þ
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
NEVADA
(State
or other jurisdiction of incorporation or organization)
|
91-1826900
(I.R.S.
Employer Identification No.)
|
10201
Main Street, Houston, Texas
(Address
of principal executive offices)
|
77025
(Zip
Code)
|
TABLE
OF CONTENTS
|
PART
I FINANCIAL INFORMATION
|
|
|
|
|
Page
No.
|
Item
1.
|
Financial
Statements (Unaudited)
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|
|
|
Item
2.
|
14
|
|
|
|
|
Item
3.
|
18
|
|
|
|
|
Item
4.
|
19
|
|
|
|
|
PART
II OTHER INFORMATION
|
|
|
|
|
|
Item
1.
|
20
|
|
Item
1A.
|
20
|
|
Item
2.
|
20
|
|
Item
3.
|
20
|
|
Item
4.
|
21
|
|
Item
5.
|
21
|
|
Item
6.
|
21
|
|
|
|
|
22
|
ITEM
1.
|
FINANCIAL
STATEMENTS
|
|
May
5, 2007
|
February
3, 2007
|
|||||
|
|
|
|||||
ASSETS
|
|
|
|||||
Cash
and cash equivalents
|
$
|
20,406
|
$
|
15,866
|
|||
Merchandise
inventories, net
|
366,937
|
332,763
|
|||||
Current
deferred taxes
|
23,166
|
23,231
|
|||||
Prepaid
expenses and other current assets
|
21,753
|
42,512
|
|||||
Total
current assets
|
432,262
|
414,372
|
|||||
|
|||||||
Property,
equipment and leasehold improvements, net
|
281,513
|
278,839
|
|||||
Goodwill
|
95,374
|
95,374
|
|||||
Intangible
asset
|
14,910
|
14,910
|
|||||
Other
non-current assets, net
|
24,498
|
21,491
|
|||||
Total
assets
|
$
|
848,557
|
$
|
824,986
|
|||
|
|||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Accounts
payable
|
$
|
102,203
|
$
|
85,477
|
|||
Current
portion of debt obligations
|
90
|
86
|
|||||
Accrued
expenses and other current liabilities
|
61,974
|
75,141
|
|||||
Total
current liabilities
|
164,267
|
160,704
|
|||||
|
|||||||
Debt
obligations
|
24,869
|
16,528
|
|||||
Other
long-term liabilities
|
80,825
|
76,346
|
|||||
Total
liabilities
|
269,961
|
253,578
|
|||||
|
|||||||
Commitments
and contingencies
|
|||||||
|
|||||||
Common
stock, par value $0.01, 64,603 shares authorized, 54,982 and 54,343
shares
issued, respectively
|
550
|
543
|
|||||
Additional
paid-in capital
|
472,274
|
462,745
|
|||||
Less
treasury stock - at cost, 11,119 and 10,708 shares,
respectively
|
(174,377
|
)
|
(165,094
|
)
|
|||
Accumulated
other comprehensive loss
|
(1,908
|
)
|
(1,908
|
)
|
|||
Retained
earnings
|
282,057
|
275,122
|
|||||
Stockholders'
equity
|
578,596
|
571,408
|
|||||
Total
liabilities and stockholders' equity
|
$
|
848,557
|
$
|
824,986
|
|
Thirteen
Weeks
Ended
May
5, 2007
|
Thirteen
Weeks
Ended
April
29, 2006
|
|||||
|
|
|
|||||
|
|
|
|||||
Net
sales
|
$
|
358,244
|
$
|
343,541
|
|||
Cost
of sales and related buying, occupancy and distribution
expenses
|
259,919
|
243,871
|
|||||
Gross
profit
|
98,325
|
99,670
|
|||||
|
|||||||
Selling,
general and administrative expenses
|
82,288
|
83,633
|
|||||
Store
opening costs
|
755
|
815
|
|||||
Interest,
net of income of $0 and $100, respectively
|
769
|
807
|
|||||
Income
before income tax
|
14,513
|
14,415
|
|||||
|
|||||||
Income
tax expense
|
5,406
|
5,370
|
|||||
Net
income
|
$
|
9,107
|
$
|
9,045
|
|||
|
|||||||
Basic
earnings per share data:
|
|||||||
|
|||||||
Basic
earnings per share
|
$
|
0.21
|
$
|
0.23
|
|||
|
|||||||
Basic
