UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 000-21915
Date of Report: August 8, 2006
COLDWATER CREEK INC.
(Exact name of registrant as specified in its charter)
| | |
| DELAWARE | | 82-0419266 |
| (State of other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
ONE COLDWATER CREEK DRIVE, SANDPOINT, IDAHO 83864
(Address of principal executive offices)
(208) 263-2266
(Registrant’s telephone number, including area code)
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 (seeGeneral 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)) |
To assist investors in assessing the impact of Coldwater Creek Inc’s (the “Company”) accounting under its co-branded credit card program, provided below is certain information regarding marketing fees, sales discounts and expenses under the program through the first quarter of fiscal 2006. Certain of the information given below amends and supersedes the Company’s prior disclosures with respect to the program.
The activation of credit cards under the co-branded credit card program has resulted in the receipt of approximately $15.9 million in marketing fees since the program’s inception through the end of the first quarter of fiscal 2006. The Company defers these marketing fees and recognizes them as revenue in future periods over the expected term of its customer relationships. The following table shows the marketing fees received by channel for each fiscal period since the inception of the program (in thousands).
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| | | Deferred Marketing Fees |
Fiscal Period | | Retail | | Internet | | Catalog | | Total |
Q1 2005 | | $ | — | | $ | — | | $ | — | | $ | — |
Q2 2005 | | | 974 | | | 570 | | | 144 | | | 1,688 |
Q3 2005 | | | 2,776 | | | 1,077 | | | 688 | | | 4,541 |
Q4 2005 | | | 3,609 | | | 1,673 | | | 800 | | | 6,082 |
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Fiscal 2005 | | $ | 7,359 | | $ | 3,320 | | $ | 1,632 | | $ | 12,311 |
Q1 2006 | | | 2,704 | | | 758 | | | 84 | | | 3,546 |
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Total | | $ | 10,063 | | $ | 4,078 | | $ | 1,716 | | $ | 15,857 |
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The following table provides actual and anticipated revenue recognition for the marketing fees received through the first quarter of fiscal 2006 (in thousands). Amounts shown for fiscal 2005 as well as the first quarter of fiscal 2006 are actual marketing fee revenues recognized during those periods. Amounts for all subsequent periods represent estimates of future recognition of these marketing fees. Because the amortization schedule involves the Company’s current estimates and assumptions of the expected lives of its customer credit card relationships, amounts shown for periods subsequent to the first quarter of fiscal 2006 are subject to change.
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| | | Actual and Expected Amortization of Deferred Marketing Fees |
Fiscal Period | | Q1 | | Q2 | | Q3 | | Q4 | | Total |
2005 | | $ | — | | $ | 389 | | $ | 1,261 | | $ | 2,121 | | $ | 3,771 |
2006 | | | 1,885 | | | 1,099 | | | 925 | | | 862 | | | 4,771 |
2007 | | | 825 | | | 745 | | | 681 | | | 643 | | | 2,894 |
2008 | | | 617 | | | 563 | | | 518 | | | 491 | | | 2,189 |
2009 | | | 468 | | | 417 | | | 377 | | | 355 | | | 1,617 |
2010 | | | 315 | | | 209 | | | 82 | | | 9 | | | 615 |
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Total | | | | | | | | | | | | | | $ | 15,857 |
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The following table provides further detail of the actual marketing fee revenue recognized through the first quarter of fiscal 2006 by channel (in thousands).
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| | | Amortization of Deferred Marketing Fees |
Fiscal Period | | Retail | | Internet | | Catalog | | Total |
Q2 2005 | | $ | 222 | | $ | 134 | | $ | 33 | | $ | 389 |
Q3 2005 | | | 774 | | | 301 | | | 186 | | | 1,261 |
Q4 2005 | | | 1,259 | | | 596 | | | 266 | | | 2,121 |
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Fiscal 2005 | | $ | 2,255 | | $ | 1,031 | | $ | 485 | | $ | 3,771 |
Q1 2006 | | | 1,429 | | | 407 | | | 49 | | | 1,885 |
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Total | | $ | 3,684 | | $ | 1,438 | | $ | 534 | | $ | 5,656 |
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To encourage customers to apply for and activate the co-branded credit card the Company provides a discount to customers on their first purchase made with the co-branded credit card. These discounts are netted against the sales price of the related merchandise. The following table contains a quarterly breakdown of these marketing sales discounts (in thousands).
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| | | Marketing Sales Discounts |
Fiscal Period | | Retail
Segment | | Direct
Segment | | Total |
Q1 2005 | | $ | — | | $ | — | | $ | — |
Q2 2005 | | | 652 | | | 452 | | | 1,104 |
Q3 2005 | | | 2,205 | | | 1,213 | | | 3,418 |
Q4 2005 | | | 1,927 | | | 1,373 | | | 3,300 |
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Fiscal 2005 | | $ | 4,784 | | $ | 3,038 | | $ | 7,822 |
Q1 2006 | | | 1,377 | | | 443 | | | 1,820 |
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Total | | $ | 6,161 | | $ | 3,481 | | $ | 9,642 |
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In addition to marketing sales discounts the Company also incurs costs of printing and mailing customized catalogs to customers who have been pre-approved by the credit card issuer to receive a credit card offer. These costs are expensed as incurred as selling, general and administrative expenses. The following table contains a breakdown of these other marketing costs by quarter (in thousands).
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Fiscal Period | | Other
Marketing Costs |
Q1 2005 | | $ | — |
Q2 2005 | | | 77 |
Q3 2005 | | | 335 |
Q4 2005 | | | 489 |
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Fiscal 2005 | | $ | 901 |
Q1 2006 | | | 284 |
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Total | | $ | 1,185 |
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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.
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| | | | COLDWATER CREEK INC. |
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Date: August 8, 2006 | | | | /s/ Melvin Dick |
| | | | Melvin Dick Executive Vice President, Chief Financial Officer |
