Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
May. 30, 2015 | Jun. 24, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Container Store Group, Inc. | |
Entity Central Index Key | 1,411,688 | |
Document Type | 10-Q | |
Document Period End Date | May 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --02-27 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 47,983,804 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q1 |
Consolidated balance sheets
Consolidated balance sheets - USD ($) $ in Thousands | May. 30, 2015 | Feb. 28, 2015 | May. 31, 2014 |
Current assets: | |||
Cash | $ 9,829 | $ 24,994 | $ 8,610 |
Accounts receivable, net | 21,929 | 24,319 | 29,267 |
Inventory | 103,619 | 83,724 | 94,626 |
Prepaid expenses | 6,476 | 7,895 | 7,953 |
Income taxes receivable | 908 | 1,698 | 600 |
Deferred tax assets, net | 3,256 | 3,256 | 3,967 |
Other current assets | 10,686 | 11,056 | 10,958 |
Total current assets | 156,703 | 156,942 | 155,981 |
Noncurrent assets: | |||
Property and equipment, net | 170,851 | 169,053 | 164,779 |
Goodwill | 202,815 | 202,815 | 202,815 |
Trade names | 228,593 | 229,433 | 240,021 |
Deferred financing costs, net | 7,253 | 7,742 | 9,210 |
Noncurrent deferred tax assets, net | 2,186 | 1,739 | 1,179 |
Other assets | 1,622 | 1,333 | 1,211 |
Total noncurrent assets | 613,320 | 612,115 | 619,215 |
Total assets | 770,023 | 769,057 | 775,196 |
Current liabilities: | |||
Accounts payable | 57,035 | 48,904 | 47,846 |
Accrued liabilities | 52,991 | 59,891 | 54,420 |
Revolving lines of credit | 7,407 | 2,834 | 23,529 |
Current portion of long-term debt | 5,274 | 5,319 | 5,741 |
Income taxes payable | 5 | 2,188 | 640 |
Deferred tax liabilities, net | 29 | ||
Total current liabilities | 122,712 | 119,136 | 132,205 |
Noncurrent liabilities: | |||
Long-term debt | 333,562 | 326,775 | 332,306 |
Noncurrent deferred tax liabilities, net | 79,843 | 82,965 | 82,638 |
Deferred rent and other long-term liabilities | 37,764 | 38,319 | 36,354 |
Total noncurrent liabilities | 451,169 | 448,059 | 451,298 |
Total liabilities | $ 573,881 | $ 567,195 | $ 583,503 |
Commitments and contingencies (Note 6) | |||
Shareholders' equity: | |||
Common stock, $0.01 par value, 250,000,000 shares authorized; 47,983,804 shares issued and outstanding at May 30, 2015; 47,983,660 shares issued and outstanding at February 28, 2015; 47,974,829 shares issued and outstanding at May 31, 2014 | $ 480 | $ 480 | $ 480 |
Additional paid-in capital | 855,648 | 855,322 | 854,174 |
Accumulated other comprehensive loss | (19,189) | (18,342) | (1,111) |
Retained deficit | (640,797) | (635,598) | (661,850) |
Total shareholders' equity | 196,142 | 201,862 | 191,693 |
Total liabilities and shareholders' equity | $ 770,023 | $ 769,057 | $ 775,196 |
Consolidated balance sheets (Pa
Consolidated balance sheets (Parenthetical) - $ / shares | May. 30, 2015 | Feb. 28, 2015 | May. 31, 2014 |
Consolidated balance sheets | |||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 | 250,000,000 |
Common stock, shares issued | 47,983,804 | 47,983,660 | 47,974,829 |
Common stock, shares outstanding | 47,983,804 | 47,983,660 | 47,974,829 |
Consolidated statements of oper
Consolidated statements of operations - USD ($) $ in Thousands | 3 Months Ended | |
May. 30, 2015 | May. 31, 2014 | |
Consolidated statements of operations | ||
Net sales | $ 169,833 | $ 173,438 |
Cost of sales (excluding depreciation and amortization) | 70,505 | 72,586 |
Gross profit | 99,328 | 100,852 |
Selling, general, and administrative expenses (excluding depreciation and amortization) | 93,941 | 90,912 |
Stock-based compensation | 328 | 277 |
Pre-opening costs | 1,056 | 2,987 |
Depreciation and amortization | 8,037 | 7,256 |
Other expenses | 525 | |
Loss on disposal of assets | 5 | 100 |
Loss from operations | (4,039) | (1,205) |
Interest expense | 4,168 | 4,302 |
Loss before taxes | (8,207) | (5,507) |
Benefit for income taxes | (3,008) | (1,928) |
Net loss | $ (5,199) | $ (3,579) |
Basic and diluted net loss per common share (in dollars per share) | $ (0.11) | $ (0.07) |
Weighted-average common shares outstanding - basic and diluted (in shares) | 47,983,738 | 47,946,616 |
Consolidated statements of comp
Consolidated statements of comprehensive loss - USD ($) $ in Thousands | 3 Months Ended | |
May. 30, 2015 | May. 31, 2014 | |
Consolidated statements of comprehensive loss | ||
Net loss | $ (5,199) | $ (3,579) |
Unrealized gain (loss) on financial instruments, net of tax provision (benefit) of $113 and ($16) | 174 | (53) |
Pension liability adjustment | 30 | 61 |
Foreign currency translation adjustment | (1,051) | (2,802) |
Comprehensive loss | $ (6,046) | $ (6,373) |
Consolidated statements of com6
Consolidated statements of comprehensive income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
May. 30, 2015 | May. 31, 2014 | |
Consolidated statements of comprehensive loss | ||
Unrealized gain (loss) on financial instruments, taxes | $ 113 | $ (16) |