weighted average shares outstanding
|
43,507
|
39,880
|
|||||
|
|||||||
Diluted
earnings per share data:
|
|||||||
|
|||||||
Diluted
earnings per share
|
$
|
0.20
|
$
|
0.21
|
|||
|
|||||||
Diluted
weighted average shares outstanding
|
44,790
|
43,500
|
|
Thirteen
Weeks
Ended
May
5, 2007
|
Thirteen
Weeks
Ended
April
29, 2006
|
|||||
Cash
flows from operating activities:
|
|
|
|||||
Net
income
|
$
|
9,107
|
$
|
9,045
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Depreciation
and amortization
|
11,546
|
11,085
|
|||||
Deferred
income taxes
|
(520
|
)
|
(6,071
|
)
|
|||
Stock-based
compensation tax benefits
|
3,448
|
1,075
|
|||||
Stock-based
compensation expense
|
1,521
|
1,025
|
|||||
Amortization
of debt issue costs
|
100
|
112
|
|||||
Excess
tax benefits from stock based compensation
|
(3,400
|
)
|
(998
|
)
|
|||
Construction
allowances from landlords
|
2,786
|
2,524
|
|||||
Other
changes in operating assets and liabilities:
|
|||||||
Increase
in merchandise inventories
|
(34,174
|
)
|
(51,999
|
)
|
|||
Decrease
in other assets
|
18,217
|
21,232
|
|||||
Increase
in accounts payable and other liabilities
|
8,909
|
15,133
|
|||||
Total
adjustments
|
8,433
|
(6,882
|
)
|
||||
Net
cash provided by operating activities
|
17,540
|
2,163
|
|||||
|
|||||||
Cash
flows from investing activities:
|
|||||||
Additions
to property, equipment and leasehold improvements
|
(17,888
|
)
|
(14,080
|
)
|
|||
Acquisition
of B.C. Moore, net of cash
|
-
|
(35,622
|
)
|
||||
Proceeds
from sale of property and equipment
|
31
|
-
|
|||||
Net
cash used in investing activities
|
(17,857
|
)
|
(49,702
|
)
|
|||
|
|||||||
Cash
flows from financing activities:
|
|||||||
Proceeds
from (payments on):
|
|||||||
Borrowings
under revolving credit facility, net
|
8,365
|
41,540
|
|||||
Repurchases
of common stock
|
(9,283
|
)
|
(7,124
|
)
|
|||
Debt
obligations
|
(20
|
)
|
(17
|
)
|
|||
Exercise
of stock options and warrants
|
4,567
|
1,863
|
|||||
Excess
tax benefits from stock based compensation
|
3,400
|
998
|
|||||
Cash
dividends
|
(2,172
|
)
|
(665
|
)
|
|||
Net
cash provided by financing activities
|
4,857
|
36,595
|
|||||
Net
increase (decrease) in cash and cash equivalents
|
4,540
|
(10,944
|
)
|
||||
|
|||||||
Cash
and cash equivalents:
|
|||||||
Beginning
of period
|
15,866
|
33,683
|
|||||
End
of period
|
$
|
20,406
|
$
|
22,739
|
|||
|
|||||||
Supplemental
disclosures:
|
|||||||
Interest
paid
|
$
|
651
|
$
|
558
|
|||
Income
taxes paid
|
$
|
74
|
$
|
8,433
|
|||
Unpaid
liabilities for capital expenditures
|
$
|
533
|
$
|
-
|
|
|
|
|
|
|
|
Accumulated
|
|
|||||||||||||||||
|
Common
|
Additional
|
Treasury
|
Other
|
|||||||||||||||||||||
|
Stock
|
Paid-in
|
Stock
|
Retained
|
Comprehensive
|
||||||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Shares
|
Amount
|
Earnings
|
Loss
|
Total
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance,
February 3, 2007
|
54,343
|
$
|
543
|
$
|
462,745
|
(10,708
|
)
|
$
|
(165,094
|
)
|
$
|
275,122
|
$
|
(1,908
|
)
|
$
|
571,408
|
||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
9,107
|
-
|
9,107
|
|||||||||||||||||
Dividends
