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
Adjustment

 

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
August 30, 2008

 

 

 

Consolidated

 

Acorn
Adjustment

 

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
September 1, 2007

 

 

 

Consolidated

 

Acorn
Adjustment

 

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
March 1, 2008

 

 

 

 

 

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)

 

 

 

Year Ended
March 3, 2007

 

 

 

 

 

Acorn

 

 

 

 

 

Consolidated

 

Adjustment

 

Proforma

 

 

 

 

 

 

 

 

 

Net sales

 

$

547,317

 

$

14,161

 

$

533,156

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

Merchandise, buying and occupancy, exclusive of depreciation and amortization

 

330,473

 

11,503

 

318,970

 

Selling, general and administrative

 

145,229

 

4,533

 

140,696

 

Depreciation and amortization

 

20,606

 

990

 

19,616

 

Impairment of store assets

 

1,081

 

751

 

330

 

 

 

 

 

 

 

 

 

Total costs and expenses

 

497,389

 

17,777

 

479,612

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

49,928

 

(3,616

)

53,544

 

 

 

 

 

 

 

 

 

Interest income

 

5,115

 

 

5,115

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

55,043

 

(3,616

)

58,659

 

 

 

 

 

 

 

 

 

Income tax provision

 

21,357

 

(1,345

)

22,702

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

33,686

 

$

(2,271

)

$

35,957

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

0.90

 

$

(0.07

)

$

0.97

 

 

 

 

 

 

 

 

 

Basic shares outstanding

 

37,307

 

37,307

 

37,307

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

0.89

 

$

(0.06

)

$

0.95

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

37,761

 

37,761

 

37,761

 

 

 

 

 

 

 

 

 

Dividends per share

 

$

0.20

 

$

 

$

0.20

 

 

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)

 

 

 

 

Year Ended
February 25, 2006

 

 

 

 

 

Acorn

 

 

 

 

 

Consolidated

 

Adjustment

 

Proforma

 

 

 

 

 

 

 

 

 

Net sales

 

$

490,508

 

$

11,441

 

$

479,067

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

Merchandise, buying and occupancy, exclusive of depreciation and amortization

 

292,072

 

9,646

 

282,426

 

Selling, general and administrative

 

131,717

 

5,542

 

126,175

 

Depreciation and amortization

 

18,847

 

586

 

18,261

 

Impairment of store assets

 

238

 

227

 

11

 

 

 

 

 

 

 

 

 

Total costs and expenses

 

442,874

 

16,001

 

426,873

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

47,634

 

(4,560

)

52,194

 

 

 

 

 

 

 

 

 

Interest income

 

2,092

 

 

2,092

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

49,726

 

(4,560

)

54,286

 

 

 

 

 

 

 

 

 

Income tax provision

 

19,313

 

(1,607

)

20,920

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

30,413

 

$

(2,953

)

$

33,366

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

0.85

 

$

(0.08

)

$

0.93

 

 

 

 

 

 

 

 

 

Basic shares outstanding

 

35,907

 

35,907

 

35,907

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

0.84

 

$

(0.08

)

$

0.92

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

36,220

 

36,220

 

36,220

 

 

 

 

 

 

 

 

 

Dividends per share

 

$

0.16

 

$

 

$

0.16

 

 

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.

 

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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
Vice President – Finance, and
Interim Chief Financial Officer

 

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