Consolidated statements of cash
Consolidated statements of cash flows - USD ($) $ in Thousands | 3 Months Ended | |
May. 30, 2015 | May. 31, 2014 | |
Operating activities | ||
Net loss | $ (5,199) | $ (3,579) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 8,037 | 7,256 |
Stock-based compensation | 328 | 277 |
Excess tax benefit from stock-based compensation | (15) | |
Loss on disposal of property and equipment | 5 | 100 |
Deferred tax benefit | (3,043) | (2,106) |
Noncash interest | 489 | 489 |
Other | 83 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,023 | 2,558 |
Inventory | (19,811) | (9,728) |
Prepaid expenses and other assets | 1,009 | 5,369 |
Accounts payable and accrued liabilities | 4,415 | (5,489) |
Income taxes | (1,524) | (3,340) |
Other noncurrent liabilities | (416) | 445 |
Net cash used in operating activities | (13,604) | (7,763) |
Investing activities | ||
Additions to property and equipment | (13,332) | (13,418) |
Proceeds from sale of property and equipment | 188 | |
Net cash used in investing activities | (13,144) | (13,418) |
Financing activities | ||
Borrowings on revolving lines of credit | 13,967 | 18,334 |
Payments on revolving lines of credit | (9,327) | (9,961) |
Borrowings on long-term debt | 8,000 | 8,000 |
Payments on long-term debt | (1,320) | (5,172) |
Proceeds from the exercise of stock options | 3 | 587 |
Excess tax benefit from stock-based compensation | 15 | |
Net cash provided by financing activities | 11,323 | 11,803 |
Effect of exchange rate changes on cash | 260 | (58) |
Net decrease in cash | (15,165) | (9,436) |
Cash at beginning of period | 24,994 | 18,046 |
Cash at end of period | 9,829 | 8,610 |
Supplemental information for non-cash investing and financing activities | ||
Purchases of property and equipment (included in accounts payable) | 2,194 | $ 2,098 |
Capital lease obligation incurred | $ 231 |
Description of business and bas
Description of business and basis of presentation | 3 Months Ended |
May. 30, 2015 | |
Description of business and basis of presentation | |
Description of business and basis of presentation | 1. Description of business and basis of presentation These financial statements should be read in conjunction with the financial statement disclosures in our Annual Report on Form 10-K for the fiscal year ended February 28, 2015, filed with the Securities and Exchange Commission on May 8, 2015. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). We use the same accounting policies in preparing quarterly and annual financial statements. All adjustments necessary for a fair presentation of quarterly operating results are reflected herein and are of a normal, recurring nature. Description of business The Container Store, Inc. was founded in 1978 in Dallas, Texas, as a retailer with a mission to provide customers with storage and organization solutions through an assortment of innovative products and unparalleled customer service. In 2007, The Container Store, Inc. was sold to The Container Store Group, Inc. (the “Company”), a holding company, of which a majority stake was purchased by Leonard Green and Partners, L.P. (“LGP”), with the remainder held by certain employees of The Container Store, Inc. On November 6, 2013, the Company completed its initial public offering (the “IPO”). As the majority shareholder, LGP retains controlling interest in the Company. As of May 30, 2015, The Container Store, Inc. operates 71 stores with an average size of approximately 25,000 square feet (19,000 selling square feet) in 25 states and the District of Columbia. The Container Store, Inc. also offers all of its products directly to its customers through its website and call center. The Container Store, Inc.’s wholly owned Swedish subsidiary, Elfa International AB (“Elfa”) designs and manufactures component-based shelving and drawer systems and made-to-measure sliding doors. elfa ® branded products are sold exclusively in the United States in The Container Store retail stores, website and call center, and Elfa sells to various retailers on a wholesale basis in approximately 30 countries around the world, with a concentration in the Nordic region of Europe. Seasonality The Company’s business is moderately seasonal in nature and, therefore, the results of operations for the thirteen weeks ended May 30, 2015 are not necessarily indicative of the operating results for the full year. Demand is generally highest in the fourth fiscal quarter due to Our Annual elfa ® Sale, and lowest in the first fiscal quarter. Reclassifications Certain prior period amounts have been reclassified in order to provide consistent comparative information. These reclassifications do not materially impact the consolidated financial statements for the prior periods presented. Recent accounting pronouncements In April 2015, the FASB issued ASU 2015-05, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement . The amendments in ASU 