on common stock
|
-
|
-
|
-
|
-
|
-
|
(2,172
|
)
|
-
|
(2,172
|
)
|
|||||||||||||||
Repurchases
of common stock
|
-
|
-
|
-
|
(411
|
)
|
(9,283
|
)
|
-
|
-
|
(9,283
|
)
|
||||||||||||||
Stock
options exercised
|
620
|
7
|
4,560
|
-
|
-
|
-
|
-
|
4,567
|
|||||||||||||||||
Issuance
of stock awards
|
19
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||
Stock-based
compensation expense
|
-
|
-
|
1,521
|
-
|
-
|
-
|
-
|
1,521
|
|||||||||||||||||
Stock-based
compensation tax benefits
|
-
|
-
|
3,448
|
-
|
-
|
-
|
-
|
3,448
|
|||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
Balance,
May 5, 2007
|
54,982
|
$
|
550
|
$
|
472,274
|
(11,119
|
)
|
$
|
(174,377
|
)
|
$
|
282,057
|
$
|
(1,908
|
)
|
$
|
578,596
|
1.
|
Basis
of Presentation
|
2.
|
Stock-Based
Compensation
|
|
Thirteen
Weeks Ended
|
||||||
|
May
5, 2007
|
April
29, 2006
|
|||||
|
|
|
|||||
|
|
|
|||||
Stock
options and stock appreciation rights ("SARs")
|
$
|
989
|
$
|
729
|
|||
Non-vested
stock
|
306
|
100
|
|||||
Performance
shares
|
226
|
196
|
|||||
|
|||||||
Total
compensation expense
|
$
|
1,521
|
$
|
1,025
|
|
|
Thirteen
Weeks Ended
|
||
|
|
May
5, 2007
|
|
April
29, 2006
|
|
|
|
|
|
Expected
volatility
|
|
30.8%
|
|
32.7%
|
Weighted
average volatility
|
|
30.8%
|
|
32.7%
|
Risk
free rate
|
|
4.5%
|
|
4.8%
|
Expected
life of options (in years)
|
|
4.5
|
|
4.7
|
Expected
dividend yield
|
|
0.9%
|
|
0.3%
|
|
Number
of Shares
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Contractual Term (years)
|
Aggregate
Intrinsic Value (in thousands)
|
|||||||||
Outstanding
at February 3, 2007
|
4,562,836
|
$
|
12.09
|
||||||||||
Granted
|
607,000
|
22.96
|
|||||||||||
Exercised
|
(619,720
|
)
|
7.37
|
||||||||||
Forfeited
|
(56,818
|
)
|
18.30
|
||||||||||
Outstanding
at May 5, 2007
|
4,493,298
|
$
|
14.13
|
5.5
|
$
|
31,073
|
|||||||
|
|||||||||||||
Vested
or expected to vest at May 5, 2007
|
4,195,252
|
$
|
13.70
|
5.4
|
$
|
30,815
|
|||||||
|
|||||||||||||
Exercisable
at May 5, 2007
|
2,414,140
|
$
|
9.60
|
4.9
|
$
|
27,644
|
Stock
Options/SARs
|
Number
of Shares
|
Weighted
Average Grant Date Fair Value
|
|||||
Non-vested
at February 3, 2007
|
1,763,883
|
$
|
6.15
|
||||
Granted
|
607,000
|
7.04
|
|||||
Vested
|
(234,907
|
)
|
6.35
|
||||
Forfeited
|
(56,818
|
)
|
6.09
|
||||
Non-vested
at May 5, 2007
|
2,079,158
|
6.40
|
Period
|
Shares
|
Vested
and
|
Shares
|
Weighted
Average Grant Date Fair Value per
|
|||||||||
Granted
|
Granted
|
Issued
|
Oustanding
|
Share
|
|||||||||
|
|
|
|
|
|||||||||
2004
|
22,500
|
22,500
|
$
|
15.79
|
|||||||||
2006
|
93,913
|
(15,000
|
)
|
78,913
|
20.38
|
||||||||
2007
|
32,666
|
|
32,666
|
22.96
|
|||||||||
|
|||||||||||||
Total
|
149,079
|
(15,000
|
)
|
134,079
|
|
Period
|
Target
Shares
|
Target
Shares
|
Target
Shares
|
Weighted
Average Grant Date Fair Value per
|
|||||||||
Granted
|
Granted
|
Forfeited
|
Outstanding
|
Share
|
|||||||||
|
|
|
|
|
|||||||||
2005
|
62,915
|
(1,772
|
)
|
61,143
|
$
|
17.39
|
|||||||
2006
|
98,088
|
-
|
98,088
|
19.19
|
|||||||||
2007
|
78,500
|
-
|
78,500
|
22.96
|
|||||||||
|
|||||||||||||
Total
|
239,503
|
(1,772
|
)
|
237,731
|
|
3.
