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THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended May 5, 2001
OR
/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 0-18632
THE WET SEAL, INC.
(Exact name of registrant as specified in its charter)
Delaware (State of Incorporation) | 33-0415940 (IRS Employer Identification No.) | |
26972 Burbank Foothill Ranch, California (Address of principal executive offices) | 92610 (Zip code) |
(949) 583-9029
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / /
The number of shares outstanding of the registrant's Class A Common Stock and Class B Common Stock par value $.10 per share, at May 24, 2001 were 11,513,133 and 2,912,665, respectively. There were no shares of Preferred Stock, par value $.01 per share, outstanding at May 24, 2001.
THE WET SEAL, INC.
FORM 10-Q
Index
PART I. | FINANCIAL INFORMATION | |||
Item 1. | Financial Statements | |||
Consolidated balance sheets as of May 5, 2001 (unaudited) and February 3, 2001 | 3-4 | |||
Consolidated statements of income and comprehensive income (unaudited) for the 13 weeks ended May 5, 2001 and April 29, 2000 | 5 | |||
Consolidated statements of cash flows (unaudited) for the 13 weeks ended May 5, 2001 and April 29, 2000 | 6 | |||
Notes to consolidated financial statements | 7-8 | |||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 9-14 | ||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 14 | ||
PART II. | OTHER INFORMATION | 15 | ||
SIGNATURE PAGE | 16 |
THE WET SEAL, INC.
CONSOLIDATED BALANCE SHEETS
| May 5, 2001 | February 3, 2001 | |||||||
---|---|---|---|---|---|---|---|---|---|
| (unaudited) | | |||||||
ASSETS | |||||||||
CURRENT ASSETS: | |||||||||
Cash and cash equivalents | $ | 38,158,000 | $ | 30,122,000 | |||||
Short-term investments | 42,090,000 | 38,060,000 | |||||||
Other receivables | 3,194,000 | 2,412,000 | |||||||
Merchandise inventories | 39,396,000 | 30,102,000 | |||||||
Prepaid expenses | 9,608,000 | 9,463,000 | |||||||
Deferred tax charges | 1,094,000 | 1,094,000 | |||||||
Total current assets | 133,540,000 | 111,253,000 | |||||||
EQUIPMENT AND LEASEHOLD IMPROVEMENTS: | |||||||||
Leasehold improvements | 102,177,000 | 99,873,000 | |||||||
Furniture, fixtures and equipment | 56,505,000 | 54,048,000 | |||||||
Leasehold rights | 2,944,000 | 2,944,000 | |||||||
Construction in progress | — | — | |||||||
161,626,000 | 156,865,000 | ||||||||
Less accumulated depreciation | (88,663,000 | ) | (85,483,000 | ) | |||||
Net equipment and leasehold improvements | 72,963,000 | 71,382,000 | |||||||
LONG-TERM INVESTMENTS | 36,429,000 | 40,018,000 | |||||||
OTHER ASSETS: | |||||||||
Deferred taxes and other assets | 14,540,000 | 14,541,000 | |||||||
Goodwill, net of accumulated amortization of $1,484,000 and $1,386,000 as of May 5, 2001 and February 3, 2001, respectively | 6,619,000 | 6,717,000 | |||||||
Total other assets | 21,159,000 | 21,258,000 | |||||||
$ | 264,091,000 | $ | 243,911,000 | ||||||
See accompanying notes to consolidated financial statements.
THE WET SEAL, INC.