2015-05 provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments in ASU 2015-05 are effective for fiscal years beginning after December 15, 2015, and interim periods within those years. Early adoption is permitted. The guidance may be applied either prospectively to all arrangements entered into or materially modified after the effective date or retrospectively. The Company does not believe the implementation of this standard will result in a material impact to its financial statements. In April 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-03, Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs . The update requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update requires retrospective application and represents a change in accounting principle. ASU 2015-03 will be effective for the Company in the first quarter of fiscal 2016. Early adoption is permitted for financial statements that have not been previously issued. The impact of ASU 2015-03 on our consolidated financial statements includes a reclassification of net deferred financing costs related to our Senior Secured Term Loan Facility to be presented in the balance sheet as a direct deduction from the carrying amount of the Senior Secured Term Loan Facility. As of May 30, 2015, the Company had $7,021 of net deferred financing costs related to our Senior Secured Term Loan Facility. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , an updated standard on revenue recognition. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using IFRS and GAAP. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple-element arrangements. ASU 2014-09 will be effective for the Company in the first quarter of fiscal 2017 and may be applied on a full retrospective or modified retrospective approach. The Company is still evaluating the impact of implementation of this standard on its financial statements. |
Detail of certain balance sheet
Detail of certain balance sheet accounts | 3 Months Ended |
May. 30, 2015 | |
Detail of certain balance sheet accounts | |
Detail of certain balance sheet accounts | 2. Detail of certain balance sheet accounts May 30, 2015 February 28, 2015 May 31, 2014 Inventory: Finished goods $ $ $ Raw materials Work in progress $ $ $ Accrued liabilities: Accrued payroll, benefits and bonuses $ $ $ Unearned revenue Accrued transaction and property tax Gift cards and store credits outstanding Accrued lease liabilities Accrued interest Other accrued liabilities $ $ $ |
Net income (loss) per common sh
Net income (loss) per common share | 3 Months Ended |
May. 30, 2015 | |
Net income (loss) per common share | |
Net income (loss) per common share | 3. Net income (loss) per common share Basic net income (loss) per common share is computed as net income (loss) divided by the weighted-average number of common shares outstanding for the period. Diluted net income (loss) per share is computed as net income (loss) divided by the weighted-average number of common shares outstanding for the period plus common stock equivalents consisting of shares subject to stock-based awards with exercise prices less than or equal to the average market price of the Company’s common stock for the period, to the extent their inclusion would be dilutive. Potentially dilutive securities are excluded from the computation of diluted net income (loss) per share if their effect is anti-dilutive. The following is a reconciliation of net loss and the number of shares used in the basic and diluted net loss per share calculations: Thirteen Weeks Ended May 30, 2015 May 31, 2014 Numerator: Net loss $ $ Denominator: Weighted-average common shares outstanding — basic and diluted Basic and diluted net loss per common share $ $ Antidilutive securities not included: Stock options outstanding |
Pension plans
Pension plans | 3 Months Ended |
May. 30, 2015 | |
Pension plans | |
Pension plans | 4. Pension plans The Company provides pension benefits to the employees of Elfa under collectively bargained pension plans in Sweden, which are recorded in other long-term liabilities. The defined benefit plan provides benefits for participating employees based on years of service and final salary levels at retirement. The defined benefit plans are unfunded and approximately 3% of Elfa employees are participants in the defined benefit pension plan. Certain employees also participate in defined contribution plans for which Company contributions are determined as a percentage of participant compensation. The Company contributed $492 and $926 for defined contribution plans in the thirteen weeks ended May 30, 2015 and May 31, 2014, respectively. |
Income taxes
Income taxes | 3 Months Ended |
May. 30, 2015 | |
Income taxes | |
Income taxes | 5. Income taxes The Company’s effective income tax rate for the thirteen weeks ended May 30, 2015 was 36.7% compared to 35.0% for the thirteen weeks ended May 31, 2014. The increase in the effective tax rate is primarily due to a greater portion of our projected annual earnings expected to come from the U.S., which has a higher tax rate than our foreign subsidiaries. |