|
Acquisition
of B. C. Moore & Sons,
Incorporated
|
4.
|
Sale
of Private Label Credit Card Portfolios
|
5.
|
Debt
Obligations
|
|
May
5, 2007
|
February
3, 2007
|
|||||
Revolving
Credit Facility
|
$
|
22,000
|
$
|
13,635
|
|||
Finance
lease obligations
|
2,959
|
2,979
|
|||||
|
24,959
|
16,614
|
|||||
Less:
Current portion of debt obligations
|
90
|
86
|
|||||
|
$
|
24,869
|
$
|
16,528
|
6.
|
Income
Taxes
|
7.
|
Earnings
per Share
|
|
Thirteen
Weeks Ended
|
||||||
|
May
5, 2007
|
April
29, 2006
|
|||||
Basic
weighted average shares outstanding
|
43,507
|
39,880
|
|||||
Effect
of dilutive securities:
|
|||||||
Stock
options, SARs, and non-vested stock grants
|
1,283
|
1,697
|
|||||
Warrants
|
-
|
1,923
|
|||||
Diluted
weighted average shares outstanding
|
44,790
|
43,500
|
|
Thirteen
Weeks Ended
|
||||||
|
May
5, 2007
|
April
29, 2006
|
|||||
|
|
|
|||||
Number
of anti-dilutive options and SARs outstanding
|
607
|
3
|
8.
|
Stockholders’
Equity
|
9.
|
Retirement
Plans
|
|
Thirteen
Weeks Ended
|
||||||
|
May
5, 2007
|
April
29, 2006
|
|||||
Service
cost
|
$
|
9
|
$
|
10
|
|||
Interest
cost
|
646
|
611
|
|||||
Expected
return on plan assets
|
(583
|
)
|
(589
|
)
|
|||
Net
loss amortization
|
5
|
39
|
|||||
Net
periodic pension cost
|
$
|
77
|
$
|
71
|
ITEM
2.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
|
Thirteen
Weeks Ended
|
||||||
|
May
5, 2007(1)
|
April
29, 2006(1)
|
|||||
|
|
|
|||||
Net
sales
|
100.0
|
%
|
100.0
|
%
|
|||
Cost
of sales and related buying, occupancy and distribution
expenses
|
72.6
|
71.0
|
|||||
Gross
profit
|
27.4
|
29.0
|
|||||
|
|||||||
Selling,
general and administrative expenses
|
23.0
|
24.3
|
|||||
Store
opening costs
|
0.2
|
0.2
|
|||||
Interest,
net
|
0.2
|
0.2
|
|||||
Income
before income tax
|
4.1
|
4.2
|
|||||
|
|||||||
Income
tax expense
|
1.5
|
1.6
|
|||||
Net
income
|
2.5
|
%
|
2.6
|
%
|
|
Increase
Quarter
1
2007
|
|||
Merchandise
cost of sales
|
1.0
|
%
|
||
Buying,
occupancy and distribution expenses
|
0.6
|
|||
Increase
in merchandise cost of sales and related buying, occupancy and
distribution expenses rate
|
1.6
|
%
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
ITEM
4.