CONSOLIDATED BALANCE SHEETS
| May 5, 2001 | February 3, 2001 | |||||||
---|---|---|---|---|---|---|---|---|---|
| (unaudited) | | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
CURRENT LIABILITIES: | |||||||||
Accounts payable | $ | 59,549,000 | $ | 43,681,000 | |||||
Accrued liabilities | 17,552,000 | 17,811,000 | |||||||
Income taxes payable | — | 5,548,000 | |||||||
Current portion of long-term debt | — | — | |||||||
Total current liabilities | 77,101,000 | 67,040,000 | |||||||
LONG-TERM LIABILITIES: | |||||||||
Deferred rent | 9,130,000 | 9,191,000 | |||||||
Other long-term liabilities | 4,065,000 | 3,887,000 | |||||||
Total long-term liabilities | 13,195,000 | 13,078,000 | |||||||
Total liabilities | 90,296,000 | 80,118,000 | |||||||
STOCKHOLDERS' EQUITY: | |||||||||
Preferred Stock, $.01 par value, authorized 2,000,000 shares; none issued and outstanding | — | — | |||||||
Common Stock, Class A, $.10 par value, authorized 20,000,000 shares; 11,513,133 and 11,236,879 shares issued and outstanding at May 5, 2001 and February 3, 2001, respectively | 1,151,000 | 1,124,000 | |||||||
Common Stock, Class B Convertible, $.10 par value, authorized 10,000,000 shares; 2,912,665 shares issued and outstanding at May 5, 2001 and February 3, 2001 | 291,000 | 291,000 | |||||||
Paid-in capital | 73,273,000 | 68,658,000 | |||||||
Retained earnings | 119,429,000 | 114,069,000 | |||||||
Other comprehensive income | — | — | |||||||
Treasury stock, 1,367,600 shares at cost | (20,349,000 | ) | (20,349,000 | ) | |||||
Total stockholders' equity | 173,795,000 | 163,793,000 | |||||||
$ | 264,091,000 | $ | 243,911,000 | ||||||
See accompanying notes to consolidated financial statements.
THE WET SEAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(unaudited)
| 13 Weeks Ended | |||||
---|---|---|---|---|---|---|
| May 5, 2001 | April 29, 2000 | ||||
SALES | $ | 137,913,000 | $ | 130,600,000 | ||
COST OF SALES (including buying, distribution and occupancy costs) | 96,247,000 | 96,883,000 | ||||
GROSS MARGIN | 41,666,000 | 33,717,000 | ||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 34,399,000 | 30,956,000 | ||||
OPERATING INCOME | 7,267,000 | 2,761,000 | ||||
INTEREST INCOME, NET | 1,520,000 | 874,000 | ||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 8,787,000 | 3,635,000 | ||||
PROVISION FOR INCOME TAXES | 3,427,000 | 1,418,000 | ||||
NET INCOME | $ | 5,360,000 | $ | 2,217,000 | ||
COMPREHENSIVE INCOME | $ | 5,360,000 | $ | 2,217,000 | ||
NET INCOME PER SHARE, BASIC | $ | 0.41 | $ | 0.18 | ||
NET INCOME PER SHARE, DILUTED | $ | 0.39 | $ | 0.18 | ||
WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC | 12,996,421 | 12,465,934 | ||||
WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED | 13,608,518 | 12,630,886 | ||||
See accompanying notes to consolidated financial statements.