Commitments and contingencies
Commitments and contingencies | 3 Months Ended |
May. 30, 2015 | |
Commitments and contingencies | |
Commitments and contingencies | 6. Commitments and contingencies In connection with insurance policies and other contracts, the Company has outstanding standby letters of credit totaling $3,326 as of May 30, 2015. The Company is subject to ordinary litigation and routine reviews by regulatory bodies that are incidental to its business, none of which is expected to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows on an individual basis or in the aggregate. |
Accumulated other comprehensive
Accumulated other comprehensive income | 3 Months Ended |
May. 30, 2015 | |
Accumulated other comprehensive income | |
Accumulated other comprehensive income | 7. Accumulated other comprehensive income Accumulated other comprehensive income (“AOCI”) consists of changes in our foreign currency forward contracts, pension liability adjustment, and foreign currency translation. The components of AOCI, net of tax, are shown below for the thirteen weeks ended May 30, 2015: Foreign currency forward contracts Pension liability adjustment Foreign currency translation Total Balance at February 28, 2015 $ $ $ $ Other comprehensive (loss) income before reclassifications, net of tax Amounts reclassified to earnings, net of tax — — Net current period other comprehensive (loss) income Balance at May 30, 2015 $ $ $ $ Amounts reclassified from AOCI to earnings for the foreign currency forward contracts category are generally included in cost of sales in the Company’s consolidated statements of operations. For a description of the Company’s use of foreign currency forward contracts, refer to Note 8. |
Foreign currency forward contra
Foreign currency forward contracts | 3 Months Ended |
May. 30, 2015 | |
Foreign currency forward contracts. | |
Foreign currency forward contracts | 8. Foreign currency forward contracts The Company’s international operations and purchases of inventory products from foreign suppliers are subject to certain opportunities and risks, including foreign currency fluctuations. In the TCS segment, we utilize foreign currency forward contracts in Swedish krona to stabilize our retail gross margins and to protect our domestic operations from downward currency exposure by hedging purchases of inventory from our wholly owned subsidiary, Elfa. Forward contracts in the TCS segment are designated as cash flow hedges, as defined by ASC 815. In the Elfa segment, we utilize foreign currency forward contracts to hedge purchases, primarily of raw materials, that are transacted in currencies other than Swedish krona, which is the functional currency of Elfa. Forward contracts in the Elfa segment are economic hedges and are not designated as cash flow hedges as defined by ASC 815. During the thirteen weeks ended May 30, 2015 and May 31, 2014, the TCS segment used forward contracts for 100% and zero of inventory purchases in Swedish krona each year, respectively. During the thirteen weeks ended May 30, 2015 and May 31, 2014, the Elfa segment used forward contracts to purchase U.S. dollars in the amount of $600 and $1,220, which represented 29% and 62% percent of the Elfa segment’s U.S. dollar purchases each year, respectively. Generally, the Company’s foreign currency forward contracts have terms from 1 to 12 months and require the Company to exchange currencies at agreed-upon rates at settlement. The counterparties to the contracts consist of a limited number of major domestic and international financial institutions. The Company does not hold or enter into financial instruments for trading or speculative purposes. The Company records its foreign currency forward contracts on a gross basis and generally does not require collateral from these counterparties because it does not expect any losses from credit exposure. The Company records all foreign currency forward contracts on its consolidated balance sheet at fair value. The Company accounts for its foreign currency hedging instruments in the TCS segment as cash flow hedges, as defined. Changes in the fair value of the foreign currency hedging instruments that are considered to be effective, as defined, are recorded in other comprehensive income (loss) until the hedged item (inventory) is sold to the customer, at which time the deferred gain or loss is recognized through cost of sales. Any portion of a change in the foreign currency hedge instrument’s fair value that is considered to be ineffective, as defined, or that the Company has elected to exclude from its measurement of effectiveness, is immediately recorded in earnings as cost of sales. The Company assessed the effectiveness of the foreign currency hedge instruments and determined the foreign currency hedge instruments