.
• SG&A expense dollars in the fourth quarter of fiscal 2011 are expected to be approximately the same as in the third quarter of fiscal 2011.
• Capital expenditures are expected to be $10 to $11 million for the full fiscal year.
As noted above, the Company also announced that it recorded a non-cash charge of $12.9 million, or $0.36 per share, included within its provision for income taxes in the third quarter of fiscal 2011. This charge relates to the Company's determination that a full valuation allowance against its deferred tax assets is necessary in order to reflect the Company's current assessment of its ability to realize the benefits of those deferred tax assets.
The Company made this determination in accordance with U.S. generally accepted accounting principles after weighing the available evidence, which included a projected three-year historical cumulative loss related to earnings before taxes as of the end of the third quarter of fiscal 2011. Recording the valuation allowance does not have any impact on cash, nor does such an allowance preclude the Company from utilizing its deferred tax assets in future profitable periods.
Third Quarter Balance Sheet Highlights
The Company ended the third quarter of fiscal 2011 with total cash, cash-equivalents and investments of $102.3 million. Inventory, excluding e-Commerce inventory, increased 12% on a per-store basis at the end of the third quarter of fiscal 2011, as compared to the end of the third quarter of fiscal 2010. The Company's balance sheet remains strong and management believes that its cash, cash-equivalents and investments are sufficient to meet the Company's cash and liquidity needs for the current fiscal year.
Capital Expenditures
The Company funded approximately $7.3 million of capital expenditures during the first nine months of fiscal 2011.
Fourth Quarter Fiscal 2011 Outlook
• For the fourth quarter of fiscal 2011, the Company expects same store sales to be flat to up low single digits as compared to the fourth quarter of last year.
• Total gross margin is expected to decrease by 400 to 500 basis points in the fourth quarter of fiscal 2011, as compared to last year's fourth quarter, due to increased promotional activity and higher product costs, somewhat offset by the anticipated leveraging of buying and occupancy costs.
• SG&A expense dollars in the fourth quarter of fiscal 2011 are expected to be approximately the same as in the third quarter of fiscal 2011.
• Capital expenditures are expected to be $10 to $11 million for the full fiscal year.
Christopher & Banks Corporation
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