THE WET SEAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| 13 Weeks Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
| May 5, 2001 | April 29, 2000 | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
Net income | $ | 5,360,000 | $ | 2,217,000 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 5,070,000 | 5,016,000 | ||||||||
Loss on disposal of equipment and leasehold improvements | 13,000 | 39,000 | ||||||||
Changes in operating assets and liabilities: | ||||||||||
Other receivables | (782,000 | ) | (186,000 | ) | ||||||
Merchandise inventories | (9,294,000 | ) | (6,481,000 | ) | ||||||
Prepaid expenses | (145,000 | ) | — | |||||||
Other assets | 1,000 | 15,000 | ||||||||
Accounts payable and accrued liabilities | 15,609,000 | 10,140,000 | ||||||||
Income taxes payable | (5,548,000 | ) | (543,000 | ) | ||||||
Deferred rent | (61,000 | ) | 139,000 | |||||||
Other long-term liabilities | 178,000 | 219,000 | ||||||||
Net cash provided by operating activities | 10,401,000 | 10,575,000 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
Investment in equipment and leasehold improvements | (2,915,000 | ) | (6,284,000 | ) | ||||||
Acquisition of store leases and store assets | (3,550,000 | ) | — | |||||||
Investment in marketable securities | (20,671,000 | ) | (16,188,000 | ) | ||||||
Proceeds from sale of marketable securities | 20,129,000 | 4,154,000 | ||||||||
Net cash used in investing activities | (7,007,000 | ) | (18,318,000 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
Principal payments on long-term debt | — | (500,000 | ) | |||||||
Proceeds from issuance of stock associated with stock options | 4,642,000 | 52,000 | ||||||||
Net cash provided by (used in) financing activities | 4,642,000 | (448,000 | ) | |||||||
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS | 8,036,000 | (8,191,000 | ) | |||||||
CASH AND CASH EQUIVALENTS, beginning of period | 30,122,000 | 44,921,000 | ||||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 38,158,000 | $ | 36,730,000 | ||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||
Cash paid during the period for: | ||||||||||
Interest | $ | — | $ | 24,000 | ||||||
Income taxes, net | $ | 9,212,000 | $ | 2,989,000 |
See accompanying notes to consolidated financial statements.
THE WET SEAL, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1—Basis of Presentation:
The information set forth in these consolidated financial statements is unaudited except for the February 3, 2001 balance sheet. These statements have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation have been included. The results of operations for the 13 weeks ended May 5, 2001 are not necessarily indicative of the results that may be expected for the year ending February 2, 2002 (fiscal 2001). For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report for the year ended February 3, 2001.
NOTE 2—Line of Credit and Loan Payable to Bank:
Under an unsecured revolving line-of-credit arrangement with Bank of America National Trust and Savings Association ("Bank of America"), the Company may borrow up to a maximum of $50,000,000 on a revolving basis through July 1, 2001. The cash borrowings under the arrangement bear interest at Bank of America's prime rate or, at the Company's option, LIBOR plus 1.5%. As of May 5, 2001, the Company had no borrowings outstanding under the credit arrangement.
The credit arrangement imposes quarterly and annual financial covenants requiring the Company to maintain certain financial ratios and achieve certain levels of annual income. In addition, the credit arrangement requires that Bank of America approve the payment of dividends and restrict the level of capital expenditures. At May 5, 2001, the Company was in compliance with these covenants.
In June 1995, the Company entered into an unsecured five-year, $10,000,000 term loan with Bank of America. This loan was repaid in full on May 24, 2000.
NOTE 3—Net Income Per Share:
Net income per share, basic, is computed based on the weighted average number of common shares outstanding for the period.
Net income per share, diluted, is computed based on the weighted average number of common and potentially dilutive common equivalent shares outstanding for the period.
A reconciliation of the numerators and denominators used in basic and diluted net income per share is as follows:
| 13 Weeks Ended May 5, 2001 | 13 Weeks Ended April 29, 2000 | ||||
---|---|---|---|---|---|---|
Net income: | $ | 5,360,000 | $ | 2,217,000 | ||
Weighted average Number of common shares: | ||||||
Basic | 12,996,421 | 12,465,934 | ||||
Effect of dilutive Securities-stock options | 612,097 | 164,952 | ||||
Diluted | 13,608,518 | 12,630,886 | ||||
Net income per share: Basic | $ | 0.41 | $ | 0.18 | ||
Effect of dilutive Securities-stock options | 0.02 | 0.00 | ||||
Diluted | $ | 0.39 | $ | 0.18 | ||
NOTE 4—Treasury Stock:
The Company's Board of Directors authorized the repurchase of up to 20% of the outstanding shares of the Company's Class A common stock. As of May 5, 2001, 1,367,600 shares had been repurchased at a cost of $20,349,000. Such repurchased shares are reflected as Treasury Stock in the Company's consolidated balance sheet.
Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations
Introduction
The Company is one of the largest national mall-based specialty retailers focusing primarily on young women's apparel, and currently operates 562 retail stores in 43 states, Washington D.C. and Puerto Rico. Of the 562 stores, 306 are Wet Seal stores and 155 are Contempo Casuals stores which cater to the junior customer, 83 are Arden B. stores which focus on a fashionable, sophisticated, contemporary customer and 18 are Zutopia stores, for the "tween" customer. The Company initiated a catalog in fiscal 1998 and an e-commerce web-site in August 1999. In fiscal 2001, the Company does not plan to mail any catalogs, but will continue its e-commerce initiatives. The Company discontinued Limbo Lounge as a retail concept at the end of fiscal 2000.
On March 25, 2001, the Company acquired the leases, merchandise inventory and furniture and fixtures for 18 Zutopia stores from Gymboree, Inc. The purchase price of $3,625,000 was allocated to inventory, leasehold improvements and furniture, fixtures and equipment. Zutopia is a "tween" retail concept which caters to the female customer ages 5 to 12. The Company continues to operate the acquired store locations under the Zutopia name.
As of May 5, 2001, the Company operated 563 stores compared to 559 stores as of April 29, 2000, the end of the first quarter of fiscal 2000. The Company opened 18 stores, acquired 18 stores and closed 32 stores for the period from April 30, 2000 to May 5, 2001.
Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's consolidated financial statements and the notes thereto.
Results of Operations
The 13 weeks ended May 5, 2001 (first quarter of fiscal 2001) as compared to the 13 weeks ended April 29, 2000 (first quarter of fiscal 2000)
Sales in the first quarter of fiscal 2001 were $137,913,000 compared to sales in the first quarter of fiscal 2000 of $130,600,000, an increase of $7,313,000 or 5.6%. The dollar increase in sales was due in part to the net increase of 4 stores; 563 stores at the end of the first quarter of fiscal 2001 compared to 559 stores at the end of the first quarter of fiscal 2000. The increase in sales was also due to the increase in comparable store sales of 3.5% for the first quarter compared to a decrease of 4.6% in the first quarter of fiscal 2000. Comparable store sales are defined as sales in stores that were open throughout the full prior 14 months.
Cost of sales, including buying, distribution and occupancy costs, was $96,247,000 in the first quarter of fiscal 2001 compared to $96,883,000 in the first quarter of fiscal 2000, a decrease of $636,000. The dollar decrease in cost of sales in fiscal 2001 compared to fiscal 2000 was due primarily to a decrease in the cost of merchandise. As a percentage of sales, cost of sales was 69.8% in the first quarter of fiscal 2001 compared to 74.2% in the first quarter of fiscal 2000, a decrease of 4.4%. The decrease in cost of sales as a percentage of sales related primarily to a decrease in the cost of merchandise due to an increase in initial mark up and a decrease in markdowns. Prior year markdowns were higher because of the need to clear merchandise due to the decrease in comparable store sales. To a lesser extent, the decrease in cost of sales as a percentage of sales was due to a decrease in occupancy costs as a percentage of sales due to the increase in comparable store sales. Offsetting these decreases was an increase in buying costs as a percentage of sales due to additional headcount added to support the company's growth, as well as an increase in distribution costs related primarily to an
increase in wages due to processing changes in the distribution center requiring additional manpower in the current year.
Selling, general and administrative expenses were $34,399,000 in the first quarter of fiscal 2001 compared to $30,956,000 in the first quarter of fiscal 2000, an increase of $3,443,000, or 11.1%. As a percentage of sales, selling, general and administrative expenses was 24.9% in fiscal 2001 compared to 23.7% in fiscal 2000, an increase of 1.2%. The dollar increase in selling, general and administrative expenses in the first quarter of fiscal 2001 compared to the first quarter of fiscal 2000 was primarily due to the increase in total sales. The increase as a percentage of sales was primarily related to an increase in merchandise delivery costs and increases in office wages and selling wages over the prior year.