were highly effective during the thirteen weeks ended May 30, 2015 and May 31, 2014. Forward contracts not designated as hedges in the Elfa segment are adjusted to fair value as selling, general, and administrative expenses on the consolidated statements of operations. During the thirteen weeks ended May 30, 2015, the Company recognized a net loss of $83 associated with the change in fair value of forward contracts not designated as hedging instruments. The Company had $708 in accumulated other comprehensive loss related to foreign currency hedge instruments at May 30, 2015. Of the $708, $479 represents an unrealized loss for settled foreign currency hedge instruments related to inventory on hand as of May 30, 2015. The Company expects the unrealized loss of $479, net of taxes, to be reclassified into earnings over the next 12 months as the underlying inventory is sold to the end customer. The change in fair value of the Company’s foreign currency hedge instruments that qualify as cash flow hedges and are included in accumulated other comprehensive income (loss), net of taxes, are presented in Note 7 of these financial statements. |
Fair value measurements
Fair value measurements | 3 Months Ended |
May. 30, 2015 | |
Fair value measurements | |
Fair value measurements | 9. Fair value measurements Under GAAP, the Company is required to a) measure certain assets and liabilities at fair value or b) disclose the fair values of certain assets and liabilities recorded at cost. Accounting standards define fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. Fair value is calculated assuming the transaction occurs in the principal or most advantageous market for the asset or liability and includes consideration of non-performance risk and credit risk of both parties. Accounting standards pertaining to fair value establish a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value. These tiers include: · Level 1—Valuation inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. · Level 2—Valuation inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3—Valuation inputs are unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques. As of May 30, 2015, February 28, 2015 and May 31, 2014, the Company held certain items that are required to be measured at fair value on a recurring basis. These included the nonqualified retirement plan and foreign currency forward contracts. The nonqualified retirement plan consists of investments purchased by employee contributions to retirement savings accounts. The Company’s foreign currency hedging instruments consist of over-the-counter (OTC) contracts, which are not traded on a public exchange. See Note 8 for further information on the Company’s hedging activities. The fair values of the nonqualified retirement plan and foreign currency forward contracts are determined based on the market approach which utilizes inputs that are readily available in public markets or can be derived from information available in publicly quoted markets for comparable assets. Therefore, the Company has categorized these items as Level 2. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values. The Company has consistently applied these valuation techniques in all periods presented and believes it has obtained the most accurate information available for the types of contracts it holds. The following items are measured at fair value on a recurring basis, subject to the disclosure requirements of ASC 820, Fair Value Measurements : Description Balance Sheet Location May 30, 2015 February 28, 2015 May 31, 2014 Assets Nonqualified retirement plan Level 2 Other current assets $ $ $ Foreign currency forward contracts Level 2 Other current assets — Total assets $ $ $ Liabilities Nonqualified retirement plan Level 2 Accrued liabilities Foreign currency hedge instruments Level 2 Accrued liabilities — Total liabilities $ $ $ The fair values of long-term debt were estimated using discounted cash flow analyses, quoted prices, as well as recent transactions for similar types of borrowing arrangements. As of May 30, 2015, February 28, 2015 and May 31, 2014, the carrying values and estimated fair values of the Company’s long-term debt, including current maturities, were: May 30, 2015 Carrying Fair value value Senior secured term loan facility Level 2 $ $ 2014 Elfa term loan facility Level 2 Revolving credit facility Level 3 Other loans and capital leases Level 3 $ $ February 28, 2015 Carrying Fair value value Senior secured term loan facility Level 2 $ $ 2014 Elfa term loan facility Level 2 Other loans and capital leases Level 3 $ $ May 31, 2014 Carrying Fair value value Senior secured term loan facility Level 2 $ $ Elfa term loan facility Level 2 Revolving credit facility Level 3 Other loans Level 3 $ $ |
Segment reporting
Segment reporting | 3 Months Ended |
May. 30, 2015 | |
Segment reporting | |