|
CONTROLS
AND PROCEDURES
|
(1)
|
Pertain
to the maintenance of records that in reasonable detail accurately
and
fairly reflect the transactions and dispositions of the assets of
the
issuer;
|
(2)
|
Provide
reasonable assurance that transactions are recorded as necessary
to permit
preparation of financial statements in accordance with generally
accepted
accounting principles, and that receipts and expenditures of the
issuer
are being made only in accordance with authorizations of management
and
directors of the issuer; and
|
(3)
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the issuer's assets
that
could have a material adverse effect on the financial
statements.
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
ITEM
1A.
|
RISK
FACTORS
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ISSUER
PURCHASES OF EQUITY SECURITIES
|
|||||||||||||
|
|
|
|
|
|||||||||
Period
|
Total
Number of Shares Purchased
|
Average
Price Paid Per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
(1)
|
Approximate
Dollar Value of Shares that May Yet Be Purchased Under the Plans
or
Programs (1)
|
|||||||||
|
|
|
|
|
|||||||||
February
4, 2007 to March 3, 2007
|
171,242
|
$
|
21.99
|
171,242
|
$
|
50,489,779
|
|||||||
|
|||||||||||||
March
4, 2007 to April 7, 2007
|
127,634
|
$
|
21.76
|
127,634
|
$
|
48,665,868
|
|||||||
|
|||||||||||||
April
8, 2007 to May 5, 2007
|
112,586
|
$
|
22.36
|
112,586
|
$
|
53,172,005
|
|||||||
|
|||||||||||||
Total
|
411,462
|
$
|
22.02
|
411,462
|
(1)
|
On
January 5, 2007, the Company’s Board of Directors approved a stock
repurchase program authorizing the Company to repurchase up to $50.0
million of its outstanding common stock, of which approximately $37.2
million remained available for repurchase as of May 5, 2007. Under
this
program additional amounts of outstanding common stock can be repurchased
using proceeds from the exercise of employee stock options. At May
5,
2007, approximately $16.0 million was available to the Company for
stock
repurchases with proceeds from the exercise of employee stock options.
During the quarter ended May 5, 2007, the Company purchased 411,462
shares
of its common stock at a cost of approximately $9.1 million.
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
ITEM
5.
|
OTHER
INFORMATION
|
ITEM
6.
|
EXHIBITS
|
Exhibit
Number
|
Description
|
10.1
|
Fourth
Amendment to Credit Agreement dated as of April 20, 2007, by and
among
Specialty Retailers (TX) LP, Stage Stores, Inc. and the named subsidiaries
of Stage Stores, Inc., Bank of America, N.A. (f/k/a Fleet National
Bank)
and the other lenders and parties named therein is incorporated by
reference to Exhibit 10 of Stage Stores’ Current Report on Form 8-K
(Commission File No. 1-14035) filed April 24, 2007.
|
Third
Amendment to Amended and Restated Private Label Credit Card Program
Agreement dated as of May 18, 2007, by and among Stage Stores, Inc.,
Specialty Retailers (TX) LP and World Financial Network National
Bank.
|
|
Certification
of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
under
the Securities Exchange Act of 1934, as amended.
|
|
Certification
of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
under
the Securities Exchange Act of 1934, as amended.
|
|
Certification
Pursuant to 18 U.S.C. Section 1350.
|
STAGE
STORES, INC.
|
|
June
7, 2007
|
/s/
James R. Scarborough
|
(Date)
|
James
R. Scarborough
|
Chief
Executive Officer
|
|
(Principal
Executive Officer)
|
|
June
7, 2007
|
/s/
Michael E. McCreery
|
(Date)
|
Michael
E. McCreery
|
Executive
Vice President, Chief Financial
|
|
Officer
and Corporate Secretary
|
|
(Principal
Financial and Accounting Officer)
|