Interest income, net, was $1,520,000 in the first quarter of fiscal 2001 compared to $874,000 in the first quarter of fiscal 2000, an increase of $646,000. This increase was due primarily to an increase in the average cash balance invested during the quarter as well as an increase in interest rates.
Income tax provision was $3,427,000 in first quarter of fiscal 2001 compared to $1,418,000 in the first quarter of fiscal 2000. The effective income tax rate was 39.0% compared to 39.0% in the prior year.
Based on the factors noted above, net income was $5,360,000 in the first quarter of fiscal 2001 compared to $2,217,000 in the first quarter of fiscal 2000, an increase of $3,143,000 or 141.8%. As a percentage of sales, net income was 3.9% in the first quarter of fiscal 2001 compared to 1.7% in the first quarter of fiscal 2000.
Liquidity and Capital Resources
Net cash provided by operating activities for the first quarter of fiscal 2001 was $10,401,000. Working capital at May 5, 2001 was $56,439,000 compared to $44,213,000 at February 3, 2001, an increase of $12,226,000. This increase was primarily due to an increase in cash, cash equivalents and short-term investments of $12,066,000, as less current year excess cash has been invested in long-term investments. The increase in working capital is also due to the increase in inventory. Inventory was $39,396,000 at May 5, 2001 compared to $30,102,000 at February 3, 2001, an increase of $9,294,000. The increase was due to a net increase of 11 stores, and the seasonal nature of the business; inventory levels are typically at a low point at fiscal year end. These increases were offset to some extent by the increase in accounts payable and accrued liabilities. The increase in accounts payable and accrued liabilities of $15,609,000 compared to February 3, 2001 was primarily due to the increase in inventory.
In the first quarter of fiscal 2001, the Company invested $6,465,000 in equipment and leasehold improvements, including $3,550,000 for the acquisition of Zutopia, compared to $6,284,000 in the same period of the prior year. In the first quarter of fiscal 2001, the Company opened 1 store and acquired 18 stores compared to 19 stores opened in the first quarter of fiscal 2000. The Company currently estimates that the capital expenditures for the remainder of fiscal 2001 will be approximately $41,585,000. These planned expenditures relate primarily to new store openings and remodel construction.
In September 1998, the Company's Board of Directors authorized the repurchase of up to 20% of the outstanding shares of the Company's Class A Common Stock. As of May 5, 2001, 1,367,600 shares had been repurchased at a cost of $20,349,000. Such repurchased shares are reflected as treasury stock in the accompanying consolidated financial statements.
The Company has an unsecured revolving line of credit arrangement with Bank of America National Trust and Savings Association ("Bank of America") in an aggregate principal amount of $50,000,000, maturing on July 1, 2001. At May 5, 2001, there were no outstanding borrowings under the credit arrangement and the Company was in compliance with all terms and covenants of the credit arrangement. The five year amortizing unsecured term loan with Bank of America in the amount of $10,000,000 was repaid in full on May 24, 2000.
The Company invests its excess funds primarily in a short-term investment grade money market fund, investment grade commercial paper and U.S. Treasury and Agency obligations. Management believes the Company's working capital and cash flows from operating activities will be sufficient to meet the Company's operating and capital requirements in the foreseeable future.
Seasonality and Quarterly Operating Results
The Company's business is seasonal by nature with the Christmas season (beginning the week of Thanksgiving and ending the first Saturday after Christmas) and the back-to-school season (beginning the last week of July and ending the first week of September), historically accounting for the largest percentage of sales volume. In the Company's three fiscal years ended February 3, 2001, the Christmas and back-to-school seasons together accounted for an average of approximately 31% of the Company's annual sales, after adjusting for sales increases related to new stores. The Company does not believe that inflation has had a material effect on the results of operations during the past three years. However, there can be no assurance that the Company's business will not be affected by inflation in the future.