Segment reporting | 10. Segment reporting The Company’s operating segments were determined on the same basis as how management evaluates performance internally. The Company’s two operating segments consist of TCS and Elfa. The TCS segment includes the Company’s retail stores, website and call center, as well as the installation services business. The Elfa segment includes the manufacturing business that produces the elfa ® brand products that are sold domestically exclusively through the TCS segment, as well as on a wholesale basis in approximately 30 countries around the world with a concentration in the Nordic region of Europe. The intersegment sales in the Elfa column represent elfa ® product sales to the TCS segment. These sales and the related gross margin on merchandise recorded in TCS inventory balances at the end of the period are eliminated for consolidation purposes in the Corporate/Other column. The net sales to third parties in the Elfa column represent sales to customers outside of the United States. Amounts in the Corporate/Other column include unallocated corporate expenses and assets, intersegment eliminations and other adjustments to segment results necessary for the presentation of consolidated financial results in accordance with GAAP. In general, the Company uses the same measurements to calculate earnings or loss before income taxes for operating segments as it does for the consolidated company. However, interest expense related to the Senior Secured Term Loan Facility and the Revolving Credit Facility is recorded in the Corporate/Other column. Corporate/ Thirteen Weeks Ended May 30, 2015 TCS Elfa Other Total Net sales to third parties $ $ $— $ Intersegment sales — — Interest expense, net Income (loss) before taxes Assets(1) Corporate/ Thirteen Weeks Ended May 31, 2014 TCS Elfa Other Total Net sales to third parties $ $ $— $ Intersegment sales — — Interest expense, net Income (loss) before taxes Assets(1) (1) Tangible assets in the Elfa column are located outside of the United States. Assets in Corporate/Other include assets located in the corporate headquarters and distribution center. Assets in Corporate/Other also include deferred tax assets and the fair value of TCS forward contracts. |
Detail of certain balance she18
Detail of certain balance sheet accounts (Tables) | 3 Months Ended |
May. 30, 2015 | |
Detail of certain balance sheet accounts | |
Schedule of detail of certain balance sheet accounts | May 30, 2015 February 28, 2015 May 31, 2014 Inventory: Finished goods $ $ $ Raw materials Work in progress $ $ $ Accrued liabilities: Accrued payroll, benefits and bonuses $ $ $ Unearned revenue Accrued transaction and property tax Gift cards and store credits outstanding Accrued lease liabilities Accrued interest Other accrued liabilities $ $ $ |
Net income (loss) per common 19
Net income (loss) per common share (Tables) | 3 Months Ended |
May. 30, 2015 | |
Net income (loss) per common share | |
Schedule of reconciliation of net loss and the number of shares used in the basic and diluted net loss per share calculations | Thirteen Weeks Ended May 30, 2015 May 31, 2014 Numerator: Net loss $ $ Denominator: Weighted-average common shares outstanding — basic and diluted Basic and diluted net loss per common share $ $ Antidilutive securities not included: Stock options outstanding |
Accumulated other comprehensi20
Accumulated other comprehensive income (Tables) | 3 Months Ended |
May. 30, 2015 | |
Accumulated other comprehensive income | |
Schedule of components of AOCI, net of tax | Foreign currency forward contracts Pension liability adjustment Foreign currency translation Total Balance at February 28, 2015 $ $ $ $ Other comprehensive (loss) income before reclassifications, net of tax Amounts reclassified to earnings, net of tax — — Net current period other comprehensive (loss) income Balance at May 30, 2015 $ $ $ $ |
Fair value measurements (Tables
Fair value measurements (Tables) | 3 Months Ended |
May. 30, 2015 | |
Fair value measurements | |
Schedule of items measured at fair value on a recurring basis, subject to the disclosure requirements of ASC 820 | Description Balance Sheet Location May 30, 2015 February 28, 2015 May 31, 2014 Assets Nonqualified retirement plan Level 2 Other current assets $ $ $ Foreign currency forward contracts Level 2 Other current assets — Total assets $ $ $ Liabilities Nonqualified retirement plan Level 2 Accrued liabilities Foreign currency hedge instruments Level 2 Accrued liabilities — Total liabilities $ $ $ |
Schedule of carrying values and estimated fair values of the Company's long-term debt, including current maturities | May 30, 2015 Carrying Fair value value Senior secured term loan facility Level 2 $ $ 2014 Elfa term loan facility Level 2 Revolving credit facility Level 3 Other loans and capital leases Level 3 $ $ February 28, 2015 Carrying Fair value value Senior secured term loan facility Level 2 $ $ 2014 Elfa term loan facility Level 2 Other loans and capital leases Level 3 $ $ May 31, 2014 Carrying Fair value value Senior secured term loan facility Level 2 $ $ Elfa term loan facility Level 2 Revolving credit facility Level 3 Other loans Level 3 $ $ |
Segment reporting (Tables)
Segment reporting (Tables) | 3 Months Ended |
May. 30, 2015 | |
Segment reporting | |
Schedule of segment reporting | Corporate/ Thirteen Weeks Ended May 30, 2015 TCS Elfa Other Total Net sales to third parties $ $ $— $ Intersegment sales — — Interest expense, net Income (loss) before taxes Assets(1) Corporate/ Thirteen Weeks Ended May 31, 2014 TCS Elfa Other Total Net sales to third parties $ $ $— $ Intersegment sales — — Interest expense, net Income (loss) before taxes Assets(1) (1) Tangible assets in the Elfa column are located outside of the United States. Assets in Corporate/Other include assets located in the corporate headquarters and distribution center. Assets in Corporate/Other also include deferred tax assets and the fair value of TCS forward contracts. |
Description of business and b23
Description of business and basis of presentation (Details) $ in Thousands | May. 30, 2015USD ($)ft²item | Feb. 28, 2015USD ($) | May. 31, 2014USD ($) |
Description of business and basis of presentation | |||
Number of stores | 71 | ||
Average size of stores (in square feet) | ft² | 25,000 | ||
Average selling square feet in stores (in square feet) | ft² | 19,000 | ||
Number of states | 25 | ||
Recent accounting pronouncements | |||
Deferred financing costs, net | $ | $ 7,253 | $ 7,742 | $ 9,210 |
Senior secured term loan facility | |||
Recent accounting pronouncements | |||
Deferred financing costs, net | $ | $ 7,021 | ||
Elfa | Elfa | |||
Description of business | |||
Number of countries in which products are sold on wholesale basis | 30 |
Detail of certain balance she24
Detail of certain balance sheet accounts (Details) - USD ($) $ in Thousands | May. 30, 2015 | Feb. 28, 2015 | May. 31, 2014 |
Inventory: | |||
Finished goods | $ 98,715 | $ 79,073 | $ 88,354 |
Raw materials | 3,535 | 3,501 | 4,668 |
Work in progress | 1,369 | 1,150 | 1,604 |
Inventory | 103,619 | 83,724 | 94,626 |
Accrued Liabilities: | |||
Accrued payroll, benefits and bonuses | 17,254 | 20,155 | 19,509 |
Unearned revenue | 4,943 | 11,385 | 4,472 |
Accrued transaction and property tax | 8,833 | 8,503 | 9,370 |
Gift cards and store credits outstanding | 7,935 | 7,683 | 7,943 |
Accrued lease liabilities | 3,953 | 3,920 | 3,178 |
Accrued interest | 2,392 | 2,333 | 2,453 |
Other accrued liabilities | 7,681 | 5,912 | 7,495 |
Accrued Liabilities | $ 52,991 | $ 59,891 | $ 54,420 |
Net income (loss) per common 25
Net income (loss) per common share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
May. 30, 2015 | May. 31, 2014 | |
Numerator: | ||
Net loss | $ (5,199) | $ (3,579) |
Denominator: | ||
Weighted-average common shares outstanding - basic and diluted (in shares) | 47,983,738 | 47,946,616 |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.11) | $ (0.07) |
Antidilutive securities not included: | ||
Stock options outstanding | 1,269,923 | 764,192 |
Pension plans (Details)
Pension plans (Details) - Elfa - USD ($) $ in Thousands | 3 Months Ended | |
May. 30, 2015 | May. 31, 2014 | |
Employee benefit plans | ||
Percentage of employees who are plan participants | 3.00% | |
Amount contributed by the Company for defined contribution plans | $ 492 | $ 926 |
Income taxes (Details)
Income taxes (Details) | 3 Months Ended | |
May. 30, 2015 | May. 31, 2014 | |
Income taxes | ||
Effective income tax rate (as a percent) | 36.70% | 35.00% |
Commitments and contingencies (
Commitments and contingencies (Details) $ in Thousands | May. 30, 2015USD ($) |
Standby letters of credit | |
Commitments and contingencies | |
Amount outstanding | $ 3,326 |
Accumulated other comprehensi29
Accumulated other comprehensive income (Details) $ in Thousands | 3 Months Ended |
May. 30, 2015USD ($) | |
Rollforward of the amounts included in AOCI, net of taxes | |
Balance at the beginning of the period | $ (18,342) |
Other comprehensive (loss) income before reclassifications, net of tax | (1,227) |
Amounts reclassified to earnings, net of tax | 380 |
Net current period other comprehensive (loss) income | (847) |
Balance at the end of the period | (19,189) |
Pension liability adjustment | |
Rollforward of the amounts included in AOCI, net of taxes | |
Balance at the beginning of the period | (1,167) |
Other comprehensive (loss) income before reclassifications, net of tax | 30 |
Net current period other comprehensive (loss) income | 30 |
Balance at the end of the period | (1,137) |
Foreign currency translation | |
Rollforward of the amounts included in AOCI, net of taxes | |
Balance at the beginning of the period | (16,293) |
Other comprehensive (loss) income before reclassifications, net of tax | (1,051) |
Net current period other comprehensive (loss) income | (1,051) |
Balance at the end of the period | (17,344) |
Foreign currency forward contracts | |