Statement Regarding Forward Looking Disclosure
Certain sections of this Quarterly Report on Form 10-Q, including the preceding "Management's Discussion and Analysis of Financial Condition and Results of Operations", may contain various forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. The Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward looking statements, including, without limitation, the retention by the Company of suppliers for both brand name and Company-developed merchandise, the ability of the Company to expand and to continue to increase comparable store sales, and the sufficiency of the Company's working capital and cash flows from operating activities. In addition, these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward looking statements, including, without limitation, a decline in demand for the merchandise offered by the Company, the ability of the Company to locate and obtain acceptable store sites and lease terms or renew existing leases, the ability of the Company to obtain adequate merchandise supply, the ability of the Company to hire and train employees, the ability of the Company to gauge the fashion tastes of its customers and provide merchandise that satisfies customer demand, management's ability to manage the Company's expansion, the effect of economic conditions, the effect of severe weather or natural disasters and the effect of competitive pressures from other retailers. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statement contained herein or to reflect any change in the expectations of the Company after the date hereof or any change in events, conditions or circumstances on which any statement is based.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133 establishes accounting and reporting standards for derivative instruments and for hedging activities. In July 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities—Deferral of the Effective Date of FASB Statement No. 133," which delays the effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000. The Company adopted SFAS No. 133 effective February 4, 2001. The adoption of SFAS No. 133 did not have a material effect on the Company's consolidated results of operations or financial condition.
In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements". SAB No. 101 summarizes the staff's views in applying accounting principles generally accepted in the United States of America to revenue recognition in financial statements. The Company adopted SAB No. 101 in the fourth quarter of fiscal
year 2000. The adoption of SAB No. 101 did not have a material impact on the Company's consolidated results of operations or equity.
In March 2000, the FASB issued Interpretation ("FIN") No. 44, "Accounting for Certain Transactions involving Stock Compensation." FIN No. 44 is an interpretation of Accounting Principal Board's ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees". Among other matters, FIN No. 44 clarifies the application of APB Opinion No. 25 regarding the definition of employee for purposes of applying APB Opinion No. 25, the criteria for determining whether a plan qualifies as non compensatory and the accounting consequences of modifications to the terms of a previously issued stock options or similar awards. The Company adopted the provisions of FIN No. 44 in the third quarter of fiscal 2000. The adoption of FIN No. 44 did not have a material impact on the Company's consolidated results of operations or financial condition.
Item 3—Quantitative and Qualitative Disclosures About Market Risk
To the extent the Company borrows under its credit facility, the Company would be exposed to market risk related to changes in interest rates. At May 5, 2001 no borrowings were outstanding under the Company's credit facility. The Company is not a party with respect to derivative financial instruments.
Item 1—Legal Proceedings.
The Company is not party to any material legal proceedings, other than ordinary routine litigation incidental to the Company's business.
Item 2—Changes in Securities. Not Applicable
Item 3—Defaults Upon Senior Securities. Not Applicable
Item 4—Submission of Matters to a Vote of Security Holders. Not Applicable
Item 5—Other Information. Not Applicable
Item 6(a)—Exhibits. Not Applicable
Item 6(b)—Reports on Form 8-K. Not Applicable
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 thereunto duly authorized.
THE WET SEAL, INC. (Registrant) | ||
Date: June 7, 2001 | /s/ KATHY BRONSTEIN Kathy Bronstein Vice Chairman and Chief Executive Officer and Director (Principal Executive Officer) | |
Date: June 7, 2001 | /s/ ANN CADIER KIM Ann Cadier Kim Executive Vice President of Finance and Chief Financial Officer (Principal Financial and Accounting Officer) |
THE WET SEAL, INC. FORM 10-Q Index
THE WET SEAL, INC. CONSOLIDATED BALANCE SHEETS
THE WET SEAL, INC. CONSOLIDATED BALANCE SHEETS
THE WET SEAL, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (unaudited)
THE WET SEAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
THE WET SEAL, INC. NOTES TO FINANCIAL STATEMENTS
PART II—OTHER INFORMATION
SIGNATURES