Rollforward of the amounts included in AOCI, net of taxes | |
Balance at the beginning of the period | (882) |
Other comprehensive (loss) income before reclassifications, net of tax | (206) |
Amounts reclassified to earnings, net of tax | 380 |
Net current period other comprehensive (loss) income | 174 |
Balance at the end of the period | $ (708) |
Foreign currency forward cont30
Foreign currency forward contracts (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May. 30, 2015 | May. 31, 2014 | |
Purchase of inventory from use of forward contracts in Swedish krona (as a percent) | 100.00% | 0.00% |
Purchase of U.S. dollars from use of forward contracts | $ 600 | $ 1,220 |
Purchase of U.S. dollars from use of forward contracts as a percent of Elfa's U.S. Dollar purchases | 29.00% | 62.00% |
Minimum term period of currency-related hedge instruments | 1 month | |
Maximum term period of currency-related hedge instruments | 12 months | |
Loss associated with the change in fair value of forward contracts not designated as hedging instruments | $ 83 | |
Unrealized loss to be reclassified into earnings over the next 12 months | 479 | |
Foreign currency forward contracts | ||
Accumulated other comprehensive loss | 708 | |
Accumulated other comprehensive loss related to foreign currency hedge instruments | $ 479 |
Fair value measurements (Detail
Fair value measurements (Details) - Recurring - USD ($) $ in Thousands | May. 30, 2015 | Feb. 28, 2015 | May. 31, 2014 |
Assets | |||
Total assets | $ 4,480 | $ 4,437 | $ 3,555 |
Liabilities | |||
Total liabilities | 4,470 | 4,281 | 3,563 |
Level 2 | Other current assets | |||
Assets | |||
Nonqualified retirement plan | 4,086 | 3,951 | 3,555 |
Foreign currency forward contracts | 394 | 486 | |
Level 2 | Accrued liabilities | |||
Liabilities | |||
Nonqualified retirement plan | 4,094 | 3,966 | $ 3,563 |
Foreign currency hedge instruments | $ 376 | $ 315 |
Fair value measurements (Deta32
Fair value measurements (Details 2) - USD ($) $ in Thousands | May. 30, 2015 | Feb. 28, 2015 | May. 31, 2014 |
Carrying value | |||
Fair value measurements | |||
Fair value | $ 338,836 | $ 332,094 | $ 338,047 |
Fair value | |||
Fair value measurements | |||
Fair value | 336,608 | 327,830 | 337,227 |
Level 2 | Carrying value | Elfa | Elfa Term Loan Facility | |||
Fair value measurements | |||
Fair value | 935 | ||
Level 2 | Carrying value | Elfa | 2014 Elfa term loan facility | |||
Fair value measurements | |||
Fair value | 5,983 | 6,463 | |
Level 2 | Carrying value | Senior secured term loan facility | |||
Fair value measurements | |||
Fair value | 324,005 | 324,911 | 327,628 |
Level 2 | Fair value | Elfa | Elfa Term Loan Facility | |||
Fair value measurements | |||
Fair value | 935 | ||
Level 2 | Fair value | Elfa | 2014 Elfa term loan facility | |||
Fair value measurements | |||
Fair value | 5,983 | 6,463 | |
Level 2 | Fair value | Senior secured term loan facility | |||
Fair value measurements | |||
Fair value | 321,777 | 320,647 | 326,808 |
Level 3 | Carrying value | Revolving credit facility | |||
Fair value measurements | |||
Fair value | 8,000 | 8,000 | |
Level 3 | Carrying value | Other loans | |||
Fair value measurements | |||
Fair value | 1,484 | ||
Level 3 | Carrying value | Other loans and capital leases | |||
Fair value measurements | |||
Fair value | 848 | 720 | |
Level 3 | Fair value | Revolving credit facility | |||
Fair value measurements | |||
Fair value | 8,000 | 8,000 | |
Level 3 | Fair value | Other loans | |||
Fair value measurements | |||
Fair value | $ 1,484 | ||
Level 3 | Fair value | Other loans and capital leases | |||
Fair value measurements | |||
Fair value | $ 848 | $ 720 |
Segment reporting (Details)
Segment reporting (Details) $ in Thousands | 3 Months Ended | ||
May. 30, 2015USD ($)segmentitem | May. 31, 2014USD ($) | Feb. 28, 2015USD ($) | |
Segment reporting | |||
Number of reportable segments | segment | 2 | ||
Segment reporting | |||
Sales | $ 169,833 | $ 173,438 | |
Interest expense, net | 4,168 | 4,302 | |
Income (loss) before taxes | (8,207) | (5,507) | |
Assets1 | 770,023 | 775,196 | $ 769,057 |
Operating segments | TCS | |||
Segment reporting | |||
Sales | 152,740 | 149,729 | |
Interest expense, net | 5 | 7 | |
Income (loss) before taxes | (1,210) | (102) | |
Assets1 | 627,721 | 604,651 | |
Operating segments | Elfa | |||
Segment reporting | |||
Sales | 17,093 | 23,709 | |
Interest expense, net | 96 | 161 | |
Income (loss) before taxes | (1,811) | 251 | |
Assets1 | 109,616 | 142,748 | |
Corporate/other | |||
Segment reporting | |||
Interest expense, net | 4,067 | 4,134 | |
Income (loss) before taxes | (5,186) | (5,656) | |
Assets1 | 32,686 | 27,797 | |
lntersegment | |||
Segment reporting | |||
Sales | (7,612) | (8,468) | |
lntersegment | Elfa | |||
Segment reporting | |||
Sales | $ 7,612 | $ 8,468 | |
Elfa | Elfa | |||
Segment reporting | |||
Number of countries in which products are sold on wholesale basis | item | 30 |